News, analysis and commentary for gold traders and investors

"Be Right - Sit Tight"

Jesse Livermore
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Gold Market Wire

News, analysis and commentary for gold traders and investors

Gold Market Update

Facing Up to Gold's Predicament

January 28, 2021 - (Gold Market Wire) - In trading, the failure to face reality is often the death knell of the trader. Once a trader digs his heels in deep, and becomes unshakable in his convictions, it is merely a matter of time before he becomes undone. We are getting closer and closer to that point with the Goldbugs and the general Gold Bulls who inhabit the market.

Being bearish wins you no popularity contests. Nobody likes a Gold bear. But trading is a lone wolf's game...if there ever was one. The reason is as simple as it is perplexing to those who crave market "company" and the hollow ring of affirmation: The Crowd is almost always wrong. Trading is a contrarians game. It is also an art form that requires discipline: ergo the top of the chart formation and why we opined that: "For the more seasoned and cynical - who think we will just revert to the 'mean', a short spec is in order."

In fact it worked out well, even better than expected.

the truth which the Goldbugs cannot dare behold.

Professionals are running this market. The ones who have a Gold book and have to make money on it. And what they see is that the need to let just enough light into the market to allow the "paper" (i.e. - the public) get encouraged again, and start buying the top. It's happened again this week, and it will happen again over the next few months.

We say this with the proper amount of measured gravitas - Gold is no place for the Bullish, for the foreseeable future. Is the Bull market over? No, we don't think so. But rallies need to be sold now. There can be no other conclusion. You want to keep a few Gold coins in your pocket for the proverbial "rainy day"? Sure. It's probably a good idea. But within the trading arena, we are now sellers of rallies.

Gold has a lot of things moving against it at the moment, and one of the things is that a wide spectrum of commodities, especially in the energy complex, are simply too attractive to allow serious money flow into the market. For Gold to rally, there has to be a wave of retail interest. And that is sorely lacking at the moment. Retail interest is busy trying to buy real estate, or get off the grid in other fashions, or looking to but hot tech stocks (probably a bad move right here!) or something else. But Gold is not moving. Failure to face that reality could be costly.

The market has proved that over the past months, and this week was yet another stark reminder. With the US Dollar rising, the bull's task will become more difficult. If stocks fall sharply and correct, the scramble to close out Gold positions will increase. The hype is a distraction. To be blunt: How many times will you listen to the hype artists who spin their yarn about "Miners" being cheap before you realise you are being had? It's time to wake up.

We see no immediate future in trading Gold from the long side. Quite the opposite, actually. Rallies should now be sold. Gold's performance has been terrible as of late, and it doesn't look likely to change anytime soon. The larger the crowd screaming against that position and the more shrill the chorus becomes - the more 'outlier' that outlook is - the more convinced we are that we will be right to sell rallies that get towards the downtrending line above. It worked this week. It is highly likely it will again.

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