Funds Will Go Under On Gold/Silver Crash: Buy Gold Now?
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While I have predicted a move to $1,200-$1,300 on gold, many hedge funds have been buying this metal constantly. With the leverage these funds utilize, mass losses and redemptions may drive many out of business.
I like gold down here now for a short term bounce. I am in the SPDR Gold Trust (ETF) (NYSEARCA:GLD) and looking for a multi day bounce. In addition, the gold miners are looking extremely attractive at current levels. This is a final flush and likely a great buying opportunity. Look at players like Newmont Mining Corp(NYSE: NEM), Barrick Gold Corporation (USA) (NYSE: ABX) and Royal Gold, Inc USA) (NASDAQ: RGLD).
The low of the day on the GLD happened around 11:10AM ET. Note the massive volume. This is called capitulation or the final flush. Also, an interesting factor is that the gold miners never made lower lows at this point from earlier in the morning.
As the market starts selling harder, gold has also seen a bounce. Note the turn back towards the commodity as the market money exits.