Hello, my friends, first of all, I want to thank you for being a subscriber and support my work and I would like you to know that it’s a great pleasure to share my knowledge with you! I am writing this article because I think we are living a unique opportunity in GOLD, last times we had a similar scenario was:
- 11/2009 – 1380 pips(drop)
- 07/2010 – 860 pips(drop)
- 09/2011 – 3500 pips(drop) in 5 weeks and the all-time high
- 09/2019 – 2320 pips(drop)
So why this moment is historical? Because both in nonspreading open interest and net-positions we never had a scenario like this!
Looks how players were positioned at last crashes and how this moment is the bigger in fuel(open interest magnitude):![]()
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Check how the other crashes were fast:
If you pay closer attention you will see that all these crashes took place at the year-end, and players were building their positions along the previous month since the beginning of the year and also some time of crisis scenario were taking place at the time:
- 2009 – European Debt Crisis
- 2010 – Portuguese financial crisis
- 2011 – Downgrade of America’s credit rating from AAA to AA+ on 6 August 2011, for the first time
- 2011 – Fears European Debt Crisis could spread to Spain and Italy
- 2011 – Black Monday
- 2016 – Brazilian Crisis
- 2016 – Fear of World Recession: here and here
In 2019 what is causing risk is the so-called Trade War. With the United States disrupting every single trading line with tariffs and threats, not forgot to mention how Trump is attacking Fed because of rate cuts he wants so badly, this is causing investors to buy safe assets and Gold is one of them. And if you look at the charts you will realize that there is a seasonal selloff in gold for October months and this is related to Asian buying and Indian wedding season.
Just to stress this point of Indian buying gold, this year the demand for this season is weak and we can see some Indian news source complaining about this. Here and here
It’s also possible to see here, that demand for physical bullion was subdued in major Asian hubs this week as high prices dampened consumer interest.
Indian dealers offer highest discounts in over 3 years
Why India is important? Because they are the world’s second-biggest gold consumer and relies on imports to fulfill its nearly entire consumption.
There’s one more chart about EUROPEAN Net Imports-Exports and you also will see that it has already peaked, or everyone who had to buy already did it.
So we should expect some kind of major catalytic news coming next weeks that will motivate big speculators to unwind their historical long positions. With that said I want you all not to have fear and you see a big candle, but take part in it and join the sell!
So we have a seasonal selloff together with massive long speculators positions, also big seasonal drops when gold prices have skyrocketed into October and technicals are overbought, exactly the case this year.
I can see other signals that big speculators are preparing the terrain to trap the maximum number of retail traders into believing GOLD is about to breakout. See this article for example. This is just complete bullshit wrote with no connexion with reality.
On the other hand here is an article worth the time of reading and have strong arguments on it.
This is one a single call for a trade, but a plan to next weeks! So if you are day trading short every rally and selloff! If you like to higher time frames, you can do a trade like this one:
If the big catalytic we are waiting for happens I will let all you know in the Chatroom if you see if before than me, please tell us all!
My friends, even if you feel tempted to share this view with someone else, please don’t! Let’s keep this edge for us. You will also see that news at retail trading websites will become more and more bullish gold next week.
That’s it! Have you all a great weekend! See you all at the chatroom!
Best Regards
Leo Hermoso
