Gold’s
recent crash also serves as a case in point of what happens when investors fall
in love with a fundamental story and ignore the market’s technical
picture.
Speaking
of gold’s sell-off, Thomas Vitiello, partner at Aurum Options Strategies, told
CNBC: “What happens is the fundamentals are there and it’s not responding the
way you would think it would, so you have to look at that.”
The
above statement is typical of those who embrace an asset’s fundamentals without
taking into consideration price pattern and internal factors. Vitiello added, “You can’t buck the trend,
but right here, how could you be bullish?”
This
statement is reflective of the confusion that faces a fundamental investor
after the price of his investment has crashed.
He sees that the fundamental picture hasn’t changed, yet prices keep
dropping. This serves to illustrate that
in the near term the market is driven primarily by technicals, not
fundamentals. [Excerpted from the 4/16/13 issue of Gold & Silver Stock Report, available at www.clifdroke.com]
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