Sell Wilson sell; gold is heading South

NEW YORK (Aug 26)  If you remember the great movie Trading Places, one of the classic lines towards the end of the movie was "sell Wilson sell." That would be the stance we would be taking on gold now, sell. Every rally has failed, and gold is a heavy favorite to go below 1700.

It would be no surprise to see gold and silver continue to fall. Over the next ten years, we expect a big rally in all metals, but over the next few weeks, this could get very ugly. The price action has been about as bad as it gets, showing no real hope for higher prices.

If you remember that metals trade like any other market, a steep fall would be no surprise. At one time, platinum was over $2,300; silver was almost $50. Both have lost over 60% of their value. We don't see gold losing that much but 1600 looks to be in the cards.

Stay away from the pundits and the reasons you conger up in your mind as to why gold should run. The market and the price action are never wrong; think about that the next time you convince yourself gold is going higher. We are investors in gold, but from a trader's position, they should go lower first.

KITCO