I'm not feeling especially bullish, but I'm nonetheless long GLD and SPY, and I closed my UUPT position (3X US dollar ETF) Friday.
I'm long gold because I think it will close November above where it is now. If it doesn't, that would be just the second month since 2001 it closed below this 40% trend channel (which it's currently just barely below, with 9 days remaining).
However, I will be monitoring the mining stocks, which I hope are only tanking violently because of tax-related selling. On Wednesday, I sold my entire gold position when GDXJ and SLW fell 5-6% while gold and silver were up and the S&P was flat. I did this because it has never been the case (to my knowledge) that such a divergence hasn't been followed by gold and silver going lower in the near term. Sure enough, that happened the next day (Thursday), and I bought back after some further downside on Friday. Incidentally, I described this decision in a comment on Turd's site, where, in passing, I unveiled GM Jenkins' Fundamental Theorem of the 21st Century Gold Bull Market, which I shall more succinctly express here, as follows:
The price of gold will never fall so low that members of the middle class (working professionals, retirees, widows, etc.) who have not already bought bullion start to feel psychologically comfortable buying bullion. Nor will price rise to the point where they begin to feel psychologically uncomfortable not buying bullion (i.e. panic buying) until they are priced out of the market. In other words, until fiat money accelerates its approach to its intrinsic value of zero, gold will always be in a tight range where the growing obviousness that it's a good investment is matched by the appearance (and accompanying propaganda) that a massive sell-off is imminent.Thus spake GM Jenkins (please cite only with attribution!). Those who have completely missed the boat, by which I mean those who do not even have a hand on it, shall not drown. Nay, verily I say unto you, they shall be boiled slowly like proverbial frogs. If we consider the average price of gold over the past year, it won't go higher every day. But perhaps the average price over the past year and a half will. (I say this because if you examine a sliding window of weekly moving averages, and look for the minimum period of time n for which the graph over the past 10 years has been monotonic, you get n= 78 or so.) A year and a half sounds about right, the equivalent of the pot full of frogs going up in increments of 1 degree celsius per month.
Gold in euros may retest support, which is why I wouldn't be surprised at seeing the euro rally.
and similarly to the $SPX:$GOLD ratio, (3) the $DOW:$GOLD ratio is right at its 38.2% retracement, suggesting it will increase, and since I already mentioned I don't expect gold to fall, the DOW should go up (hedging is for lesser men).
I'm not playing with silver until $35 is cleared, but if/when it is, I think $35 becomes the floor.