Transcript of Gold Traders are NOT Ready for this Move.
TraderNick
0:00So, following the CPI report this0:02morning, I got a bunch of questions from0:04people because CPI came in in line with0:06expectations, like exactly on the dot,0:09and yet gold ripped higher. And in0:12today's video, I'm going to explain just0:14how important crowd sentiment and0:16tracking this stuff ultimately is.0:18Because the reason gold pops on an0:20expected or as expected CPI report is0:23because of crowd sentiment. Everybody0:26was positioned for gold to drop on CPI.0:29And there in lies The Clue. James, can0:31you do me a favor and find a clip of0:34Nicholas Cage saying the word clue in0:37National Treasure? I love that movie and0:39I love Nicholas Cage.0:49Clue.0:52Okay, so take a look at gold price0:53action here this morning. This is a0:5530-inut chart. CPI comes out and you0:57have a big spike to the downside that0:59gets faded absolutely hard as anything.1:02Now, I'm not a day trader, but this sort1:05of stuff sometimes tempts me because1:06crowd sentiment going into this, I mean,1:08we talked about this on the live stream1:10before CPI and how potentially spiky to1:14the upside CPI could have been. Even1:17now, I was actually outlining that if1:18CPI came in lower than expected that we1:21would get a monster rip on gold. And and1:24I think that that actually would be the1:25case. If we're looking at this, if we1:26had seen a cool CPI print, gold would1:29have absolutely blown the roof off of1:31this thing. But even with a CPI number1:33that came in in line with expectations,1:35here we go. We're ripping higher here1:37today. Here's why. Now, if you're an1:38EdgeFinder user, you'll know right1:40towards the top, we have this little1:42category called crowd sentiment. It is1:44near and dear to my heart for a very1:46good reason. It is imperative to1:48understanding where crowds are1:50positioned in markets before big1:52announcements like this because a lot of1:54times they give huge clues as to where1:56markets might be going next. And here is1:58that clue that we were talking about.2:00Okay, take a look. Gold here selected2:03put call uh volume spread here is2:05basically just taking a look at the net2:07number of calls versus net number of2:09puts traded on the underlying here. In2:11this case, GLD, which is an ETF that2:13tracks gold. All right. So, gold2:14sentiment going into CPI, horrible,2:17terrible. Everyone betting gold's going2:19to crash. CPI is going lower or CPI is2:22going higher. Uh, yields are going2:23higher. Gold's going lower. This is a2:26rate hike story that is going to crush2:28the precious metals. Okay, that was the2:30sentiment going in. And I'm not telling2:32you that from opinion. I'm telling you2:34that from factually. Look at the way the2:36crowd sentiment was positioned. We were2:38super super bearish. And so now you have2:41the CPI report. Imagine if for 3 weeks2:44straight somebody told you that we are2:47going to have the worst tornado, hail2:49storm, hurricane that you've ever seen2:52in your local area and then what2:54actually shows up is just a little bit2:55of some strong winds. Obviously, the2:58expectation was disastrous and the3:01actual was not so crazy. And I think3:04that's exactly what happened with gold3:06today. You had everyone expecting and3:08positioned for using our tools. We just3:10talked about that. We saw everyone3:12positioned for a major drop in gold3:14going into the CPI report today. So when3:16you got something that was sort of just3:18a shrug for the market, boom, there goes3:20gold to the upside. This is so critical3:23because this by itself can produce what3:26I believe to be a pretty strong way to3:28balance a possible asymmetric riskreward3:31profile for a market you're watching.3:33Let me put that into plain English3:35point. If everyone is bearish on3:37something or everyone is bullish on3:38something, there's a lot of scenarios3:40where the bears if they're in the3:42majority or the bulls if they're in the3:44majority get disappointed on anything3:47outside of their narrative. So if3:49everyone thinks gold is going to crater3:51lower because yields are going to blow3:53out to 5.1% today on a hot CPI print. If3:57that's the narrative and you get3:59something anything less than that, boom,4:01up goes gold. And I sent this in our4:03Telegram channel. By the way, this is4:04free to join. I have it linked in the4:06description down below. I said that if4:07you're not tracking retail sentiment,4:09you are really missing the full story.4:11Macro is important, price action is4:13important, but positioning,4:15understanding where crowds are currently4:17located and as well as what institutions4:20are doing is where there's some really4:22good opportunities.4:24By the way, I just realized I have a4:26spam message from Betsy here in the USA,4:29not an official account. [laughter]4:33Get out of here. Also worth mentioning,4:35EdgeFinder, which is the tool that I'm4:36using to scan all this data, is4:38currently on superale right now. If4:40you're interested in getting 45% off the4:42product or splitting it up into a4:44payment plan that is affordable to your4:46current budget, you can use the same4:47tools that I'm using to spot these4:49opportunities in markets. If you're4:51interested in exploring payment plans,4:53getting access to this discount and all4:54the details around it, scan the QR code4:56that you see on the screen right now, or4:58click the very first link in the4:59description down below to speak to a5:01real person on my team who can get you5:03some information and find a plan that5:05works for you so that we can get you5:06these tools and you can start5:07implementing them into your trading. Not5:09having this sort of stuff in my view5:11makes trading a lot more difficult5:13because you're operating in the blind5:14that you can't really see in price5:16action alone. So, a lot of traders, they5:18focus only on what's happening in the5:19technical chart. And I'm not undermining5:21how important technical analysis is. I5:24think it's a huge part of what I do. But5:26so is understanding what crowd5:29positioning is doing. Not just crowd5:31positioning. You ready for the next5:33part? Check this out. Coot data history.5:35We flip over to our good friend gold5:37here. Look at where institutions are5:40conveniently located. They are located5:43super long gold. Okay. Now again, I want5:46to outline this is not my opinion. This5:48is not just my my uh my speculation of5:52what what positioning looks like. I'm5:54not looking at candlestick patterns to5:56try and tell you what institutions are5:57doing. None of that. All of this stuff6:00that I'm showing you is data. It is6:03factual. It is not uh hearsay. It's not6:06opinions. Right? And I'm telling you6:08that because it's so important that we6:09understand like a lot of people try and6:11gauge what institutions are doing6:12through some sort of fancy candlestick6:14pattern. And I find that to be kind of6:15nonsense cuz price action can be very6:17deceiving at times. Whereas just having6:20the data laid out in front of us, we6:22knew and talked about it on the live6:23stream and videos leading up to this CPI6:26institutions are long on gold. And6:28meanwhile, crowd sentiment was super6:30pessimistic. That creates a very unique6:33opportunity. Whereas if you know how to6:34spot that stuff and our tool automates6:36that concept as well by tracking, you6:39know, institutional activity, crowd6:40sentiment, etc. uh we monitor this stuff6:44because of how useful it can be in6:46spotting opportunities. So, like I said,6:48get the tools if you don't have them.6:49Link is in the description below. Okay,6:50so I'm still long gold and I have to6:53continue to kind of ramble about this on6:55our secondary YouTube channel today. Uh6:57I highly encourage you to go check that6:59out. A1 Trading on YouTube. I had some7:01conversations with Chris and with um uh7:04with James uh from our team here. We had7:07some really good conversations about7:08this stuff. So stay tuned on that uh and7:10check out that video if you if you have7:12not already after this one. But I talked7:14all about how I think that the7:16probability is for the Federal Reserve7:19to actually be potentially7:22willing to hold interest rates in the7:24upcoming meeting or at the very least if7:26they do hike interest rates by a quarter7:28point which is what the bond market7:30expectations are currently. I think7:31it'll be a very dovish hike. Now what7:34does a dovish hike mean? Now, if you7:37have a hike, that means that they raise7:39interest rates. That is typically dollar7:41bullish, gold bearish. The market,7:43however, um is thinking that they're7:45going to hike interest rates twice by7:47the end of the year. I think that there7:50is probably a scenario in which if they7:52do hike, it's a guide for just one hike.7:55Now, that would be very different than7:57what the market is expecting. Remember,7:58we're talking about positioning and8:00sentiment here. I think if the Fed hikes8:02that they're probably only going to do8:04it one time this year rather than a8:06second time. I also still loosely hold8:09on to the thought process that we could8:10see zero hikes. Now, I'm open-minded.8:12I'm going to adjust to what I see8:14happening in markets, but right now, my8:17opinion is that you have sufficient data8:20that the Federal Reserve could be like,8:22"Hey, we're not going to hike interest8:23rates." And here's why. Real quick, I8:25wanted to take a second to tell you guys8:27about today's video sponsor, Owanda.8:29Owanda is a Forex and CFD brokerage that8:31has been in the space for years, and8:33they currently have a special promotion8:35where new clients can get access to free8:37Trading View Premium. New qualifying8:39clients can receive a coupon for 38:41months access for a Trading View free8:43subscription to essential plus or8:46premium charting packages. In order to8:48qualify, open an eligible OAN account8:50and meet the minimum trading volume8:51requirements for the desired charting8:54package coupon. terms and conditions8:55apply. And they've actually had a8:57history with Trading View for 10 plus8:59years at this point. And with a 4.6 star9:01rating on Trading View and 33,000 plus9:04reviews, Owanda is pretty wellknown, has9:07a solid reputation in the space. OAN9:09also has [music] competitive spreads and9:11fast execution. For traders looking to9:14level up their trading with Trading View9:16tools [music] as well as a brokerage9:18like Oanda, consider checking them out.9:20Down below in the description, I'll9:22leave a link where you can explore this9:23special offer that they are offering my9:25subscribers for a limited time. Thanks9:27again to Oanda for supporting today's9:29video. Now, back to the content. First9:30of all, hiking interest rates doesn't9:32solve the largest problem in the room,9:35which is energy prices going higher. Oil9:37is going up, up, and away here recently.9:40Of course, today is a big down day,9:41which is nice. Uh but this move higher9:44and higher in oil price is a problem for9:48the inflation story. Rising energy costs9:51cause everything else to get more9:53expensive to do. If you're going to ship9:55goods from China to the US or from9:58various places and put them on the10:00store, input costs like energy can lead10:04to businesses having to raise their10:07prices to keep profit margins steady.10:10Let's do a really quick example. Let's10:11say that it costs you $10 to make your10:16product. I don't know. Let's say you10:18sell uh cereal boxes. Okay, so it cost10:20you $10 to make a pallet of cereal and10:24you're going to put in the store and you10:26sell that pallet, let's just say at $15.10:29Okay, so you have a $5 profit. So10:32overall you make $5. That's a 50% profit10:36margin. Okay, and let's say that it cost10:38you $10 and let's just say that $2 of10:42that is your fuel costs. Uh, these are10:45super super rough numbers, but let's10:48just say that $2 is attributed towards I10:51want to fix this dollar sign. Hold on.10:53$2 is attributed towards your fuel cost.10:56All right. Well, let's say that gas10:57prices fly high and suddenly that number11:01goes from two to three. Okay. If that11:06number goes to $3, suddenly this number11:08drops to four. You've now gone from what11:12was a $5 profit to a $4 profit because11:15of the change in gas prices. Not11:17something you can control. It's just11:18something that happened in the world.11:20Your profit margin dropped off. In order11:22to keep your 50% profit margin, which is11:26important for shareholders and owners of11:28businesses, etc. They are unlikely to11:31they they are usually going to pass on11:33the costs that they've incurred to the11:35final pro product cost, right? So, how11:37are they going to do that? Well, they're11:39going to raise this top price to $1611:44to keep this uh number right here at $511:49profit. So, they make a uh my numbers11:52aren't working. Hold on. It's cuz I11:54needed to change this price. There we11:55go. So, their their costs are now $1111:57with the change in fuel. They have a $511:59overall profit. Their profit margin12:01still looks pretty good. Um okay. So in12:04that case, and it's still actually a12:06little bit like a 45. So they might need12:08to raise this like to650. You get the12:10point. The topline cost of the product12:12has to go up in order to maintain the12:15roughly 50% profit margins that maybe12:17they want to do on this product. 50%12:19profit margins, by the way, is very high12:21and probably not the profit margin that12:23that you know all products are going for12:25for sure, but this is just a simple12:27example. The point is energy costs going12:30up. If this number goes up, so too do12:32prices. You tell me, where does the12:36Federal Reserve come in to help this12:39from stopping to go up? The answer is12:41they don't. They can't control oil12:43prices. If the Fed raises rates, that12:46does not help with oil prices, right?12:49Oil prices can continue to move higher.12:51Now, the point that I'm trying to get at12:53with this is that the Federal Reserve12:54may choose, in my opinion, to sit and12:56wait and say, "Hey, we don't want to12:59damage the economy. We think, you know,13:01we are better off just waiting and13:02seeing what happens with oil prices13:04because if something good happens in the13:05Middle East, which is possible, let's be13:07hopeful." Um, and oil prices drop, that13:10does a ton of their work for them and13:12they don't have to do anything. Now, I13:14think there's another point to be made13:15that they may choose to hike interest13:17rates just to sort of stay in uh13:21credible terms with the bond market. The13:23bond market is rising and rising and13:24rising on yields and telling people or13:27the the bond market is basically telling13:28the Fed, hey, we think you need to hike13:30rates. You need to keep inflation from13:32blowing out uh as much as possible. You13:35can hike rates and it doesn't help oil13:37prices, but you can hike rates and maybe13:38it helps other things. it slows the13:40economy, maybe it slows um hiring, etc.13:43And and I think that that is where they13:45may not want to do that because if we13:47actually take a look at some of the13:48hiring stuff, yes, you had a good13:50non-farm payroll number, but let's dive13:52deeper into this. Let's look at the jobs13:54market. How good is it? Do we have a lot13:57of room to squeeze borrowing costs14:00higher when the jobs market has already14:03kind of been in sort of a not14:06necessarily a terrible situation?14:08Employment is pretty full in the United14:09States. Like it's not a bad spot, but we14:12aren't we're also not seeing massive14:13hiring, which is partially something14:16that the administration's very14:17interested in. They want to boost jobs.14:18They want to get more revenue coming in14:20through taxes. How do you do that? Well,14:21you get more people working, payrolls,14:24uh, payroll taxes, etc. So, okay, jobs14:27data did come in good recently, but the14:28two prior to that were a little soft.14:31So, I think the Fed might look at that14:32and be like, "All right, well, what14:33about ADP numbers?" Private payroll14:35world has been kind of lackluster. came14:37in softer than expected the last three14:39uh times in a row, three months of data.14:41Unemployment rate is actually in a14:43pretty decent spot. This is where they14:45could say, "Hey, you know what? Our our14:464.1% unemployment rate is not too14:49shabby. Uh maybe we can afford to hike14:51rates a little bit there. Weekly jobless14:53claims, I think, are are worth14:54mentioning. They've pretty much stayed14:56flat. Haven't really changed, but um14:58nothing too alarming here." So, that's15:00decent. But then look at Jolt's job15:01openings. Jolt's job openings. We zoom15:03this out. Take a look at the last few15:05years. let's say 3 years. This has been15:07in a secular decline for some time. Job15:09openings have been declining in the15:11states and so putting on pressure by15:14raising rates could actually act to slow15:16this further, which I don't think that15:19they want to do. So, this is my bull15:21case for for gold on why I think the15:23Federal Reserve doesn't want to do too15:25much hiking because it could hurt the15:28jobs market. Uh, and I think that they15:31don't want to deal with that pressure,15:32that problem. Now again the challenge15:35here is that inflation is still15:36generally higher but here's today's15:38report came in in line with expectations15:403.4 3.4. If we had seen and this is15:43where I talked about this all week long.15:45If we had seen the number come in at 3.615:483.7 etc. I probably would have said yeah15:51I think they're going to hike rates and15:52maybe twice. But because we're seeing15:54inflation at 3.4%15:56I think that the Federal Reserve may not15:59have the votes necessary. Some Fed Fed16:01officials will want to hike rates for16:02sure, but I think others will want to16:04hold them. Um, and so I I'm generally in16:08the camp of being a little bit more on16:09the dovish side, at least at the time of16:11recording this. Uh, because if we go16:13back to our asset scorecard and let's16:15filter for the US dollar for a second,16:17and I know I'm going very um very16:19macroheavy today. Uh, but we did a16:21little bit of sentiment as well. I I16:23think we want to watch some of these new16:25data points coming in. So CPI came in in16:27line with expectations, 3.4% 4%.16:30However, PPI came in higher than16:32expected. So, we had a little bit more16:34of a bullish factor here this week from16:36inflation. We also know yields are16:38moving higher. So, it is possible that16:41we could get a rate hike. Um, I'm16:42open-minded to it, but still kind of16:44holding on to the idea that if they16:45hike, it will be a dovish one, and16:48that's kind of my thesis for the time16:50being. That said, our data points moving16:52a little bit more in the direction of16:54high inflation this week with the PPI16:56numbers um I think is going to keep me a16:58little bit more on the neutral side when17:00it comes to DXY. I'm not looking to17:01aggressively short the dollar, but as we17:04discussed in today's video, I think a17:06lot of the move higher in gold today was17:08just sentiment kind of getting worked17:10off. I think if you're going to see gold17:12prices continue to move higher, you17:14would need to see the dovish hold uh or17:16I'm sorry, the the dovish hike next week17:18or potentially a rate hold. Um I think17:22the scenario that would crush gold next17:24week would obviously be the hawkish17:27hike. Now, that would be the signal17:29where they hike rates with a clear17:31signal that they are ready to hike17:33again. Uh and if that is if there's an17:36overwhelming vote to hike, that would17:38kind of be the narrative. And and if17:39that happens, you know, then I think we17:41have a [snorts] situation where my gold17:43trade stops out and I'm got kind of back17:45to square one. And if that happens, I'm17:47open-minded as always with my trades and17:49my ideas. I don't know with certainty17:51what happens next in markets. I'm making17:53educated guesses. You can see how17:54complex this stuff can get very quickly.17:56But having the right tools actually17:58gives us the lens to investigate, to18:01build a case for or against a particular18:04asset. And so when I go to gold here,18:06we're sitting flat zero. I would like to18:08see this thing from a technical18:10perspective show some resilience. If18:12that were to happen, gold could get18:13bullish. The point is seasonally, it's a18:16little bit of a softer period in the18:17month of September, but then we go into18:19a couple months here in the end of the18:21year where gold typically does tend to18:23rise. So, I'm very curious to see how18:25that plays out. We also see Bitcoin up18:27today. I don't know if you guys saw18:28this, 3.7%. Ethereum is also ripping18:31higher here today as well. Uh, and so18:34what this tells me is maybe there's a18:36little bit of a rising sentiment of18:38like, okay, well, maybe we're going to18:40hike, but maybe it's just once, right?18:42That's a that's a new narrative that18:43could be forming. Um, and I think right18:46now I'm I'm loosely holding on to that18:48thesis. The main reason for this is CPI18:50today was not super convincing to me18:52that we need to hike aggressively. And I18:54think if the Fed doesn't need to hike18:56aggressively, they opt to sort of stay18:58put. That that's generally how I think19:00that they tend to move. Yes, you have19:02some concerns from the bond market. Hey,19:04you you guys should hike rates. But look19:06at Japan. The Japanese bond market has19:08been telling them that they should hike19:09aggressively for years and they have19:11declined to do so. That's why Japanese19:14yields keep moving higher and the yen19:15keeps weakening is because people are19:17like, you know, the yen is devaluing19:19quickly. Why aren't you hiking rates?19:21And the Bank of Japan, the Ministry of19:22Finance, the administration there is19:24like, nope, we're pro growth. We're19:26going to let that keep going because we19:27need more growth and we're going to keep19:28rates low. And at least in my opinion,19:30it feels like the US is kind of headed19:31down a similar path where it's like,19:33"All right, we're going to spend into19:34oblivion to try and keep things uh, you19:37know, under control here." And when I19:39say under control, what I mean is19:40keeping the US central to the AI race,19:43the economic growth story here staying19:45as strong as possible. If you start19:47hiking rates a bunch and you start, you19:49know, seeing monetary policy tighten19:51aggressively, um, it really takes the19:53punch bowl away from the AI trade. And I19:55think that that is missionritical for19:57them not to do. And so I think that19:59generally speaking, they're going20:00they're only going to raise rates if20:02they absolutely are forced to do so.20:04Trading fundamentals can be a lot of20:06[music] hard work, but we actually made20:08a pretty cool free Telegram channel20:10where we are publishing constantly20:13updates on what is going on from a macro20:15fundamentals perspective. And no, it's20:17not AI. It's not written by a robot.20:19It's written by a real person on our20:21team. His name is Allen. He puts20:22together a report each day on what is20:24going on on things like gold, currency20:26pairs, commodities, indices, etc. on a20:29global financial fundamental analysis20:31basis. It's a really cool newsletter20:34where you can basically stay on top of20:35things by reading for like a minute per20:37day. If that would be interesting to you20:39to join the free Telegram channel, there20:41is a link in the description down below20:43on this video that you can join and get20:46into the action there. We also offer20:48special discount perks for our products20:50as well as [music] for funded accounts20:52and for brokerages etc. And we also do20:55some giveaways as well. So definitely20:57take a second to join the Telegram20:59channel in the description [music] down21:00below. I also want to take a second to21:02just genuinely thank you for supporting21:04my content here. Make sure to subscribe21:05and hit the thumbs up button if you have21:07not already. And I do hope that more21:09videos in the future will continue to21:11help you on your trading journey. Good21:12luck. Thanks for watching.
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