We've passed the midpoint in May and gold closed above $930 on Friday May 15th. This could be hugely significant and should give all prudent investors pause for thought.
Allow me to share with you an email message I sent to my family today that focuses in on my concerns on this topic. Although this will not be a long article, it is intended to motivate us to think "outside the box" as we slide into the "Sell in May and go away" time of the year. Here's what I wrote my family today:
"Realizing it is only the middle of May, it might be too early to say "it's going to be different this year"
when it comes to gold and silver.
"During the past seven years gold and silver always corrected between May and October, sometimes just
a little and sometimes a lot. So I'm suspicious that it hasn't made some meaningful downside move yet, but I don't want to be clue-less either.
"Notice the comments from Casey Research which I received today. It addresses the tension and the high level of uncertainty that is floating out there in the world of investing, especially in the precious metals arena.
"It was a second straight day of minor change for the precious metals(Friday), with silver and platinum submitting losses, while gold somehow managed to eke out a modest finish in the green.
"However, gold aficionados had to be satisfied with the results, given that the usual suspects were lined up in opposition, with oil selling off and the dollar moving strongly against the euro. Gold likely got a lift from declining equities.
“For gold and silver, we are going into a win-win situation,” said Ashraf Laidi, the chief market strategist at CMC Markets in London. “When we will have a retreat in the financials and the rest of the stocks, we will have some rotation into metals.”
"In addition, “The core inflation number helped stabilize gold and helped gold up $930,” said George Gero, of RBC Capital Markets.
"That could be meaningful heading into next week, according to Ralph Preston, of Heritage West Futures in San Diego, who predicted that, “A close above $930 could be explosive.”
"Yet more positive statements came from Tom Pawlicki, of MF Global, who noted that, “Gold has been the object of affection for hedge funds and also has paid increasing attention to the dollar lately … That helps explain why gold has rallied both when stocks have risen and fallen.”
"If the funds are moving back into the yellow metal, that bodes very well indeed."
I was looking at the 6 month technical chart on the Gold ETF (NYSE:GLD), especially the 50 and 100 day moving averages.
