In this new 4 minute video I explain exactly what I mean by a "short gold position." It does not mean I am bearish on gold, however the scenario I point out in this video could make money by being short gold and long another important market.
The video points out what the scenario is, and which market you should be long in, against a short gold position. This is an interesting twist and a video you shouldn't miss.
As always our videos are free to watch and there is no registration required.
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All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub
@Kris
Find your comments interesting, I have the same feeling. What factors are in your thinking?
Sid
"Look at a long-term gold chart." I do, every day, and I agree that the nominal price of gold will rise and fall relative to its mean value based on the existing trader emotion. However, as a non-trading gold holder, my ultimate long term chart is utterly simplistic because of my age (83). It only has two points: Year 1930 - Gold Price $20. Today 2011 - Gold Price $1410.
Thank you for your response.
You all miss the point. Adam is talking about a spread position. He is still bullish on gold.
"GOOD LUCK SHORTING GOLD!!"
Look at a long-term gold chart. It goes up and down like everything else. Hey, I think it will go higher, too, but it may well go lower first.
Good pts by all and good to consider. Nobody ever really knows 100%...at least on timing. Speculative or Not. I'm expecting to see 1600 at the year end but not before another sharp pull back. I personally see gold falling back below 1300 and silver below 25 before hitting any major new highs. We shall see.
..."Anything to do with the metals has to be considered speculative"... Say what?! Is the PAPER Fed pumped Stock Market NOT speculative? If anything, the metals, particularly the precious metals and especially gold, are the LEAST speculative investment possible today. They are SOLIDLY supported by massive Central Bank currency debasement world wide, led by the U. S. Federal Reserve. GOLD, as the universal denominator, simply adjusts to the average decreased (or increased, if ever) VALUE of all debased currencies. Other metals follow.
GOOD LUCK SHORTING GOLD!!
Adam
Your suggestion is reckless and highly speculative.
Maple,
I respectfully disagree. Anything to do with the metals has to be considered speculative. This is a spread position indicating that gold should not appreciate as much as silver based on the technical formations and our trade triangles. This is what makes a market to people having different opinions.
All the best,
Adam
Silver is strongly overbought and due for a major correction -- 10-12% possible. This is NOT the time to go long. Gold? Not so much. If silver approaches $28 BACK UP THE TRUCK! and enjoy the ride back up.
A highly risky play based on sentiments and not technicals.
Thanks for the advice Adam but personally I see gold being at the start of a new corrective wave that will very soon use last years top around the 1430's to spring well into the 1500's. It will go fast and strong. Just my 2 cents. Al
tango6: Except VIX, and probably not oil right now, either. But just about everything else is crashing.
Steve
Except for the long-term fundamentals: Less oil being found, more users in China and the bourgeoisification of emerging nations.
Then there's Gadaffi, who can blow up his pipelines if he feels like it. Buy the rumor, sell the fact.
Regardless, $200 oil is coming.
Mr Snitch
Except VIX.
I think Adam is right in the short term
Looking at the chart for gold, I would anticipate a retracement soon to surface. The daily chart is showing a trading range since October 2010. We are in the upper range now between 1410.00 and 1420.00 resistance area. My target for a short term pullback would be at the 1370.00 area.We will need a substantial break above the 1420 area and a close above to break out of this trading range. I expect a rebound from this area and a retest of the 1370 support.
I like the play. It's counter-intuitive but I won't be taking it. I will be tracking it, though. I have a small portfolio and I have to try to go for the surest sectors I can.
I agree with manfred that markets are in dangerous territory. A reversion to the mean is overdue and may have started. That would take the S&P down to the 1200 handle or lower.
Rather than gold, I'm going to take positions in oil and aggie etfs because oil supply is seriously threatened and food shortages are cropping up (pun intended) all over the place. Food shortages are an element (not the major one, but maybe the straw that is breaking the camel's back) in the Middle East uprisings.
Thank you Adam for an interesting idea.
Good lord, oil up over 10% in 2 days based on absolutely nothing at all. Supply hasn't changed, demand hasn't change. This world is so stupid sometimes.
The good news this market correction is going to lead to a massive short squeeze. Let the selling continue for a few days, and watch for the volume to dry up. Then, buy up any good setups.
Get short everything NOW. Right now.
Thanks Adam, for this suggestion, I'll be interested to see how it plays out. I tend to instinctively agree with Manfred and Keith that Gold will share much of the same movements as silver with less volatility. Therefore I don't see a reason to weigh down a long silver position with a short gold (I'm happy with the volatility). Gold may still break through resistance if the geopolitical situation gets uglier. If it doesn't, well maybe gold's appeal will fane more than that of silver, silver being more than a monetary metal. Also there's all this talk about JPM silver shorts to unwind.I'm only long silver plus a number of gold junior miners and silver miners, both junior and 'senior'. Best trading fortunes to all!
thank you for your video. Shorting gold and long on silver with so much chaos in the middle east may not be prudent.Used your donchian channels + williams %R + 3 day high worked like a treat in timing the crude oil market, so thank you for your educational lessons.
Sarkar
if there is a correction in precious metals it will hit silver much harder than gold.... especially since silver is much more overbought now than gold... and a parabolic move in silver will be corrected very fast and in a very nasty fashion... I recommend to hold physical silver in your hands but do not trade this crazy tiny market.. way too risky now... sharp moves all over the places ..
as well I think gold will react first before breaking out to new highs.. maybe back to 50dMA around 1380
Thanks for the video always appreciate your opinion but I will respectfully disagree with your view here(my opinion only)
Mean reversion/momentum divergence: parabolic moves will retrace SHARPLY when they do, yes even silver will.
I think the last deeper pullback on gold is much more healthy, now it's able to take on the resistance and break through. Do note that EVERY major sustained bull run, stochastic WILL always show overbought + price will always be breaching upper donchian.
If you go long silver/short gold remember to have GUARANTEED hedges. Synthetic option positions or certain CFDs with guaranteed stops, not raw naked futures/etfs. Beware that silver can drop sharply, such as silver margin requirements being raised(which there is one coming up shortly), people will bail out of silver and pour into other commodities, including gold.
"if we do fall back we have the assurance that gold will fall faster than silver" I disagree with that one Adam.
I would have more confidence in being short silver and long gold for now. You might be on the losing side short term with that trade but when the market does reverse you'd be on the right side.
Silver always outperforms gold toward the end of a larger cycle. We are seeing that now. Silver will crash violently soon... weeks or months... who knows.
For now, my bet is that gold will make new all time highs before the spring correction comes home to roost.
Sir,
I just subscribed to your service on 22nd February 2011. I primary trade forex. I want to know at what point to enter the market using the Scan method readings. Will buy at +85 and sell at -65 be good trades, or I must wait till +100 or -100 before entering a trade?
Thank you.
Okoruwa,
For short term trading use the strategy below. Although it's not our suggested method for the Trade Triangles for Equities it can be effective.
Weekly Triangles determine trend and possible entry points.
Daily Triangles determine timing: exits, entries and re-entries.
The last triangle issued on the weekly chart should always be used to identify the overall trend. You can also use the weekly triangle as a potential entry point if you can get into the market within the last 3 trading days of the signal. Then you are to look at the daily triangles for possible exit and re-entry points, or entry points if your weekly is in a steady trend.
Key Rule: always trade with the trend. Make sure your weekly and daily triangles correspond in direction.
*If you are a shorter term trader, it is possible to use the weekly triangles to determine overall trend and possible entry points and the daily chart to determine individual timing points. Please be aware of the short term whipsaws, and lack of overall trend strength.
As a short-term trader, you want to pay particular attention to the second Triangle (New 3 Day High/Low). This is the one second from the top that will generate a positive or negative short-term signal for you. If the Triangle is GREEN, you should then confirm the signals viability status with the fourth Triangle (New 3 Week High/Low). The odds are in your favor that the trend will continue if both the Daily and Weekly light are both corresponding in color. If both Triangles are GREEN, then a positive movement is likely. However, if the Daily and Weekly Triangles are RED, then a negative movement is likely. If the Triangles differ in color then you should consider keeping a sidelines position.
How It Works
The Daily triangle is created whenever a market moves over the previous three day high and remains above the previous three day low. The reverse is true when the low of the previous three days is broken to the downside, it creates a RED Triangle. This is an automatic stop-out of a long position if the Weekly Triangle (4th signal from top) is GREEN. If the Weekly Triangle is RED, it signals a short sale is in order. If you are not familiar with short positions please consult your broker, or learn more from the experts in our INO TV online seminar service.
5 Successful Short-Term Trading Rules
1) The odds are in your favor when you trade with the major trend.
2) Always trade using stops. Never cancel a stop.
3) Plan your trade and trade your plan.
4) Never try to pick tops or bottoms, the market may surprise you.
5) Go with the flow. Don't fight the markets.
Best,
Jeremy