Q: Do you have an expectation of what will happen over the next few years in the gold market?
A: Yes. I expect that after the low is in that we will have a three to five year bull market with prices dramatically higher than they are now. I have confidence in that expectation in part because it is like day following night. The only real issue is timing: when it will turn, not if. Economic law is just a binding and unforgiving as the law of gravity, just not as well understood. I have discussed this in prior posts: 97% of what is written about economic matters is propaganda deliberately designed to mislead.
Q: Does your long term outlook effect your short term trading recommendations?
A: Yes. I will not be playing the short side, the correction moves, within the larger bull market. I will be limiting myself to the bull side. Too many market calls risk stressing the process and so getting bad results.
Q: Could you elaborate?
A: Certainly. Read the related materials on leverage, compounding and pyramiding. You can see from this material that most of the profits come from the trading strategy, not from th0e market call. The call must be correct as the starting point but without the leverage and compounding the results are not spectacular. In the example used: the difference in compounding at each five percent move rather than at ten percent is a 300% better result.
Q: Seems like with all that extra trading that the trader has more stress.
A: Yes, more than simply buy and hold but then the results are not worth writing home about. It would be much more difficult to handle if you mixed long and short strategies and the results might well be, even if the trades were correctly executed, worse. On this upcoming opportunity, after we see the low, my strategy is keeping it simple. Only deal in options so that there are no margin calls. Trade only on the bull side; compound; and, periodically take some profits off the table. Also, the person entering the trades is separated from the person doing the market calls and making the decision concerning leverage, compounding and withdrawing profits.
Market Commentary (above) by Arthur Fixed
[box type=”info” style=”rounded” border=”full”]Commentary from Arthur Fixed the author of the Art of Speculation during Civil War – Sun Tzu Meets Jesse Livermore is a private manuscript copyrighted 2012 by Art Fixed.[/box]
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