Leading Off…The Gold trade is broken

May 28, 2014

Screen Shot 2014-05-05 at 9.13.38 PMTim Reazor
Chief Investment Strategist
NorAm Asset Management

The gold trade I’ve been discussing with you for quite some time is broken.  Gold lost the $1288 price level falling 2+% today and is now clinging to $1661 support.   You may be asking why don’t we hold on to shares of GLD or the delta 70 calls that may have 40+ days left to expiry.  We could wait for a bounce and then sell, but ask yourself this simple question.  Which door is open most at the moment in gold?  Is the door to higher prices open or lower prices open the widest. Lower prices win the day for the moment.

What’s Next?

This $1261 price level is key.  If $1261 can’t hold then $1250, $1235 and $1218 are in the cards.  Will we get a bounce?  We’ll most likely bounce at some point, but when is the huge question.  I’ve found that my first opportunity to sell and take a small loss is usually my best opportunity.  Remember, we can always revisit this idea when prices firm up.

To see my watch-list and game plan for this week watch this video http://vimeo.com/96256833

You can listen to the show live, Your Money, on Saturday’s at 10:00 AM – just click this link and bookmark it – http://www.iheart.com/live/1190AM-4276/?autoplay=true

You can also listen via the iHeart Radio app.  Simply download the app to your smartphone and search for 1190 AM Dallas.  There is even an alarm you can set to remind you of when our show is on.

If you want to come into my office and learn about credit spreads send me an email.  It would be a pleasure to meet, bond and talk stocks together – [email protected]

I often talk stocks and markets on twitter – you can follow me by searching for my handle – @TJReazor

I hope today’s newsletter helped.

Best Regards,

Tim

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