For the past three months, the gold market has been stuck in the massive liquidation movement. Also, investors sell everything to save cash. However, a market analyst says that this phase in the gold market may be near the end.
“We are siphoning off the last investors clinging to their fingernails”
Carley Garner, co-founder of brokerage firm DeCarley Trading, says in an interview that gold is largely overlooked because investors ‘push the sell button across the board’. He notes, however, that speculative positions put it attractively undervalued. Therefore, he adds that gold will not be ignored for a long time. Garner makes the following statement on the subject:
We’re siphoning off the last investors clinging to their fingernails. These are people who have given up on the idea of higher gold and silver prices. After all, that’s probably ironic, when things get close to turning the corner.
“You don’t see this very often for gold either”
cryptocoin.com As you follow, the latest trading data from the Commodity Futures Trading Commission shows that hedge funds have had the most bears on gold since May 2019. Garner says of this:
Some big speculators are close to being net short. You don’t see that very often, either. When you see this kind of thing, it’s usually a sign that most of the downside pain is on its way.
Garner is optimistic about gold in the short term, but…
The precious metal continues to struggle to find consistent bullish momentum. It was in this environment that Carley Garner’s view of gold interpretations came. However, the price is also holding the critical support above $1,700. Not only does gold appear oversold, but Carley says the US dollar appears to be overbought and is entering a seasonally slow period. The US dollar, albeit still high, fell from a 20-year high last week.
Garner is optimistic about gold in the short term. However, he notes that he does not rule out the possibility of falling below $1,700. He also adds that investors should be aware that the precious metal is still in a long-term downtrend. He also says that prices must rise by more than $100 to reverse the current trend.
Ways to protect bull bets under
Meanwhile, Garner also notes that there are ways for investors to hedge their bullish bets. He explains that in the current environment, he sees an opportunity to play gold in the options market. He says he likes the idea of getting a call spread of $1,800 or $1,900 in December and selling a $1,600 or $1,625 put to pay for the trade. In this regard, Garner makes the following assessment:
Basically, you are entering the market without spending a lot of money on options. As long as the market doesn’t fall below the strike price you decide to sell, finance the call spread, you’re not in bad shape. With a strike price of $1,600, you have almost a hundred dollars to fault. It’s possible that any bullish position someone put here will certainly leave room for error.
