Druckenmiller: “I Sold All Of My Gold On The Night Of The Election”/The Trend
Trader Scott’s Market Blog
November 10, 2016
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First of all, anyone who sold gold into the grotesquely bearish upthruston Tuesday did a very good job. While I can understand someone having to cover a short position (I’m on the wrong side of things myself sometimes), but who in the world could be dumb enough to go long into that mess. So Stan Druckenmiller was one who sold all of his gold Tuesday night. He’s one of the few big money managers around whom I respect (even though he did work for the ancient mummy idiot George Soros). But long ago when I became confident in my ability to survive in this business, listening to others’ market views became a distraction. My outlook for gold is much different than Druckenmiller’s. If gold is in a bull market, which is my view, then selling waves are potentially buying opportunities. There has never been a better “method” invented than determining the trend, and if it is up, you buy into support. And you do some selling on the way up to reduce risk, among accomplishing other things. It’s that simple. Admittedly, this “simple” method took me way too long to: a) learn; b) accept; c) implement consistently and successfully; d) RESPECT.
Gold has begun to see the strong hands step back in on the buy side as noted on the chart. But the strong hands are very patient and methodical, and they don’t mind averaging down. So I am now becoming very attentive and watching support areas where we likely will see a running of sell stops. The point is now to be anticipating a set up for a major low forming this month. And here is a GDX chart with support areas coming in to focus.
In the Zero Hedge article, Druckenmiller appears to be very optimistic about an economic rebound with President Trump. I have heard that a lot the last few days and it is baffling to me. I get the optimism surrounding the infrastructure spending. But how is it going to be funded – the only possibility is via helicopters. How is that some great achievement? The inflation, derivatives mess, and higher interest rates will dwarf the short term benefits from helicopter money/infrastructure. And I also get the benefits from a lower corporate tax rate and a supposed flood of capital back to the US. But that’s all theory and proposals. Who knows what happens, for instance, when the Congress gets their grimy hands involved. And how do we know corporations will repatriate all of those supposed trillions. And the globalists will be fighting him the whole way. Our two major problems in this world are debt and derivatives. And under Trump those two problems are going to get worse, not better. I have no problem with Trump beating Clinton, but I do not share the optimistic outlook. And I certainly do not share the optimism about the recent stock market rally allegedly related to the President-elect. And lastly, why no one is talking about this is mystifying, but short term rates in the US are at eight year highs. Folks keep telling me that rates are going to stay low for as long as the CBs want them to stay low and I keep disagreeing with them – and meantime, rates just keep trudging higher. To repeat, short term interest rates in the US bottomed in 2011 – over 5 years ago. Please accept what is going on here. Supply and demand always wins, one way or another.
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day.Scott returned to markets over fifteen years ago where he continues as an independent trader.
November 11, 2016 @ 5:18 am PRice
The Daily Bell has an interesting take on things in articles such as http://www.thedailybell.com/news-analysis/trump-and-brexit-directed-history-proceeds-apace/ They see a “populism vs. globalism” meme being propagated in a Hegelian dialect/thesis-antithesis manner in order to steer peoples’ thoughts in the preferred direction.
I think this fits in with your wondering about the resolution of unsolvable problems such as debt. In peoples’ minds who are propagandized by the meme, whomever is in office at the time of major disruptions will be held responsible. Their “side” will be discredited, no matter the true history with which they weren’t associated.
Thanks for your trading thoughts. You’ve helped me be more serious about managing risk.
November 12, 2016 @ 12:41 am traderscott
Good article, thank you. I just don’t get how a Trump or anyone can do a damn thing about the debt and derivatives. It’s impossible to deal with at this point. And yes, there is absolutely nothing more important than controlling risk.
November 13, 2016 @ 3:32 pm KlassiKougar
How can anyone have said that they predicted the down fall in gold? Gold initially popped on the news of Trump’s victory and did a complete reversal which is probably over done but will probably test $1190 — I don’t hold over night any more and play the swings which is tough because they are wider and more violent. Almost got stopped out of HGD on Friday but held on for some nice gains. Sold at the close.
November 13, 2016 @ 3:51 pm traderscott
Read the previous posts first.
November 11, 2016 @ 1:32 pm David
Shock and Awe! Glad you’ve seen it coming.
I just couldn’t resist the temptation to buy back some miners today.
November 11, 2016 @ 1:47 pm traderscott
The time frame is getting closer, PMs are “breaking support”, now I’m waiting to see a selling climax (strong hands getting very aggressive) unfold to begin to set up a major low. And bearishness is soaring. We’re getting there David. Patience still required.
November 11, 2016 @ 9:03 pm MQB
Thanks for your political and market analysis once again Scott. Spot on me thinks ;-)
November 11, 2016 @ 9:21 pm traderscott
If I can just get the market analysis somewhat accurate, I’ll be happy.
November 11, 2016 @ 10:30 pm mike trike
Thanks Scott. Is Rememberance Day usually this active? I didn’t even know the markets were going to be open today as it is a holiday for me. Woke up and saw the carnage and bought some miners and JNUG as well as GDX call options.
Seems kind of weird (fishy) that the massive volume selloff occured during a day which is a holiday for many. Gold was being dumped at a time when the best price wouldn’t be realised. Why would someone do that?
November 11, 2016 @ 11:01 pm traderscott
To your second question Mike, which I believe is satirical and point well taken. But I’ve been repeating that we need to be concerned about a new selling wave in gold to new multi-month lows into the second half of November. Silver really needs to break $17 to set up a solid foundation for the next big rally. But today was a good day to run sell stops – and the massive volume was really in silver and GDXJ. Rememberance/Veterans Day is just another market day, but it worked well for you.
November 12, 2016 @ 4:51 pm Aamer
Waiting …waiting for that final low in Gold and Silver. Several months ago I would have bought earlier and lost a decent chunk of my PA acct….so happy I am reading / listening to your advice and learning a little.
Agree that we need to break silver to below 17 and maybe even <16 before we hit that magic bottom. Think we may see it this month….however , am interested in your idea of a retest of these levels in both gold and silver later in December….and how to trade it ?
Also re why the US equity mkts may show resilence etc is that the rest of the world is fucxxx …either by its own doing or by the US providing help. First they break up banking secrecy….than leakages of client acct info ie HSBC ..Panama paper leaks…..so that capital cannot hide anywhere….and with this destruction of tax havens outside of the US, Delaware and Nevada are thriving ….attracting global capital. Capital flows finding home in high end real estate in the US…..no questions asked when you buy a 25 m USD apartment but if you move 500 USD you have to show origin of the money !!!!!
So whilst I share your scepticism re US equity mkts I have to balance that view with what happened after WW1 and WW 2……when Europe was destroyed and capital flows found a new home in the US. So wHen I see Merkel of all people inviting refuges from the ME 2 years ago into Euope with the backing of the EU powers…when Euope was going into a recession and revival of terrorism in European cities plus the situation in Greece….France, Portugal….EU banks..screwed as they are by their own doing but also attacked by US…see last fine agst DB etc kind of makes me think that history is repeating itself. I won't even go into the Russia baiting policies of NATO and possible consequences ……but should the above situations go from bad to worse….capital will flow to the US. USD bullish but also equity bullish and maybe even treasuries ….
Asia is also being pulled in….we are likely to see instability in Thailand, India , China etc in the coming months.
Finally re Trump…..whilst I am skeptical that he is who people would like him to be….we will soon know by the make up of his cabinet. If he pulls an Obama on us and hires the usual suspects we know the con is still on….. Already the rumours re defence secretary, treasury secretary are not reassuring …..
Optimist as usual,
November 13, 2016 @ 11:56 am traderscott
And I was just getting excited about a Trump Presidency Aamer. The thing coming up in PMs depends on if you’re a trader or investor or both. For most people, use this situation as a way to accumulate at “ideal” times. As a trader, trade the volatility. There will be new short term support and resistance areas. Those are how to do the short term trading. I know many successful guys who approach this situation exactly like this – as both a trader and investor.
November 13, 2016 @ 12:19 pm ManAboutDallas
Big money is buying this decline; I capture the trade-by-trade data for 10 major miners and 20 juniors and 27 out of those 30 were showing Positive Net Moneyflow for Wednesday, Thursday, and Friday; the 10,000 -share “big block” numbers were 30 out of 30. I expect a Final Flush tomorrow morning ( 11-14 ), then a little backing-and-filling, then up they all go. Remember where we are in the Wave Count: Wave 2. Wave 2 does EVERYTHING NECESSARY to make people Buy The Lie that Wave One was just “… another bear market rally, it’s over folks, sorry ’bout that.. yada, yada,yada… blah, blah, blah, and BARF! ” It’s done a great job; listen for the Cassandra Chorus to reach raucous cacophony levels next week to flush the last of the bought-last-summer-at-the-August-top crowd.
p.s. Stan is lying. You can see it in his eyes; you can see it in his body language; you can hear it in his tone of voice.
November 13, 2016 @ 12:35 pm traderscott
Yep, this decline is doing its’ job. It’s the selling waves which set up the buying waves and it’s the buying waves which set up the selling waves. Weak hands to strong and visa versa over and over.
November 13, 2016 @ 6:12 pm Kit SLOAN
Gold will hit $3,000 and silver$100 within 2 years – up an down daily movements the major investors must ignore and accumulate heavily on the drops to build a major position – one needs time to pick up 200 tons of gold but I expect it to be worth $20 billion to give a good return.
November 13, 2016 @ 6:19 pm traderscott
I’m holding you to it.
November 13, 2016 @ 10:20 pm Robert B. Eckhardt
I wish the technical analysts well, though I have no interest in emulating them.
People who wish to build wealth would do well to read and heed Jesse Livermore’s principles. Among them one of my favorites is:
“It was never my thinking that made the big money for me, it was always my sitting.”
True for me as well. We still hold two shares of Berkshire Hathaway Class A, bought for an average of $3125 per share. These colsed Friday at $234,860 each.
We have been buying gold since 2004 at under $400/ounce, and mostly below $900/ounce, then held off for a long while. We began buying again with the drop below $1300/ounce, and keep adding on roughly $50/ounce declines. I predict that the price decline will stop well before we hit $0/ounce, and have no idea when that level will be breached.
Take advantage of the bargain prices as you can.
Robert B. Eckhardt 11.13.2016
November 13, 2016 @ 10:22 pm Robert B. Eckhardt
Left out of the above note: The BRKA was purchased in 1987 on the day that it dropped from $4600/share the previous day. RBE
November 13, 2016 @ 10:47 pm traderscott
Agreed Robert. I don’t use TA either.