Beware the scorching gold rally

HE JARGON of gold trading echoes that of poker. “Strong hands” are investors loyal to the metal no matter the price. “Weak hands” are flaky punters who fold at the first sign of trouble.

- The Economist

After the gold price hit $4,380 an ounce, a record, on October 20th, it fell by more than 10%-only to recover some of its losses. AP

(AP)

Bullish investors win when they convince others of their story for why the price is rising, which boils down to why, this time, strong hands outnumber weak ones. Their bluff is called when the market softens. If the price does not rebound, their story collapses. If it does, it gains credence.