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The Swinging Pendulum of the Gold Market: How to Trade the Middle
I recently observed the pendulum clock on my fireplace mantel and noticed the similarities between the recent price action in the gold market and the back and forth motion of the pendulum. Both have pivots, mid points, full and half swings, time and length. Pendulum swings in the markets are usually based on opinions. When talking about opinions, the famous author Arthur Schopenhauer stated it best: “Opinion is like a pendulum and obeys the same law. If it goes past the centre of gravity on one side, it must go a like distance on the other; and it is only…
14Nov2008 | Brewer Investment Group | Comments Off | ContinuedGold Futures Dirty Secret (Part 2)
We ended the first part of this two part series with an unanswered question: Why has physical supply dried up now?
The answer to that question lies in the two vehicles that have made the gold carry trade possible. This is another issue that I’ve alluded to in prior issues of B&B, but I would again like to briefly explain this notion.
Gold Carry Trade
The gold carry trade takes two forms. The first is enacted by the central banks of the world. Essentially the banks use the futures market to pre-sell gold. This is a beautiful deal for the central banks when…
4Sep2008 | Oxbury Research | Comments Off | Continued
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