Predicting Market Price Gaps

Q: Do all market price gaps get filled?
A: That is the tendency, yes.

Q: Then that information can be useful in predicting future price action? Is this something you use to call the low in the gold market? If so, how do you use it?
A: Price gaps indicate an imbalance of buy and sell orders. When this imbalance occurs, the specialist — market maker — steps in to buy or sell in order to maintain an orderly market. In an orderly market, the market maker matches buy and sell orders and is not at risk. When there’s a disorderly market — no buyers or no sellers — the market maker buys or sells for his own account. Naturally, he will take a premium if he’s selling short and a discount if he’s buying. This is part of the information evaluated in determining if specialist short covering has occurred.

Q: What do you make of the fact that over the last five weeks we’ve had price gaps on the up and the down move?
A: It is consistent with the expectation that there will be one last test of the lows.

Q: Yes, I understand it’s easier to know that something is than to know what might be. But still, with your experience, can you give us a timeline estimate?
A: It serves no useful purpose. You only need to know that the bottom is in when it’s in. I suggest you spend your time studying rather than speculating: Murray Rothbard’s Man, Economy, and State, Ludwig von Mises’ Human Action, and, for an application of the laws discussed in these books, The Art of Speculation during Civil War – Sun Tzu Meets Jesse Livermore, available at Amazon.

Q: I understand you’ve written a new book. Could you give us a preview?
A: Certainly. I have two books that will be available in four weeks. The first is an expansion of The Art of Speculation during Civil War — Sun Tzu Meets Jesse Livermore. The second is an analysis of The Five Dimensions of Man. I attempt to bring the big picture of dimensions into the everyday issues of economic behaviour: the macrocosm into the microcosm. It is a proposed answer to Albert Einstein’s quest for a unified field theory. It rejects the Copenhagen interpretation of quantum mechanics and its analysis of the double slit experiment.