Gold has plunged about 10% or so in the past 3 days, to as low as $1705s per oz. Of course, my short bet for this correction was doing very well. See below over 200% jump of my GLL call options at its peak. Since I had a sell order in place, I took the profit and walked away.
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| GLL Sep 17 '11 $16 call 2.35 | 0.85 | | | 20 | $0.75 | $3,200.77* | 213.33%* |
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However, gold fought back strongly today with a great jump to $1824/oz. Silver jumped up also with it. This kind of swift price changes in a way support the rationality
why I did not take my paper profits for my new silver long positions. I simply cannot keep the pace with it.
The natural question now is whether this gold correction is over and we are "safe" again with the trend in the short-term. If you ask me, my answer is: I'm not so sure yet. Technically speaking, gold is still within its bouncing band. Unless it convincingly bounces above $1830 or so (a strong resistant line) to start a new up leg, there is a good chance that it may drop again from this resistant line. I'm still thinking that a decline to the $1600s range is quite possible, although there is no guarantee since the political and economic risks out there are just too pronounced, which may justify its further appreciation from this level. As I said before, I have given up the urge to look for its bottom. I have used this significant plummeting, although very brief as of now, as my buying opportunity to add some long positions again for gold. I may be too early but no one knows for sure how this gold bull will behavior under too much public attention.
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