It’s Not About ‘Right’, or ‘Wrong’

For the typical engineer, this is probably the most difficult concept to grasp and overcome in the markets:

‘It can’t be calculated’.

Of course, being engineers, they’ll argue about ‘Quants’, ‘Artificial Intelligence’, and the now long forgotten, ‘Watson’.

What ever happened to that so-called computerized answer?

Back in the day, another engineer told me for months on end, how ‘Watson’ was going to change everything.

The ‘machine’ was going to affect my trading. Naturally, he could not say how (when asked), just that it was.

As far as I know, Watson has not been in the news for years.

Enough said.

So, the typical engineer might look at the previous gold updates (here and here) and gesticulate, “It’s wrong!”.

That type of thinking is called a ‘Mind-Trap‘. It’s not about ‘right’ or ‘wrong’.

It’s The Ephemeral ‘Probability’

For gold at this juncture, there’re so many moving parts with some known, and likely many more, unknown.

However, from a strategic standpoint, the probability is we’re at The Danger Point®

As we speak, there’s a panic into the metal that’s not being confirmed by the other monetary metals, Palladium, Platinum, and Silver.

Yet, even with the ‘panic’, gold (GLD) remains below the previous ‘Invasion’ spike high, shown below.

Gold GLD, Weekly

Each market ‘extreme’ (so far) is lower than the last.

As can be seen by the blue line, we’re right at resistance and the ‘test’ of the prior spike high.

The chart below paints a more ominous picture (for the downside).

If GLD, can’t push higher from here and begins to retrace, it potentially confirms the wedge pattern.

A ‘terminating wedge’ is typically the last part of a move before reversal.

Why A Reversal?

As mentioned, there’re a lot of moving parts. There’s also an unprecedented amount of debt world-wide that’s now coming under strain to say the least.

The SVB collapse and others, likely set events in motion not yet fully revealed to us in the serfdom.

Sovreign nations have sold gold to pay off debt in the past like this example.

How much more debt do we have now, versus then?

The Big Surprise

So, it’s not about right or wrong or getting the top tick before reversal. It’s about the probability.

That probability says we’re at a confluence of debt, interest rates, price resistance, market patterns and (potential) sentiment extremes.

No one expects a major downside reversal in gold. It would be a massive surprise, if it happens.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279