Friday, February 15, 2013

Shooting after Paulson

The lack of volatility in the S&P has me looking at other markets, and gold is one of those.  We are getting close to a buy area for gold, the question is whether it is a buy for a short term trade or a long term trade. 

Gold is in liquidation mode right now.  The sharks are circling around John Paulson, with gold going down with stocks going up, Paulson's huge gold position is looking worse and worse.  It would be a good sign for gold bulls if Paulson gets out and the sharks no longer have a target. 

Gold is swayed more by sentiment than fundamentals.  Investor flows are the primary driver and it seems like we're close to a point where the sentiment is capable of turning quickly.  The S&P should continue to grind higher but I don't think that will be a negative for gold going forward, it could just set up a rush for commodities for fear of inflation. 

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