“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"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






Friday, May 17, 2013

Gold Chart

Gold has come off of one horrific week in terms of price action. As noted on the price chart, the metal pushed into the region where it recently had its LOWEST CLOSE in some time. You might recall that after the spike down towards $1320, physical demand was unleashed in what can only be described as a torrent. That demand spooked bears and resulted in a wave of short covering that took price nearly $160 off that low. It was at that point that the big selling re-entered.

The resistance at $1485 - $1475 proved to be a bridge too far and down went the metal. It encountered some decent buying near $1440 but once that gave way, especially once $1420 collapsed, sell stops did the rest. Once it lost its "14" handle, many buyers stepped back, expecting that downside momentum would enable them to acquire the metal even cheaper.

I am now watching to see whether or not this market can hold support down at the shaded rectangle I have marked on the chart. Personally, I am welcoming this move back to that recent low because I want to see how it now responds. I do not like buying into markets with spike lows or selling spike tops mainly because the risk/reward can be too great based on the entry point and the exit point that tells you that the trade has soured. A test of a low, that holds is a much better entry point with lower risk. The flip side to this is that if $1320 fails to hold, it will confirm that bearish flag formation noted on the chart with a potential price projection down closer to $1100. Yikes!



It did not help matters any for gold to see in the most recent 13F reports to the SEC, that very large institutional investors have been jettisoning their shares of the gold ETF, GLD. Northern Trust dumped some 910.5 thousand shares alone in Q1 with BlackRock in second place dumping 428.5 thousand shares. If you take the largest institutional investors combined, their selling accounted for nearly 75% of the shares being dumped in GLD.

Paulson is holding firm but it would appear most are not. This is where the pressure keeps coming on the paper markets over here in the West. Institutions see no reason whatsoever to own the metal when they can better put that client money to work achieving historic gains in the US equity market bubble.

The current investing strategy is therefore very simple here in the West - SELL EVERYTHING GOLD and GOLD RELATED and buy equities; i.e. anything that is not a gold or silver mining equity.

With nearly every single passing day bringing us yet another new lifetime high in US stock markets, the pattern is clear - institutional money, and hedge fund money, are buying equities in what they now firmly believe is a NO LOSE SCENARIO. This sure bet is what the Fed and the Central Banks globally hoped to create and they have done just that.

As mentioned many times here - trying to fight the tape is a fool's errand. Traders have to go with the money flow. Investors had better be damned careful is all that I can say. There is a vast difference between trading and investing. This is coming from a professional trader so please do not casually dismiss this.

The Fed has managed to annihilate the very concept of "RISK". If anything, the only risk that now exists is the RISK OF NOT BEING IN the STOCK MARKET and angering your clients who are sure to take their money elsewhere. Money has no loyalty - it goes to where it can gain the largest yield and all money managers understand this. If they wish to retain their client base, they must chase stocks, whether or not they want to. Again, this is just  a reminder, they are not investing client money - they are trading it.

We are living through monetary history. Others coming behind us are going to pour over this period that we are privileged to be first hand participants in trying to come up with explanations for this speculative frenzy in equities that we are now experiencing. Mark it well and remember it; you can tell your kids and grandkids what it was like to watch an entire generation collectively lose their minds and throw caution out of the window. This is what ZERO YIELD environments produce.

28 comments:

  1. https://twitter.com/mjb4632/status/334762266580897793/photo/1

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  2. It is the imminent *end* of QE, not QE itself, which is driving the gains in the stock market. This guy here does a good job explaining why.

    Gold is dropping because real interest rates are rising. And real interest rates are rising, in part, because markets sense an end of QE sooner rather than later - treasuries are selling off.

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  3. http://jessescrossroadscafe.blogspot.com/2013/05/paper-gold-metal-gold-when-worlds.html
    Jesse's latest. I agree the fragility of the systems' remaining functional components and anti-competetive, overbearing alliances signals a black swan or sudden subversion.
    "
    But I agree with David, that there will be a 'closing of the gap' between paper and reality once again, most likely triggered by some 'black swan event' that simply no one could see coming. Except those that the financiers have worked so hard to silence and discredit.

    And then there will be a thunderclap of convergences, and a recognition that we have been led down the same garden path by the irresponsibles once again.

    This is the continuing story of the will to power and the rule of law, and the rights of individuals to protection of property and liberty against the incursions of powerful moneyed interests. In history this is marked by an ebb and flow of lessons learned and forgotten."

    Jesse's "related link" has Andrew McGuire seeing first hand unprecedented gold CB and wholesale demand including some ETF redemptions made to acquire the metal in the fund.
    Soros and Blackrock exited their ETF's likely knowing paper claims becoming too risky. Their shares could be directly redeemed for gold, or cash for gold allocation. As for Soros, in a news story this week, he's gone into gold shares in a big way.
    Related link:
    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/17_Maguire_-_Physical_Demand_Shows_Gold_In_Massive_Bull_Market.html

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  4. After today, there can be no more doubt.

    Bernanke's "5-year Plan" was simply brilliant.

    Probably succeeded far better than he originally thought.

    The Perpetual Motion Machine of rising stock momentum and accelerating commodity deflation is now getting ready to go into overdrive.

    Grains and gold leading the charge and is pulling the CRB Index lower and lower.

    This looks to be an exact repeat of the late 1990's, with soaring stocks and zero inflation.

    I has been truly amazing how Bernanke pulled us from the grip of a financial collapse and hyperinflation and actually pulled the right levers so that the EXACT OPPOSITE would happen.

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    Replies
    1. Yes the money printing is incredibly effective....


      THE 7 BERNANKE YEARS
      So it is guaranteed that Bernanke and other central banks will continue their superb productivity. Bernanke has of course been the most productive man in history. In his 7 years as Chairman of the Fed he has printed more money than during the whole history of the USA. US Federal Debt has between 2006 and 2013 gone from $8.4 trillion to $16.8 trillion. Bearing in mind that it took 230 years for the US debt to reach $8.4 trillion in early 2006, this is quite a feat achieved by Bernanke.

      http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/17_Coming_Collapse,_Massive_Global_Debt,_The_Bernanke_Fed.html

      More Foreclosures and Suicides than During the Great Depression
      The Root Causes: Unemployment and Foreclosure

      Why do more people kill themselves during severe downturns? It’s not just a downturn in the business cycle in some general sense. It’s more specific than that.

      Unemployment and foreclosure are the largest triggers in increased suicide risk.

      http://www.zerohedge.com/contributed/2013-05-17/more-foreclosures-and-suicides-during-great-depression

      I guess if the plan was to ensure the wealth of the few over the many it was a huge success...oh, don't forget food stamp usage. Get better every minute.

      Delete
  5. Andrew McGuire is like the boy who cried wolf. You never really know when to believe him. I read one gold dealer in India relay that there is a supply glut heading into wedding season. Did they stock up before the tax hike?

    I agree with Dan. If you want to scale in, wait until 1325. It's all but inevitable. You can be assured that the bulls are there waiting and will mount a counteroffensive. But it's looking more and more like a 13 handle isn't long for this world.

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    1. This comment has been removed by the author.

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    2. Quotes sourced from http://www.ino.com @ 5:20PM ET, Friday May 17, 2013:
      Market Last Change %
      Crude Oil 96.24 +0.79 +0.83
      Natural Gas 4.104 +0.122 +3.06
      Corn 652.75 +11.25 +1.75
      Soybeans 1448.5 +21.0 +1.47
      30yr Bond 143.87500 -1.56250 -1.08
      10yr Note 131.859375 -0.609375 -0.46

      Delete
  6. http://www.financialsense.com/contributors/lee-adler/gold-at-major-inflection-point
    Lee Adler of the Wall Street Examiner can't help but lay out some of the reasons for today's special gold opportunity.
    Though his charts can be adjusted for a slightly different basis, similar charts tell the same story.
    Adler's always been highly opinionated on the markets. Expect gratuitous lecturing(though brief) about manipulation, enough to acknowledge even widespread interventions, but dutifully hedging his claims with glib, requisite jabs at conspirators and "gold bugs".
    In fact, though he's using what some consider to be unreliable, adulterated COT data, by covering this and some long term charts, his analysis concludes:
    "It’s really a tossup, but I expect at least a strong rebound from around these levels. Whether that turns into a new cyclical bull phase should be signaled by whether gold gets back above 1500 for more than just a peekaboo."

    Hmm. Contradicting himself in the same sentence. Got SPONSORS to please?
    Or just keeping a safe distance from leperous gold heretics and the unwashed...

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  7. Hindu Times article on supply/demand. There is no imbalance per this article. In fact, they say there is a glut in India right now.

    http://www.thehindubusinessline.com/markets/gold/indias-gold-imports-fall-57-in-q1-of-2013-wgc/article4720327.ece?ref=wl_markets

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    Replies
    1. Indian gold traders scramble for supplies despite high premiums

      May 17 (Reuters) - Gold traders and jewellers in India, the world's biggest buyer of the metal, were scrambling for supplies after the central bank restricted imports on a consignment basis, triggering a surge in premiums.

      http://in.reuters.com/article/2013/05/17/markets-india-precious-idINL3N0DY1EE20130517

      Delete
  8. Dan,

    I love youI as an American Patriot. I too am a libertarian. I want to let all of your readers know a few things. First, Americans of the past were patriots (WWII) they gave us a chance of freedom. We are now in very precarious times. I am 52 years old. I don't have alot of m0ney but what I had I invested in gold. I think the young bloods in NY have no idea what it took to take this country. If there was any change I would go to war to fight for freedom and capitalism. I do not know what this President is? In fact, I think he is a Socialist. Even knowing that, if there is a currency war as I suspect is it alll around us fine. Tell us. I will take my .223 AR 15, my .45 and go fight the chinese; the russians, whoever, for a way of life given to me from god, since I was born an american. What I cannot understand is the big banks waging war against us and our way of life. Tell me I am wrong. Tell me that they are not trying to manipulate us. I am not a war monger and love all people, even those that are integrating into our system, w/o legas status. What they are doing is wrong, illegal and promoted by our President. What the IRS is doing is completely out of hand, and if proved, we should give Mr. Miller his due, that is nothing, nata, absolutely no future. If on the other hand, it proves that he took orders from Mr. Obama then, lets hang him (Obama). If I need to fight for America, I have no problem doing that, I told my wife tonite, what is the platform of the unions? What do they want? world workers unite? Wrong, Americans unite. Why doesnt anyone understand the United States should promote FREEDOM. I think everyone should start to pick sides. I dont care if I die, as long as my kids, grandkids survive in America. It is getting very convulted right now. Screw Russia, China, even South America. What we need is not a socialist President but one who values Freedom, liberty, and capitalism, not neo capitalism, or GE type capitalism but real capitalism. Why is this so hard to understand. What is it profit, greed? Why. Dan, I can fight still, shoot a .223, a .45 and can lead anyone into a war that makes sense. Lets just get it on. Wall streets Jamie Dimon is ____ full of greed. Blanfein same way. It is going to get very interesting soon. I dont want war, but if it comes I know Jesus will accept me. He knows my heart. Freedoom. Liberty. Wall Street and Jamie, Blanfein, know greed. Let them rot in hell. War is coming, and Jamie you are not an American you are a P____. So is Blanfein. If this country was won it was from my uncles who served valiantly, some died, some lived, some served in Korea, some in WWII, some even in WWI. Why is it we have these libtards controlling our markets. Why Dan...what is wrong with this country. Do you think the Russians care about us? How about the Chinese, the N. Vientamese? I think not. I am ready. I have weapons and know how to use them. lets get it on...

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    Replies
    1. You are a self-described small "l" libertarian. I wonder if you got involved with Ron Paul's campaign a couple years ago - really got involved by registering Republican and going to county GOP meetings and persuading people. I don't think you did, and it shows that you sat it out by all of the empty words you now type. Too bad you didn't get involved and act when you had the chance. Now you are left to complain.

      You refused to get involved. So sad - spinless "patriots" who stand around and complain.

      Delete
    2. I attended the first Tea Party rally,then the Beck rally with my father. So do not challenge my patriotism. I also have many family members buried in Arlington. One of my best friends just lost his ONLY SON in Afganistan about a year ago. Broke him. He was later told he was shot point blank by an Afghan trainee. Do not tell me I am not a patriot. Do not tell me that I am spine less. If so I will give you my addres and we can just do what men did when sonemone called the other a traitor. I attend any and all rallies against this manipulated Keynsian system. I am sure I am on the WH watchlis, you know the Napolitano list. Who ever you are come on bring it. A Kimber TLE 1911 .45 is quite accurate and if need be I can hit a 3" target at 25 yards preferably a liberal progressive target. Paper of course.

      Delete
  9. I am an American,not a world banker. I invested in gold not to be take an by American Bankers, like Jamie, or Lloyd, but rahther to be hedged against the coming war. They, American Banking cartel do not give a shit. They are the problem. They are not Amercans rather they use us as an ATM. If I said what was true about jamie and Lloyd I could be put in jail, none the less, they are full of greed. I cannot comprehend anyone allowing what the GS bankers did to us, both in 2008, now again in 2013. Lloyd you know what I speak of. You and your kind should be shot. Period. Shothen then take it off three days later. Well I have a message for you. Take very good care of your family, cause, I really do not like you very much. Blythe Masters same for you. You are a contra American. Open to criticism and much chagrin. Heck, I would not like to see you or I too would probably spit in your face you little B___. Nothing makes me angrier than greed. You are full of it. Enough said. May god be with us all. Dan I love you. My uncles and others graves are enough proof to me to know the truth. America is turning to a culture I cannot even fathom. However, finance and econoics I understand, greed beyond belief is something I abhor.

    ReplyDelete
    Replies
    1. Hang in there man. They may have won a battle, but they have not won the war.

      Delete
    2. You're a good man Wolf. Life is an adventure, live it.

      Delete
  10. OK folks, prediction here, based on the anatomy of the stock panic coming out of existing bearish sentiment, back in 1907.
    At least this gives some idea of recovery timing.
    There was then an identical october high, cascading downwards to an identical april plunge.
    From there, a rally back to the lost support level, and then cascading lows into a november bottom, at half price of the october high 13 months earlier.
    For gold, this is $900, which is uncannily close to Martin Armstrong's target.
    From there, the market will rally strongly, and one year later will be back at the initial october high of $1800.
    I don't think its any coincidence that this will occur at the same time the DOW/S&P top out and plummet.
    Sell what you have at the top of the back-to-support-rally, and save all your cash for this coming november bottom. Buy back to increase your holdings by some 40%. Thats the perfect theoretical anyway :)
    You heard it here first!

    ReplyDelete
  11. Sorry guys I am holding till they take everything they I will hunt down all of them. I know how to hunt,have all the tools, and even can get into the system to find all of em. Does not mattter to me at this point, I have lost alot, and to me, they need to lose more. Blythe you are an enemy, so is Jamie, I hope you feel secure with is protection, lOL, you should not. You are vulnerable so is your family. just so let you know, when you lose everything you dont have much more to lose. You should understand but you are privelieveged. Jamie, you personally abhor me. You are part of the system that needs purging. Just for your informaiton, send em over I will kill them one at a time. good luck, lets see who wins. I love war, so did my ancestors they were good at it. I too am expert trained at weapons. so it should be an even battle. Hope you are ready. Cause I am motivated at this point. Good luck, I dont mind dying at this point cause there is very risk. Just fun in trying??? How about you having fun fucking all the American gold holders. I hope so and I hope it is worth it to you. Your life is now on the line.

    ReplyDelete
    Replies
    1. "Just for your informaiton, send em over I will kill them one at a time. good luck, lets see who wins. I love war"

      This is the rant of a deeply disturbed person.

      Delete
  12. I think these are evil people. All we want is a free and fair market. When an analyst tells his friends before he either upgrades or downgrades a stock, that makes it all unfair. When bankers who hold trillions of dollars of the public money conspires with the fed to kill the gold market , that is also unfair. A level playing field people, or as white wolf says, there should be a heavy price to be paid.

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  13. Hey all...take a deep breath and relax.

    Many of you (including me) are afraid at this point. Taking a write down on your investment account or gold holdings is emotionally hard (understatement!)
    I for one do not believe that the gold bull market is over.
    Listen carefully to what Jim Rogers is saying. This type of correction is normal and necessary in a bull market.
    He is not the only billionaire with this opinion, there are others like John Paulson, Eric Sprott etc.
    Anger will get you nowhere, this is just the way markets work.
    The pain you are feeling right now will also be felt by those who are being herded into the DOW right now..perhaps even worse.
    All along many in the know have told us that when this is all said and done "Gold will be the last man standing"
    I believe this...because of the fundamentals...not because of crazy conspiracy theories and all the other monster under the bed stuff we sometimes read.

    ReplyDelete
  14. Hi everybody,

    I see 2 ratios of fibonacci to explain the moves of gold on the long term.
    The first one based on the 300 - 1940 $ complete move up.
    The second one based on the 750 - 1940 $ wave up.

    It gives the area of 1315-1345 a great importance as a support zone.
    Should it fail (I don't say it will or it won't), I don't see any other support before 1200 $ (next fibo of 750-1940) and then 1130 $ (next fibo of 300-1940).

    Depending on the timing and if we break Under 1300 $, I'm currently planning to buy aggressively on these 2 levels if I find a decent technical signal to do so.
    I don't imagine gold will be able to fall Under 1130, as it also will meet an important long-term uptrend line.
    But who know?

    One thing I also imagine is when the paper reaches its lowest levels, then will be the day that margins become 100%, all the paper longs are ejected from their leveraged positions, physical gold's prices then rocket up once more. We'll see if I'm right. My core positions will always be physical.

    http://s17.postimg.org/mfwbalzjz/gld.jpg

    ReplyDelete
    Replies
    1. HDH -nice postings. I appreciate your sangfroid.
      Dan, Thanks for your sanity in this insane market.

      The ferocity of late day selling / shorting of miners- the HUI setting a new low & HUI:GOLD low makes me think that gold is going to break through support. Seven straight down days in gold so far. I'd imagine Monday is going to be down, or at least start down.

      That said, I'm chomping at the bit to get more physical at a great price . The other commodities' ability to hold in the strong dollar + a lot of anecdotal + observational evidence of I've taken in in NYC over the past six months makes it seem that inflation is arriving. Harder to lie about other commodities than the paper controlled gold & silver markets.

      Delete
  15. In the history of the world there has only been 1 time when gold went down 600 dollars in value. That was 1980 when it went from 850 to 200. So this is a historic decline. Just for 1 comex contract, its a decline in value of 60,000 dollars. To put it in perspective, the total value of 1 contract of corn is 30,000. So corn would have to go to zero and then lose another 30,000 to equal the decline in gold. So this is historic. When something has only happened one time in all of history. So every dollar decline from here, if it happens, will just make this decline even more historic. I dont know what it all means, other then its not very often that history is being made. Just to say this has been a massive decline in gold and silver. Of historic proportions.

    ReplyDelete
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  17. Art of investment ...

    Buy when everyone is fear ... and sell when everyone is confidence ..

    ReplyDelete
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