Gold Market Wire
News, analysis and commentary for gold traders and investors
End of Month and Quarter Liquidation Looms
March 27, 2020 - (Gold Market Wire) – Its enough having a Friday to deal with in times like these, but early next week brings both the end of the month and the end of the quarter.
This is that magical time of the year which only comes 4x per annum and is when CEOs, MDs and Trading Managers tell everyone underneath them what to liquidate ...No ifs ands or buts. It's a mandate and mandates get carried out. The big picture people take over the reins and tell everyone, “I don't care if you think it's 'going to go right back up', - sell it!”
This is the time of year when companies do their very own 'reset' – above and beyond all the panic liquidation that's occurred. In such an environment its easy to say, 'let's be a contrarian', but the timing is wrong. It is the time to stand back and watch. Only the greatest traders on earth, of which there are probably a few dozen, all with access to a lot more 'quality' information than you have (like deal flow and inside tracks), can make money in a liquidation from the short side. Others, who behave with sanity, simply get out of the market and then stand back and wait.
This is one of those times to play the waiting game.
What does it all mean for Gold?
Well, to begin with, we're in the middle of the channel, hovering about in a no man's land. But beyond that, Gold is stalling. The follow through we hoped for is unlikely to materialise between now and the close (especially with stocks being hit again), and probably what is preventing any surge is that and a combination of illiquidity due to Corona 'lock down' and the fact that the dreaded end of quarter liquidation is causing fear in the minds of reasonable men.
It is a not unreasonable fear.