Friday, May 20, 2011

Metal in my head

1:45 pm (Hawaii)
Physical gold a possible buy (spot 1513.50) showing strength after a natural pullback off all-time high price (1560ish). Strong volume today after weakness for the past two weeks.

Paper gold also a possible buy here, but I favor 2x bull (DGP) as a daytrade rather than a hold over the weekend (through GLD, XG, etc.)

Physical silver also consolidating, but immense CME pressure remains and the climb back to spot highs (49) or even 40 will be a grind.

Paper silver is a more volatile/profitable trade up or down (AGQ vs. ZSL).

Eurozone crisis makes Gold very attractive ... or maybe not. Greek default? Gold is golden. QE3 delay? Bad for paper and could present physical Gold, Silver at significant discounts. It's all dependent on the affect on the US Dollar.

Beyond trades, better to buy physical here than waste it on meaningless frivolities. But when?

PERSPECTIVE: In 2008, '09 and '10, Gold was flat to negative between mid-May to late August. In '10, Gold rose in early summer, but gave back the gains and went negative before fall.

In the past two years, Gold has been cheaper in July than May. That's even with QE1 and QE2 in place.

The trend remains up based on this three-year period. Timing is key.

That also means that there is no hurry to buy physical, especially if QE3 is delayed or buried. Long term, beyond QEs and defaults, Gold is a standard and will hold up, probably keep rising unless the dollar rises (impossible?) and the trendline from late 2008 is broken. 

So, I won't be afraid to get physical gold this summer, but I will always seek the best price or simply pass until better prices arrive. Gold, silver, always shopping wisely. The past week, a Scottsdale Silver 10-oz stacker was at $387, only to drop to $373, then rose back to $390. 

I want physical gold at spot price, or as close to it as possible. Premium doesn't matter because this will be an eternal-hold position. Tiny, but growing.

Best value? Maybe junk silver. The hunt begins. 

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