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

Silver Market Update

Silver Slump Abates

November 4, 2021 - (Gold Market Wire) - Wednesday turned out to be quite the day - to say the least. Our new channel provided us with a buying opportunity, with the caveat that we were prepared to ride the market down to $23.00 if it went against us. No sooner did we buy than the market ripped South, stopping at $23.01 and then turning on a dime to work higher. We traded from $23.01 to $23.73 What a ride!

hourly chart capturing yesterday's swing.

Yes, "Fed Tapers Stimulus" and all that, but we didn't expect too much out of the Fed - just more jaw boning to the market. The move to $23 and then reversal was so obviously traders/locals running out some weak length it's becoming almost laughable. Fading the news paid off, as it almost always does. The market, even more than usual, over-reacted. Now that is something we better get used to: Volatility. It looks like we are going to be entering a new era of volatility, and we know what that means in the metals - especially in Silver. Scale down the size and try and avoid margin. If you do use margin, you'll need to be exceedingly disciplined and professional in your behaviour and know how to cut a position in a flash. Personally, we'd just rather scale the size down. Although speculated about here over the months, we really are going to open a "news fade" trading book.

As we drift mercilessly in the West towards hard socialism and then, eventually communism (probably after a wave of Sovereign defaults) - the dissection of "Fed Speak", "Biden Speak"(lol), and all other types of government speak, can actually us to garner money for our eventual 'escape to who knows where' by fading the chatter. After all, as was once opined in Communist China in the 1970s, the era of the great wall posters, "When one knows the nuances, the walls tell all." So it will be now in the West... unless we save ourselves from government perpetuated nonsense, which, frankly, looks highly unlikely. History is a much stronger force than reason.

And so, back to the market. Where does this all leave us? Unsurprisingly, right back where we started, as it usually does after news nonsense. $23.50 an ounce and, by our reckoning, getting ready to move higher.

technically perfect - even in chaos.

As the chart above shows, even in the drama of the sell-off, the market, who always has the final say, behaved perfectly. That is what the experienced, honed trader knows. Where to stop and pivot. We picked $23.00 as the bottom and it worked, almost to the penny. We didn't expect it, because we bought at $23.50 and change - but we did identify it. Why? Because the clean .50 increments have been a strong feature of this market for months. It was a logical place to go to. Also, the pushing of the market to (options) strike is what the professional options market-makers love to do, as they battle it out. The pros who were long the $23 strike on a wing and short the $24s just had a religious experience, and 'someone' just took all that cheap at-the-money gamma off of them, knowing the market would likely be quickly reversed. Get it yet? Push 'em to strike; get 'em to bail; acquire cheap gamma; then, ramp the market back up as the news fades. Please do not try this at home... unless you know what you are doing.

Sadly, our channel lived a short, if exciting life, and we are now technically re-assembling a picture. To be honest, there's not a lot to go on just yet. We still have this (fairly useless) monster to meditate on:

...really puts us in mid-stream

The balance of the week is going to be highly interesting. We're sticking with our length believing that some semblance of sanity will now return and we will work gradually higher. But the lesson to be learned is clear... going forward: expect increasing volatility over time, and act accordingly. If you try and be a trading hero in such an environment, you will likely be living in a cardboard box rather quickly.

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