"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Monday, August 13, 2012

Gold Retreats from the Top of its Trading Range

Nothing doing on gold being able to break out from its consolidation pattern. Last week I showed a chart with gold right at the very top of that range and working into a heavy resistance level. Today it failed to better that resistance and was shoved back lower meaning that the odds favor it working lower within that range from here as we wait for the next round of buying support to surface. It should be able to garner buying near $1600 initially on down towards $1585 should that not hold it.

Keep in mind that this market must have a spark to take it up and out of this range. Until it does, the consolidation pattern remains in effect.

There are several factors working in gold's favor but until we get the hedge fund community to come back in on the long side in a big way, the needed firepower to kick off a trending move is not there.


  1. Hi Dan,

    Besides a hedge fund buying, do you believe a geopolitical event or European monatary event could trigger a decisive move higher in the metals? Or would such an event be the catalyst for the hedge fund buying. Cheers, Richieboy78

  2. Gold has put in a significant bottom, hence the bounce for the bulls see more after the link: http://www.readtheticker.com/Pages/Blog1.aspx?65tf=669_gold-timing-review-2012-08

  3. Dan,
    I am surprised by your comments... about the hedge funds.

    You are, and I agree with you, giving all kind of names to the hedge funds and their lagorithms, but now we need them to bet massively on the price of gold so we can see a breach higher? And they could decide after the rise to drop their bets and the POG would go down again...
    My question to you is this: Are we hostages of the hedge funds or will the POG going to move based on its own fundamentals and as richieboy said this would be a catalyst for the hedge funds buying? I do hope the latter is the right answer.

  4. Just when I think I have seen everything, there is gold going from 1607 to 1593 in 1, I repeat 1 tick. This is war, no doubt about it. The bulls cant afford to be in this range forever. Its either make new highs or be subject to these incredible down moves.

  5. Hubert, there are trading terms Dan uses to compliment his analysis. So yes, we will see all kinds of fund and investor and momentum buying increase in due course.

    1. Hi Michael,
      Not sure I agree with your explanation. Dan is saying first:
      "Keep in mind that this market MUST HAVE A SPARK TO TKE IT UP and out of this range. Until it does, the consolidation pattern remains in effect."

      Then he says:

      "There are several factors working in gold's favor"
      This is what I called fundamentals which are independant from anything else. But then Dan says:

      "but until we get the hedge fund community to come back in on the long side in a big way, the needed firepower to kick off a trending move is not there."

      So the hedge fund community is the one choosing when and why the POG should go higher and the same community cpould decide to stay out and the POG would continue its slide... This is why I said we are becoming hostages and do not count a bit in this market.

      By the way I am a big fan of Dan and link his blog to many of my friends and business connections.


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