ASK ARORA: SELL GOLD AND BUY FRENCH STOCKS? NOT SO FAST $SLV $GDX $ EWQ $GLD $EZU $VGK $HEZU $EUFN $FEZ $IEV $EWP $EWI

Many investors were only recently rushing headlong into gold.

To them, the world was falling apart, and they had perfectly good reasons to buy gold: The U.S. was firing missiles on Syria. North Korea was threatening a nuclear war. There was concern that the right-wing Marine Le Pen would be elected France’s president.

Since then, gold has fallen quite a bit. Investors who were part of the herd frenzy to buy gold are now losing money. Especially hurt are investors who made leveraged bets using futures or options.

Those investors are now asking if they should sell gold and cut their losses. At the same time, they are asking if they should buy French stocks on the news that Emmanuel Macron, a centrist, has won the French election.

There is a big difference between knowing something and internalizing it to execute an investment properly. Let’s discuss this.

Chart of gold and European stocks

Please click here for a chart that compares popular gold ETF GLD,  with iShares MSCI Eurozone EZU, The reason I am not comparing it with France ETF EWQ,  is because, although I had discussed the French ETF in “These are the investments to make now that the French election fear has eased,” my call was to buy EZU for diversification and lower risk. Please note the following from the chart.

• Gold has broken 61.8% Fibonacci retracement. From a technical perspective, this is negative.

Please click here to see two tables that we provided to our subscribers when gold was running up. The first table showed a 70% probability of gold hitting the key support zone of $1,220-$1,226 an ounce. Now that this key support zone has been hit, it is common for a technical bounce to occur…Read more at MarketWatch

 

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