This House Believes Gold will Make 2000

At times Gold exhibits a tendancy to vary in-line with market sentiment. This is down to two reasons:

• As risk assets decline (Equities, Euro, Credit etc) margin calls are made and agents are forced to cover their shorts by selling Gold reserves.
• Poor economic and risk outlook can lead to a strong USD as investors switch to Treasuries. A strong USD makes buying Gold expensive to external agents, ceteris paribus, bringing down demand.

We are also all well aware of Gold's safe haven nature whereby the price varies inversely with market sentiment, as investors flee to one of the few securities which is all-but-certain to hold its value throughout inflation, deflation or even depression.

So which is it to be?

Fortunately for JF it doesn't matter.

Case 1: ECB levies taxes on EMU nations through the printing press (inflation). Gold skyrockets on inflation and wealth preservation tendancies.

Case 2: Global Financial Meltdown, worse than 2007/8, flight to Gold is unprecedented and severe.

The only other option is external aid (read China, Russia) which will likely still fall broadly into Case 1 as far as this trade is concerned.

The Trade:

Long Gold @ 1744 (~15:45 10.11.11)

Stop: Key Support level at 1600

We will look to take profit around the 2000 level. Our timeframe is between 2-6 months, wide enough to allow due amount of political hysteria in Europe.

10:47 ***EDIT*** Closed 2/3 of position for  +23 points @ 1767.

15:52 ***EDIT*** Closed final 1/3 of position for +29 points @ 1773.
 - The closer we get to December the more likely the markets will freeze up and give way to an Xmas rally. So strong is the power of the Turkey that this fund believes it may have mistimed this particular trade entry. Stay posted for a re-entry next week if the Italy story deteriorates again (at bargain Gold prices) or perhaps early next year as the post-season market hangover kicks in.