Gold is currently at a short to medium term crossroads. It has been surging well past the $1200, $1250, $1300 and $1350 per ounce level, but has recently retreated off its highs. Gold closed at $1325 and may decline further. The recent earnings announcements of major companies like Apple and IBM, have propelled the confidence of the market and helped shift demand for equities.
In conjunction with this shift, the dollar has become stronger, resulting in a devaluing of commodities. Silver, copper and oil have all faced a similar fate in recent trading sessions. Warren Buffet had recently stated that equities for the near term are the buy, stating that all the gold ever mined would fill a pit 67 x 67 x 67 feet. That wealth would buy 10 Exxon Mobiles with a trillion in spending money left. What would you rather have?
Now, there is no way I am going to argue with Mr. Buffet on investing or Cherry Coke. However, I, nor anyone reading this, has anywhere near the power, fiscally or clout wise as Mr. Buffet. Given that gold has broken the support level of $1328, it may suggest a retracement. This is a logical event, as gold had risen for 11 consecutive weeks, prior to this week. $1300 is a psychological level, and because of this is the next threshold to either bounce off of or fall below.
While it is for each investor to determine what is their own short and mid term horizon, gold is still a currency without a country. We will probably not see gold at $250 an ounce again and probably will see it rise past the $1350 level, but the question is when. Some may have the tolerance to buy and hold, while others may not be able to stomach the ride, but such is the market.
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