Never count your chickens

Are we seeing a repeat or is this the beginning of a Santa Clause rally?

After Thursday's sharp fall, Friday's price action recovered all of that ground. It has happened before (the sharp drop on November 9th was followed by a two day rally on the 10th and 11th - and the 11th was a Friday too). But I must also remind myself that people speak of a Santa Clause rally. A price run up towards Christmas as bankers fill their stockings to ensure a good annual bonus. So I must be ready to dump those shorts and buy stocks.

I promised you a silver analysis after yesterday's gold. I have closed off lots of gold positions and have only a sprinkling of silver now. I must be ready to reverse those positions too in case there is a precious metal's rally. 

As I explained yesterday - instead of acting as a hedge gold is now moving with the market.

Silver's a lot like gold

It turns out that at the same time as gold began to follow the market so did silver, except that silver took a 30% tumble first. So I will now be watching how this relationship fares to manage my precious metals stake. This blog is helping me to see a bit more clearly.

My trading year follows the financial year so I have until April to make a profit. At this moment I am 5.6% down, compared with the market (I use the FTSE as my benchmark - always have since I used to trade UK shares exclusively) which has fallen by 8%. Just a few days ago the gap in my favour was much larger. But with three and a half months to go I am quietly optimistic.