Precious Bane

Scary scenario for anyone with a big gold holding

The tension continues as losses accumulate, mostly in gold and silver.

I've made the judgement that the odds for a downturn in the market have shortened. I have added to my short positions. But the market continues to edge upward, nudging that resistance line. I have not lost much but I must be ready to move if resistance is broken. This is still very much on the cards. You may remember that I warned myself that a false downward break out can signal a real break  out at the other end of the range. I must remain vigilant.

I do not short individual shares. It's too hard to do from a practical perspective. Instead I buy shorts on the markets: SUK2 in the UK, and DXD and SDS in the US.

My big problem is how to manage losses in gold and silver. This is my hedge against real calamity in the world economy. The safe refuge. It represents 21% of my portfolio as of last night. This means any pull back in price really hurts and I don't have a strategy for managing this. (Ideas gratefully received.)

Silver presents the same problems

I am always on edge after making a big gain and yesterday I panicked as I saw gold and silver start to eat into my hard won profits. So I sold half my gold and a third of my silver - held in my UK account. Then in the evening gold and silver started to recover and, again in panic, I bought some back in the US market. I missed most of the recovery. The problem is that these two markets are so hard to read. Look at that gold chart. We're in the middle of a channel so the price could go either way. There is a diagonal resistance line that has been in place for a month. A support line which held for a week has just been broken - it was that move that made me sell. The volume spike on the last big rise is worrying. None of this would be too bad if my holdings were not so great. The major support level is 3% below where we are now - and some of my holdings are leveraged - so a fall to that level would hurt badly.

Silver is almost as bad. Its hard to know what to do.

Portfolio position at present is: gold and silver 21%, commodity 5%, equity 2%, shorts 12%, cash 61%.