Wednesday, December 11, 2013

All That Glitters Remains Risky

In the ended trading week, gold and gold equities remain in a higher risk, buy zone. Translation- only attempt to catch the falling knife at your own risk or use only long-term funds. In the latest week, money supply contracted versus the prior week, directionally in line with seasonal trends. However, the degree of the decline was greater than the seasonal average, the third week in four weeks this has occurred. The is starting to become a trend, and may indicate a slow down in economic activity or Fed actions. In any event, the timing models were little changed from previous week, but still improved from previous month.

6-Month model, currently -1.8 vs. -1.95 last week and -1.4 last month

1-Year model, -1.4 vs. -1.46 and -1.3

Long-term model, -1.7 vs. -1.9 and -1.3

Although the timing models continue to lean towards the positive, the risk model remains in a high risk mode. This suggests that further downside in the gold and gold equities could be in the offing and any buying should be done cautiously absent of an intra-week sign of strength. On this last point, we have seen some strength come into gold complex, or at the very least a lack of sellers at points sellers would have come into the market. However, I would stay cautious short-term. 

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