Originally published by Chamber of Merchants
Look, you know that I’m of the opinion that Gold is going to hit a higher mark that $1377+ . This is my opinion and my stock positioning is based on this thesis. I will discuss this and a few things on the Big Picture | Weekend Report.
I’d like to share what I’m looking at:
What we Expect vs What we Get
In the graph above you can see what I expected and even posted on: I expected a 9 day dip and then an immediate bounce back.
Instead, we did get the bounce, but it was muted; moving up $10, dipping $8…moving up $7, moving down $6.
Look at the graph in January. There is a high probability that the big boys and smart money are engineering a similar move in gold. It was a constant grind, two steps forward, one step back. It exhausts traders and sends most investors running. Yet, those that remained seated got to enjoy the show from $1050 to $1377.
Now compare that to the last 2 weeks. Two steps forward, one step back. One day everyone is hugging and cheering, the next day most of the gains are gone.
Even today, the goldies were sold down (by retail traders) simply because the HUI and other U.S ETF’s were down. But there is a stark difference between U.S and Australian gold miners. Mainly relating to AISC vs Gold price. More for later.
The point of this post and Perspective. Chart is to share that I believe that Gold is going repeat the previous grind up until most traders have missed most of the move.
As a Merchant I must consider that this time it’s not different and that history repeats itself. The most obvious trade that most of us expected was an aggressive bounce after hitting the 200MA. However, it looks to me like we’re repeating the trend from January. If that is the case, then things are going to get very shiny over the next few weeks. Slowly but surely until the market finally catches on. The aggressive ramp could be around elections, but December or January may be the blast past $1400 when interest rates either don’t get raised, or have been raised. Either way, I see it being great for gold.
Could I be wrong? Of course. That’s why I can’t advise you. I share only the insight about my own portfolio and thinking.
But as a Merchant I need to have a thesis, a foundation of a probable future and position accordingly. That means I take risk because I cannot see the future (not clearly anyways ;p ).
If I wait to see what everyone else is doing, then I would be part of the herd and I’ll make as much profit as the herd. That prospect does not interest me in the least.
I’ll end off here since I see the ASX All Ordinaries Gold is rebounding like I expected.
(The market direction is always decided at the end of the day. Not the start)
ASX All Ordinaries Gold
Volatility is going to get fearsome. If you can’t learn to feel less and think more then the market is not for you for the next few weeks. I expect things to go a bit topsy turvy.
I also anticipate the positions I have taken to start trend positively shortly.
P.S It turned out I was right about the bottom of the Euro and GBP. However, U.S Dollar keeps rallying. We’ll sort that out soon enough.
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