All that is gold does not glister

Silver 230911

Both gold and silver fell through support levels in a spectacular manner. I show the silver chart because it is more dramatic. But go back a few days and you will see that the potential double top is now confirmed for gold. I have scurried to drop my holdings.
I have also closed out my index short position with a super profit. I may reopen a small position before the US market closes to take advantage of any bad news that comes out over the weekend. But I do have to be fearful of good news.
I have a dear friend who is keen on the more explosive bits of the stock market and he has tempted me away from the straight and narrow path. He has introduced me to some derivatives called covered warrants. They can be bought like shares and can be held in a SIPP. Society Generale, a French bank issues a slew of them and I have popped into the bookies and bought one whose code is SN13. It expires in the middle of next year and unless the price of gold goes up it expires worthless. In the mean time its price magnifies the movement in the price of gold massively. If the price of gold reaches $2000 by mid December good old SN13 will rise in price by 93%. My friend was very excited when he saw this figure. I prefer to think first about how much I could lose and bought a quantity where I could live with losing all my money. I see it as an experiment from which I can learn. So far it has taught me that you can lose a lot of money quite fast if you really want to.

Out to lunch today in the Oxfordshire Cotswolds. Lunch was cooked for us by a lovely 94 year old lady who managed to produce a roast meal using only a microwave. An astonishing feat. Her son and daughter have disconnected her cooker because of the number of fires that it started.
Being out meant that I did not watch the gold price fall. But I pulled out when I phoned to check on the American market open. I then discovered something was amiss. My cash holdings are now up to 97% with just a few petty holdings: in COW, those warrants, and a position that I have held for far too long shorting US treasuries. I will keep a sharp eye out all evening for a possible change in direction and will act accordingly.