Current pause is merely shaking out the weaker hands, Matt Zeman argues
Going back to late August,
gold has been the talk of the town. Every time you turn on any financial program, someone is talking about
gold. The notion of $2,000-an-ounce
gold has become widespread, in fact, to such a degree that I have to look at it in a bearish light. After the breakout from the previous trading range, I feel like this market got too bullish too fast. What happens when everyone gets on one side of the boat? That's right -- it capsizes.
Now, don't get me wrong, I do not think this market is done by a long shot. I believe there could be a tremendous amount of upside, especially in the longer term. One must keep in mind, however, that the market's job is to shake out the weak hands.
In this case, I believe that
gold is simply "shaking out" some of the weaker longs before making another run at resistance and possibly going much higher. Let's also not forget that this market covered a lot of ground in a short period of time. In my experience, markets do not go straight up or down, and
gold is no exception. I look at current price action as more back-and-fill trade, nothing more.
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