"I was wondering about gold, what are we looking for for us to go back into it? Sept isn't that far yet, so are we waiting for a drop back to the daily 200? I notice that it has been using the 60min moving average for a while, is that normal for an over extended Market?

"With reference to the yobbo spring, pages 13 to 15 of that massive 90odd page gold report you linked to a few weeks ago, seems relevant..."

David Fuller's view It depends on your methods of participation. I have often mentioned in Audios and also Comment, that if you hold a fiscal bullion fund (the easiest and certainly one of the safer ways to participate), and did not mind the occasional mean reversion towards the MA, then you have little to worry about until this secular bull market eventually enters a mania phase. The same is probably true for gold shares which mostly remain rangebound due to weak stock markets. Although generally more risky than bullion for all the reasons mentioned previously, they are now quite cheap relative to bullion.

Gold is certainly not in a mania phase today, in my opinion, although it is presently at its third most overextended position relative to its MA for this secular bull market. However, Eoin pointed out in his excellent review of 11th August that gold was showing a 20% upside divergence at its high until today of $1814.95. He noted that it had been more overextended twice previously, 28% at the May 2006 peak and 29% at 2008 peak which occurred in March of that year.


You can see the difference on this 10-year semi-long chart for bullion. If gold were to match its 2006 and 2008 overextensions on this move, which it certainly could given current momentum and growing interest, it would reach $2000 or perhaps more if it ranged along the way. That, incidentally, is the minimum level that I had mentioned as possible before the end of 2Q 2012, in two or three Audios although not in Comment. We will probably get there earlier, provided stock markets do not fall much further than I expect.

The main tactical problems with gold today concern leveraged futures trades, not least because there will probably be additional hikes in margin requirements. Also, the third highest overextension relative to its MA for this secular bull market to date is not exactly a low risk moment for gold futures in terms of overbought versus oversold short-term technical readings.

Like you, I am far from convinced that we will see a mean reversion to the MA anytime soon, although that would be a very nice buying opportunity if it did. Therefore, should a futures trader jump in at this level, now that another new high has been reached today? That is obviously not without risk, although one can limit that with a stop and it would take only one or two more good day to the upside for one to raise a stop loss order to at least a breakeven level.

Please do not wait for me. I have been an aggressive trader of gold and particularly silver from the early days of these secular uptrends, as you probably know and could review in the Archive. However, I have scaled back considerably as the price has risen. Eoin and I obviously share very similar financial interests with subscribers. However, none of us are conjoined at the hip in terms of our trading and investments.

At challenging times like this, including 2008, 2000, 1987, 1974, etc, I have always curtailed my personal trading and investment activities, as veteran subscribers may recall. I have done this for two reasons: I do not have to play in the storm, and my main commercial priority is the analysis provided by this service. I do not need more distractions during hectic periods. I also know that there will be plenty of other trading and investment opportunities in the months and years ahead.