"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

Trader Dan's free work will soon be available at www.traderdan.biz

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.


  1. 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.
    the winners ultimately write history

    1. And they "disappear" any inconvenient evidence that might support a notion that runs contrary to their world view.

    2. Sorry both of you are wrong: When you read history books you know the real truth.

      The new Pharaoh would destroy all pictures and writings related to the previous pharaoh in order to claim the fame due to their predecessors... However historians have been able to get the story back despite the destruction.
      Hitler, Stalin and all modern dictators have tried to hide their destructive actions... but we all know the true story.

      Today's elite is hiding the truth from the sheeple and trying to rewrite history (R.E: the real reason why we have this huge crisis (Wall Street financial elite who sold their toxic garbage to other financial institutions, pension plans, cities, counties...) but we already know the truth and historians in the near future will be able to tell the true story... The only thing that would "disappear" is the human beings who are covering the manipulation.

    3. sadly most people simply don't take any time or make any effort to uncover the truth in history. they imbibe the grand lies. their history and understanding the world will come from infotainment.

      the greatest inventor in 20th century nicolai tesla was virtually written out of science books and his character attacked.

      the greatest historian in the 20th century immanuel velikovsky was burnt at the stake by the scientific community. virtually all his scientific predictions proved to be true over time. all he did was relay what the ancients knew.

      there are enough clues to tell people they are lied to but most people simply don't care. they think that they are too clever to be lied to since they figure that if it were a lie - everyone would know about it. little do they know.

      there is probably no more than 5% of the population that informs themselves to any degree

    4. also people will say that even if they believe the lie, they are not effected. i talk with these people who think such things and these same people will make their decisions of life based on the grand lies.

  2. Hi Dan, happy Good Friday, thanks for all of your information and effort, great insights. Steve

  3. 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.

    This comment caught my eye... make me think how the whole QE is controlled and orchestrated by the elite and moneychangers of our time. Greed prevails!

  4. Thanks as always Dan. Happy Easter to you. Here is where I am having doubts. I have subscribed to the model that money printing should induce cost push inflation. By QE4, we should see this into gold & commodities. Furthermore, Cyprus should be gold / monetary metal positive by any number of theories (banks not sound, signaling by central banks that individuals / businesses should put money to work rather than slosh around demand accounts). For that matter, Gold as currency should be going up as Yen is competitively devalued ala currency wars. So it seems that we have had at least 3 major triggers for the next leg of gold, and yet it is not happening. Even the element of time is getting close to worn down. And yet the tape is not confirming the theory. One has to ask, what is wrong. If one says merely there is a conspiracy to hold prices down, that is doing no one a favor--because even if true, I don't want have my life's hard won savings eroded.

    1. MDLGTO;

      I hear ya buddy. I am just as frustrated and put out with gold as you are. For that matter, the fact that the US equity markets keep going vertically north no matter what occurs out there is mind boggling. It all comes down to the fact that $85 billion per month is basically going straight from the Fed's printing press directly into the US equity markets. Nothing else matters.

      Gold, on the other hand is being capped and will not be permitted to move higher. As long as the hedgies are making money in equities, they do not care about gold except to want to short it on rallies.

      If this does not end badly, then everything we have ever learned about economics and monetary matters is false. I just happen to believe that history and logic will eventually rule the day but I might be too damned old to have it to me any good before it does.

      I can tell you as a trader that you have to go with the money flow to make money but when everything within you is screaming that this is madness, it is easier said than done.

      Happy Easter,

    2. If I may add,
      That there is no interest in gold now (or not as much as expected) doesn't mean they are right and buying gold is wrong.
      Rome was not made in one day.
      Eventually, I think fundamentals will prevail, but maybe the gold price rise will not look like a gradual increase, but like a brutal earthquake after gathering enough accumulated strength.
      Remember, the passengers of the Titanic still danced and listened to music, even after the shock. Would you have thought then : well, if no one is going to the bloody safe boats, why should I care? I don't want to bother my family for apparently no reason or a wrong signal...
      How did investors felt like 2 days before the krach of 1929? I'm sure many of them were happy smiling and buying, buying mooore stocks.
      You are in "La Haine" from Kasowitz. Maybe we jumped from this 50 floor building already, and gold is the only parachute. Are you going to think, as you fall faster and faster "hey, wait a minute! I ain't feel anything! No bruises, no harm, no pain. I'm just fine, this was a just "fausse alerte"", or are you going to open the golden parachute?
      Open your parachute, because they are breaking all the alarm signals. Statistics are manipulated just as the price of gold for that reason.
      But sooner or later, you will reach the floor at 200 mph and BOOM.
      I was in Iran in october 2012. Wanna know how you feel like when, without warning, your currency loses 25% per DAY in 3 consecutive days? Everyone who could raced for dollars...then for GOLD. But it was TOO LATE for most of them. Last passengers of the Titanic never made it, as history sadly reminds us.
      Listen to the alarm bells.
      Don't mind if gold prices will go up now or within 2 or 4 months. Gold is the safety, the insurance of return of capital vs return on capital.
      For now, it should be the safe play for a certain percentage of your assets imho.
      Happy Easter to all,

    3. I'm glad that all this QE money is not flowing into the PMs, since it would only act as additional weak hands, and we would have another cheap money-induced rise to 1800 gold/35 silver only to have the selling start and have us come back to here once more.

      Also I'd assume that any strong hands that sat out the decline from 1900 gold/49 silver to down here, and through this 18-month sideways pattern, will be holding onto their metals even prices declined a little more, I'm sure.

      For the price of the metals in other currencies, which thankfully you are keeping an eye on as well, the picture looks even better.

      Lastly, besides my comment, hereby wishing you a nice Easter weekend as well!

  5. Reputations and credibility are being destroyed across the board for all who were not devout followers and believers in the Bernanke Fed and the Paul Krugman "final solution".

    How many times have we heard that the money printing is going to cause havoc with inflation, stagnation, dollar crises, etc.?

    Heh, instead, the money is being funneled to re-inflate the exact same bubbles that popped in the first place:

    - Consumer borrowing and spending
    - Out of control government spending
    - A new housing flip/rehab/rent bubble
    - A new tech bubble with stocks like AMZN, PCLN, CRM with PE ratios of "N/A"
    - A U.S Dollar and U.S. Treasury bubble
    - A corporate and junk bond bubble

    And in the meantime, commodity prices are getting utterly destroyed, creating even more "spending momentum" for the consumer in the form of a stealth tax cut.

    Lew is now on the way to Europe in order to offer advice on the Cyprus situation.

    Pretty soon, Bernanke, Draghi, and Abe will be having a secret meeting somewhere in order to compare notes on how to cleverly script statements in order to "jawbone" the Algo speculators to dump commodities and buy Treasuries, Bunds, and JGB's when the CRB index gets back to the top of the range.

    We are truly living in a wonderous, euphoric environment with guys like Kudlow patting Krugman on the back, and guys like Jim Sinclair getting spears thrown at him.

    Virtually all the central bankers are now looking at the "Bernanke Model", which is now in the process of being upstaged by Shinzo Abe's brazen attempt to force economic improvement by even faster and more aggressive printing, which in turn is sending JGB yields even lower!!!

    We will all look back at this point in history and economists will be studying this for years to come as hands down the most amazing financial era ever recorded.

  6. I just calmly buy more. Thanks for the price discount, Ben!

  7. Back to the subject, it's true that technically, I don't see many encouraging signals.
    One of my indicators is the MACD 9 20 7 (shorter parameters still making it reliable and earlier signal than the standard ones).
    - on the 3 months time unit (quarters), the MACD just crossed which can be a bear signal on long-term.
    - monthly, I see no strenght in the last month's bounce. Strong support zone 1550 only managed to stop the decline.
    - weekly, the Andrew's fork (end february, middle may, octobber 2012 pivots) is still alive and kicking, leading prices down at every attempt of breaking through the mlh sup. Both Bollinger bands are going down, and the ma20 is of course down. Last week once again showed no strength.

    With all this, of course situation is not only technical, but also fundamental, especially in a manipulated market.
    But Jim sinclair mentioned that this is an epic fight between physical buyers and paper sellers, and as of now, I still haven't seen the bulls winning any decisive victory.

    So from an objective point of view, though I know gold should go up, and very likely eventually will, I can't tell for sure if it will be with or without a further decline towards 1550, and maybe through it down towards 1450.
    Careful with greed and leverage.

  8. Those who were first to call for the dot com crash or the housing bubble crash were at least 2 years too early. When the crash didn't happen according to their schedule, they were ridiculed and told they were crazy or wrong. They were proven right.

    This gold trading range will end and gold will go much higher when inflation eventually takes hold. This long consolidation pattern is just a blip in the big scheme of things. Fundamentals will win the day but it will do it on it's own schedule. Ignore the noise, stay long and you won't go wrong.

  9. The downward drift of the CCI and all the other factors taken together suggest a monster of deflation unfolding, despite the money printing going on by central banks everywhere. As debt defaults and government confiscations/taxation continue to increase, gold may catch a bid not for inflation protection, but for the ability to move an asset out of electrons.

  10. It's because the money that was flowing into Gold is flowing these days into bitcoins. Simple.


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