I haven’t posted in awhile. But the last time I penned a thought I was commenting on the September 11th Commitments of Traders report for gold.
I essentially made two points: The report indicated a big commercial net short number which often, but certainly not always, tends to put a damper on prices for awhile. And if you have existing precious metal positions (you do, don’t you?) you should stick with your existing plan, manage your risk, and let the market go as high as it wants to go.
Since then, gold did back off for awhile, falling from a high of $1024 an ounce to a low of $985. But even heavy commercial selling can’t keep a raging bull down. And yesterday gold made a very strong advance, closing at an all-time high of $1042.
What lit the fire under the precious metals yesterday? If I told you the truth I would just say it’s a bull market and that’s what bull markets do — they go up. But I realize people have to have reasons for why things happen. It seems the British newspaper, The Independent, reported that Arab states — along with China, Russia, and France — are making secret plans to stop using the U.S. dollar for oil trading. That bit of news didn’t do the dollar any good. But it did a world of good for gold. It makes sense to me. Why would anyone want to own U.S. dollars these days?
The bottom line is to ignore the news and know that bull markets always go a lot further up than anyone thinks they can. Enjoy the ride.