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 and 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…
“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 over the past month. It was trading near $1,400 per ounce on the date of the last full moon (July 16). It traded as high as $1,550 earlier this week. 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 am so conflicted about gold right now. 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, the short-term looks sketchy. The public is rushing in to buy at the same time the “smart money” is amassing a large short position.
So, like I said… I’m conflicted.
That conflict resolved itself early yesterday morning. I looked out my kitchen window to see the biggest, brightest full moon I’ve 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 Siderograph indicator 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. Having nearly 40 years’ worth of trading experience has taught me a lot… including how gold might behave during a full moon.
But if you’d like to hear my latest ideas, you’ll have the chance next month…
I’ll be at the second annual Legacy Investment Summit from September 23-25 in Southern California. If you’d like to discuss technical analysis, options trading strategies, or even the phases of the moon… I’d be happy to meet you. And, plenty of other investment greats like Teeka Tiwari, Doug Casey, and Jeff Brown will be there, too.
There are still tickets available for my Market Minute readers right here.
Reader Mailbag
Today, Jeff Clark Trader subscribers thank Jeff for a recent position update (paid-up subscribers can see that here)…
Thank you for addressing the GDX [VanEck Vectors Gold Miners ETF] concerns. Overall, you did mention it was a speculative trade.
I’m still looking to exit this trade and so it was good to read your response… Thank you all for the diligence and expertise.
– Erik
Thanks for addressing the GDX trade. I was one of the dummies that forgot to put in my “sell half at 100%” order after the initial trade. Then I was so busy without my phone handy, I missed the sell signal. That won’t happen again. You see, I am a novice options trader that, through the last seven weeks as part of your service, has increased my portfolio 15% (after paying my subscription for life!).
Your directions are clear, concise and consistent. When you say things like, “this is highly speculative,” or “be prepared to lose 100%,” or “maybe you should only risk half as much as you normally would,” I have already learned to be attentive.
Thanks for all your insights and recommendations. You are helping this “little guy” get ahead. I am telling friends and family to check you out.
– Matthew
Erik and Matthew, thank you for the kind words. And thank you for being members of Jeff Clark Trader. (If you’re interested in a Jeff Clark Trader membership,
click here to see our limited-time offer of $19 for a whole year.)
Meanwhile, two subscribers share their recent wins…
Jeff, I did my first two option trades last week. I only invested modest money. I’ve made over 20% on each trade in 24 hours. I’m reviewing your options videos and learning more each day.
– Paul
Thank you, Jeff, for teaching us how to consistently trade the market. I took your advice on Monday, bought calls on the dip. I was sweating bullets as I watched things dip even further. I took a deep breath, analyzed the charts, read your advice again, and decided things were, in fact, bottoming out. So, I bought a little more. I took out conservative positions on both trades with time for them to play out.
Within two days I had DOUBLED my money. The greedy side of me wanted to let it ride and see just how much money I could make, but Jeff’s voice in the back of my head told me that we don’t trade that way. This isn’t a one-time event and losing my capital over a silly, greedy gamble is just poor investment strategy.
So, I took my original investment off the table by selling half the calls and let the rest ride it out to see what happened. Lo and behold, it nearly doubled again! The greedy side of me wants to play the “what if” game, but the reasonable, measured investor you’re creating in me says, “Look dummy, you just make 187% on your investment in THREE DAYS! You just made more money than you make at work in a month off of two plays.” I can’t argue with that logic. And now I have even more capital ready to deploy for the next play. Thank you so much for helping us all learn to be better traders!
– Mike
And others address the volatility this past week…
Hi Jeff, What a week! Your guidance through this volatility is fantastic. I had my best week yet trading with you. My account is up 49% this past week alone. I love volatility. Thank you for all you do.
– David
The “volatility” this week (and much of the rest of the time) has nothing to do with rubber bands. It has everything to do with large investors manipulating the market (buying and selling in unison), making money in both directions, time and again, under the guise of volatility (that they cause)… Just follow the money…
– Steve
I want to thank you. I am new to option trading and your training is really valuable. I will be in the Legacy Investment Summit in September and hope I can shake your hand.
– Maxime
We look forward to seeing you there, Maxime!
For those who still haven’t bought tickets, there are still some left for Market Minute readers. It’s your chance to meet Jeff and the rest of Legacy Research’s top analysts, face to face. To learn how you can get your tickets now, click here.
Do you agree with Steve that there’s more to the “volatility” this week? How have you been trading it?
Let us know, along with any other trading stories, questions, or suggestions at feedback@jeffclarktrader.com.