On CNBC’s “Fast Money,” Carter Worth said that it is all about tactical versus structural when it comes to the precious metals. He explained that structurally, the move in gold is about the currency debasement.
What Happened: It is trading nowhere near the adjusted inflation of an all-time high of $2,700. But tactically it is getting a bit crowded and now is the time to hedge, Worth mentioned.
Why Its Important: Gold closed higher 8 weeks in a row and historically, it has happened only 4 times before, said Worth. He explained that in a month after the move gold averaged a profit of 2.4%, while three months later it recorded an average loss of 8.9%. Six months after the move it lost 1%.
Worth also showed a daily chart of SPDR Gold Trust (NYSEARCA: GLD) and said that it looks steep and crowded. He thinks that it is time to hedge and take some measures.
What Next: The situation is similar to iShares Silver Trust (NYSEARCA: SLV). It managed to close 8 consecutive weeks higher only 6 times before and after these events recorded a significant drawdown. Worth explained that it doesn’t have to do that, but it could be a good tactical decision to hedge. Structurally, silver could go to $50 and gold to $3,000, said Worth.
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