Is this finally the Golden Moment?
Let's revisit my call for a major top in GOLD now that we have reached the time period I designated. One of the distinguishments that needs to be made for those who might have stumbled upon this site for the first time is as follows.
I am a trader not an economist, so all of the trades I make are based on what I consider to be the fundamentals of a market based on what I have learned over the years through Hard Knocks University. I do not represent in any way that people's gloom and doom theories about our currency are right or wrong, and what if correct effect it would have on this market. Those opinions may well be correct, I really do not care. Trying to make big picture calls like that based on just arbitrary opinions is not how I approach trading.
It is much easier in my opinion to look for the next 3 months move in prices than the next 10 years. So lets again revisit why I am so bearish on this market. As you can see from the chart, we have the largest long position of small speculators in history. The horizontal line marks the old prior peaks. As you can see as clearly as can be, each time we have been at these levels, there has been a major decline in the price. At the same time you can see with the green line the heavy selling the commercials have been doing here. Also, Sentiment is in the bullish camp. You can also see what generally happens with sentiment bullish, declines.
Why is this true? After all I could just be drawing a line on a chart and be data mining for a result? In general small speculators are driven by emotion, commercials are driven by very detailed market information, they actually mine the product. As you can see recently, this whole run up has been driven by small speculators buying. There is just simply not enough purchasing power numerically for people buying one's and two's to hold up price in the face of selling by deep pocket players. Also individuals tend to be late to the party and wait wait wait, ok now let's buy now that we are sure it is going up. That was real estate in 2005. I cannot tell you how many people said, "well I am buying it as in investment." Some investment it turned out to be, a 50% decline in two years!
Since commercials have the most knowledge of the real supply and demand situation, they are the most informed. The one asterisk is that they are by nature hedgers, so they are often opposite the trend like this. This is why timing just using them alone is not enough. They can be wrong for months at a time, but in the end they are most often proven correct. Now the burden falls upon the individual investor to keep prices up here while the deep pocketed people are selling into this strength. At some point this will give way.
There is a seasonal tendency for a decline right now which is why I chose this time frame to make this call. However, if we were to go sideways here then roll over in a month I would still consider my call to be pretty good. Of course if we go up another $200 then the call is lousy.
I am looking for short entries every day here, but likely in Silver since it has been weaker. It is basically the same trade.