Gold Parabola

This is the momentum market in these times.  Gold has gathered an extra amount of prestige in this precarious economy.  It is the new barometer of speculative excess, like crude oil was in 2008, like the Nasdaq was in 2000.  There are outrageous price targets out there, $1800, $2000, $3000, just like there were outrageous targets for crude oil like $200, $250, $300 during its run up.  Like oil, the gold run up will end badly, but from what price?  I do believe gold will go up even higher next year as the fundamentals behind the move are solid.  Central banks are adding to stockpiles and investors are seriously considering adding gold as a bigger part of their portfolios.   There is a growing attractiveness of holding something that provides both protection against inflation and a "supposed" hedge against market crashes.  The second point can be disputed, because I believe gold is now firmly interconnected to the weak dollar story, as seen by its weakness last Thursday. 

We are close to the point where gold becomes a good short for a swing trade. There are limits to how high markets can go parabolic in the short term, and gold is pushing those limits right now.  At $1210, gold is probably a good swing short here.   Initial downside target of $1170, and then at $1150.