If you recall last week I indicated that a gold newsletter was a week late in cautioning its readers about an impending drop in the price of gold and correspondingly gold equities.
Today, it made a clearer caution that more downside is on the way. It goes on to say that Gold falling below the 38.2% level (US$1,839) tells us there are bigger falls ahead and suggesting that the next stop for gold is likely to be US$1,795–1,810, failing which she then expects a dip down all the way to US$1,720–1,760. That aligns with the $1700-1800 band I spoke about this morning. The newsletter goes on to tell us to expect a bumpy time for gold stocks in the weeks ahead but remained convinced that the longer term trend remains intact and healthy, in face well poised for a recovery from that point.
Here's what to watch . First the all important $1800 mark. Second, GDX (now at $33.45) does not go below $32.46, thats about 3%, in all likelihood that could be taken out.
But here's the thing. Gold equities have already taken a big knock over the past two days. Sure if gold retrace another $100, we could see further retracement, which is why I indicated to brace for 10-15% downside in gold equities yesterday, and we have already seen some of this already being played out today.
IMO important to reflect on why you bought them in the first place. A prospective and promising gold junior which can unlock immense gold discovery won't need to care too much about another $100 drop in price of gold, there's still enough meat even at A$2200-2400 gold price - it is what gold would fetch two years or more from now, no one is saying yet the bull market for gold is over. Gold stocks that have enjoyed significant upside in the past months may be the ones under pressure if the reason for their rise was more speculative driven or hype. Not all gold stocks ought to be viewed in the same light. And if one had bought them for long term investment, one wouldn't sell it for a loss if one has lost the chance to sell at a profit earlier on , unless one is prepared to trade.
This is why I stated in my post before this , that it is important to be decisive and make a quick decision and not procrastinate on whether to sell (or to buy) and one would want to do it before the event starts- the event is referred to as a large selldown or a big rally. In other words, if one wants to be greedy, be greedy early and one wants to mitigate losses, don't blink , it always hurts and being decisive can within even seconds or minutes go a long way to stop a small loss getting into a bigger one.
The above reflects my personal views and opinions only and obviously everyone should make their own respective decisions.
