Is the gold price poised for a big rally?

When even the little guy is sure of where the market is heading, it can only mean one thing. Get ready for a major disappointment.

In every great bull and bear market, there is a central idea that runs through the trading community and acts as the main focal point for traders. This idea must appear simple to grasp and obvious' to the vast majority. A 'difficult to understand' economic theory would not do the trick.

For example, driving the great gold bull market from the pre-millennium to the top in 2011 was the almost universal belief that the gold price was inversely joined to the value of the US dollar and this was being devalued by the enormous build-up in federal and state debt.

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(Contracts of 100 Troy ounces)Row 0 - Cell 1 Row 0 - Cell 2 Row 0 - Cell 3 Open interest: 384,164
Commitments
141,50672,78219,183184,972265,196345,661357,16138,50327,003
Changes from 09/03/13 (Change in open interest: -4,420)
-10,445-9783,5077,111-5,126173-2,597-4,593-1,823
Percent of open in terest for each category of traders
36.818.95.048.169.090.093.010.07.0
Number of traders in each category (Total traders: 287)
11282666465213181Row 8 - Cell 7 Row 8 - Cell 8

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.