"Water shapes its course according to the nature of the ground over which it flows; the soldier works out his victory in relation to the foe whom he is facing. Therefore, just as water retains no constant shape, so in warfare there are no constant conditions."
Sun Tzu

Tuesday, February 19, 2013

How far can Gold Fall (Short-term)?

Here is another view on my short Gold trade. The following chart shows the 5-day Rate-of-Change or the price of Gold. It highlights that the metal is capable to frequently decline 5-10% in a very short period. In fact, during the last 7 years, one or two of these selloffs occurred each year. Gold just lost 3% in the last week, so there is still some room before I plan to take profits. Should we get an aggressive reversal earlier, I would of course close the trade.

Disclosure: Covestor Model is short GLD.