June Comex Gold is ever so slightly still in an uptrend after having gone parabolic. The recent selloff, to me, is not a downtrend the way I define them – just profit taking. June futures would have to sell below 1180, else the steeper trendline is holding. Once it’s broken though, you’ll probably see a reversal back up before the lower trendline at 1130 broken. Either way, it’s going to be volatile.
The SPDR Gold Trust (NYSE: GLD) is still in an uptrend too. IMO, I don’t think anyone would want to be short GLD nor gold futures. Maybe day trade on the short side, but that’s it. I don’t know anyone who’s taking shorts home with them.
The world is raising cash TODAY. That IMO is what gold traders should be focused on for any severe sell-off. In other words, I don’t think that the fundamental reasons why you’d want to be a gold bull are changing, but you have to manage risk TODAY, not based upon your 5-year thesis about how gold gets to $300 on the GLD or $3,000 basis December 2012 futures.
Traders should be incorporating a “dry powder” mode more than ever. If there’s a “flash crash,” currency intervention, and bona fide market crash, you want to be on the other side of the dysfunction.