Gold has topped, here’s my downside target
Gold and Silver:
First lets start with the most important news: COMEX raised
the margin requirements for gold (50%) and silver (15%). This is as sure a sign
of a top as any since it forces speculators to pare back longs since they have
probably “pyramided” into their gains.
Recall that back in August we gave a targeted top of $500. On
Monday we said gold had topped at $500 and we recommended closing all longs and
said aggressive traders could look to go short. But on Wednesday we said the
decline was choppy in nature and that this could mean a final assault on
marginal new highs – $502-$510 – was in order before the final top.
Note that bullishness is at an extreme in gold while
speculators have pared back their net longs. This indicates that many big
players are distributing at the top, while the COMEX “fixes” the game by
charging more to play in the uptrend. As such we think gold has or is very near
a significant top. The ensuing decline should carry back to the apex of the
breakout we featured back in August ($420).
Regards,
Jes Black
FX Money Trends
613 4th St Suite 505
Hoboken, NJ 07030
Tel: 646.229.5401
Jes
Black is the fund manager at Black Flag Capital Partners and Chairman of
the firm’s Investment Committee, which oversees research, investment and
trading strategies. You can find out more about Jes at
BlackFlagForex.com.
Prior
to organizing the hedge fund he was hired by MG Financial Group to help
run their flagship news and analysis department,
Forexnews.com. After four
years as a senior currency strategist he went on to found
FxMoneyTrends.com – a research firm catering to professional traders.
Jes
Black’s opinions are often featured in the Wall Street Journal, Barrons,
Financial Times and Reuters. He has also written numerous strategy pieces
for Futures magazine and regularly attends industry conferences to speak
about the currency markets.