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

The Philosophy of Trading

June 18, 2021 - (Gold Market Wire) - One must allow others to be 'right.' It consoles them for not being anything else.” -Andre Gide

So here we are...right back at $26.40 (at least when we started this post it was)... right where the whole journey began. Sometimes, you just gotta laugh. What now? Well, it looks like we are about to see if Gold (and yes, we mean silver too) and the US Dollar can rally together. Regular readers here will know that we think they can, and a glimpse at the long term charts will prove it. Does that mean it will happen “right now!?”...Will it happen 'this time?' … as the Goldbugs always insist you must 'predict.' What a fool's errand. Why does Gold attract such people?

Trying to answer such things only shows how an insistent philosophical position is the undoing of so many. The point of trading is to make money!!! Not to be “right.” It's to take some money out of the market, and then stand aside and wait for the next opportunity. It is not to bet the house, and then hold on through several decades, getting ripped up and down the market; being stopped out; chasing strength and selling only when you can't take any more pain, all the while INSISTING that we are going to $10,000 an ounce. Those are the predilections of losers. If Gold is your insurance, and that alone, then put 5%-10% of your liquid assets in it and forget the market completely, except to check on it every fortnight or so. You are just wasting your time trying to see if the market is always confirming your insistent prediction. Perhaps you just want to be proven as 'right.' (We thought we were here to make money.)

We might(emphasis on might) get to $10,000 in two years...or maybe twenty...or maybe not at all. Equally, the market might die at $3,000. Anyone who says they 'know' what is going to happen is full of it. Ok, Sinclair did this in the 1970s, yes he did, by correctly predicting that an attempt to balance the balance sheet of the United States would have to be made. (That's how he figured the $900 an ounce target when Gold was just $100.) That can't be guaranteed any more. That was back when sanity still had a seat at the table. That is no longer the case. That was when the Treasury Department and the Federal Reserve had in interest in preserving a functioning, capitalist America. Now, that is not a given, anymore, either.

But, all the while the Bugs insist – like a sulky six year old... we are going to $10,000... not matter what anyone says! And if I die 10 years from now, with Gold at $2,750...it's only because "I ran out of time.” ... (certainly I wasn't 'wrong'!) ... Now you can see why we chose the opening quote for this post. Psychotics inhabit the Gold market more than other markets, because of the romanticism of Gold, its history, and the fact that it can be held and stored forever.

None of this behavior helps anyone 'make money!' And so, are we back to Goldbug Jim Dines' famous theory of the secret desire of all gamblers to actually lose money? GMW has no desire to delve into what creates things like that. That's not our remit.This site is about trading. And in trading we don't swing for the fences. We take something out of the middle of the market are grateful for it. Staying humble is important. Most of the great traders I have known, and I have known many, are very humble, and human. It's probably a recipe for their success. The fact that they know they can often be wrong; that they aren't afraid to admit it to themselves; and they know what action to take when they are. (The humble person who is never afraid to pull the trigger. That is what makes a great trader!)

So where are we now?

Well, the US Dollar is back with a vengeance and it looks ready to take some scalps. We don't think this is some two-day rally. It looks like a major turn-around, and that the Dollar could rip. The failure to get over 1.2350 vs. the Euro is a big deal, and we think its likely the Dollar will head higher. The impact on Precious Metals, was, naturally, negative at first. But, we must insist – it will not necessarily stay that way. As readers know – the 'correlation trade' is over-hyped, in our book.

We find it very interesting that the market high today in Silver has been $26.50... where the lift off happened. The stalling pattern at $26.40 also revealed its importance. These were our two buys in the past two months. We got in at the right signal. And we were humble enough to start selling when the rally started to stall. That's the other aphorism you forget at your peril - "Pigs Get Slaughtered."

So far so good.

Today's action is anything but encouraging for the Metals Bulls... but we still have the close, and we can never rule out, in environments like this, that the market could roar back and close right on the $26.40-50 level. It's happened before...many times. Engaging in that type of speculation holds no interest for us.

catch a falling knife??? ... no thanks!

Aside from the fact that we deplore involvement in markets of this tenor, we also note the following retracement today:

...not a good development.


We went right up to the lift off point - kissed it goodbye (?) and headed back down. Looks bearish in our view. But we are not in it. We hit the sidelines yesterday, taking profit on our last 1/3 from $26.50 and avoided the whole thing. Heroics are not for us. "Be courageous when others are fearful?" Not for us. Not right now. Not when the Dollar has after-burners on and is ripping the British Pound the proverbial 'new one'...in addition to the failure we've mentioned in the EUR/USD. We'll wait for some dust to settle. The sidelines are comfortable and we are glad to be on them, watching.











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