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I don't have a crystal ball that will allow me to foresee what future prices may be in six months, but there is no reason gold can't be higher than it is at the present in six months. On the other hand, gold is trading at an all-time high; and I typically do not like trading long into new highs. Perhaps it's a personal bias, but all-time highs and all-time lows are areas I like to avoid. This is a situation that many small investors handle the wrong way. On many charts, you will see the last few bars of an intermediate trend punctuated with some blowout status. That is to say, the last few bars will be fairly long (have a wide range) and generally move near the previous high with some authority. Of course, a breakdown of the current trend in gold might take days, or even weeks. In any event, I want to point out that small traders tend to pile into periods near the latter stage of movement. What the large traders are doing with their gold and what the small traders are doing with their gold is important information to have in your possession. There is also a group of traders who are referred to as “gold bugs.” Gold bugs are individuals who have an emotional attachment to gold. This group of individuals has certainly had their day in the sunshine over the last several years as investors have flocked to gold in record numbers. Gold bugs are easy to spot, as they are usually talking about gold and its potential rise to $5000. They are an amiable enough group of investors, just be warned that the solution for every one of their problems will involve buying gold. When considering the question the title of this article poses let's throw out the market behavior and emotional feelings. The chart for gold doesn't look too bad other than it has been bought pretty hard, but that buying may continue. The price of gold is currently near an all-time high, which makes it pretty pricey. So, to buy gold at this juncture would be to pay top dollar for commodity very near its highs. No, for me, gold is a pass. While there is some upside potential for gold, the fact that it is trading at or near its high gives me pause to consider some potential downside risk, too. That being said, I think I would be a buyer of gold on any major pullback. In summary, we have been discussing gold and its potential for appreciation and/or depreciation and the upcoming months. We have talked some about where gold sits in comparison to its past trading range, and thought it was position very high. Finally I commented, for me, the potential upside of gold is offset by what I see as a stronger downside. Of course, this doesn't mean gold won't appreciate in coming months, it may; but there are other asset classes, to my way of thinking, that may outperform gold in the near and intermediate term. Real Live Trading Doesn't Lie. Spend 3 days with me, in my trading room, and see if you are one of the many that can profit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here.
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