Gold Market Wire
News, analysis and commentary for gold traders and investors
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When the Market Speaks
November 25, 2020 - (Gold Market Wire) - Of all the cardinal 'sins' that surround trading, the one that has undone the most people is the 'sin of pride'; aka, the closing of the mind to the potential that one could be wrong. This axiom is what causes people to insist that they are right and that the "market is manipulated". Leaving aside the fact that a manipulated market is no place to put your money in, from either the long or the short side, the insistence on being right, against mounting evidence to the contrary, is the fatal flaw of ego - which will separate you from your money faster than anything.
The past week has been just such an example.
Gold is in trouble, and no amount of posturing and insistence; no amount of excuses and rationales, can deny that. That is simply what the market is telling us. Right no we have, this European a.m. - the proverbial dead cat bounce that is telling us that our current short position is the right one, and that we should stay with it. Large downside draw-downs should lead to further short closings for profit, but one thing is amply evident: Gold needs to regain $1850 or it is going lower.
So you can scream and stamp your feet about how 'unfair' it is; and you can listen to those who only ever say "BUY", but if you want to make money, or, at the very least, protect yourself from losses (a critical part of trading), you can perform the simple task of shelving your ego and listen to the market. The market is now speaking very clearly - and (as we just said) it is saying, establishing length before a weekly/monthly closing about $1850 is a fool's errand. Yes, waterfall's end...but sometimes they can take years to unwind. Other times they take only a few days/weeks - and we have no idea what this will be this time around. So let's let the market do the talking.
Above the market, as we said, is $1850 that commands our respect. Below the market, we have the following levels from the monthly chart:
If you are 'long and wrong' you might want to use any rallies to lighten up and ease some of the pain. DON'T start a scale down program now. It is the wrong time. If you have a scale down buying program in place, you might want to cancel it, lighten it, or move it to a lower parameter. That is how negatively we view the recent action. Of course, we could be completely wrong...and we will be all to ready to reconsider our outlook for lower prices... when the market takes on the $1850 (slightly higher would be better, technically) level and holds there for a weekly or monthly close.
As for now, we ride our short position, looking for lower prices.
(note: regular readers of this site are well aware that we are wildly bullish agricultural commodities over a 2-4 year time frame. Our especial favorite instrument has been corn, which we identified as a raging buy when it had a 3 handle. Corn isn't disappointing, and we are holding fast to our length. the chart is bullish and the market looks to be setting up in a whole new stratosphere as evidenced below:
When you trade you have to go where the action is - unless you want to be a professional watcher of drying paint. And right now - agriculture is about as good as it gets...especially if you can't stomach the nonsense that the stock market has become (and which we would start shorting now). When I was a young(er) trader I was always amazed that the experienced traders in the oil pit (open outcry back then - what a time!) would effortlessly float over to the coffee, cocoa, sugar ring, where they had bought participations and get involved when the pickings were rich. To them, an active market was a market with opportunity. So it is today with agriculture, and it is not going to end anytime soon. If this persists, we may have to change the name of this site.
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