Loading ...Further disclosure
I’ve been doing some further soul searching, and as the saying goes, I have tried to keep sentiment and emotion out of the room.We have been brutally taught again and again these last three years, that fundamentals and logic do not drive today’s markets.
PM bulls and optimists, please look away, the following post is very bearish.
These breaks of support remind me of the weekend in April 2013, when gold had just pierced $1500 support to around $1480 for the Friday close, and silver was on the window-ledge at $26. When markets opened on Monday, it was a massacre. I had sold half my swing portion in each metal through the weekend (I trade on Bullionvault, open through the weekend), and was able to re-enter when the worst damage was done. It was not an easy decision at that time to sell half my metal at a loss, but paid off in that instance.
Now here we are again, especially in silver. I take on board Argentus’ caution that this might be a ruse to shake out the weak hands, but as the saying goes, he who fights and runs away, lives to fight another day. Because as soon as one uses ‘courage’ on the trading floor, that emotion thingy is now making the decisions, and I think we all agreed that is a bad thing.
So this weekend, I am off-loading a third of my remaining swing portion. Actually, it takes more courage for a PM bug like me to sell at a time like this, than to sit tight, but the decision is being made by the head. I expect to buy it back later, cheaper. If not, I’ll enjoy the gain on my remaining swing portion, and my phys.
So, emotions apart, and looking at things objectively, this is what I see.
Gold has broken support, and a further grinding bear cycle phase may now begin. It may have some relief rallies, but the downside could be very bad.
Oil has crashed, weak demand is a factor, the signs of deflation are numerous. Metals will be hit too in the short term.
The JPY:USD cross, position and trend, is telling us something.
And silver?
Ah silver. Horizontal support is being broken in each of the three currencies that I trade in. here are some stats per kilo (and in ounces for the dollar stats) with the percentage decline from here, penciled in:
Dollars: currently $520 / $16.16, I see the next horizontal support at $14.94 (8%), $12:47 (23%) and then $8.88 (45%).
Pounds: currently £324/kilo, I see next horizontal support at £301 (7%) and £249 (23%)
Euro: currently 415/kg, I see next horizontal support at 373 (10%) and 347 (16%).
So, silver horizontal support in these three currencies, by my reckoning, ranges between a 7% and a 10% fall. If any of these currencies comprise the active support, then the story is the same; around an 8% fall from here. Note that at the moment, in both silver and gold, we are suspended in air, between the support we just broke, and the next chart support somewhere below. This is not a minor detail!
And if that support gives way, then watch out below. Then we get our tens of percents.
To conclude, we all make our investment decisions based on our personal circumstances and expectations. Till now, I have been largely all-in, but I am taking some chips off the table, just in case. I am fully aware that right now might be a major buying opportunity, but it might also be the time to stand aside. That’s risk everybody, it cuts both ways. We have been brutally taught again and again these last three years, that fundamentals and logic do not drive today’s markets.
Whatever stance people take at this time, good luck to all, and never be all out of cash.