Gold Holdings are Pouring out of Funds but is the Party Over?

 

The recent decline of commodities, specifically gold and silver has accelerated in the last 2 trading days with Gold officially below $1,400. I’ve gotten a quick pulse from online publications along with checking in with other traders and fund managers. It’s a mixed a bag of opinions but the one thing that is for sure is the volatility we will see in the equity markets this morning. Names that have exposure to such commodities that are in a state of inflection will be on the move.

 

Remember when looking back to past trends, specifically in Gold, the incline in price from sub-prime worries was inconsistent in terms of slope and momentum. 

 

At the beginning of 2008, Gold went up 20% in a month and a half followed by another 20% incline over the next 10 months before retracing 18% of that gain in the final month of 2008. 

 

2009 and 2010 so some of the best trending markets but we did see a large sell offs periods of of July and October of 2010. 

 

From there we went into a consolidation pattern before finally breaking an 8 month low. This break is certinly sharper than many expected but historically not unprecedented.

 

The better bet is with the trend but one has to remember that large pullbacks are not uncommon.