Gold Market Wire
News, analysis and commentary for gold traders and investors
Silver Market Update
Silver Bulls Fend off The Tree Shakers
May 31, 2021 - (Gold Market Wire) - Standing your ground can be a tough job when you have been trained (correctly) to know that 'no one is bigger than the market'. Those who get married to the trade suffer the fate of everyone who bought Gold from (roughly) 2010 to 2015... a long protracted period of pain. But if we run every time the pressure is on, we will become the proverbial 'weak length' that COT just loves to steal on. That means knowing when the tree shakers are coming out to scare away the weak length, in an otherwise bullish market. That, in turn means, know when you are in a truly bullish posture and when its time to hit the sidelines.
Right now, we are in a truly bullish posture. We have the recent double bottom in the Metals, a nice solid trend line, a 50-day/100-day moving average that is staring to cross, a stochastic that has had some retracement all combined with a completely polarized political world in which government is widely distrusted by the populace. We have interest rates starting to move up, we have food prices and raw material prices (like lumber) on fire. And this is all happening within the context of a population that has so little confidence in the west it is running from city centers as fast as it can, and seeking refuge in suburbia and beyond - i.e. - the hinterlands. You can add to that, a western world that is beginning to charge a super-power (China) with a heinous crime against humanity, while blaming another military super-power (Russia) with sabotaging its energy systems.
And that is how you can differentiate the end of a bull market from a tree-shaking exercise. One is an overly euphoric market that doesn't really deserve to be where it is, the other is a non-sequitur within an increasingly troubled environment. If you scream 'end of the world' all the time, as almost everyone in 2011 did, you got caught out and failed to realize that the temporary rescue of the banking system (pared down to the preference of the big players) meant Gold was ripe for a dirt nap.
Today, regrettably, is a very different situation. The tree shake we just saw, was actually pathetic, and those who fell for it need to realize their mistake. The bears are about to lose control. Volatility, though, will still be the norm, and that means you will need strong hands to hold on; you will need to scale down, or shut off the margin; and you will have to behave with impeccable discipline.
In a bull market, like we are in now, the key is not to chase markets higher, not to use leverage, unless you are a seasoned pro, and not to let the tree shakers throw you out of your position...expecially not your core position. All of these things can be boiled down to one: Pack you emotions away in a trunk and bury them under the ocean floor. They will be your undoing.