Gold is keeping making all time highs

A truly amazing year for gold: the shining beautiful metal has reached all time highs again and again!

"Are you crazy?" I heard the mumbles immediately from everywhere. Indeed, the all time high for gold was reached about 9 years ago above $1900 and now gold is only trading hands around $1650, still about 20% shy away from the peak. I know of course but can you tell me what the chart below tells you? Not all time highs?!

It is all about the perspective, friends!! While in the US$ term, gold is still a long way to go to challenge its all time highs, in virtually all the other currencies, including major ones like Euro, JPY, UK pound or CAD$ etc, gold has made all time highs, nothing shy from the hot stock market believe or not! The only major currencies that haven't made gold all time highs are limited to three: the United States, China, and Switzerland. But they are all closing in!  That's the power of thinking out of the box!! After all, gold is the only de facto global reserve currency that cannot never be devalued. Holding gold and going anywhere in the world, you are sure you have the hardest currency in hand that will allow you to keep your buying power regardless of what is happening anywhere. As a matter of fact, there is a good and increasing sign that gold will be outperforming stocks in the next decade or probably longer but that will be a topic of another time.

Just a few days ago, I "warned" my Family that gold stocks were poised for a big move one way or the other. Well, we got a strong upside move now and I'm pleased we are well positioned for it. I'm sure you will start to hear more headline news about gold and people will start to chase as well. But as a contrarian, I'm not so fast to jump into the FOMOs. While gold has indeed broken out for the 6 years high since 2013, I don't think it is ready to simply go up to challenge its all time highs....at least not yet although it is just a matter of time for sure! Two major reasons:

·       For one, the current $1650ish area is a very strong resistance for gold and technically it is very hard for anything to break out from a strong multi year resistance with the first attempt. I don't believe gold can either. We may see quite a few attempts before it can overcome the overhead resistance.

·       More importantly, the smart money has increased their short bet in the historically high level. As I said before, the smart money for gold, the Commercial Traders, have never been wrong on their bet although they tend to be early and therefore not a market timing indicator but rather a directional indicator. In other words, the smart money is betting overwhelmingly now for a correction of gold. I don't believe they will be wrong this time as well.

With this rationale, I won't chase highs for now for sure but it does not mean I cannot put money into gold. As I said, you just need to be a bit smarter by thinking out of the box and can still ride the gold uptrend without getting hurt when its correction is coming.