An “early call” to sell Gold – Aussie Dollar is the key

Extract from my November 16th, 2011 newsletter

The Trade: 

Short Sell Gold on break below ~ $1,760 spot price.

Stop at $1,806 or $1,796 (to be determined/refined)

BUT the key to watch is AUD breaking below 1.0050.

Today’s fall in the EUR below 1.3480 along with declines in Copper, Silver and Platinum are providing early and minor confirmations for the Short Gold trade.

Further confirmation of market weakness, especially in equities would be confirmed if the SPX broke below 1,226.

If (once) gold’s decline commences, we’d look for it to test and break levels such as $1,630, $1,540 and $1,450 onto its way down to $1,340.

At a premium to Platinum..

Gold continues to trade at a premium to its more expensive cousin, Platinum. The spread between the two hasn’t been this wide for at least 30 years.

For past 20 years, the price of platinum has traded at an average of $250 higher than gold while the past 10 years has seen it trade at a mean of $405 above gold.

Today, gold is $145 higher that platinum. This is $550 “off” the 10 year average and a $300 deviation from its 3 year average.