Quick Update on Gold

Just about two weeks ago, I wrote that gold in 2011 was oil in 2008 meaning that it would be a great shorting opportunity but that I wasn't short just yet. In the few days that followed the post, gold fell by about $200, raising questions from my friends and readers, among who my friend Mr Anonymous asked whether I had missed the shorting opportunity. Here's what I replied:

Anonymous said...
Did you miss your shorting opportunity?
Though I'm not short yet, I am not sure neither about having missed the opportunity.

The market is often more forgiving than it looks like, and gives second chances :-)

With all those hyper-inflationists calling the decline a buying opportunity and the market expecting the Bernank to make a big announcement on Friday, who knows what will happen until end of next week?
Well, today — what referred to as "the end of next week" — gold is back at $1,880 — shy only about 2% from its intraday all time high of August. The shorting opportunity is still here, and this gold rally might still have some legs judging by what happened in Silver a few months ago.

I will look into shorting both gold and silver, but not outright shorts, I will rather do diagonal put spreads to be protected by adverse moves and possibly aim for bigger gains if I get the timing right.

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