I sold the rest of my index short positions on the Goldman disappointment this morning, and flattened out the metals longs into the close.
Silver is a dreadnought and I would find it hard to bet against it even at this lofty level. Gold is running into stiff resistance here in the 1500 to 1510 level. It tagged the short term measuring objective on our chart today. Whether it will higher and break through before consolidating its gains I cannot say.
A word about objectives on the chart.
Someone wrote in taking me to task a bit for 'limiting my gold target to 1500' whereas some other fellow put it at 1520 based on a little inverse H&S and why don't I show that, the implication being that I was being stingy.
First of all, the objective on the chart is pretty clear, a range from 1500 to 1510. I drew both lines as a range, and labeled the lowest one as the 'minimum. It obviously depends on how you measure the head to the neckline. I was not sure so I showed the range as a 'slop' factor.
An objective from a classic chart formation is a MINIMUM measuring objective, not a limitation. This is basic charting. The minimum has been met. That does not mean I am saying that's it, pack it up, we're done.
Second, I even drew the line down from the neckline and to the head on the little inverse H&S that forms the right shoulder of the big inverse H&S that measures up to 1590. And then I drew the same line up from the neckline to 1510. So I show the work. The measure from the head to the neckline is roughly the objective for a clean breakout from the neckline. That is how these things work. I did not put H, R and L labels on it because then the chart gets too busy. And the biggest factor for me are the trendlines.
I added something that looks like a trendline on silver. Its going straight up here which makes even me edgy, but that's what is happening, a massive short squeeze. There is a lot of pain on that chart. Try not to add to it.
I will most likely not sell any bullion, and at most hedge it in the event of a decline that breaks a key trendline by either shorting something or buying an inverse ETF.. But that is what seems to be appropriate for me. There is too much 'friction' in selling bullion to do it frequently. The problem with selling bullion is that it is very hard to make oneself buy back in.
Some guys make a career out of taking calls after big moves, saying down if it was up, and up if it was down. Some of them word their forecasts such that they take both sides. It's not that they make any money doing this, but odds are decent they will be right half the time, and most people will forget the times they were wrong, and they certainly won't remind you.
Most of the time it's an ego thing. Trying to recapture a golden moment when they were lucky and got it right. That's a tough addiction because you don't even see it; self-delusion is a powerful drug. But they talk down to everyone else, those other dumb sheeple, because that's how they get their kicks, on Route 66.
I was fortunate. I got really lucky once, selling out a huge long position around the top of the tech bubble, and then going short and riding it almost to the bottom. And I can definitely see where that might have gone to my head. But God in His tender mercy had the market just beat the living crap out of me for almost two years in the run up to the housing bubble, as I was incredulous that the Fed would keep such a obviously reckless behaviour going. And I was wrong. So my humility was assured.
And I learned from that, and am back ahead of the game. Every speculator has to go through this, the big hit, the bloody beating, and have their teeth handed to them, at some time or another, before they are well seasoned. The trick is to remain standing and not lose your entire stake, whether it be stocks or even cards. Life is a school of probabilities, and everyone must learn. Most traders lie and will never discuss their losses, but if they are any good, they are there.
But I know a lot of guys who made big bucks in the bubbles who fell in love with themselves, and have never shaken the need to succeed, the euphoria of winning, even yet. But most of them go broke one way or the other, either monetarily or morally. And when the going gets tough, they can get rather creepy. They are perfect, but they are not doing well, so someone must be out to get them, pulling them down. That never ends well.
Silver will let us know when it is done for the time being. That does not appear to be yet, but I wonder if we are not close.
