Guide to the BASED

Risk management Gold Report

This is a guide to the BASED Gold Report. Scroll down or click different sections of the report to learn more.

Buy/Sell Zones

The Buy/Sell Zones are price levels where it is advantageous to buy and sell. Use these zones to improve your margins by aligning probabilities with your purchases and sales.

BASED Trend Signals

The BASED Trend Signals tell you what the price trend is on short, intermediate, and long time horizons—up to a month, up to a year, and multiple years respectively. Use these trend signals to manage your inventory levels, avoid losses, and guide your decision making.

Daily chart

A six month daily price chart including smaller charts for volatility and volume. Use this chart to see the most recent price moves and how volatility and volume are changing within this trend—see what's happening within the trend.

Weekly chart

A two year weekly chart with a smaller chart for Commitment of Traders report data. Use this chart to gain a longer term perspective and see how others are positioned in the market.

Past and upcoming key events

Important events e.g. central bank meetings or data releases which can have a short term but a major impact on price. It is important to be aware of these events so that you don't get surprised by sudden price moves caused by these events.

Flows

Advanced data:

The flows table tells you what other people are doing in the market. The CoT, short for Commitment of Traders, tells you how speculative futures traders are positioned in the market—high and growing numbers tell us that investors are bullish and vice versa.

The volume tells you the trading activity in futures contracts i.e. how much interest there is to trade gold and whether interest is growing or falling.

Use the Z-scores to quickly see how positive or negative other people are about gold—a Z-score higher than 1 indicates slightly higher than average interest and a Z-score higher than 2 indicates exceptionally high interest.

Volatility premium

Advanced data:

Volatility premium tells you how much protection investors are buying in the options markets. In a nutshell, high volatility premiums indicate high demand for protection and fear in the market whilst volatility discounts are a sign of complacency and danger in the market.

Volatility trends

Advanced data:

Volatility trends tell you whether the volatility, i.e. swings in price, the market is expecting (implied volatility) and what has actually happened (realized volatility) is rising or falling. Generally speaking, falling volatility is a positive sign while rising volatility is a sign of rising danger.

Market sentiment

The BASED Sentiment Index is a simple and quick to read figure to see how optimistic or pessimistic investors are about gold—the index oscillates between 100 (extremely high optimism) and 0 (extremely high pessimism). Often when the index gets close to these levels, price is getting close to a bigger top or a bottom so keep an eye out for trend changes.

Key levels

Price price levels for potential price turns i.e. reversals. Being aware of these levels helps you make better decisions when price is at these levels—levels above are dangerous spots to buy and levels below are often bad spots to sell.

Professional remarks

When the data changes we pay attention. Meaningful developments and changes in the data will be highlighted in this section so that you can quickly see what is happening and learn from them.

Useful links

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