It appears we are on the cusp of a change in the market flow, or perhaps we will continue the range-bound trading we have seen recently. How’s that for “die-hard” conviction? These uncertain days warrant this kind of conviction. Despite which way we go tomorrow, one thing is true – corporate earnings will have much to do with what the market does …
Last week, I asked about a company called optonline.com. I was receiving a number of similar questions from the same address but with a different name attached. I received an answer from a reader that explained the whole deal. I would like to thank that reader for clarifying the issue for me, and I want him to know that I appreciate his contributions.
Today, I have another interesting question, which, as usual, implies more than the question itself.
I am interested in a daily conversations about gold trading. Gold is going up and down constantly, so it is quite hard to define floor or tops. What do you think about the future of gold?
This reader’s first sentence is a request to all of you. The gold arena provides numerous trading possibilities and opportunities. A “daily conversation” about gold trading would both be interesting and helpful for all of us.
His second sentence leads right into a reality for all of us and that is that the movement in gold is simply a reflection of the uncertainty in the markets. As my opening implies, expect this to continue for a time. So, if you are trading gold, defining tops and bottoms is a difficult task indeed. Perhaps a better strategy is to trade what you believe. If you believe gold is going higher, or much higher, because of the global economic and fiscal issues, then you buy long and wait for the economic collapse. If you believe gold is overbought, overcrowded, and a bubble trade, short it and wait for the bubble to burst. If you believe gold will trade up and down for a while, forget about “defining” tops and bottoms. Look for pivot points and trade tightly within those margins.
As to my opinion about where gold is going … In fact, I believe those who seriously predict gold will go to $5,000 in 18 months, or those who predict the bubble will burst soon driving the price back to the $700 level are delusional. These folks actually believe in their ability to predict the future, which is delusional. The truth is that it could go either way, which makes it a flip of the coin. For those who subscribe to the “oracles” out there, I would like you to look at their whole and complete record of predictions. The fact is that you will always hear about this person or that person who accurately predicted this or that in the market, but what you don’t hear is how many times this or that person incorrectly predicted future market movement.
Speculation is a fun exercise. I indulge in the practice in the most general way, so my optimistic view of the broad market tells me gold is an overcrowded trade, and anyone who has done this for a while clearly understands that when the crowd gets bored, they leave the show.
Trade in the day; invest in your life …
