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November 26, 2010
– Comments (8) |
RELATED TICKERS: GLL
, GLD
, GM
As you know a lot of people have bought gold, not because it is more popular but because in the olden days it was the only safe currency. So when times are scary people have been trained to convert their money to gold. When things stabilize they sell the gold and put their money to work.
There are three reasons to sell gold.
1. It is selling for three times what it cost to produce ($450 to $500 to produce)
2. There is an over supply of gold and it is growing,. 98% of all gold is still here. We will never run out of it. Even if all the mines dried up we would still have tons that can be melted down and made into more jewelry.
3. The world economy is shaky but it is clear there will be no major collapse. As things stabilizes fewer people will see reason to buy gold. There will be more sellers then buyers. Every transaction will cause the price to go down and down and down. It is at $1365 an ounce and should stop at $675 an ounce (35% above what it cost to produce)
The name of the etf is :
ProShares UltraShort Gold The ticker symbol is ; GLL
This goes up as gold goes down double. 2x the movement of gold.
Let me say that again , this makes money as gold drops. You are betting against gold.
GLL should go to $60 or it could go to it’s high of $130. Right now it is at $30
Gold could go up 10% if it rallies one more time. The ETF would go down $6
If you want to risk $1000 you would buy 150 shares (actually you always risk your total investment but by my estimates you are risking a $6 per share drop). It should go up to at least $50 but at first it may drop.
Think about buying this in January. I already bought a bunch but It could drop one more time.
On a different note: I see while writing this gold and the DOW futures have taken a big drop. I wrote two blogs predicting this would happen this week.
Gota crash to rally for elections from August 25th and
How Timmy will make GM rally. from November 20th.
Basically we should get a big drop then one more rally just before GM announces it’s sales report. After that rally we should drop until Obama starts to campaign for re-election.
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