Got Gold Report – Euro Shorts Cover, Silver Lame

Gold sold off sharply, silver answers. 

ATLANTA (Got Gold Report) – We have been on the sidelines for a while now waiting for gold and silver to correct in summer thin trading, as it usually does this time of year.  It took a little longer than we thought it might, but gold finally balked as the third quarter got underway. There were actually a number of harsh reversals happening simultaneously, so gold investors shouldn’t feel alone.

The U.S. dollar index repelled lower as the euro index popped and popped big.  The TED spread, which is sort of a measure of bank confidence dropped for a second week, falling below 38 basis points, down more than 10 points or more than 20% in two weeks suggesting that Eurozone systemic banking fears are easing.

The Big Sellers of gold and silver seem to have prevailed, finally, perhaps sending us into a summer correction.  So far the sell-down hasn’t yet made it into our expected zones of support and there is no guarantee they will.  But, until this pullback got underway we feared a runaway breakout might take off without our short-term trades on.  Now, we are hopeful this pullback will take both gold and silver into our “wheelhouse,” which is where we are more comfortable attempting a reentry.

More in a moment, but first here’s this week’s closing table: 

On this 234th “birthday” for the United States we are once again beginning the upcoming holiday-shortened, thin liquidity summer trading week on the sidelines with our short-term metal trading ammunition, glad as ever that we hold physical metal for longer-term purposes, but waiting for a sure-enough Vulture opportunity to fire our short-term bullets.  Should the Big Sellers or fearful late longs running for the exits drive precious metals not all that much lower from Friday’s close and into our expected zones of potential support we are very likely to rejoin the short-term metal battle.

That’s our Simple Simon game plan for summer trading we have mapped out, as we detail below, but if we do get the chance for reentry just ahead, as always it will only be with appropriate new-trade trading stops for peace of mind and protection.  How else could we ever leave the computer to go fishing?    

To read the complete Got Gold Report -- Euro Shorts Cover, Silver Lame, July 5, 2010 -- click here