In as we speak’s Cash Morning, we contemplate yesterday’s “correction” in gold and silver.

Maybe correction just isn’t the only option of phrase. 

“Annihilation”, “destruction”, “extinction” all spring to thoughts as properly.

Gold and silver, as a Norwegian soccer commentator famously mentioned, “took one hell of a beating”.

So what occurs now?

A brutal if helpful studying expertise for first-time traders in valuable metals

Let’s run among the numbers.

Gold’s peak got here final Thursday at $2,075/oz, retested on Friday. In a single day it touched $1,862. A lot of the promoting got here on Monday.

That’s greater than $200-worth of positive factors given again in precisely 24 hours.

I’d be extra involved if it weren’t for the truth that, so frothy was this market, we’re solely again on the ranges we noticed a few weeks in the past in late July.

Talking of frothy, let’s look now at silver. My ambivalence in direction of the metallic of the moon, the metallic of Monday, is properly documented on these pages and the motion of the final month, I feel, exemplifies why I really feel such ambivalence.

Friday we had been touching $30. Come Tuesday evening, we fell beneath $24. A 20% hit in as many hours. My sympathies specifically to anybody utilizing leverage which, dangerous although it’s, all the time appears to occur with silver. It sucks you in like that.

But when I’d mentioned to a silver dealer in early July, when silver was $18, that come August silver might be $25, he would have bitten your hand off. But right here we’re as we speak with silver at $25 – a full 40% greater than it was a month in the past – and most longs might be nursing losses. 

A merciless mistress certainly.

A minor detour for these enthusiastic about medieval chemistry

By the best way – what was I speaking about once I mentioned the metallic of the moon? Right here’s a bit little bit of trivia for you.

At the moment we all know of 90 metals or extra. Many you’ve in all probability by no means heard of, not to mention touched or seen. Issues like cesium, nihonium, flerovium, moscovium, livermorium, yttrium or zirconium.

Till the thirteenth century there have been simply seven identified metals – gold, silver, copper, tin, lead, iron, and mercury. 

There have been additionally solely seven identified celestial our bodies – the solar, the moon, Mars, Mercury, Jupiter, Venus and Saturn. Every metallic got here to be related to a celestial physique – gold with the solar, silver with the moon, iron with Mars, and so forth.

There are seven days of the week too, and so did every metallic come to be related to a day. Gold’s day, in fact, was Sunday, and silver’s was Monday. 

At the moment, Wednesday, is Mercury day. Or because the French name it, mercredi.

Anyway again to the nitty gritty.

Is that it for valuable metals? 

Is that this it? Is that this the top of the bull market?

It could be, however I doubt it. 

At this stage, I nonetheless favour the “wholesome correction in an ongoing bull market” idea, one which washes out the surplus and cleans issues up. 

The identical “printing cash like there’s no tomorrow” circumstances that had been in place final week, are nonetheless there as we speak. Solely final evening I ate out to assist out with a few of it.

Gold and silver had been simply too frothy. I had grizzled veterans, who ought to know higher, on the telephone telling me, “this time it’s totally different”. Cash had labored its method all the best way down the meals chain: beginning with gold, then to the big caps, from there to the mid- and tiny-caps. Doubles and triples had been occurring on a weekly foundation. Heck when the tiny-caps are rising you already know one thing’s up.

Then the sister metals platinum and, particularly, silver made a parabolic transfer – silver’s parabolic strikes all the time come late within the cycle. 

These previous couple of months have been as typical a valuable metals increase cycle as you’ll ever see.

Over the subsequent few weeks we are able to count on a rally – that appears prefer it has already began – adopted by one other nasty sell-off. Then we’ll get some smaller rallies and sell-offs and the market will step by step consolidate.

Then we wish to see the market fall asleep for a number of months and be uninteresting and sideways-y, so that everybody forgets about it and loses curiosity.

What I actually don’t wish to see on this primary bounce is gold and silver going again as much as their highs of final week, re-testing them and failing. If that’s the case, I would assessment and declare that the bull market is over. 

That motion can be all too just like 2011 when the final nice bull market ended, and some of the vicious bear markets within the historical past of man there adopted.

With gold at $2,070 final week, I used to be in search of a correction again to $1,920 – the previous excessive. I wished to see that stage re-tested and kissed goodbye. That method the previous excessive – resistance – would turn out to be assist. However yesterday it went via that stage prefer it wasn’t there.

So we revise our targets. I’d prefer to see us finally make our method again to the $1,780-$1,800 stage and for gold to search out assist there. That may be a agency basis for the subsequent leg up.

Both method we now have some months of consolidation to get via.

There may be all the time the opportunity of course that gold and silver rebound and go straight via their highs of final week to above and past. 

However I discover that unlikely.

Daylight Robbery – How Tax Shaped The Past And Will Change The Future is out there at Amazon and all good bookstores with the audiobook, learn by Dominic, on Audible and elsewhere.