Quote:
Originally Posted by 1973
Since GDX didn't bounce back sufficiently, approximately 6% required, last night, the buy signal has been negated.
It doesn't mean that price will drop further. If you have bought, you may sell on the bounce back and we will have to wait for another chance.
GDX has dropped because gold was overbought and need some correction. The correction in gold also drag GDX along. The excessiveness has now just been almost worked off and then.......
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gold has obviously been a good trade over the last 5 years - i remember it being at $400/oz back in 05 or so and it has quadrupled since then. so no one can or should take that credit/foresight away from you.
but as another poster mentioned, part of this run up has been due to the instability of economies, with gold becoming a safe haven. my worry is that part of this has been speculative money, and with borrowing costs pretty low many people have been buying gold on margin.
if we are expecting another 2008 crisis, and it looks like that may be a better than 50-50 proposition right now, then potentially you could have another bout of deleveraging forced by this tightening of credit. and since GDX is an ETF wouldn't it be subject to the same deleveraging forces as well?
full disclosure: i am long gold as well so i hope i am wrong. but i think that it could be awhile before the fundamental story catches up to where gold and gold stocks may eventually fall to. i will probably offload some as well on further strength but i do think there is a longer-term investment thesis