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

Metals Make a Break to the Downside.

June 17, 2021 - (Gold Market Wire) - The 'becalmed' Precious Metals market we characterized yesterday has finally broken out of its nearly month long sideways action and made a move... to the downside. Out of our two avenues for concern; a falling stock market and a rising US Dollar, we got the latter. The failure to move above 1.235 on EUR/USD over the past month looks likely to have fairly important consequences. The fall in the Dollar has stalled, it did not make new lows. Yesterday's daily chart on EUR/USD was a bloodbath, and the follow through this morning is just piling on the pressure on the Metals, at least for the short-term.

a significant US Dollar rally

And so, once again, the "US Dollar is Finished!" crowd has been given a dose of reality... and that means just about every Goldbug out there. If ever there was a trade where everyone is leaning on one side of the boat, it is the Dollar bear crowd. They have been wrong for years and are likely to continue to be wrong. We, to the consternation and ire of many, remain, as we have been for years, long-term US Dollar bulls. The failure of the rally to actually make new highs - above 1.2350 - is the reason why the Dollar has turned and followed through so strong. The smart money knows that the bottom is in, and we agree. The Dollar has more room to run.

On to the Metals.

The surging US Dollar has 'broken the Silver Box" which we have been trapped in for the past month. Once the lower boundary gave way, at $27.43, we turned down hard, as the chart shows.

the month in the Box has ended.
If you tried the second scalp, you likely gave back the money from the first - so it was a wash. The idea to buy around $27.45 and sell if we started trading under $27.30 was a great loss limiter, which is, many times, what trading is all about. It was a scalp, so it was small, and we stuck to the discipline, so we got knocked for 15 cents and that was that. The past six weeks have been good to us. Our discipline to start shedding 2/3 of the major position taken at $26.50 weeks ago, along with closing out the small length at $26.40, has paid off handsomely. We closed out 1/3 of the major length (and the $26.40 long) at $27.40 and 1/3 at $27.85. That leaves us with 1/3 left from the $26.50 which we now close. The entire position was taken off for profit, and that is what trading is for - making money. The scalps scratched. A productive 6 1/2 weeks of trading - where the name of the game was discipline - not swinging for the fences. It's time to sit back and watch the market develop now, and decide where to take the next position. The core positions remain the same - long Gold and US Dollar (and long crude oil). The trading position, in Precious Metals, which is 90% of what we do here, is now flat.
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