Gold Outlook

In my view, the ongoing breakout rally in gold can be compared to either

1) the rally in 2007/2008 with gold topping out at USD 1,038 and crashing back to USD 680 during the financial crisis only six months later OR

2) with the breakout above USD 1,000 that happenend in 2009 when gold rallied relentlessly within three months to USD 1,225, then pulled back to 1,050 and then rallied for the following oneandahalf years to much higher levels..

Currently, the set up seems more similiar to 2009, hence target USD 2,535 then pullback to around USD 2,100, then off to USD 3,000+x... BUT the open gap at USD 1,835 speaks for the 2008 kind of scenario... In any case, much higher gold prices should come in the following years.

Hence, I would not sell any physical positions at around USD 2,500. But all leveraged longs need to be closed completely and focus needs to be on shorting for a few weeks at least. Mining stocks could be reduced into strength. They could quickly give back a large portion of their profits and during summer most of the time it did not make sense to be fully invested in mining stocks...