We’re seeing a major trend reversal in metals from down to up.
| Metals Analysis Pages |
Chart Defined Trend | Overall Composite |
| Gold | Up | Buy |
| Silver | Down | Sell |
| Platinum | Up | Buy |
| Copper | Up | Hold |
| Palladium | Up | Buy |
| News, Last hour | Last 24 hours | Last week |
Every time we see a major trend change in metals sideways volatility engages and long-term trend following programs experience extraordinary high losses.
For accounts profitable by at least $15,000 per trading unit I’d with the program as I expect recovery but feel it may get worse before it get’s better.
For accounts up less than $15,000 per trading unit I would stand aside until we have more defined trends, although this program is within it’s defined risk parameters risk it may get worse by $3,000 to $6,000 before it gets better.
For the accounts on the sidelines I will contact everyone when conditions improve and we have a better return on risk.
The Problem
During this 80 days gold moved from $1,223.10 to $1,222.40
From the 3rd of August 2018 to this morning 3 December 2018 gold had an overall change from $1,223.10 to $1,222.40 down $0.70 or $70.00 dollars per 100 ounce contract, contract value at $1,22.40 = $122,240
The daily ranges over this same period have averaged $12.59, or $1,259 per contract, the smallest daily range was $6.10 or $610 per contract the largest $35.30 or $3,530 per contract.
This Type of price action maybe ideal for range trade programs but it can be lethal for long term trend trading strategies, click here for historical price data.
The bad news is we’re currently in a deep draw-down of ($10,760.72) drawdown this puts the Gold collar ATA ($1,465.72) from the previous worst case drawdown of ($12,276).
One ray of sunshine is this gold program has survived and recovered from many a deep drawdown over the last decade.
Previous drawdowns and recovery periods
March 2008 intra-month drawdown ($8,284) month on month drawdown ($6,313) recovery to new high April 2008
August -September 2009 intra-month drawdown ($9,370) month on month ($7,034) recovery to new high equity November 2009
May – June 2010 intra-month drawdown ($10,974) month on month drawdown ($8,299), recovery to new high equity February 2011.
August 2011 intra-month drawdown ($9,951) month on month ($8,066) recovery to new high November 2011.
December 2015 intra-month drawdown ($10,357) month on month ($7,822) recovery to new high June 2016.
August-September 2016 intra-month drawdown ($12,276) month on month drawdown ($10,579) recovery to new high March 2017.
Current intra-month drawdown ($9,345)
For the metals markets I believe price action is cleaning up and the worst of this drawdown is over. We may take out the old ($12,276) but I I believe the maximum worst case scenario will be less than ($16,000).
Technically gold’s long term trend has changed from down to up
Trend confirmation is showing the same with a overall 40% buy.
With what is occurring in the Global Stock Indices this may be the end of the drawdown with flight to quality metals buying fueling the gold and other precious metals markets higher.
Looking at the price action in the S&P I am surprised aggressive share liquidation and precious metals purchases have not already engaged.
Global index analysis links.
| Analysis & Quotes | Chart Defined Trend | Overall Composite |
| S&P 500 | Down | Sell |
| Nasdaq | Down | Sell |
| Euro Stoxx 50 | Down | Sell |
| Euro Stoxx E600 | Down | Sell |
| DAX Index | Down | Sell |
| CAC 40 | Down | Sell |
| Swiss Market Index | Down | Sell |
| Hang Seng Index | Down | Sell |
| Nikkei | Down | Sell |
| ASX 200 Index | Down | Sell |
| FTSE 100 | Down | Sell |
| News Last hour | Last 24 hours | Last week |
I believe we are on the verge of a major market move in metals. This move will be fueled stock, currency and Government debt liquidation.
Deteriorating governmental credibility will further fuel safe haven buying, metals and fueling this program to anther new new high.
For account up more than $15,000 per unit I will maintain discipline, trade with the trend up or down using tight parameters and collars that will define risk on every trade and for the duration of every trading period.
For account up less than $15,000 our automatic risk exit point (-$10,000 from the previous equity high was hit) and position were liquidated, net loss for all trades from previous high ($10,760.72).
For these accounts I will follow standard procedure of standing aside until the trend becomes more defined and notify everyone upon re-entry.
If the volatility in this gold program is too great, please advise and we can downshift to something less aggressive such as the EUR-CHF.
If you have any questions and/or special instructions please contact me anytime.
Regards,
Peter Knight Advisor
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