Ugly and Beautiful! These are the only two words coming to my mind if you ask me about the overall market in the past week. How can I use these two antonyms to describe the market at the same time?
Well, the stock market was really doing badly, while it couldn't be better for the precious metals, especially gold which has reached its all time high at $1631. If you bought gold or silver recently, you should be really enjoying what is going on with your metals. But I must warning you: in the very short-term, the stock market is quite oversold and the precious metals are quite overbought. What does it mean? The market has a tendency to return to its mean, which is probably true for everything in the world of the nature. When it is too far away from its mean either direction, it will likely move to the opposite direction regardless what is the overall trend for it. My gut feeling is that the stock market is very much oversold at the moment and is very likely to snap back fiercely. The catalyst is most likely the debt ceiling deal in the next 2 days. In contrast, the precious metals are quite overbought and most likely will contract significantly in the next few days. Mentally you should be prepared for this scenario. I would take this temporary sell off to get in more for the precious metals. I have a strong hunch that the precious metals have gone into another leg of ascending. Please don't panic regardless how violently it may look like. Don't be chicken!
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