Even though I focus here on SPX and all the stuff inside I have posted and noted a whole lot about gold.
I would like to think for a finance muggle with a laptop I have been pretty accurate on gold.
If I may be so bold as to highlight this note I sent out 7 days ago…
Well 7days and 7% hits kinda nice.
Now here is the hard part. I have not been long gold in the run as I should have been since ~ 4th August as my system says to be…
I have been taking a step back and focusing on the day job.
That’s what makes this post awkward. I would have been long and feeling pretty good about myself, but now staring at this retracement and through gritted teeth saying “its not broke trend yet”.
So it was this sexy chart that prompted the note for people to be cautious. What made this one different from all those yellow arrows is the run up wasn’t being driven by options.
Remember that on that run higher into the start of this year realised volatility was increasing which meant as the price was rising the more “European” style trend followers would have been reducing their position sizes in line with increasing volatility.
Eventually all the fancy vol traders that bought cheap deep OTM calls 3-4 years prior on gold the gamma was exhausted. The sheep had all piled in. The CTAs were selling on the way up, and the day traders had other shiny’s.
Where are we now?
In terms of the recent move this momentum thrust has been strong but over the short term it is kinda given all it can give.
If we look at a longer timeframe version of our normal detrended chart a similar timeframe to my self congratulatory chart..
The recent move has been somewhat of a wimper. In fact it looks a lot like 2021.
If that move were to be repeated it would put us somewhere in the middle of June 2021.
Using that analogue we could see $4000 using GC or £366 on GLD.
Our wiggly lines have bottomed and started turning up we could see these levels as we move forward in time but “prices may vary”.
Who knows?
I certainly don’t. All this is just a guide to help us be a bit less wrong.
Gold(en) Opportunity
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