Gold Looking At Fourth Day in the Red (GLD, IAU, GDX, KGC)

2011 is not looking at all like 2010 when it comes to the initial trading for gold prices.  This morning we see that Gold is trading lower yet again in London and the gold bugs have to be wondering if the 30% gain in 2010 was as good as it can get.  If this morning’s trends hold, then Thursday would be a fourth consecutive drop in the price of the shiny yellow stuff.  The recovery with better data, better jobs data, China’s ongoing tightening measures, and the stronger dollar are acting to remove the craze and demand for gold.  What reserve currency? Spot gold is trading down 0.21% or -$.93 at $1,371.02 in early spot trading.

SPDR Gold Shares (NYSE: GLD) closed at $134.47 on Wednesday and early indications show prices around $133.90; iShares Gold Trust (NYSE: IAU) is indicated lower but has yet to trade.  We recently tried to give a “Best Gold Mining Stock for 2011” as Kinross Gold Corporation (NYSE: KGC) along with several other large picks even though 2011 is starting to look like the year of the great gold flop.  In our equity pick for miners we want to see at least some hedging from investors.  Our hedging trade is with put options in the Market Vectors Gold Miners ETF (NYSE: GDX) or in the SPDR Gold Shares (NYSE: GLD).

Goldman Sachs was recently out with a $1,690 forecast and higher even after that.  No markets are supposed to run straight up.  The gold trade won’t go without powerful surges higher in 2011, but the endless buying and buying every day without care for price or after-effects is getting a reality check.

Stay tuned.

JON C. OGG