Tuesday, September 11, 2012

Caution on Gold

I turned cautious on gold about 10% ago.  It appeared that the price had broken down technically, despite the conceptual case for owning gold.  That was the wrong call over the short term, at least.

I realize that most observers expect central banks in major countries to continue to debase the currency as a way out from huge debts and sluggish economies.  But..

Now, sentiment measures have surged with the rebounding gold price.  Yet, commercial market participants (the "smart money") have become relative sellers.  The commercial participants have an excellent record in the gold market, so I'd heed their negative position.

I'd be cautious about gold here, and definitely would not buy now.

Steve Lehman

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