Gold (GLD, IAU) is down hard today from an attempt at a new high. This does not guarantee it will fail, so you may want to average out instead of selling everything at once, but it does increase the risk of a significant price correction. The alternative is that it represents a retest of the breakout area. We will know more by the close.
The prior GLD high was 139.54, so look to see if it closes below there today. If so, a bigger correction may occur. If you don’t sell at a top or lighten up there, your other option is to sell on further weakness. You have to define where your exit points will be. You can use various support levels or percentage stops as in selling when GLD falls 5% from the top and selling more once it has dropped 10% from the top just as examples. Those are called trailing stops as many of you may know. (Read more on the “Buying Checklist” page on the main site here: Buying Checklist
The AMEX gold bug index is now down from testing the 1-03-2011 peak of 578.80, so set some stops on your gold stock profits as well!
My personal preference is to exit trading positions, when trading gold, while keeping a core position in gold that is not touched, at least until things get very stretched.
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