Gold, Silver Futures Getting Hammered – Maybe Not a One-Way Trade After All

Gold, Silver Futures Getting Hammered – Maybe Not a One-Way Trade After All

Gold, silver, and the other precious metals are getting slaughtered today – with gold down a whopping $44 as I type this!  There’s a lot of pain on this heat map:

Metals Futures Heat Map January 2011

Nowhere to run to, baby…nowhere to hide. (Source:

I almost forgot that gold can also go down.  Perhaps a clue that we were due for some sort of sharp decline in gold was my softening bearish stance on the metal. 🙂

Longer term, I think the secular bull market in gold is in place, and gold will probably eventually top the $2,000 – maybe it goes a lot higher, who knows.

But no bull market goes in a straight line – we’ll see whether or not this is a minor blip for gold, or a more serious one.  Remember, gold had a massive correction of 50% during the 1970’s bull market that saw it rocket from $35 to $850 – and that correction wiped out a lot of people.  And we saw a similar serious correction in 2008.

Moral of the story is that the gold market is very difficult to time, so your best bet is probably to dollar cost average your entries into the yellow relic – and of course stay away from margin.

While I’m playing armchair speculator here, I’ll hazard a guess that we will see a major gold correction sooner rather than later – if only to even out both sides of the trade.  When you see 90% + gold bulls for months on end, something has to give, as eventually you are going to run out of new people to go long on the buy side.

(And yeah, I still like the dollar as a short term trade, because everybody still seems to hate it!)