POSITION: No position in Gold (GLD)
I sold our entire gold position in both the Hedgeye Asset Allocation Model and in Hedgeye’s Virtual Portfolio on Monday, December 6th at $138.55. This was not a popular decision.
It was an especially unpopular position given that:
- It is year end and everyone is long Gold
- It is finally consensus to see gold as a replacement currency for the Fiat Fools
- I was presenting in front of investors in gold country yesterday (Vancouver, BC)
Now if I was a banker, my boss probably wouldn’t have allowed me to make a bearish call on Gold ahead of meetings in front of large holders. Oops, did I just write that?
But all TIME, PRICE, and VOLATILITY factors that supported the sell decision aside, there is a very important shift in the Hedgeye fundamental global macro view that doesn’t support the gold price making higher-highs in the immediate-term. We are long of and bullish of the US Dollar.
That position, combined with the macro calendar catalyst that Ron Paul is going to have the right to subpoena the leader of the Fiat Fools (The Ber-nank) in January gives plenty of support for a continued bid to what was a the Burning Buck. The world’s reserve currency could simply have a credibility bid associated with Americans seeing a live, two-sided, debate about what debauching the dollar really creates – the inflation.
If the US Dollar Index can remain above its intermediate-term TREND line of support ($79.49), and the Gold price remains below its immediate term TRADE line of support (1389) like it is today, there will be a heightened probability that gold breaks $1376 (see chart), then makes a move down toward its bullish intermediate-term TREND line of support at $1313. That’s not a crash, but it’s a correction that could leave a mark.
Yours in risk management,
Keith R. McCullough
Chief Executive Officer