You don’t have the guts.
leaving original comment but disregard - corrected below I trust this has the same general meaning, but for my own understanding “Schneid” isn’t a literal translation for guts. Might think of it as “you don’t have the edge.”
Although clearly etymologically connected one has to distinguish:
Schneid = guts, courage (I would perfer the latter one because “Schneid” is formal and old fashioned)
Schneide = (cutting) edge, blade
Therefore the translation with “guts” is a good one.
I’m not a native English speaker but I would understand “You don’t have the edge” as something like “You don’t have an advantage” and that is not a translation of the German sentence.
Great insight, thank you!
I think, given that “Schneide” also denotes that portion of male anatomy often referenced in insults, that the sentence could mean, “You don’t have what it takes!”
I am not aware of any usage of “Schneide” referring to male anatomy, insulting or otherwise.
Are you sure, that you don’t mix up something?
Oops! My typo. “der Schneid” (the correct word for the Cloze sentance) has the following meanings: guts, pluck, grit, courage, balls, according to dict.cc.
Okay, but I still think there is a misunderstanding.
Just because in you might translate “Schneid” with “balls” in some connections that does not mean that the German word has the same tone or connotation. “Courage” fits better.
It is neither colloquial nor rude and it can be safely applied as a praise to ladies, too.
The most serious newpaper might print:
“Bei den Meisterschaften erwies sich Prinzessin Kate als schneidige Reiterin”.
(At the championship the Princess of Wales proved to be a courageous rider.)
If anything, it is a bit old fashioned. I would think twice to translate “ballsy” here. 
OK. But dict.cc treats Schneide (with an “e”) and Schneid (the spelling in the Cloze sentence as different words, related but with different focus of meaning. It looks like there’s a general word for courage, and a ruder one for, well, being rude.
No.
Things like knives have a “Schneide”, an edge. People cannot have “Schneide”
People have “Schneid”, i.e. courage.
And if people have “Schneid” or as an adjectiv are “schneidig”, it is neither rude to say that nor does it mean that they are rude.