marceau

It's risky, I know. But if gold shows strength over $905 then silver will test for a breakout. That means a move to $18 by my reckoning. I'm only risking a small part of today's profits on this one.

I don't think it matters too much, gold is leading today, not following. It will still pay to be vigilant, the downside risk is still there, I'm going to wait for the dust to settle before makng any more trades.

That's why I've bought silver here, I think the chances of a test of $18 are quite high. I have no intention of holding on to it beyond $17.90, too much risk.

Very much depends how fast we get there and what the charts look like at the time. My current thinking would be to hold on, a sell-off at $950 is quite obvious and would be an ideal opportunity for the market to dump some undercommitted longs. First things first, let's get through $910. Until that happens this could be a bull trap.

Just re-entered silver at $17.623 for a speculative short term punt. I'll wait until gold has come closer to $900 again before trying any more longs for the time being.

Good work. I've covered all of my longs now for some very good profits. I'll look to re-enter below $905 and $17.65, but again only with small positions. Until we have broken $910 spot then it's still too early to be counting any chickens.

Great move in silver, looks set to test $18 today.

Good move by gold there, just broke through $900, silver looks set up for a big rally. If gold can get past $910 this correction is dead. Edit: I broke with my normal rules and bought the breakout there, lets hope it doesn't come back and bite me.

I'm pretty much in agreement here. If it pulls back I will add at $885, $880 and buy big at $875. I think we're at least going to get a test of $910 over the next week. I'll still be keeping half of my trading fund as dry powder though, just in case we do get down to $850 again.

Gold breaking through $894 there has greatly lessened the risks to the downside. At least now if we do drop back we're not set up for a large fall. If it can cross $900 again today gold will be well set up for a break out and rally. I'm tempted to go long again. Edit: I haven't gone long, I'll wait and see before entering any position.

It looks well set up to rally straight up through $910 all the way to $950. But I see distinct danger here as well, gold has made lower highs on repeated attempts at $900-910 and we're right at the top of the power downtrend line which has been in place from the start of this correction. If we don't get through $894 today then I'm afraid we could be in for another $30 smackdown or worse. Risk/reward is too high for me to trade at the moment, if I take a position it will be a small one at the $886 level. Edit: Looks like gold just broke down. I wouldn't enter long today, the risk is too great.

Seems to be a big tussle going on around the $887 mark, gold is jumping about all over the place. I think we're due a big move but I've no idea in which direction, so I'm staying out for the time being.

Oh and I cleared my long from yesterday at $893. I'll probably buy again at the next decent pullback.

Interesting discussion here this morning and I agree with many of the points being made. What is clear to me from the various governement talking heads I have seen and heard over the last few days is that they really haven't grasped the basics of this situation and are planning to rely on old 'model' thinking to provide a generic solution to a unique problem. In other words they don't have a clue about the causes or effects of this crisis and therefore can't hope to be effective in fighting it. The basic reality is that there is no more growth to be wrung out of the western economies and there hasn't been for the last decade or so. To return to normality and accept that fact means massive economic pain on an unprecedented scale, a cut in living standards not seen in many generations and the death of the credit market. Recovery of this situation is not possible, THERE IS NO GROWTH. There are therefore only two possible avenues that governements will take, pump it up further or let it pop. There is no way they will ever let it pop without losing their positions of power, so they will either inflate away merrily and attempt to disguise it, or they will sit on their hands and hope it all just goes away. In the US I vote for the former, in the even more clueless UK I vote for the latter. That means a lot more inflation in both countries in my opinion. As for wage inflation or the money supply getting through to Joe Six Pack, I've argued before that it doesn't matter and I still think that this is the case. Yes, inflation will move more quickly once more liquidity hits the hands of the western masses, but it won't stop inflation if it doesn't get through. The bulk of our price spirals will be generated by overseas markets or by big money players, neither of which will be affected by, or give two hoots about, the western populace. Either way this ends very badly for us and stays very bad for a long, long time.

Yes, that is correct. The only thing I will add is that although the core positions are generally in less risky areas, some can be higher risk, but have moved well into profitability. Obviously those new to the market won't have that protection. The whole process of gold investing is made far easier simply by having been in the market for longer. It will take some monumental disaster to take gold back to last year's levels, let alone the levels of 4/5/6 years ago.

In this case I'm quite bullish on the immediate future for gold, but the chart risk is still quite high, so I'm not going to place too much money into the short term market. I will most probably exit this position on the first test of $900, dependant on how the charts look when we get there. If we drop from here I will probably exit just below support at $880, so the risk/reward is quite good and the size of the position means a very small loss. That's how I trade, playing risk/reward and trying to stick as close as possible to support/resistance levels. This case probably isn't the best example, as I'm not very close to a key support level, but I've seen this morning's chart action so many times in the past, and in the majority of cases they've led to more gains within 24 hours. If I'd been watching the market when the drop occured I would have been in at the $876 level, and would be holding now for $900, however I was away from the screen when it happened, so I'm taking a bigger risk at $884. As for the chart risk, I always find it more profitable playing trends rather than trying to fight against the tide. A good example is during the first month of the correction, where the downtrend was clear and it was quite obvious that the recovery back to $950 was just a bounce. During that period I took out almost no long positions and made some very careful shorts, all of which paid off quite well. You may remember me banging on like some kind of doomster around then, well that was why. The trend wasn't supportive of price rises and the shorters made by far the easier money. At the moment we're in limbo, from a chart perspective, range bound between $850 and $910 and with all kinds of conflicting news. The volatility is high and the market is shaking off both longs and shorts in preparation for the beginning of another trend. The start of the trend will most likely be marked by a very large move, so if you get caught with too big a position on the wrong side of the trade you're going to get hurt and have no chance of recovery. The picture will become a whole lot clearer once we've broken $900 and particularly $910, as we will have broken out of the downtrend that has been in place since the start of the correction and the charts will leave gold free to rally. That will be the time to start buying the dips in earnest, as the trend will support your position and be likely to erase your mistakes. Remember there is still an awful lot of money to be made between $910 and $1000, and with a lot less risk than there is at present. Buying NY trading dips during an established gold uptrend is the single easiest way to make money in this market. As for stops I tend to be a bit more free and easy with them than I should be, which does sometime catch me out. The entry point is key for stops, if you have waited for a good pullback then generally you can afford to be a bit tighter with them. But if you're playing momentum you have to leave them loose or the market will just knock them out. For this reason I don't generally 'chase' gold or silver with momentum trades - hence the adage 'don't buy strength'. If you don't have tight stop discipline you may well make lots of winning trades, but the losses you make will be so big that they'll wipe out your profits and more. Believe me, I've learned this the hard way. There are times of course when you just don't see it coming, like the drop from $1000, I took some nasty losses on that, but stops and a bit of good fortune (I had exited a number of trades in order to move some money around), saved me from a catastrophic loss. All of this of course only applies to trading, for buy and hold core positions the time to buy is now, just start drip feeding it in at any price below $900. If you truly believe in the gold bull then the worst case is that we take a year or so to get back to the highs. A bit long, but I hope this was helpful. The key is to develop a style that works for you and stick to your own rules. You'd be surprised how often the basics work in the gold market, being greedy while others are fearful and fearful while others are greedy can work wonders, it's just remembering this fact when you're getting caught up in the action that's the hard part.

Core position - Long term positions in physical gold and gold mining shares which I have no intention of selling or trading. Physical - Exactly what it says on the tin, physical holdings of gold and silver. Again, not for trading but long term holding. Represents a comparatively small percentage of my position as I mostly hold mining equities. The rest of my interest in the gold market is for trading on a more frequent basis, using instruments such as options or even CFDs.

I notice we had the traditional NY trading dump today, nothing new there, very predictable. What I liked was the fact that it seemed to run into a wall of buyers at varying support levels, the result of which has been a nice 'v' recovery. Looks very bullish to me, so I've added a small long.

Further to my last post, it's been a good day in gold (and a fantastic day in silver) so far, but until we close above $910 I'm going to stay vigilant and not take too many risks. This market has been fooling both bears and bulls for the last few weeks, and has made some startling 'bucking bronco' moves to shake off undercommitted and undercapitalised investors. The range $850 - $910 won't last forever, and I'm pretty sure we'll breakout of it to the upside. But to be safe I'd rather be in from the lower end of the range than the higher end, so I'm holding off until we either drop back down or break above $910 decisively. If gold does break out and I miss it, I still have my core positions to console me.

Indeed. Shorterz must have felt the pain on that one. I think we'll get a lull now before an earnest attempt at the $900 / $17.50 resistance levels later today. Normally I wouldn't buy strength and would wait for a $10-15 pullback before adding, but I have a feeling we're about to go parabolic again. I'm off to do some thinking about how much I'm prepared to risk.

Resistance will (again) be at $896 then $900. If we get through the shorterz are going to be incinerated. Edit: Silver moving up on its own again. Oil going for the highs. Very promising stuff.

He'll be back though. He's just jetpacking off to his secret volcano-base to plan more 'free-market' manipulation. Probably involving lasers this time.

Not just that, did you see the euro inflation report? Highest in 16 years. Instantly put the notion of the Fed raising rates more quickly than the ECB in the dustbin. Looks like the dollar won't be appreciating against the euro after all.

Gold at important resistance now, if it can break through to $885 it will probably head back to $900 today. Edit: Gold just cleared it, I think we're in for a good rally here if it can hold.

Nice rally so far in gold today, it will be interesting to see how the market reacts if we get the usual NY trading 'smackdown'. If they see it as a predictable move and buy the dip, then I think we're in for a substantial rally over the next few days. If not, it's still anyone's guess but I'm siding with a rally.