October and the Coming Gold Collapse
As this month unfolds you will see more progress on the structural reforms in Washington that will be needed to get the employment picture and the economy on more solid footing. As we await that situation we should see the, for a lack of a better title, “The Eric Cantor Double Dip Scare” which started with the deficit antics in late summer and should end with a testing of the 1070 level in the S&P 500.
The big story for October will however be the unwinding of gold positions when things start looking better for the economy. The wildest objective out there at the moment is a 62 percent drop from the all time highs on gold, 1917 down to 728. That would be exciting but anything that takes out the 400 day average at 1389 and brings out the goldbug fear would be something to watch. In the next few days we should see a little bounce in gold to the resistance level at 1706 before the collapse gets underway.