All that Glitters is Not Gold

The recent spike higher in the U.S. Dollar Index is having a dramatic impact on a variety of markets, but none more than gold.

Gold traded over $1200/oz. a mere few weeks ago, but it has retraced 10% from that level and is now trading at approximately $1080/oz. Many long term prognosticators forecast that our greenback will continue its trend lower. As such, commodities in general and gold specifically should benefit.

That said, I remain concerned about getting heavily involved in commodities, especially gold, because of the fact that there are many short term speculators involved in this sector. What happens given the preponderance of those market participants? Excessive volatility in the price action.

With gold dropping off the face of the cliff as pictured, it is highly likely to fall into the $1050/oz range. Why that level? $1050 represents an approximate 50% retracement of gold’s move on the year.

Unless you are the type thrilled and skilled at skiing black diamonds, I recommend keeping gold plays to a small percentage of an overall portfolio.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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