Gold Update- Calls and New Positions.

As many of you know, Gold and especially Silver are my two least favorite assets to analyze because of the largely JPM  inherited short from taking over Bear Stearns (in silver) and QE and die-hard gold bugs as well as COMEX interference, Central B. policies re: gold, the re-hypothecation and over-pledge of tangible assets vs. the paper derivatives.

I do believe though that the Gold / G:D calls could be worth hanging on to for a while longer, although I have several open positions in GLD so I will thin some of it.

For those who prefer equity positions over options, GLD long or any of the leveraged ETFs, will work as well.

It has been my opinion since we saw the large triangle in GLD in 2011 that gold had either topped and was heading for an intermediate or primary bear market.

I believe right now gold has just set up for a large counter trend rally, remember bear market counter trend rallies are some of the strongest rallies you'll see in any market and if you think about it, you'll understand why-they are in a bear market, to move price they need to be impressive, believable and appeal to traders' sense of greed or fear of being left behind.

As QE jacked up gold, an exit from QE should do what? More importantly, Gold is bought as a hedge when THERE ARE FEARS OF INFLATION- in other words, BEFORE inflation hits.

The F_E_D is actually scared we may see deflation, what does that say for Gold and the obvious bubble mentality that has driven prices through the roof?

GLD charts and the different plays available...

 10 min chart of GLD the last 2+ days, this morning we saw a head fake move to shake out the longs, retail has no idea how accumulation by smart money works, they think they see a big volume spike and a jump in price that, that is smart money buying-NO! Smart money was in long before.

However when retail places stops right below support, the most obvious spot ever and smart money runs those stops and get two things they need: 1) cheap prices to buy in to and 2) Most importantly, supply or volume for the size of their positions.

Does retail ever wonder who took the other side of all those stops being hit? Of course not, that's a smart money head fake tactic and you saw as I mentioned earlier today and hundreds of times before, a head fake often marks the actual move/reversal as it did in GLD this morning. 

This does have a bit of a "Crazy Ivan" shakeout look, "Clearing the baffles" on both sides of the range.

For a longer term-maybe several weeks or more, I'd consider GLD a long here for a non-leveraged or a 2x leveraged long. I don't consider it an option play unless you already got it at a good level.

The 15 min GLD chart shows the bottom and the accumulation

More importantly, on a 60 min chart, a large double bottom or "W" base is apparent, this will support the counter trend rally.

Here's the 3C accumulation of that same "W" base.

The 2-day long term GLD chart with the triangle in 2011 that we called a top in gold right then and said we'd be looking for a downtrend. I think the leading negative 2-day GLD chart says in the longer term GLD is in a bear market, but in the near term we should expect a strong counter trend rally that could last weeks, maybe even a month or more.

This is why I'd be okay with a 1 or 2x leverage long GLD equity position, I'd leave room on the stop for volatility, even if I had to take less shares to do it-this is a longer term move, but there will be volatility.

If any options trades set up I'll let you know (other than the calls we already have open).