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September
09
2019

Lessons From My Very First Gold Trade
Jeff Clark

Maria’s note: Maria Bonaventura here, managing editor of the Diary. Longtime readers know Bill is long-term bullish on gold. But colleague Jeff Clark spotted a short-term signal you should consider before you go all in on gold right now.

You may think Jeff’s advice is “nuts” at first. But it’s a lesson that has helped him profit from gold over the past 40 years – whether it’s trading up, down, or sideways. And right now, Jeff says gold is flashing its next signal…

It was October 1980. I was sitting on a public bus with my girlfriend, discussing what sort of engraving I should have on my high school ring. I mentioned how unfortunate it was that gold prices were so high that I would have to work extra hours at the shoe store to buy the ring.

A stranger in the seat in front of us turned around and uttered this sentence:

“Be careful trading gold during a full moon.”

There was a full moon that evening. But, I ignored the stranger’s advice and bought the gold ring anyway.

That was my very first gold trade. I bought at the absolute peak of the market. Just after I placed the order for my ring, gold began a 20-year bear market.

Ever since that day, whenever I see a full moon, I’m reminded of the unsolicited advice from that stranger on the bus, “Be careful trading gold during a full moon.”

It may seem absolutely crazy to you, but that advice has saved me from much financial heartache. And, I suspect it will prove valuable right now.

Gold has enjoyed a fabulous rally lately. It was trading near $1,400 per ounce on the date of the July full moon (July 16). It traded as high as $1,550 just under a month later. That’s a “breakout” move. No one can argue with the bullish momentum.

And the longer-term reasons for holding gold are as solid as ever. The entire world is buried under a mountain of debt – much of it at negative interest rates. The potential for a catastrophic financial event is about as high as it has ever been.

So it’s no wonder just about everybody seems to be rushing to buy gold right now.

That’s also why I’ve been so conflicted about gold. You see… the financial market rarely rewards the popular trades. And, let’s face it, buying gold is a popular trade.

I love the idea of owning gold for the long term. But, with the public rushing in to buy at the same time the “smart money” is amassing a large short position, the short-term looks sketchy.

So, like I said… I’ve been conflicted.

That conflict resolved itself on August 14. I looked out my kitchen window to see the biggest, brightest full moon I’d seen in months slowly descending behind the hills to the west.

Now… before you start thinking I’m totally nuts to consider trading anything on the basis of moon phases, you should know that many popular technical analysis theories are based on lunar cycles.

It’s true. The formulas behind both the Elliott Wave Theory and the Bradley Pentagonal Time Cycle Theory are derived from lunar cycles. In fact, much of modern-day mathematics can trace its roots to the early astronomy of Galileo.

Of course, that doesn’t mean you should look to your horoscope for financial advice.

But, strange things do sometimes happen during a full moon. And, one of the strangest things I’ve learned in nearly 40 years of trading is that gold often changes its short-term direction within a day or two of a full moon.

Bullish moves often reverse and turn bearish. And bearish moves often lead to bullish turnarounds.

There’s a lot of action going on in the gold market right now. Traders are going to have lots of opportunities to trade the moves. But, before you go chasing after one, maybe take a look up in the sky first.

Best regards and good trading,

Jeff Clark

P.S. On Wednesday, I told my Market Minute readers to expect a short-term pullback in gold stocks. And sure enough, the gold market tanked 5% on Thursday…

With that move, there’s no doubt in my mind that the short-term direction for the gold market just shifted bearish.

But here’s the thing… Whether or not you’re invested in gold, there’s a way to capture profits from every upside AND downside move in the gold market.

It’s a specific technique I’ve refined for years. And on Thursday, I came forward to reveal it to the world. Watch the whole presentation here – but don’t wait. This comes down after Monday.

One of the worst things an analyst can do is make a prediction that includes both a price and a date. Odds are you’ll end up with egg on your face.

But one thing we can do is look at history. Today’s gold bull market won’t be identical to others in the past—but history does provide clues about how high the price might go based on prior trends.

By my calculations, there have been five gold bull markets since it was legal to own again in 1975. Here are the percentage gains of each, plus how long they lasted.

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