Important Resistance Zone

Comments: on three separate occasions in the near past, the $640 to $650 area stopped Gold cold and led to bad sell offs. Now that we're back at this area, caution is advisable. I think it helps somewhat that sentiment is quite bearish, but that may be for a reason. After all, many commodities are currently in medium term bear slides. In his recent commentary, gold analyst Clyve Maud has suggested that we should not trust this move unless it breaks $660 convincingly, to avoid getting whipsawed again. I think there is wisdom in that approach. I closed out my USO bet today at a modest profit and I'm just going to wait and see what develops next.

I think geopolitical factors should be downplayed when investing in Gold, but I thought that China's recent use of a defunct satellite for target practice has some potentially bullish Gold implications. Not just the animosity that such a move raises, but also because of the possibility that it could help inspire a new arms race in the space sector--that would certainly be dollar dilutive. In fact, I generally consider geopolitical factors these days only to the extent that they are dollar dilutive and less from the perspective of whether they will lead to real crises or military conflicts. There's just too much scaremongering going on right now, the kind that caused Gold to get whipsawed in September so I don't really like that. If you read Jim Sinclair's MineSet these days, it's 75% filled with hack scaremongering about possible attacks and potential nuclear conflict and third world war scenarios. If this were any other sector, that stuff would be called "fluff".