How Baumring Proved His Mastery of Gann in Profits Turning $25,000 into over a million dollars in under two years

Following his breakthrough and its integration into a complete system which he called Gann Harmony, Dr. Baumring turned to the markets to prove the validity of the system through trading.

He began with a $25,000 account and in less than two years compounded his capital into over a million dollars. Having proven that the system was capable of producing the promised returns, he then verified that it was applicable to all markets, doing a full analysis of and trading 18 futures markets and a selection of stocks, and he verified that the system was applicable to any market.

Large Scale Proof of Baumring’s Gann Breakthrough

A comparison of the Gold bull markets. 1966–80 with 1998–2013.

In order to then prove Gann’s theories on a larger scale, Dr. Baumring traded for a metals company placing and hedging their positions in silver and gold. This was in the late 70’s and early 80’s when gold and silver exploded in an exponential market to their historical all-time highs. Dr. Baumring had forecast the top of the gold and silver markets to within a three-minute time window, using the techniques of Gann’s system.

He implemented a sophisticated strategy which allowed him to transition from a position 200 contracts long to a position of 200 contracts short in a screaming exponential market. As the timing point for the top approached with the market moving as only commodities do at all-time highs, the owner of the company he was advising was hesitant to sell at the timing point and asked if he could wait another minute. His minute long hesitation cost him $60,000.

The Master Options Strategist

Aside from his understanding of Gann’s system that allowed for the timing and price projections for his trading, Baumring was also a master strategist. He studied the options rules of the brokerages of the day to such a degree that he discovered strategic loopholes in the options rules that would allow him to structure his trades through offsetting multiple layers of options positions in such a way that would allow him to control a massing position in the gold market with a comparatively small amount of capital.

In so doing, at one point, he created a structure that was producing $150,000 per each point movement in either direction. However, the owner of the company was an obsessive trader and kept placing his own positions on the company account that would disbalance the delicate strategy Baumring had in place, frustrating him to the point that he said he would quit if it happened one more time. Of course, the owner did it again and Baumring walked out leaving the position in place and flew home to California.

Several days later, he received a call from E. F. Hutton, the broker on the account, pleading with him to return on their dime, first class, to unravel the position, which was so complex they could not undo it without causing the entire structure to collapse. After this E. F. Hutton rewrote their options rule book to close the loopholes that Baumring had discovered and exploited to his advantage.

The Herald Examiner Interview

In an interview with Aruo Sederberg in the Herald Examiner on February 4, 1986, Dr. Baumring stated:

“The market has volcanic underpinnings… If I make a statement about how big it could be, you wouldn’t believe me…. From now to the end of the third quarter, the market will be sideways or down, perhaps some 200 points (on the Dow). Then we expect a rally like 1927 to 1929, to 3000 or more by 1988 or 1989. There will be 400 million-share days on the market.”

At that time such high volume and volatility were unheard of, but a year and a half later when Black Monday hit and the market dropped 1000 points in a few days, Dr. Baumring just smiled as he had been holding 5 S&P500 put options from the last high and had just made a tidy profit of $120,000 in just over a week.

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