Gold and silver dive

Just a little patience was needed

I was out to lunch yesterday so little opportunity to fiddle. Nevertheless I did have time to ditch the gold and silver that I had foolishly repurchased, before too much damage had been done. And my US index shorts made money. I still have not bought back my UK index short position.

The market is now well on its way down the channel. I have predicted successfully but, as before, I have failed to capitalise on my prediction properly.

Is this capitulation in gold?

The big issue is the precious metal drama. All the support lines have been broken in a huge dive for both metals. Their tether to the stock markets holds but yesterday it was exaggerated. However (and I say this with trepidation for it is a huge temptation for me to jump back on board) yesterday's price movement has all the hallmarks of a capitulation. A very sharp drop (over 3% for both metals) on a spike in volume. A capitulation is the moment when the last of the determined holders give up their positions and admit defeat to the relentless pressure of bear action. No more sellers left in the market and buying pressure can now push the price higher. Those who got out of the market early and who are not licking their wounds can grab the opportunity to buy cheap. The rest, who took maximum losses, will be frightened to re-enter the market and will miss the boat.

And in silver?

The price fall has continued overnight. I bit more hand sitting and then I will be back in. I have not done well out of this slide but others have done much worse.