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Gold: Wait for Further Pullback, Says Najarian

Gold: Wait for Further Pullback, Says Najarian

The mining stocks have been a tear but gold itself continues to toy with investors' emotions. After a snappy rally off the lows at the end of the second quarter, the barbaric metal continues to get stymied at about $1,330. With prices hinting at a breakout again early this week we asked The Options Monster himself, Jon Najarian if this was the real deal.

In the attached clip Najarian says gold is looking good so far but it's still locked in a range. Where others see resistance in the $1,325 area, Najarian is more optimistic. "It was $1,425 in June of this year. I think that's the next stopping point."

The challenge for gold investors is that they've seen this movie before. For the last 52-weeks every gold rally has been met with selling pressure, leaving gold stuck in a downward trend. Having been burned so many times before the question is whether or not discretion is the better part of valor for would-be bulls.

Related: Landscape for Gold Has Changed Forever, Says Trader

To Najarian the metals are about emotion on the margins. Weak holders who got long gold much higher have been creating price resistance with sales the whole way higher. Those hands have slowly been getting washed out. That doesn't mean he's chasing it here, just that he's bullish over the long haul.

"One of these times John Paulson is going to be right," Najarian says of the famously battered gold bug hedge fund manager. "Just not yet. Not Bernanke, Draghi and the rest of these guys doing what they're doing."

Najarian says the trade here is to chill and wait for a pullback. If it gives up the ghost again and drops below $1,300 he's a buyer. If not he's happy to let others chase.