It certainly applies to today’s gold market and Bill’s commentary titled “Gold Market Fluctuations Today”.
As you know, I spent my early years in finance as a market maker (specialist) for an average of 35 different companies successfully. Things tend to go to your head as a kid until you get this strange idea that you could never make an error.
Blyth & Co in 1958 had a head trader renowned for his talent. I felt I witnessed some market weakness entering a situation I was a market maker in at that time. I flipped the key on our direct phone wire to Blyth & Co asking for his market on this company. He replied 12 bid 12 1/2 offered (12 to 12 1/2). Being a cocky kid, I offered what was then a considerable block of shares at $12. He bought them all to my surprise. Blyth then asked me if I had any more to sell? I said maybe, but I would be back to him. I knew I was in trouble so I flipped my direct line to Marty McNeill at Vilas and Hickey using him to check Blyth’s market on this item. Marty came back to me with the bad news 12 1/8 to 12 5/8. That was more electric shock that my short was in trouble. Marty did not make this market therefore was not competition to Blyth as I was. I told Marty to cover my short act the market plus 1/8 to him and and take a long position of the same size for me as an agent. Of course by the end of the day it was 14 bid.
Today in gold there was a multi-billion paper sale of gold on the Comex which took gold down only to reverse up and now exceed more than $6 from the low caused by the paper sale of billions in gold in seconds.
This is, in my opinion, a repeat of Blyth’s life lesson to me of trading. Someone bought that multi million offering of paper gold and then continued to buy pushing the price up above the sale prices.
I do not care if there seller was the Fed or King Midas himself. Gold is headed up the magnets to a new high and then higher with of course great drama as only gold can provide.