A warning for gold traders

Dr. Ski notices something of potential significance

It has been almost a year since the triple sell signal and that signal’s impact has historically been eradicated after 1-2 years. On the other hand, and keeping with my paranoia regarding “coincidences”, Fidelity Brokerage just informed me that beginning this week on 2/10/05 (Thursday) I will be unable to initiate new short positions in Fidelity Select Gold (FSAGX). They wrote that since the shorting programs inception in 1987, “There has been little interest in it,” so they are stopping it because they don’t make enough money from it.

When no one is interested in going short, that’s a very strong signal that the market is running out of buyers and is about to head south with a vengeance. Don’t get me wrong, gold is an excellent long term bet, but markets always move up and down within the greater trends. The run from 250 to 460 was tremendous fun, but now there’s likely some down time required before the next leg is fueled. Perhaps it will bounce from 415 or 400 for a time, but the bounce will be short term.

None of this need concern the accumulationists, of course. They’ll just be pleased to be able to buy more at lower prices soon.

In any event, it is amazing how many market turns are highlighted by decisions such as these.