First a personal disclaimer – I am short gold and have been for sometime. However, something about the current market action intrigues me and my interest is catalysed by the comments that surround gold from both bulls and bears. Of late bearish articles regarding gold have been in the ascendency with predictions that gold might fall to $660. Everyone knows my view of predictions – so I will only say this once. Anyone who makes a prediction about where an instrument is going clearly has no real idea of how complex markets are, nor how dim they look when it doesn’t work out. Trading is a business of reaction not prediction. Pundits who make predictions in my experience generally dont make any money.
Nonetheless, if you look at the chart below you see something interesting.
You can see the great gold bull market that lasted from 2008 to late 2011, followed by congestion and then the beginning of the fall. This is all wonderful to look at in hindsight and think to yourself if I only I had really loaded up but that is simply the nostalgia of trading. What interests me is the current period. My assumption was that if gold punched through the low of around $1180 then this would see an acceleration in the downtrend and it would give me an opportunity to load up. This clearly has not happened, gold remains steadfastly range bound just below this level. This combined with the overwhelmingly bearish nature of commentary surrounding gold is one of those things that makes me go..MMMMMMMM.
So if everyone says something should be going down but it is not then what does this mean. To my way of thinking it simply reconfirms the nature of price being the ultimate narrative, it does not matter what your story is, nor how well you think you tell it. Price is the only thing that counts.