July 24. 2020 - (Gold Market Wire) - Gold is seeking out the all-time high at $1921 and gradually inching its way towards the level, having used the energy from Silver's explosive rally of the past week to make its move. The target is now in sight, and the chart is starting to create a parabolic formation.

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For those who have held length throughout the past few days and weeks, and especially anyone with a margined position, the race to new highs will likely draw in all various and sundry speculators that could very well cause a spike high followed by a significant sell-off. If you run with length during moves like this, try and find momentum based places to take some of that length off and realize some of the profits. The chances of a sharp turn-around are increasing. Do not misconstrue this as calling a top (a genuine fools game), or claiming an end to the bull market in Gold and Silver - it is not. We have further to run and will make significantly higher prices in the future. But profit taking is part of the discipline in the trading book - as opposed to the investment portfolio and core/insurance position. If we experience a sharp sell-off, will you start dropping your position after it begins, or would you rather sacrifice some upside action and start putting money in your pocket. The decision shouldn't be hard.

Many a speculator rides a rally all the way to the stratosphere, only stay "strapped in" when it starts to unwind, and traverses the flag pole all the way back down. If you can't stomach letting go of some length, you'll never be a trader - so don't trade.... just hold forever and see how that works out. Many did in 1979/80, and suffered for it. I recall (then) one seriously long member of the public rejoicing the ride through $700 and claiming that $2000 was in the bag, when a seasoned pro barked down the phone to him, "it doesn't matter if it's $700, $1500 or $4500.... because you will never sell!" and then slammed the receiver down on him. Sure enough, that phone call was the bell that really rang to indicate a top was coming. Now, having said that, that is not where we are today, at least in our judgement here. But that does not mean profit taking for trading length isn't the order of the day, especially if we cross the all-time high. If and when we do, we doubt that it will be the last time we see the market start with an $18(00) handle. Trading in a bull market is about pocketing profits and waiting for the sell off to start the incremental scale-in buys, firm in the belief that we are heading higher.

Needless to say, chasing strength here is not recommended.