Gold - Big Correction or Reversal ???

Similar Price Spike (Nature and Time wise)

• Glaring similarities between silver spike (last week of March – 25^th April 2011) and current gold spike (1^st July – 10^th August 2011)
• Silver had massive media coverage during that spike which was very understandable given the extent of rise...and various brokerage houses had published silver “fundamental” reports...Gold off late has been having massive media coverage...and most of the investment houses (GS,JPM...) have massively upgraded gold post massive rise...(GS – 1800+, JPM – 2500 !!!)

Similar Policy Reaction

• Policy Reaction to silver was massive increase in margin requirement (Both initial and maintenance) Margin was raised 5 times in matter of 8 days..Initial and maintenance both was increased by 84% !!
• Silver had huge whipsaw movement after initial margin hikes...every attempt to reach $50 was met with higher margin requirement...effectively 5 margin hike in span of 8 days resulted in massive silver price collapse from $50 to $34 in matter of 15 days...
• Gold margin was hiked by 22% on 10^th August 2011, the very day gold peaked at around 1814 and closing at 1746 on 12^th August 2011, registering fall of around 4%...

Now, Gold surely didn’t have as vertical spike as silver but then silver has always been more volatile...however sentiments had turned massively bullish with end of the world scenario and currency collapse debates and gold as only alternative currency...if such massive bullish set up (both in terms of price rise and sentiment) is met by margin attack, then it should certainly call for caution...if gold indeed bounces back towards 1800 over coming days and if same rise is again met with  margin hike..then its time to be extremely cautious...because set up is very very classic for either a big correction or reversal....!!!

GOLD RISE HAS BEGUN TO MASSIVELY HURT CENTRAL BANKS CREDIBILITY (PARTICULARLY FED) AND MOST OF THE PLAYERS HAVE PLAYED THIS TRADE EASILY FOR QUITE SOMETIME NOW...WHEN A TRADE HAS PLAYED SO WELL AGAINST AUTHORITIES FOR SO LONG...THEN ITS TIME TO BE CAUTIOUS....VERY CAUTIOUS !!!

(source - http://www.thechartstore.com/)