The Two Best Calls Ever on a Gold Correction
The loose cannons screeching about “Comex is going to Default” and “Crimex” have just led their flock to the shearing shed one more time. In the third week of January both the XAU and HUI began a moonshot, the 2nd biggest rally for the indexes ever measured.
If you are one of those investors with at least an 'over the room temperature IQ’ and you understand that markets are like pendulums - they swing from one extreme to another - you would view the incredible rocket higher as an opportunity to take some money off the table. I may have mentioned that before. All of a week ago. It was good advice and timely.
Meanwhile at the meeting of the flat earth society, the fools were telling their flock that the commercials were about to get fried. But why? At market bottoms the strong hands buy from the weak hands. At tops - even intermediate tops - the weak hands buy from the strong hands. The weak hands are always the last guys to hop on the train.
Commercials don’t drive markets, speculators do. Commercials have to cover all the contracts the specs want to enter, not the other way around. But the number of people utterly clueless about how commodity markets work is quite remarkable. The spec longs and commercial shorts have hit a new record high. And we know the last people to buy are the weakest of weak hands. So they bail out at the first sign of distress. They have been bailing for days.
I wrote three weeks ago:-
I’ll stand by that. Gann Global's James Flanagan was saying three weeks ago that we were on the verge of an important correction. The high for gold was three days later. We have had a swishy-washy market for three weeks. This correction has been one of the most predicted corrections in history. Everyone who understood anything about commodity markets understood that new record longs from the weakest of the weak hands was a screaming signal to get out.
Naturally the herd wants to follow the rest of the sheep following the fools who have no clue as to how commodity markets work. All because they really need that $119 a year. When they start preaching and you love those words, remember the point I tried to make in my book: Nobody Knows Anything. Anyone wanting your money has an agenda and it is rarely to make you money. They want to feed your fantasies, tell you what you want to hear. If you are dumb enough to listen to them, you are certainly dumb enough to send them money.
Click here now to read this PDF from James Flanagan.