Between the conspiracy theorist, Gold bulls, and the pundits calling for billion-dollar gold, markets rallied on Wednesday. After Monday’s breakdown, gold has managed to rally the last couple of days and again this morning. To us this is no more than a dead cat bounce in a market looking to go lower.
Markets always have small reversals within the pattern that create either buying or selling opportunities. In the case of the current gold action, these rallies are levels to sell. The downtrend started in early September and every rally has been a selling opportunity.
Gold and Silver are in downtrends and until there is a reason to reverse, we will continue to stay short and add to our positions. The key levels to watch if the downtrend is going to reverse is a close over 1520 Gold and 18.20 Silver. Pundits, Gold bugs and conspiracy theorists aside, we will stay short until then.