Sky Is the Limit for Gold but Correction Risk Grows

  • Gold raged $50 per troy oz. higher after the last note posted on this site 27 March. Sitting on gold longs was my preferable strategy during the past few weeks as most other asset classes had difficulties finding their footing in either direction.
  • The long distance gold marathon higher is far from over, but it is time for traders to lock in some gains on partial positions and/or raise stops per prudent risk management.
  • Chatter builds surrounding Republican plans to revive healthcare, tax, infrastructure, and regulatory reform efforts. While there is a serious lack of budgetary space to enact the more ambitious elements of the Trump growth agenda, negative sentiment towards said reforms may have peaked for now.
  • Geopolitical risks in France of a Le Pen victory are far overblown.
  • The Korean peninsula is still a wild card but constructive developments in recent US-China relations will be sufficient to keep North Korea out of the top headline spot now that the 105 year Kim-Il anniversary has passed. The Trump Administration decision to not label China a currency manipulator is not unrelated.

Bottom line: long term gold investors should stay long and strong in their positions while shorter term traders should be more cautious by protecting recent gains in case there is a bull market correction.

gold 042017