Different people have different trading styles. Some advocate to follow the trend, some swear by the technicals with all the chart analytic tools while some trade on news. There is no perfect strategy, and one should find a suitable strategy based on his or her own style and resources. One thing we can all agree on – that the market is manipulated. Manipulated by those who have the power and by those who have the money.
Gold has reached a recent high. Not the all time high, but near the all-time high and with a force which looks like it may set a new record. The market volatility and the political instability has caused gold to once again cross the $2000 mark. While there are some fluctuations, the $2000 mark seem to be the new reference point. The gold bulls are raging.
However, JP Morgan is one such entity which believes that gold will fall. Or rather, it believes it can make the price of gold fall. Controlling an approximate 53% of metal derivatives in the US banking system, JP Morgan threw its financial might in an attempt to force down the price. If this was in the past, the other financial institutions or even countries might go on the basis of ‘If you can’t beat them, join them’ mode of operation, adding more weight to JP Morgan’s (and by extension the US) strength.
But things are different now. Firstly, countries are openly going against the US. On top of that, central banks of the world are buying up gold in big amounts, reducing the supply on the markets. With that in mind, financial institutions are hesitating or even not daring to follow JP Morgan in shorting, as evident in gold’s strong uptrend in the recent days. Attempts to push the price down has been met with strong support.
The collapse of SVB had sent ripples in the financial system, and the failure of Credit Suisse nearly escalated the world into a financial crisis. If JP Morgan fails, the world can plunge straight into financial hell. The failure of JP Morgan is more than just the loss of money in their failed shorts. It is more than just another big bank which will shut down. It is more than the financial tsunami it will cause. It is the credibility and integrity of the US’ financial and banking system at stake. It is the US’ power to control the flow of events which is in question. It is the US’ grip on the whole financial system on the betting table. When Lehman Brothers collapsed, the US still had a firm grip in the system it set up. 15 years later today, the grip is no longer as strong. A damage which they could tank in the past may be crippling for them today.
I would not say that the failure of JP Morgan will mean the collapse of the US. No. The fall of the East India Company did not mean the doom of the Great British Empire too. For a very long time different countries have attempted and failed, as well as attempted without concrete success yet, to ignore the demands of the US, to damage the US, to overtake the US. But if JP Morgan fails in this big gamble, then it will mean one critical success as well as a series of falling domino cards.
JP Morgan may be alone for now. But like any other entity, be it an individual, organisation or country, JP Morgan is bound to seek help from other friendly parties or even the US Government if necessary. Because surely entities on the same side will know a failure of one of their own will not necessarily mean well for them. In a war of any kind, often times it is a contest of endurance, of who has more stamina and resources to last till the end. From Sony’s Blu-ray triumph over Toshiba’s HD DVD to US’ victory over the Soviet Union in the Cold War, war pits not only tactics, but also the resources to carry on till the end, where the winner takes everything.
No one knows who will win in the end. But for us, it is our job to make sure we do not become the sacrifice. You may have your own ideas about USD currency pairs in the forex market or XAU/USD pair in the commodities market, but we definitely do not know what will happen the next minute. Even the organisations and countries fighting do not know. The gamble is on the table, and all the dirty tactics carried out under the table, with each side secretly holding their trump card. I am not saying that the central banks of the world are out to kill JP Morgan by buying gold. But I have said many times that high level decisions fulfill a multitude of objectives, and if I can complete a side quest while doing my main, why not?
If you are doing trading, especially in the XAU or USD pairs, then be careful. Try not to have too many positions going on at once. Keep your trades short where possible. That way, if unexpected circumstances happen, at least you can escape with minimal damage. There is no need to be too eager to capture the big fall or rise (depending on which side you stand). There is always money to be earned, provided you can survive the fire.