Gold Lobogala? from Suhil Kedia

August 26, 2011 |

Greetings to the Specs gathering at the Speculators Party 2011.

I would have loved to meet all at this looked forward to event, but able to travel into New York only in early September.

So here is my question, does the parabolic zoom in gold recently qualify to be a candidate for inspecting if a Lobogalaesque thud will come now?

What are the good ways to be on the lookout for a parabolic move to be turning into a Lobogalaesque detour, in general?

Best,

Sushil

Comments

1 Comment so far

Craig Bowles on August 29, 2011 3:13 pm
It’s interesting to look at the 13wk moving average vs the 39wk. It’s been a good bubble indicator. 1998, 2000, 2004, 2008, 2010, 2011 got big spreads in short-term vs the long-term. 5% seems to be important. You see runs above, especially in something like oil. When the spreads pull back to 105, it can get ugly. Gold has been fluctuating in high spreads for a long time, so it’d be interesting to see it pull back to 105. When stocks pulled back to 105, we got the flash crash, this recent pullback, and even worse. At the least, you have to be wary of a 2004 type market where you get a period of increased downside potential and limited upside potential. The S&P pullback moved to 99% already and oil to 88%. 99% was the 2004 pullback, so the only worry would be a recession. Following the normal economic cycle would see the economy pick up into Q1. The biggest change recently is the Fed actions have succeeded and pushed up the lagging part of the economy. The lagging index is outpacing the coincident. That should never happen but here we are with an inversion yet again. Hopefully the sharp drop in the leading inflation indicators helps stocks but everything seems so complicated these days. How can you hold gold when the lagging indicators are outpacing the economy? It’s unsustainable for the economy to run like that. You can see why so many great hedge fund managers have decided to hang it up and go fishing.