Flash Alert - March 24, 2011

Alert: Gold and IAU

 Has gold put in a key-day reversal?

It looks that way. Gold futures made a new high today. And now the US trading session is finishing up with gold below yesterday’s close. Silver has also reversed early gains and is nearly flat on the day, after closing at new highs yesterday. 

Is this something to be worried about? Not necessarily. But it is a common pattern that’s seen as a predictor of lower prices in the near term. While it makes sense to watch gold closely here and at potential support levels, the new high is encouraging for the longer-term trend for gold.

Because we are positioned in IAU (iShares Gold Trust), I thought it important to make you aware of today’s price action. This position is basically trading at the same level at which we entered. I do not recommend taking any action at this time but will continue to monitor IAU closely.

For the more aggressive and speculative traders among us, you may consider a short-term position in DZZ (PowerShares DB Gold Double Short ETN) to play for a potentially sharp, short-term move to the downside in the price of gold.