Please click on the following link to listen in to my regular weekly radio interview with Eric King over at the KWN Markets and Metals Wrap.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/30_KWN_Weekly_Metals_Wrap.html
Saturday, March 30, 2013
Thursday, March 28, 2013
Gold Flops
Once again the gold market has failed to respond to what should have been bullish news. How many times have we witnessed this now over the past few months? The very foundations of the Euro are being shaken and yet the metal can barely keep its head above water. Selling pressure has been that intense. One can only wonder how much of the hoard of Western Gold has been drawn upon by these monetary elites to squash the warning signal and further the illusion that all is well.
At the same time we see the US equity markets screaming to one new high after another. I mean, there really is not a single care in the world is there? I understand the tape as a trader but I swear that economic and monetary historians are going to look back at this period and wonder if some sort of bewitching spell has been cast over the minds of men.
I mentioned to a friend in passing the other day that we could have the entire state of California slide into the Pacific Ocean along that San Andreas fault line, and the S&P 500 would still move higher.
More and more the disconnect between copper and the base metals, not to mention the Dow Transports and the broader equity markets worsens. For that matter, take one look at the Continuous Commodity Index or CCI, and marvel yet some more. I have been a complete fool when I naively believed that the conjuring into existence of another $85 billion each and every month would have seen that money being moved indiscriminately by hedge funds into BOTH equities and commodities. Not so - somehow the alchemists running these Central Banks have managed to herd the investor lemmings class selectively into equities. That in itself is nothing short of astonishing,
Is it any wonder then that gold cannot seem to find its footing? While a growing number of investors/traders are coming around to seeing the US government issued CPI for the worthless propaganda that it is, one cannot argue with the commodity futures world itself where the collective judgment of the market towards commodities in general is quite evident.
Apparently, while trillions of dollars have been created, the velocity at which those dollars are changing hands is simply not accelerating. Rather than circulating through the economy in general and inducing inflationary pressures, the money merely moves from the Fed's "electronic printing presses" into Wall Street and sits there.
Looking at the gold chart, one can see that buying support is evident on trips below $1600 but the market cannot gather enough momentum-based buying to trigger the overhead stops above $1620 that need to be targeted if this metal is going to get some upside excitement going. It is rangebound once again. Bargain or value based buying provides support at the bottom of the range while technically based selling is evident above $1610. Quite frankly, at this point, I do not know what it is going to take to break the metal out of this range.
Moving along to silver, one can see the same rangebound pattern particularly on this 4 hour chart. Note that the metal cannot break through $29.25 - $29.40 on the top side but it attracts buying on trips down towards the $28 level. It too is stuck.
Following is a monthly chart of gold... On this longer term chart one can see the very broad range that has been in place for some time now, with $1800 on the top and $1550-$1530 on the bottom remains solidly intact. Gold is obviously in the lower third of that range.
Happy Easter to all my fellow Christian readers. Christ's resurrection from the dead and His ascension into heaven is proof that His sacrifice for sin has been accepted by the Father and that He was all that He claimed to be. Rejoice and my His peace guard your hearts and minds. It is certainly needed in this time of distress in which we now find ourselves.
At the same time we see the US equity markets screaming to one new high after another. I mean, there really is not a single care in the world is there? I understand the tape as a trader but I swear that economic and monetary historians are going to look back at this period and wonder if some sort of bewitching spell has been cast over the minds of men.
I mentioned to a friend in passing the other day that we could have the entire state of California slide into the Pacific Ocean along that San Andreas fault line, and the S&P 500 would still move higher.
More and more the disconnect between copper and the base metals, not to mention the Dow Transports and the broader equity markets worsens. For that matter, take one look at the Continuous Commodity Index or CCI, and marvel yet some more. I have been a complete fool when I naively believed that the conjuring into existence of another $85 billion each and every month would have seen that money being moved indiscriminately by hedge funds into BOTH equities and commodities. Not so - somehow the alchemists running these Central Banks have managed to herd the investor lemmings class selectively into equities. That in itself is nothing short of astonishing,
Is it any wonder then that gold cannot seem to find its footing? While a growing number of investors/traders are coming around to seeing the US government issued CPI for the worthless propaganda that it is, one cannot argue with the commodity futures world itself where the collective judgment of the market towards commodities in general is quite evident.
Apparently, while trillions of dollars have been created, the velocity at which those dollars are changing hands is simply not accelerating. Rather than circulating through the economy in general and inducing inflationary pressures, the money merely moves from the Fed's "electronic printing presses" into Wall Street and sits there.
Looking at the gold chart, one can see that buying support is evident on trips below $1600 but the market cannot gather enough momentum-based buying to trigger the overhead stops above $1620 that need to be targeted if this metal is going to get some upside excitement going. It is rangebound once again. Bargain or value based buying provides support at the bottom of the range while technically based selling is evident above $1610. Quite frankly, at this point, I do not know what it is going to take to break the metal out of this range.
Moving along to silver, one can see the same rangebound pattern particularly on this 4 hour chart. Note that the metal cannot break through $29.25 - $29.40 on the top side but it attracts buying on trips down towards the $28 level. It too is stuck.
Following is a monthly chart of gold... On this longer term chart one can see the very broad range that has been in place for some time now, with $1800 on the top and $1550-$1530 on the bottom remains solidly intact. Gold is obviously in the lower third of that range.
Happy Easter to all my fellow Christian readers. Christ's resurrection from the dead and His ascension into heaven is proof that His sacrifice for sin has been accepted by the Father and that He was all that He claimed to be. Rejoice and my His peace guard your hearts and minds. It is certainly needed in this time of distress in which we now find ourselves.
Monday, March 25, 2013
Euro Loses 1.29 Support Level
It is my opinion that last week the European Central Bank was quite active in the Foreign exchange markets defending the Euro and preventing the breakdown below the 1.29 level. Watching the price action, and this is from the perspective of a long time trader, there was no fundamental reason I could see for the Euro to experience intraday rallies of the magnitude that it was seeing, based on the deteriorating conditions surrounding Cyprus. It was if some magic hand was pushing it back up and away from the 1.29 level on any approaches there with enough force to take it all the way through 1.30 and then some.
Today, based on the earlier comments of the Dutch Finance Minister, that support zone collapsed on very large volume. I have no doubt whatsoever that it was this event that set Mr. Dijsselboem scurrying back to the microphones to disavow what he so arrogantly announced previously during the trading session, to wit - that the arrangement made with Cyprus would henceforth serve as a "template" for dealing with problem banks in problem Eurozone nations.
While he may backtrack and attempt to spin those earlier comments, which were quite clear I might add, the damage has been done as the proverbial cat is now out of the bag. Regardless of the subterfuge and deceitful backpedaling, it is now abundantly clear that the monetary officials in the Eurozone regard taxpayer deposits as, in actuality, belonging to the state.
As usual, we are now witnessing the resort to the typical left leaning claptrap about "only the wealthy" being forced to contribute to the savings of the banks but that begs the question that any sane individual would be asking under such conditions, "Why the hell should I as a depositor be the least bit concerned about the safety of my life's savings in any bank?" After all, that defeats the entire reason for depositing money in a bank in the first place. If the banks cannot be trusted, and if the government officials are all to willing to raid, confiscate, steal, the money of the depositors in order to bail out the unholy nexus between the banks and the government, how in the world can that inspire the least bit of confidence in the banking sector anywhere in the Eurozone that similar issues exist?
What we are witnessing is the rotten stench of decaying balance sheets brought on by years and years of overspending. As long as there were enough banks willing to buy that government debt, the party and the recklessness could go on. However, Mr. Market has a way of eventually bringing reality home to even the most obtuse of individuals and that is precisely what has now happened.
Quite simply - who in their right mind would be willing to buy the bonds of these troubled nations? And more precisely, whither goest Cyprus at this point? It's economy is a wreck and in my view will continue to be so into the foreseeable future. It's economy was based primarily on banking and tourism. At this point, who would want to travel there other than those wanting a bird's eye view of the trainwreck and as for banking.... that goes without saying.
While gold is certainly being capped above the $1610 level, it is continuing to attract dip buyers on trips down towards support at $1585. It ran down there earlier today only to encounter sufficient buying to propel it back above the $1600 level. Clearly that in itself, while not an outright victory for the bulls, is a defeat for the bears who no doubt were shocked by the severity of the buying pressure that came into the market.
Bulls still need to clear $1620 to force some of these shorts out of the market. It might be tough to do that as long as the capping operation is ongoing but my guess is that it will take a tremendous amount of physical gold sales to continuing holding the price down.
Today, based on the earlier comments of the Dutch Finance Minister, that support zone collapsed on very large volume. I have no doubt whatsoever that it was this event that set Mr. Dijsselboem scurrying back to the microphones to disavow what he so arrogantly announced previously during the trading session, to wit - that the arrangement made with Cyprus would henceforth serve as a "template" for dealing with problem banks in problem Eurozone nations.
While he may backtrack and attempt to spin those earlier comments, which were quite clear I might add, the damage has been done as the proverbial cat is now out of the bag. Regardless of the subterfuge and deceitful backpedaling, it is now abundantly clear that the monetary officials in the Eurozone regard taxpayer deposits as, in actuality, belonging to the state.
As usual, we are now witnessing the resort to the typical left leaning claptrap about "only the wealthy" being forced to contribute to the savings of the banks but that begs the question that any sane individual would be asking under such conditions, "Why the hell should I as a depositor be the least bit concerned about the safety of my life's savings in any bank?" After all, that defeats the entire reason for depositing money in a bank in the first place. If the banks cannot be trusted, and if the government officials are all to willing to raid, confiscate, steal, the money of the depositors in order to bail out the unholy nexus between the banks and the government, how in the world can that inspire the least bit of confidence in the banking sector anywhere in the Eurozone that similar issues exist?
What we are witnessing is the rotten stench of decaying balance sheets brought on by years and years of overspending. As long as there were enough banks willing to buy that government debt, the party and the recklessness could go on. However, Mr. Market has a way of eventually bringing reality home to even the most obtuse of individuals and that is precisely what has now happened.
Quite simply - who in their right mind would be willing to buy the bonds of these troubled nations? And more precisely, whither goest Cyprus at this point? It's economy is a wreck and in my view will continue to be so into the foreseeable future. It's economy was based primarily on banking and tourism. At this point, who would want to travel there other than those wanting a bird's eye view of the trainwreck and as for banking.... that goes without saying.
While gold is certainly being capped above the $1610 level, it is continuing to attract dip buyers on trips down towards support at $1585. It ran down there earlier today only to encounter sufficient buying to propel it back above the $1600 level. Clearly that in itself, while not an outright victory for the bulls, is a defeat for the bears who no doubt were shocked by the severity of the buying pressure that came into the market.
Bulls still need to clear $1620 to force some of these shorts out of the market. It might be tough to do that as long as the capping operation is ongoing but my guess is that it will take a tremendous amount of physical gold sales to continuing holding the price down.
As usual, the gold shares once again were of no help to the actual metal. I read a report today somewhere that stated if gold were to fall as low as $1,000, many of the entities involved in gold mining today would no longer be viable. The way some of these shares are acting, they already no longer look viable, truth be told.
It should be noted that the party in the global equity markets, brought on my near endless conjuring of "money" into existence by the Central Banks primarily of the West, has been handed a citation by the police and told to tone it down as the neighbors are complaining of the noise. Obviously this is a no-no to the best laid plans of mice and men, those being the monetary officials who I would lump under the category more of mice than men, since I consider them despicable Cretans and parasites. That means all the stops must be pulled out to keep Cyprus afloat and assuage any rising concerns among the investor class.
The entire thing boils down to keeping this ephemeral confidence from waning one iota. It is all about illusions, perceptions and subterfuge.
Dutch Finance Minister Loves Raiding Savings Accounts
Reuters is reporting this morning comments from the Dutch Finance Minister, Jeroen Dijsselbloem, who by the way heads up the group of European Finance Ministers, to the effect that the "solution" in Cypress is a "new template" to address future banking problems in the Euro area.
I want you readers, particularly those of you in the Eurozone, to wrap your heads around this and consider the brazen audacity displayed by these people. What he is saying is that bank savings deposits no longer effectively belong to you the savers. They belong to the state and the state will confiscate them whenever it is deemed to be in that state's best interests.
If this does not send shock waves throughout the system and instill fear in individuals throughout the Eurozone, then there is no hope for any such people. Normal, rational, sane, thinking individuals will immediately recognize this for what it is; a complete reversal of the traditional role of banking in which banks makes loans to depositors and other individuals. Now, depositors are in effect making loans to banks. Yet even that is not an apt comparison for in the case of a loan, one usually expects to receive back the amount loaned plus interest. In this case, the depositors are having their money forcibly extracted from them with no hope of ever seeing it again and having that money used to bail out the banks instead! I never believed I would EVER witness this in my life and yet here it is. What is even worse is the blasé attitude displayed by the monetary authorities. Just who in the hell do these people think that they are?
These pestilential parasites, who sit in ivory towers and can glibly utter such rapacious comments, are literally undermining the entire banking system in their shortsighted idiocy.
Do these fools really believe that those citizens who have money in Eurozone banks, particularly high net worth individuals, are going to merely sit by and calmly observe this situation and do absolutely nothing? I cannot think of a better way to start a run on the banks. If individuals believe that the state now believes it has the right to raid their hard earned wealth at any time why would they feel the least bit secure about putting that wealth in harm's way?
As far as the price action in both gold and in the euro goes, Gold was down rather sharply early in the session as the safe havens were thrown out once a "deal" was announced. The Euro was down but not by much considering the backdrop. Once those Dutch official's comments hit the wires, the bottom fell out of the Euro and gold began working off its lows.
Gold in Euro terms shot sharply higher and is up nearly 1% as I type these comments. If it can push past the 1250 euro mark, it looks like it has room to make a run to 1280.
I am still thunderstruck as I contemplate those comments uttered by Mr. Bloem. This is like something out of fictional novel and yet it is happening right before our eyes.
I want you readers, particularly those of you in the Eurozone, to wrap your heads around this and consider the brazen audacity displayed by these people. What he is saying is that bank savings deposits no longer effectively belong to you the savers. They belong to the state and the state will confiscate them whenever it is deemed to be in that state's best interests.
If this does not send shock waves throughout the system and instill fear in individuals throughout the Eurozone, then there is no hope for any such people. Normal, rational, sane, thinking individuals will immediately recognize this for what it is; a complete reversal of the traditional role of banking in which banks makes loans to depositors and other individuals. Now, depositors are in effect making loans to banks. Yet even that is not an apt comparison for in the case of a loan, one usually expects to receive back the amount loaned plus interest. In this case, the depositors are having their money forcibly extracted from them with no hope of ever seeing it again and having that money used to bail out the banks instead! I never believed I would EVER witness this in my life and yet here it is. What is even worse is the blasé attitude displayed by the monetary authorities. Just who in the hell do these people think that they are?
These pestilential parasites, who sit in ivory towers and can glibly utter such rapacious comments, are literally undermining the entire banking system in their shortsighted idiocy.
Do these fools really believe that those citizens who have money in Eurozone banks, particularly high net worth individuals, are going to merely sit by and calmly observe this situation and do absolutely nothing? I cannot think of a better way to start a run on the banks. If individuals believe that the state now believes it has the right to raid their hard earned wealth at any time why would they feel the least bit secure about putting that wealth in harm's way?
As far as the price action in both gold and in the euro goes, Gold was down rather sharply early in the session as the safe havens were thrown out once a "deal" was announced. The Euro was down but not by much considering the backdrop. Once those Dutch official's comments hit the wires, the bottom fell out of the Euro and gold began working off its lows.
Gold in Euro terms shot sharply higher and is up nearly 1% as I type these comments. If it can push past the 1250 euro mark, it looks like it has room to make a run to 1280.
I am still thunderstruck as I contemplate those comments uttered by Mr. Bloem. This is like something out of fictional novel and yet it is happening right before our eyes.
Saturday, March 23, 2013
Trader Dan Interviewed at King World News
Please click on the following link to listen in to my regular weekly radio interview with Eric King over at the KWN Weekly Markets and Metals Wrap. We will be discussing the implications of the market action in both gold and the Euro given the Cyprus situation.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/23_KWN_Weekly_Metals_Wrap.html
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/23_KWN_Weekly_Metals_Wrap.html
Thursday, March 21, 2013
Cyprus Fears Rekindled?
Talk today was all about the resurgence of fears related to the situation in Cyprus. The US equity markets were heavy throughout the session as a result but from what I could tell, there was not that much demand for safe haven US Treasuries. Yes, those were higher but considering the extent to which the concerns surrounding Cyprus were in the headlines, I would have expected a much stronger tone to the US bond market.
Also, remember when the news first broke over Cyprus over last weekend and the markets opened for trading Sunday night here in the US. The Euro was absolutely mauled as a result. Today, while it was weaker, it refused to stay below the 1.29 level. From what I can see, there apparently is not that much worry over the Europe if the common currency will not stay down below 1.29 on the Cyprus news flaring up again.
The Yen on the other hand was acting as if the end of all things was upon us as it completely erased yesterday's sharp losses soaring over 150 pips at one point today. For the life of me I do not understand why anyone would call the Yen a "safe haven" currency but then again, I do not understand why anyone would call the US Dollar one either. Both nations are printing TRILLIONS of these respective currencies into existence and yet this is somehow a safe haven?
Like I and many others have said - there is nothing rational about markets, not any more.
Gold caught a firm bid today and managed to stay above $1610 for most of the session which is promising. It needs to prove it can clear resistance near $1620 if the bulls are going to be able to seriously squeeze that extremely large hedge fund short position. Frankly, I am not sure what it is going to take to push gold through this level if the Cyprus news and the reverberations related to that cannot do it. Whoever it is that is doing the selling up near the session highs is strong handed and will take some serious force to dislodge.
Gold in Euro terms is showing signs of life having broken out to the upside of its downtrending channel. It is no longer making a series of lower highs and lower lows but has stabilized and looks to have forged a bottom. With Yen gold strong, Sterling Gold looking decent and now Euro gold joining the chorus, the bears will have to dig in deeply to prevent the respective overhead chart resistance levels from giving way. We know that there is a deep pocketed seller present in New York - is that the only place?
Resistance in Euro Gold is near today's high at 1250 followed by 1270 and then 1280. After that, Gold has a shot at testing psychological round number resistance at 1300 euros.
U S Dollar priced gold is shown below on a two hour chart where the selling effort can be more clearly seen.
Also, remember when the news first broke over Cyprus over last weekend and the markets opened for trading Sunday night here in the US. The Euro was absolutely mauled as a result. Today, while it was weaker, it refused to stay below the 1.29 level. From what I can see, there apparently is not that much worry over the Europe if the common currency will not stay down below 1.29 on the Cyprus news flaring up again.
The Yen on the other hand was acting as if the end of all things was upon us as it completely erased yesterday's sharp losses soaring over 150 pips at one point today. For the life of me I do not understand why anyone would call the Yen a "safe haven" currency but then again, I do not understand why anyone would call the US Dollar one either. Both nations are printing TRILLIONS of these respective currencies into existence and yet this is somehow a safe haven?
Like I and many others have said - there is nothing rational about markets, not any more.
Gold caught a firm bid today and managed to stay above $1610 for most of the session which is promising. It needs to prove it can clear resistance near $1620 if the bulls are going to be able to seriously squeeze that extremely large hedge fund short position. Frankly, I am not sure what it is going to take to push gold through this level if the Cyprus news and the reverberations related to that cannot do it. Whoever it is that is doing the selling up near the session highs is strong handed and will take some serious force to dislodge.
Gold in Euro terms is showing signs of life having broken out to the upside of its downtrending channel. It is no longer making a series of lower highs and lower lows but has stabilized and looks to have forged a bottom. With Yen gold strong, Sterling Gold looking decent and now Euro gold joining the chorus, the bears will have to dig in deeply to prevent the respective overhead chart resistance levels from giving way. We know that there is a deep pocketed seller present in New York - is that the only place?
Resistance in Euro Gold is near today's high at 1250 followed by 1270 and then 1280. After that, Gold has a shot at testing psychological round number resistance at 1300 euros.
U S Dollar priced gold is shown below on a two hour chart where the selling effort can be more clearly seen.
Monday, March 18, 2013
Another European Domino
I am not going to spend much time providing the details of the events unfolding in Cyprus since the readers of this site are all well aware of those by now.
I do wish to note a couple of things however.
First - We are watching the inevitable effects of the experiment in socialism when it reaches its logical conclusion. When generations are either taught or have it implied to them that they can allow their governments to run up ruinous levels of debt and yet suffer no consequences whatsoever, they have little to no incentive to throw out the political leaders who hold the actual purse strings. The cradle to grave policies of the nanny state are not sustainable over the long haul. The reason is clear - politicians make promises to pay that they cannot keep. Eventually there is not enough money to cover the promises and the government is forced to borrow to the point that it can no longer afford to pay the rate of interest that creditors demand to compensate them for the risk.
We all know that the proposal to confiscate up to 9.9% of the savings accounts of those who have worked hard to amass that money is nothing more than government sanctioned THEFT. Spare us the insults of calling it a "tax" and thereby seeking to justify this reprehensible policy. People use banks because of one reason and one reason only - TRUST. Take that away and you have destroyed the foundation of the banking system.
Put yourself in the place of an average European citizen who is watching this debacle unfold before their eyes. Would you feel the least bit secure if you had now been awakened to the fact that your government's leaders had spent the nation into bankruptcy and were suggesting that as part of the solution to their folly that those same fools who ran up the debt in the first place now be permitted to raid your personal savings account to somehow solve a problem of their creation? What would you do in their situation? I tell you what I would do; I would immediately begin transferring money out of banks in any of those nations which had been on the receiving end of bailouts from the ECB and the IMF. I would move that money into gold and would not think twice about doing it. If those deposits are no longer sacred, then what is to prevent futures politicans from raiding them whensoever they please?
Once again we have collusion between the financial elites that run the monetary system and the big banks. I have nothing but scorn and contempt for these large banks who gorged themselves on various government bonds and are now in the position of watching their balance sheets go to hell in a handbasket as the value of those bonds plummet. What really makes my blood boil however is that these banks have adopted a mentality that they can go running and screaming like spoiled children to their respective political leaders to use the PUBLIC's MONEY to save them from their own damned stupidity and greed.
Excuse me, but I was once naively of the opinion that the banks existed to make loans to the public. Apparently that is no longer the case - now the banks exist in order to see money taken from their depositors to save their own rear ends for buying debt that no one in their right mind would have purchased.
I do wish to add however, that even though I am disgusted at this unholy alliance between the big banks and the monetary masters, the people in these respective nations do bear some culpability in this matter; they are not without any blame whatsoever. Last time I checked these people vote and they voted to put enough politicians in power to continue spending. As long as the people keep putting the same kind of irresponsible, short-sighted lackeys into positions of power, why should they expect these leaders to change their ways. Those who would ruin their own nations for the sake of short-term political gain deserve to be unceremoniously thrown out of office.
By the way, America, are you watching what is happening here because we are following in the same trajectory as many of these Euro Zone nations.
On gold - the flight to safe haven was on display today with that buying strong enough to propel gold through the psychological $1600 level. Watching it soar throught that level overnight during the Asian session was noteworthy because at one point, a wave of fierce selling came out of nowhere and took the price all the way back down to below its Friday settlement price. The dip did not last long - if you blinked you missed it - but it was very obvious that someone was trying to cap the price and prevent the metal from moving even higher.
All day long the move higher was being resisted by a strong overhead seller. My guess is that this is not hedge fund selling but rather selling originating from the official sector. I also noted today that the Euro, which was slammed down in Asia at one point today moved all the way back up to above the 1.30 level. The manner in which it did so looked very peculiar to me.
I hate to say that the ECB was involved when I have no proof of this but it was very odd to see anyone at all anxious to buy that currency for any reason today given the ramifications of the Cyprus mess. Maybe, just maybe, the monetary masters were out in full force today attemping to prevent a meltdown of their dearly beloved Euro. I simply have no other explanation for the midday move higher in the Euro off its worst levels.
I want to add here that their best efforts notwithstadning EURO GOLD soared higher adding 1.5% today. It is near 1237 euros as I write this. As a matter of fact, gold took off today in terms of all the major currencies again. This is continued evidence to me that gold is getting some serious attention by those who are growing increasingly disconcerted with the policies of the Western Central Banks and their respective finance ministers/leaders.
The chart below notes that various levels that have technical significance for gold. It will take a push through $1620 to really begin a short covering process in earnest. I noted in my KWN Weekly Metals Wrap interview that the hedge fund short position was the largest on record. Some of that began to come off today. There still remains a large number of those shorts however.
Ideally, gold will stay ABOVE $1600 but at the very least, it should remain above $1585 or so to suggest that it has entered yet again into a new and higher trading range.
Once again the useless gold mining shares did nothing to aid the upward progess of the actual metal as they were weak all day long and ended closing down on their lows. No wonder no one wants to own the damned things. As far as providing any decent returns on investment, they suck. What else can I say...
Currency traders had best prepare to go another week without much sleep. Sigh... maybe we can get some ingenius inventor to come up with a pill that provides the human body with the same benefits of getting a decent 7 - 8 hours worth of sleep in a night. I know I will be the first in line to sign up for that...
I do wish to note a couple of things however.
First - We are watching the inevitable effects of the experiment in socialism when it reaches its logical conclusion. When generations are either taught or have it implied to them that they can allow their governments to run up ruinous levels of debt and yet suffer no consequences whatsoever, they have little to no incentive to throw out the political leaders who hold the actual purse strings. The cradle to grave policies of the nanny state are not sustainable over the long haul. The reason is clear - politicians make promises to pay that they cannot keep. Eventually there is not enough money to cover the promises and the government is forced to borrow to the point that it can no longer afford to pay the rate of interest that creditors demand to compensate them for the risk.
We all know that the proposal to confiscate up to 9.9% of the savings accounts of those who have worked hard to amass that money is nothing more than government sanctioned THEFT. Spare us the insults of calling it a "tax" and thereby seeking to justify this reprehensible policy. People use banks because of one reason and one reason only - TRUST. Take that away and you have destroyed the foundation of the banking system.
Put yourself in the place of an average European citizen who is watching this debacle unfold before their eyes. Would you feel the least bit secure if you had now been awakened to the fact that your government's leaders had spent the nation into bankruptcy and were suggesting that as part of the solution to their folly that those same fools who ran up the debt in the first place now be permitted to raid your personal savings account to somehow solve a problem of their creation? What would you do in their situation? I tell you what I would do; I would immediately begin transferring money out of banks in any of those nations which had been on the receiving end of bailouts from the ECB and the IMF. I would move that money into gold and would not think twice about doing it. If those deposits are no longer sacred, then what is to prevent futures politicans from raiding them whensoever they please?
Once again we have collusion between the financial elites that run the monetary system and the big banks. I have nothing but scorn and contempt for these large banks who gorged themselves on various government bonds and are now in the position of watching their balance sheets go to hell in a handbasket as the value of those bonds plummet. What really makes my blood boil however is that these banks have adopted a mentality that they can go running and screaming like spoiled children to their respective political leaders to use the PUBLIC's MONEY to save them from their own damned stupidity and greed.
Excuse me, but I was once naively of the opinion that the banks existed to make loans to the public. Apparently that is no longer the case - now the banks exist in order to see money taken from their depositors to save their own rear ends for buying debt that no one in their right mind would have purchased.
I do wish to add however, that even though I am disgusted at this unholy alliance between the big banks and the monetary masters, the people in these respective nations do bear some culpability in this matter; they are not without any blame whatsoever. Last time I checked these people vote and they voted to put enough politicians in power to continue spending. As long as the people keep putting the same kind of irresponsible, short-sighted lackeys into positions of power, why should they expect these leaders to change their ways. Those who would ruin their own nations for the sake of short-term political gain deserve to be unceremoniously thrown out of office.
By the way, America, are you watching what is happening here because we are following in the same trajectory as many of these Euro Zone nations.
On gold - the flight to safe haven was on display today with that buying strong enough to propel gold through the psychological $1600 level. Watching it soar throught that level overnight during the Asian session was noteworthy because at one point, a wave of fierce selling came out of nowhere and took the price all the way back down to below its Friday settlement price. The dip did not last long - if you blinked you missed it - but it was very obvious that someone was trying to cap the price and prevent the metal from moving even higher.
All day long the move higher was being resisted by a strong overhead seller. My guess is that this is not hedge fund selling but rather selling originating from the official sector. I also noted today that the Euro, which was slammed down in Asia at one point today moved all the way back up to above the 1.30 level. The manner in which it did so looked very peculiar to me.
I hate to say that the ECB was involved when I have no proof of this but it was very odd to see anyone at all anxious to buy that currency for any reason today given the ramifications of the Cyprus mess. Maybe, just maybe, the monetary masters were out in full force today attemping to prevent a meltdown of their dearly beloved Euro. I simply have no other explanation for the midday move higher in the Euro off its worst levels.
I want to add here that their best efforts notwithstadning EURO GOLD soared higher adding 1.5% today. It is near 1237 euros as I write this. As a matter of fact, gold took off today in terms of all the major currencies again. This is continued evidence to me that gold is getting some serious attention by those who are growing increasingly disconcerted with the policies of the Western Central Banks and their respective finance ministers/leaders.
The chart below notes that various levels that have technical significance for gold. It will take a push through $1620 to really begin a short covering process in earnest. I noted in my KWN Weekly Metals Wrap interview that the hedge fund short position was the largest on record. Some of that began to come off today. There still remains a large number of those shorts however.
Ideally, gold will stay ABOVE $1600 but at the very least, it should remain above $1585 or so to suggest that it has entered yet again into a new and higher trading range.
Once again the useless gold mining shares did nothing to aid the upward progess of the actual metal as they were weak all day long and ended closing down on their lows. No wonder no one wants to own the damned things. As far as providing any decent returns on investment, they suck. What else can I say...
Currency traders had best prepare to go another week without much sleep. Sigh... maybe we can get some ingenius inventor to come up with a pill that provides the human body with the same benefits of getting a decent 7 - 8 hours worth of sleep in a night. I know I will be the first in line to sign up for that...
Saturday, March 16, 2013
Trader Dan Interviewed at King World News Markets and Metals Wrap
Please click on the following link to listen in to my regular weekly radio interview with Eric King over at KWN Markets and Metals Wrap. We'll be covering the Commitment of Traders report in depth this week laying it out against the price action in the metals. We will be providing some insight into why the metals are moving in consolidation patterns noting key technical levels that need to be taken out for some additional strength to be seen.
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/16_KWN_Weekly_Metals_Wrap.html
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/16_KWN_Weekly_Metals_Wrap.html
Tuesday, March 12, 2013
Gold Clears Initial Hurdle
Gold put in some strong gains in today's session clearing its first overhead level of resistance in the process. Since the beginning of the month of March, it has not been able to clear $1585 - $1587 as it attracted selling on approaches to this region. Buying in today's session was strong enough to absorb the offers that emerged in a rather easy fashion which is a bit surprising to me considering the duration of this resistance zone. I would have expected shorts to put up a bit more of a fight up here. That they did not has to be rather disconcerting if you are a bear as it illustrates that they are wavering in their conviction of lower prices ahead.
I mentioned last week when I first put this chart up that the bears were being frustrated in their efforts to break the metal down below this strong buying zone noted. We are now seeing the signs of that frustration as the newcomers are starting to cover.
Now that the bulls have cleared that $1585 - $1587 level, it is essential that they prove their mettle if prices retreat back down towards this area. That will signal that the bulls have regained the short term initiative from the bears.
I would look for fiercer resistance at the next resistance zone where the "16" handle will emerge. Not only is that a psychological resistance level but it is also a technical one. If the gold bulls can take the price up and through this level and maintain the price ABOVE this level, we should see a run towards the late February peak up near $1620.
I want to again note here that gold put in another strong day in terms of the major currencies such as the Yen, Pound, Euro and Swiss Franc. It continues to display strength across a wide variety of currencies, which is always good for a bullish cause.
The other thing of note - the HUI regained its losses from late last week after it put in that huge upside reversal on Wednesday. It once again encountered selling pressure as the various stocks that comprise this index rose to their last week highs. This is showing up on the chart near the 360 level. I need to see this index CLEAR 372 and do it with authority to prove to me that this is indeed a lasting bottom in the mining sector. I am of the opinion that if it does this, the gold and silver charts will both show markets that are taking out their respective overhead resistance levels.
Remember, it has been the shares which are dragging on the metals; if those shares are done going lower as it appears that they are, then it is going to be difficult for the bears to beat the actual metals down any longer. Keep in mind that there is a very large, multi-year high, hedge fund short exposure in gold. That position will be vulnerable if the bulls can continue to peel off the weaker-handed shorts that have tagged along for the downside ride. There are significant stops above this market that if breached, will provide some nice upside fireworks.
As usual, the key will be whether the bullion banks emerge as sellers on any rallies. They have been using this downdraft to cover their previously built short positions and have reduced that significantly. Are they content to leave that as is or are they looking to rebuild it? We shall see. One thing is for certain however; those hedge fund computer algorithms are not going to ask any questions if the bulls can take out the overhead resistance levels that trigger the buy signals on those infernal machines of theirs. They will be buying back at the same speed that they have been selling for some time now.
I mentioned last week when I first put this chart up that the bears were being frustrated in their efforts to break the metal down below this strong buying zone noted. We are now seeing the signs of that frustration as the newcomers are starting to cover.
Now that the bulls have cleared that $1585 - $1587 level, it is essential that they prove their mettle if prices retreat back down towards this area. That will signal that the bulls have regained the short term initiative from the bears.
I would look for fiercer resistance at the next resistance zone where the "16" handle will emerge. Not only is that a psychological resistance level but it is also a technical one. If the gold bulls can take the price up and through this level and maintain the price ABOVE this level, we should see a run towards the late February peak up near $1620.
I want to again note here that gold put in another strong day in terms of the major currencies such as the Yen, Pound, Euro and Swiss Franc. It continues to display strength across a wide variety of currencies, which is always good for a bullish cause.
The other thing of note - the HUI regained its losses from late last week after it put in that huge upside reversal on Wednesday. It once again encountered selling pressure as the various stocks that comprise this index rose to their last week highs. This is showing up on the chart near the 360 level. I need to see this index CLEAR 372 and do it with authority to prove to me that this is indeed a lasting bottom in the mining sector. I am of the opinion that if it does this, the gold and silver charts will both show markets that are taking out their respective overhead resistance levels.
Remember, it has been the shares which are dragging on the metals; if those shares are done going lower as it appears that they are, then it is going to be difficult for the bears to beat the actual metals down any longer. Keep in mind that there is a very large, multi-year high, hedge fund short exposure in gold. That position will be vulnerable if the bulls can continue to peel off the weaker-handed shorts that have tagged along for the downside ride. There are significant stops above this market that if breached, will provide some nice upside fireworks.
As usual, the key will be whether the bullion banks emerge as sellers on any rallies. They have been using this downdraft to cover their previously built short positions and have reduced that significantly. Are they content to leave that as is or are they looking to rebuild it? We shall see. One thing is for certain however; those hedge fund computer algorithms are not going to ask any questions if the bulls can take out the overhead resistance levels that trigger the buy signals on those infernal machines of theirs. They will be buying back at the same speed that they have been selling for some time now.
Monday, March 11, 2013
NO FEAR
Remember when those two words were popping up all over the place, whether on T-shirts, Bumper Stickers, Skate Boards, etc.? It was like so many other fads that have come and gone although it is apparently back in vogue, at least when it comes to the lemmings that the Fed has piped into piling back into equities.
Take a look at the Complacency Index as I like to call it or the "Fear Index" as others have dubbed it- the Volatility Index. It reached levels in today's trading session not seen since April 2007, that is a month shy of SIX YEARS AGO!
Wall Street hasn't a care in the world and apparently the sky is the limit for the equity indices. And I used to think Wall Street loved Easy Al (Alan Greenspan)! They are so in love with Uncle Ben (Ben Bernanke) that I think we are going to see them start naming streets after him in New York's financial district.
I have said it before and will say it again, you cannot fight the tape on this rally in the equities. Everything we ever learned about being able to print your way to prosperity is obviously utterly wrong; the modern day alchemists have proved that not only that it is, but that every age/generation that has ever come before us completely missed the mark.
The Central Banks have managed to create an environment in which Bear markets are a thing of the past, never to be witnessed again in our lifetime. And Yes, Virginia, there really is a Santa Claus...
Take a look at the Complacency Index as I like to call it or the "Fear Index" as others have dubbed it- the Volatility Index. It reached levels in today's trading session not seen since April 2007, that is a month shy of SIX YEARS AGO!
Wall Street hasn't a care in the world and apparently the sky is the limit for the equity indices. And I used to think Wall Street loved Easy Al (Alan Greenspan)! They are so in love with Uncle Ben (Ben Bernanke) that I think we are going to see them start naming streets after him in New York's financial district.
I have said it before and will say it again, you cannot fight the tape on this rally in the equities. Everything we ever learned about being able to print your way to prosperity is obviously utterly wrong; the modern day alchemists have proved that not only that it is, but that every age/generation that has ever come before us completely missed the mark.
The Central Banks have managed to create an environment in which Bear markets are a thing of the past, never to be witnessed again in our lifetime. And Yes, Virginia, there really is a Santa Claus...
Saturday, March 9, 2013
Trader Dan Interviewed at King World News Metals Wrap
Please click on the following link to listen in to my regular weekly radio interview with Eric King on the KWN Weekly Markets and Metals Wrap.
Friday, March 8, 2013
Gold in some Foreign Currency Terms
By request...
The spike lower in EuroGold below 1200 seems to have been a relatively short-lived phenomenon, for now. You will note that in terms of the Euro, gold has been in a steady downtrend since October of last year with the trend more defined since November.
This is a possibility that it has broken this downtrend but one day does not a new trend make. We need to see CONFIRMATION. For a bare minimum, I would need to see Eurogold trade through the 1240 level and maintain its footing ABOVE that level. I would feel extremely confident that a near term bottom is in if price could climb past 1250.
Sterling gold is displaying a wedging pattern and has not performed as poorly as EuroGold of late. This is due to the extreme weakness in the British Pound which has has trouble lately on the crosses as further weakness displays itself in the British economy. The BOE is engaged in its own bond buying program and there is chatter that it may not be sufficient to lift the economy out of its doldrums over there.
You might notice that Sterling gold does not remain below the 1000 level for any length of time. It is very similar in that sense to Euro Gold and I might add, to US Dollar priced gold in reference to the $1570 - $1560 level.
I would need to see Sterling Gold above 1110 - 1120 to feel that it is going to challenge its all time high near 1180.
Lastly, Yen Gold - what more need be said - it is on a strong tear higher as the Yen has been the whipping boy of the crosses. The new Japanese government is determined to stave off the deflationary funk that has gripped its economy for decades and to that end, is going to create boatloads of yen if necessary. The currency is devaluing against nearly every single currency out there, not to mention gold. I would look for the all time high in this "cross" to be taken out by summer.
The spike lower in EuroGold below 1200 seems to have been a relatively short-lived phenomenon, for now. You will note that in terms of the Euro, gold has been in a steady downtrend since October of last year with the trend more defined since November.
This is a possibility that it has broken this downtrend but one day does not a new trend make. We need to see CONFIRMATION. For a bare minimum, I would need to see Eurogold trade through the 1240 level and maintain its footing ABOVE that level. I would feel extremely confident that a near term bottom is in if price could climb past 1250.
Sterling gold is displaying a wedging pattern and has not performed as poorly as EuroGold of late. This is due to the extreme weakness in the British Pound which has has trouble lately on the crosses as further weakness displays itself in the British economy. The BOE is engaged in its own bond buying program and there is chatter that it may not be sufficient to lift the economy out of its doldrums over there.
You might notice that Sterling gold does not remain below the 1000 level for any length of time. It is very similar in that sense to Euro Gold and I might add, to US Dollar priced gold in reference to the $1570 - $1560 level.
I would need to see Sterling Gold above 1110 - 1120 to feel that it is going to challenge its all time high near 1180.
Lastly, Yen Gold - what more need be said - it is on a strong tear higher as the Yen has been the whipping boy of the crosses. The new Japanese government is determined to stave off the deflationary funk that has gripped its economy for decades and to that end, is going to create boatloads of yen if necessary. The currency is devaluing against nearly every single currency out there, not to mention gold. I would look for the all time high in this "cross" to be taken out by summer.
Gold Chart plus Comments
I am pressed for time right now but wanted to get some charting out there for the readers. I apologize for the lack of "stuff" this week but a trader's life can be busy at times.
As those who have been regular readers of this site know quite well by now, I have been very cautious in regards to gold for some time now. When a market continues to violate one chart support level after another, it is never a bullish sign, no matter what all the self-proclaimed experts are pontificating whether it be some backwardation nonsense chatter or "bullish COT" reports.
I have said it before and will say it again, speculators, particularly the large ones, aka, hedge funds, are what drive markets nowadays. When they are selling, it is never bullish. The only time it is bullish is when they are loading up on the short side and a market is not breaking down through support levels.
We might have just reached that point. I want to emphasize, "might" because I need some further confirmation from the price action. What I am seeing however is a market that keeps entering a zone that I have marked, "STRONG BUYING ZONE" and every time that it does, it does not stay in that zone for more than three hours time.
Note the following 60 minute chart and you can see that the moves lower into this zone generate high volume buying in which price tends to spike off of the worst levels rather than closing each bar down on the lows. That is an indication of heavy buying by some very strong hands.
We have had three occasions now since the first of this month that this level has held rock solid. it is evident that the bears have been unable thus far to break the price down through the bottom of this zone.
What I want to see to feel more confident is an upside breach of the top of this trading range that REMAINS ABOVE this level for at least 4-6 hours, preferably a day. I believe that if this occurs, we will begin to see some of these hedge funds start to cover.
If gold can get back above $1600, it will suggest that a bottom is in. The flip side is of course if this support level gives way. Let's hope it does not.
One last thing, gold was VERY FIRM today in terms of nearly EVERY SINGLE MAJOR CURRENCY. Whether it was Yen gold, Euro gold, Sterling Gold, Swissie Gold and even Aussie Gold and Loonie Gold, the metal was higher even as the US Dollar was sharply higher. That is very noteworthy. In the past I have spoken to the idea that if gold is moving higher in terms of most of the other major currencies besides the Dollar, the chances of the bears breaking it down sharply in US Dollar terms is greatly diminished. The opposite of course holds true; if the metal is higher in US Dollar terms only while it is moving lower in terms of these other majors, the rally is not going to last much longer.
What today's move is signaling is that gold is trading as a currency again and not so much as a Dollar related issue. Again, I would like to see additional confirmation of this besides just in the Yen (Yen Gold is on a tear higher). It is still a fact that regardless of talk about early cessation of the QE3 and QE4 programs, many of the Western Central Banks, and I am including Japan here in that sense, are employing their own versions of QE or have adopted monetary easing policies. While speculators are busy being enamoured of stocks, it is not being lost on gold as to what these Central Bankers are all doing to their currencies. Never in the history of mankind has so much paper currency been created simultaneously. It is a wonder that we are already not using the stuff to heat our houses instead of wood!
Let's see what next week brings us. At least the HUI has stopped going down for now!
As those who have been regular readers of this site know quite well by now, I have been very cautious in regards to gold for some time now. When a market continues to violate one chart support level after another, it is never a bullish sign, no matter what all the self-proclaimed experts are pontificating whether it be some backwardation nonsense chatter or "bullish COT" reports.
I have said it before and will say it again, speculators, particularly the large ones, aka, hedge funds, are what drive markets nowadays. When they are selling, it is never bullish. The only time it is bullish is when they are loading up on the short side and a market is not breaking down through support levels.
We might have just reached that point. I want to emphasize, "might" because I need some further confirmation from the price action. What I am seeing however is a market that keeps entering a zone that I have marked, "STRONG BUYING ZONE" and every time that it does, it does not stay in that zone for more than three hours time.
Note the following 60 minute chart and you can see that the moves lower into this zone generate high volume buying in which price tends to spike off of the worst levels rather than closing each bar down on the lows. That is an indication of heavy buying by some very strong hands.
We have had three occasions now since the first of this month that this level has held rock solid. it is evident that the bears have been unable thus far to break the price down through the bottom of this zone.
What I want to see to feel more confident is an upside breach of the top of this trading range that REMAINS ABOVE this level for at least 4-6 hours, preferably a day. I believe that if this occurs, we will begin to see some of these hedge funds start to cover.
If gold can get back above $1600, it will suggest that a bottom is in. The flip side is of course if this support level gives way. Let's hope it does not.
One last thing, gold was VERY FIRM today in terms of nearly EVERY SINGLE MAJOR CURRENCY. Whether it was Yen gold, Euro gold, Sterling Gold, Swissie Gold and even Aussie Gold and Loonie Gold, the metal was higher even as the US Dollar was sharply higher. That is very noteworthy. In the past I have spoken to the idea that if gold is moving higher in terms of most of the other major currencies besides the Dollar, the chances of the bears breaking it down sharply in US Dollar terms is greatly diminished. The opposite of course holds true; if the metal is higher in US Dollar terms only while it is moving lower in terms of these other majors, the rally is not going to last much longer.
What today's move is signaling is that gold is trading as a currency again and not so much as a Dollar related issue. Again, I would like to see additional confirmation of this besides just in the Yen (Yen Gold is on a tear higher). It is still a fact that regardless of talk about early cessation of the QE3 and QE4 programs, many of the Western Central Banks, and I am including Japan here in that sense, are employing their own versions of QE or have adopted monetary easing policies. While speculators are busy being enamoured of stocks, it is not being lost on gold as to what these Central Bankers are all doing to their currencies. Never in the history of mankind has so much paper currency been created simultaneously. It is a wonder that we are already not using the stuff to heat our houses instead of wood!
Let's see what next week brings us. At least the HUI has stopped going down for now!
Wednesday, March 6, 2013
Strong Finish to HUI
After what must no doubt seem a near eternity to many, there is finally a sign of life in the mining sector. A BULLISH ENGULFING pattern appeared on the daily chart today. This is a pattern that is generally valid after a prolonged downtrend. It also is much more reliable if overall volume is good. So far we have both ingredients in place judging from some of the actual miners today.
There are two things I am looking for at this point. First - I want to see this index close strong on FRiday of this week and not puke out over the next two days. Second - I would also like to see it push through 370 on a weekly closing basis within another week or so.
Aggressive traders/investors can wade into the water on select shares PROVIDED that they use sound money management techniques. That means this - if this week's low gets violated - GET OUT. Don't stand around arguing why the market needs to go up. GET OUT! You can always get right back in if the market action subsequently dictates it is okay to do so.
Longer range, more conservative oriented investors would probably want to see that weekly close above the 370 level to prove that this is anything more than a dead cat bounce and actually has some legs to it. One day wonders are becoming way too frequent nowadays due to the nature of computer algorithmic trading so some confirmation is warranted for those who like to see some follow through before making a move.
I am noting that the indicator has turned higher from an extremely oversold level but it has not yet generated a buy signal. The index will need to add to today's gains to trip it into a buy mode. Also, I like to look at previous peaks in the indicator to see if those can be bettered. Remember, a trend that has been a long time in the making is sort of like a gigantic cruise ship. It takes a while to turn. The same sellers who have been pushing these shares relentlessly lower will be looking for a place, a level, at which they can sell any rally UNLESS THE MARKET PROVES THAT THE TREND HAS TURNED.
Keep that in mind...
There are two things I am looking for at this point. First - I want to see this index close strong on FRiday of this week and not puke out over the next two days. Second - I would also like to see it push through 370 on a weekly closing basis within another week or so.
Aggressive traders/investors can wade into the water on select shares PROVIDED that they use sound money management techniques. That means this - if this week's low gets violated - GET OUT. Don't stand around arguing why the market needs to go up. GET OUT! You can always get right back in if the market action subsequently dictates it is okay to do so.
Longer range, more conservative oriented investors would probably want to see that weekly close above the 370 level to prove that this is anything more than a dead cat bounce and actually has some legs to it. One day wonders are becoming way too frequent nowadays due to the nature of computer algorithmic trading so some confirmation is warranted for those who like to see some follow through before making a move.
I am noting that the indicator has turned higher from an extremely oversold level but it has not yet generated a buy signal. The index will need to add to today's gains to trip it into a buy mode. Also, I like to look at previous peaks in the indicator to see if those can be bettered. Remember, a trend that has been a long time in the making is sort of like a gigantic cruise ship. It takes a while to turn. The same sellers who have been pushing these shares relentlessly lower will be looking for a place, a level, at which they can sell any rally UNLESS THE MARKET PROVES THAT THE TREND HAS TURNED.
Keep that in mind...
HUI to Gold Ratio exceeds Nov. 2008 low then bounces
The ratio briefly dropped below the low made back in November of 2008 before bouncing higher in today's session. It came very close to matching the October 2008 low. It could be that we have gotten the answer to our question posed previously whether the gold shares would need to move lower against the price of bullion before the HUI would finally bottom out. I want to see a bit more subsequent action to feel that has been confirmed.
By the way, I will try to provide a CLOSING chart of this later on today if my schedule permits.
As far as the actual index itself goes, it ran to within a point or so of the 61.8% Fibonacci Retracement level noted on the monthly chart before attracting what seems to be at this point a significant amount of buying. I want to take a look at some of the actual stocks that comprise this index to get a better sense of whether this is a one day wonder or is the long-awaited selling climax. Again, that will need to await the close of trading today and also how these things behave tomorrow. The weekly close is also going to take on a great deal of significance given the extent of the price decline in this sector, particularly against the backdrop of an upside runaway in the broader equities.
Note that the technical indicator has surpassed the 2008 low in regards to its oversold reading. It is back to levels last seen in 2001, TWELVE YEARS AGO!
Incidentally, gold itself is stronger in terms of all of the major currencies today; Canadian Dollar, Swiss Franc, Euro and Yen. It is basically holding steady against the Aussie which is vascillating up and down today against the US Dollar. This is coming on the heels of a stronger Dollar which is noteworthy. In observing the price action in the metal today it looked as if the bears were gunning for downside stops below $1570. They didn't reach them!
I was suprised at the ferocity of the rebound off that level as it reversed quite sharply to the upside around 8:45 AM CST on strong volume. Somone either covered in large size or some new buying came in. I am not sure which it was right now but the volume was big. I would like to see the metal close out a pit session trade this week ABOVE $1587 or so. That would make some of the Johnnie-come-lately gold bears extremely nervous. It will still take a closing push or good intraday push through $1600 to confirm a near term bottom. That would also need confirmation by the HUI.
By the way, I will try to provide a CLOSING chart of this later on today if my schedule permits.
As far as the actual index itself goes, it ran to within a point or so of the 61.8% Fibonacci Retracement level noted on the monthly chart before attracting what seems to be at this point a significant amount of buying. I want to take a look at some of the actual stocks that comprise this index to get a better sense of whether this is a one day wonder or is the long-awaited selling climax. Again, that will need to await the close of trading today and also how these things behave tomorrow. The weekly close is also going to take on a great deal of significance given the extent of the price decline in this sector, particularly against the backdrop of an upside runaway in the broader equities.
Note that the technical indicator has surpassed the 2008 low in regards to its oversold reading. It is back to levels last seen in 2001, TWELVE YEARS AGO!
Incidentally, gold itself is stronger in terms of all of the major currencies today; Canadian Dollar, Swiss Franc, Euro and Yen. It is basically holding steady against the Aussie which is vascillating up and down today against the US Dollar. This is coming on the heels of a stronger Dollar which is noteworthy. In observing the price action in the metal today it looked as if the bears were gunning for downside stops below $1570. They didn't reach them!
I was suprised at the ferocity of the rebound off that level as it reversed quite sharply to the upside around 8:45 AM CST on strong volume. Somone either covered in large size or some new buying came in. I am not sure which it was right now but the volume was big. I would like to see the metal close out a pit session trade this week ABOVE $1587 or so. That would make some of the Johnnie-come-lately gold bears extremely nervous. It will still take a closing push or good intraday push through $1600 to confirm a near term bottom. That would also need confirmation by the HUI.
Monday, March 4, 2013
HUI / Gold Ratio Chart - Updated
Today's sell off in the mining shares dropped this ratio, which has already been collapsing, to levels last seen at the depth of the credit crisis back in 2008. It should be noted that the ratio did recover that month moved up smartly off its worst reading.
This time around however, the ratio is not recovering. It closed last month in February at the lowest CLOSE for a month since May 2001. That is an astonishing TWELVE YEARS AGO. The month of March is still young so the ratio has time to recover but so far it is showing no signs yet of reversing.
Some select shares are either the screaming buy of a lifetime or gold is going to fall further yet. It is unclear just what it is going to take to convince BROADER stock market perma bulls to stop chasing them higher. News that China is attempting to slow its overheating real estate market down was shrugged off like a bad habit in today's session in the US.
I know that many analysts continue to insist that the broader stock market is still cheap. That is their business and their opinion. I believe we are witnessing another speculative mania courtesy of the Federal Reserve. With the Fed having slashed interest rates to practically ZERO and with commodities in general out of favor with hedge funds and other larger investors, stocks are the only game in town to obtain any sort of yield in this insane speculative nirvana that the Fed's policies have created. I suppose the rally in equities will continue until it just doesn't. The tape continues to tell traders to buy the thing.
That of course is not much use as predictions go but these guys are drooling all over their chins while they eagery await any dips in the market to gorge themselves on more equities. Nothing, and I do mean "NOTHING" can disabuse this gang of the current Bullish rage that has seized upon them and will not let them go. Quite frankly, it is stunning to watch this herd mentality grow more virulent with the passing of each and every day.
This time around however, the ratio is not recovering. It closed last month in February at the lowest CLOSE for a month since May 2001. That is an astonishing TWELVE YEARS AGO. The month of March is still young so the ratio has time to recover but so far it is showing no signs yet of reversing.
Some select shares are either the screaming buy of a lifetime or gold is going to fall further yet. It is unclear just what it is going to take to convince BROADER stock market perma bulls to stop chasing them higher. News that China is attempting to slow its overheating real estate market down was shrugged off like a bad habit in today's session in the US.
I know that many analysts continue to insist that the broader stock market is still cheap. That is their business and their opinion. I believe we are witnessing another speculative mania courtesy of the Federal Reserve. With the Fed having slashed interest rates to practically ZERO and with commodities in general out of favor with hedge funds and other larger investors, stocks are the only game in town to obtain any sort of yield in this insane speculative nirvana that the Fed's policies have created. I suppose the rally in equities will continue until it just doesn't. The tape continues to tell traders to buy the thing.
That of course is not much use as predictions go but these guys are drooling all over their chins while they eagery await any dips in the market to gorge themselves on more equities. Nothing, and I do mean "NOTHING" can disabuse this gang of the current Bullish rage that has seized upon them and will not let them go. Quite frankly, it is stunning to watch this herd mentality grow more virulent with the passing of each and every day.
Saturday, March 2, 2013
Trader Dan Interviewed at King World News Markets and Metals Wrap
Please click on the following link to listen in to my regular weekly radio interview with Eric King over at KWN on the Weekly Markets and Metals Wrap.
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/2_KWN_Weekly_Metals_Wrap.html
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/2_KWN_Weekly_Metals_Wrap.html
Friday, March 1, 2013
Strong Weekly Close for the US Dollar
The USDX has been unable to clear the 81.50 level for some time now, though it did close right on it last week. This week however was a different story as the Dollar powered through this resistance breaking out of a 5 month long sideways pattern. It should be able to make a run to at least 83. If it can push past there it stands a good chance of heading to 84. That should be a big test of the currency. If it clears that, it will begin a trending move to the upside.
Hard to believe isn't it considering the fact that next to Japan, the Fed has been the biggest debaucher of the currency in terms of the sheer size of money creation it has embarked upon. It just goes to show how rotten the Yen, the British Pound have become and possibly the Euro might be. In other words, the US Dollar is the lesser of the evils.
Let's see, the US is running a $16 Trillion+ deficit with its leaders unable to agree on slowing the rate of spending (note that i did not say CUT SPENDING) by less than TWO CENTS on the Dollar and yet the Dollar is the currency of choice. Absolutely amazing is it not?
Note the ADX below (the dark line) is turning up from a very low level indicating the possibility of the beginning of a trending move. This line will need to to climb above 20 to indicate that this is anything more than a grinding move higher. Momentum however is positive.
Hard to believe isn't it considering the fact that next to Japan, the Fed has been the biggest debaucher of the currency in terms of the sheer size of money creation it has embarked upon. It just goes to show how rotten the Yen, the British Pound have become and possibly the Euro might be. In other words, the US Dollar is the lesser of the evils.
Let's see, the US is running a $16 Trillion+ deficit with its leaders unable to agree on slowing the rate of spending (note that i did not say CUT SPENDING) by less than TWO CENTS on the Dollar and yet the Dollar is the currency of choice. Absolutely amazing is it not?
Note the ADX below (the dark line) is turning up from a very low level indicating the possibility of the beginning of a trending move. This line will need to to climb above 20 to indicate that this is anything more than a grinding move higher. Momentum however is positive.
A Tale of Two Cities
No, it is not the classic by Charles Dickens set against the backdrop of the French Revolution; rather, it is the price charts detailing the nature of the economy as told by two camps.
The first is the S&P 500 as it powers higher and shrugs off Italian election results, sequestration fears and moribond employment choosing instead to focus on the data detailing growth, albeit however minute that might be.
The second is the copper market, afffectionately referred to as "Dr. Copper" for its uncanny ability to project investor sentiment towards overall economic growth.
These two apparent lookalikes, Darnay and Carton, have recently taken to going their own separate ways unlike that of the novel wherein they find their paths increasingly intertwined.
Take a close look at the following two different colored lines. The blue line is the closing price of the S&P 500 (emini) while the red one is the red metal, Dr. Copper.
Don't worry about the actual price level of either one; look only at the DIRECTION of price movement for both lines. I have only gone back to June of last year with this for analysis purposes but wish to point out how the two lines are basically in sync until February of this year. Notice that they tend to both rise and fall together. Spikes in the S&P were matched by spikes in Copper with dips in the S&P coinciding with dips in the price of Copper.
Along about the beginning of this year, the two markets began to diverge a bit in the sense that while the general trend in copper was up, it began moving lower during periods in which the S&P continued to move higher. Copper would recover from the dip and move higher again, seemingly catching up with the S&P but right around the beginning of the second week of February, these two companions apparently parted company and did so rather glaringly.
Can you see how sharp the fall in copper has been over the last month? Can you also see that while the S&P has briefly dipped following copper lower since the middle of February, it then rebounded higher as copper continued to sink? The divergence is especially pronounced over the last week or so.
Here is the issue - both of these markets should not be both true. In other words, if Copper is a predictor, and a generally reliable one, of expected economic activity in the future, then one has to question why the equity markets are seemingly no longer paying attention to its fall. We are constantly being told by the pundits that the global economy is recovering and growth is expected to continue, even if it is at a rather lackluster rate. Yet, here we have copper falling lower giving us a clear signal that growth is expected to slacken.
Which one of these forward looking indicators is true?
I should also note here that the large macro funds ( the hedge funds ) are now playing copper from the short side. Talk about more fuel for further uncertainty. Watching to see how this will further unfold is certainly going to be interesting to say the least.
The first is the S&P 500 as it powers higher and shrugs off Italian election results, sequestration fears and moribond employment choosing instead to focus on the data detailing growth, albeit however minute that might be.
The second is the copper market, afffectionately referred to as "Dr. Copper" for its uncanny ability to project investor sentiment towards overall economic growth.
These two apparent lookalikes, Darnay and Carton, have recently taken to going their own separate ways unlike that of the novel wherein they find their paths increasingly intertwined.
Take a close look at the following two different colored lines. The blue line is the closing price of the S&P 500 (emini) while the red one is the red metal, Dr. Copper.
Don't worry about the actual price level of either one; look only at the DIRECTION of price movement for both lines. I have only gone back to June of last year with this for analysis purposes but wish to point out how the two lines are basically in sync until February of this year. Notice that they tend to both rise and fall together. Spikes in the S&P were matched by spikes in Copper with dips in the S&P coinciding with dips in the price of Copper.
Along about the beginning of this year, the two markets began to diverge a bit in the sense that while the general trend in copper was up, it began moving lower during periods in which the S&P continued to move higher. Copper would recover from the dip and move higher again, seemingly catching up with the S&P but right around the beginning of the second week of February, these two companions apparently parted company and did so rather glaringly.
Can you see how sharp the fall in copper has been over the last month? Can you also see that while the S&P has briefly dipped following copper lower since the middle of February, it then rebounded higher as copper continued to sink? The divergence is especially pronounced over the last week or so.
Here is the issue - both of these markets should not be both true. In other words, if Copper is a predictor, and a generally reliable one, of expected economic activity in the future, then one has to question why the equity markets are seemingly no longer paying attention to its fall. We are constantly being told by the pundits that the global economy is recovering and growth is expected to continue, even if it is at a rather lackluster rate. Yet, here we have copper falling lower giving us a clear signal that growth is expected to slacken.
Which one of these forward looking indicators is true?
I should also note here that the large macro funds ( the hedge funds ) are now playing copper from the short side. Talk about more fuel for further uncertainty. Watching to see how this will further unfold is certainly going to be interesting to say the least.