Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold, Hoping for a Break

Commodities / Gold and Silver 2010 Jul 27, 2010 - 12:53 PM GMT

By: Toby_Connor

Commodities Best Financial Markets Analysis ArticleI want to discuss something that came up on the blog Friday.  An anonymous poster hinted that we were going to see more gold weakness in the days ahead because big money had to sell their positions.  Folks, big smart money traders don’t sell into weakness.  These kinds of investors don’t think like the typical retail investor who is forever trying to avoid draw downs.  Big money investors take positions based on fundamentals and then they continually buy dips until the fundamentals reverse.  The fundamentals haven’t reversed for gold so I’m confident in saying that smart money isn’t selling its gold, it is using this dip to accumulate.


With that being said, there are times when big money will sell into the market and it is why so often technical analysis, as it’s used by retail traders, doesn’t work.  They sell into the market in order to accumulate positions.  Let me explain.

When a large fund wants to buy, it can’t just simply start buying stock like you or I would.  Doing so would run the market up causing them to fill at higher and higher prices.  Unlike the average retail trader, smart money attempts to buy into weakness and sell into strength.  (Buy low, sell high).  In order to buy in the kind of size they need without moving the market against themselves, a large trader needs very liquid conditions.  Ask yourself, when do those kind of conditions exist?  They happen when markets break technical levels.

If big money is selling it is because it is trying to push the market below a significant technical level so all the technicians will puke up their shares to him.  By running an important technical level it can cause a ton of sell stops to activate, allowing it to accumulate a large position without moving the market against itself in the process.  We saw this very thing happen in the oil market recently and also in February as gold bottomed. 


Technical traders wrongly assume these breaks are continuation patterns but the reality is that very often they are just smart money “playing” the technical crowd so they can enter large positions.  The key to watch for is an immediate reversal of a technical break.  When that happens you know there was someone in the market buying when everyone else was selling.  9 times out of 10 it was smart money.

At the moment everyone is jumping on the bear side for gold.  Remember we saw this exact same sentiment in the stock market 3 weeks ago.  I knew the bears were going to be wrong simply because the market was way too late in the intermediate cycle for there to be enough time left for a significant decline.

The gold bears are going to be wrong also and for the exact same reason.  It is just too late in the intermediate cycle for there to be enough time left for anything other than a minor decline.

I'm now waiting and hoping for a break of the May pivot.  I want to play that break, if it comes, like a smart money trader.  That means I want to buy into the break instead of panic sell like most dumb money retail traders will invariably do.

The reason, of course, is that gold is still in a secular bull market.  In bull markets you buy dips.

Also, the dollar, with the break below 82 this morning, is starting to show signs that it is now in the clutches of the 3 year cycle decline.  Every Gold C-wave so far in this 10 year bull market has corresponded to a major leg down in the dollar.  I'm confident this C-wave will inversely track the dollar’s move into that major cycle low due early next year.

Sentiment wise, gold has now reached levels more bearish than at the February bottom.  That means gold is at risk of running out of sellers.

And finally, and most importantly it's just simply too late in the intermediate cycle for gold to have enough time for a significant drop.  This is the 25th week of the cycle and the intermediate cycle rarely lasts more than 25 weeks.  That puts the odds heavily in favor of a major bottom either sometime this week or next.  And don't forget, gold is about to move into the strong demand season.  Like clockwork, gold invariably puts in a major bottom in July or August before the run up into the strong fall season.

The bears are going to be wrong again.

Toby Connor
Gold Scents  

GoldScents is a financial blog focused on the analysis of the stock market and the secular gold bull market.   Subscriptions to the premium service includes a daily and weekend market update emailed to subscribers.  If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions,email Toby.

© 2010 Copyright Toby Connor - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in