That pulled the rug out from under both gold and the bond market as those markets plunged. Rising interest rates in what most investors believe is a NON-INFLATIONARY environment is serving to lure short sellers into gold and forcing an exodus among recent bottom pickers and even some long-time bulls.
As stated many times recently, gold is in a intermediate term bear market and as such, rallies are going to be sold by speculative forces until such time as the technical chart pattern changes.
I wish to remind readers of this site not to be sucked into taking aggressive long positions in anything gold right now unless you have deep pockets and can absorb further losses while you wait for the deflation/inflation psychology to shift. Trying to buy into a market like this right now is attempting to catch a falling knife - you are going to end up getting hurt.
One of the most important thing to learn if you are trading futures is that LEVERAGE can destroy you. Far too many of these self-appointed experts in gold, whether they be "analysts" recommending long positions based on their improper reading of that Commitment of Traders reports, or those who have gold to sell, simply do not recognize that the chart pattern in gold has shifted on an intermediate and shorter term time basis. When they glibly recommend long positions in gold, they are setting you up to get hurt badly when the trend reasserts itself as it is currently doing today.
If you are trading on the shortest of time frames (day trading) that is one thing as there will always be short term tradable bottoms as well as tops. However, to take a position in the gold futures market without a technical chart confirmation that the trend is changed is the same as having a financial death wish. Remember that....
Currently gold is holding above psychological chart support at the $1200 level which is near the cost of production. That level needs to hold or it will revisit the recent low near $1180. I have noted the extremely high volume day with ellipses. That area should attract buying if the bottom is actually in. We will see what happens.
The mining shares are also falling lower today which is serving to bring additional sellers into the Comex. Throw in the fact that the US Dollar is absolutely SOARING and proving to be the King of the Hill among currencies, gold has its work cut out for it if it is going to start any sort of SUSTAINABLE rally to the upside. For right now, gold will have to clear and STAY ABOVE $1250 - $1260, preferably on a weekly chart, to denote a more lasting bottom.
Martin Armstrong comments on gold today in his blog: "In gold today we have three Weekly Bearish Reversals 1233, 1197, and 1176. Take out all three and we should expect a drop to 1040 area. It would be fantastic to see a collapse to $950 by the first week of August. That would destroy gold in the eyes of most as even an asset class. That would then set the stage for a real bull market."
ReplyDeletehttp://armstrongeconomics.com/2013/07/05/gold-euro-here-we-go-again/
I read 'tons' of financial and political articles which I post on my blog:
http://goldtradercommentsaugust2010.blogspot.com/
which I post for people who are trying to grasp an understanding of what is going on in this crazy world.
I listen to ALL SIDES to understand what is going on.
Armstrong is a very poor writer (horrible grammar, spelling and sentence construction, but is a genius when it comes to understanding complex markets and history and has been very accurate for a long time.
Jim Sinclair is bullish gold all the time and may be correct 'in the long run', but Armstrong seems to be more helpful in understanding the interim twists and turns of these 'cycles'.
Dan is the best at explaining these markets in real time in terms we can all understand and is the most knowledgeable 'trader' you can listen to.
This is just my two cents to help you all learn what you need to learn as quickly as possible.
In the end, we're all in deep doo doo and what's coming ain't going to be pretty, or comfortable no matter how much money you are able to retain in whatever form you hold it.
Keep learning every day or you won't survive what's coming. And even then, you may not want to.
Pity our children and those to come.
This comment has been removed by the author.
DeleteAs long as there will be over-leveraged long people on gold out there, who think that going below this or this price is unthinkable and impossible, then we may very well keep going down short term when they realize with sheer terror that the impossible is happening and they must abandon their position in a panic.
ReplyDeleteAgree 100% with you Dan.
I'm not trying to figure out what will be the bottom or where it is impossible that prices can go further on the short term.
If a capitulation occurs, all expected supports and lows could break down for a short while on the paper price.
I'm contrarian very sporadically, with small amounts, stop losses very close, risk reward high, and I get out at the first warning. Thanks for reminding us to be extra careful.
damn good letter and refreshing to hear a straight shooter instead of a stopped clock perma bull, countless names who will go un-named here; lots of time needed to restore the charts; grains and softs are all on the defensive and I do not think energy can sustain itself up here for much longer; still have to give benefit of the doubt to U.S. stocks and Nikkei; $ clearly king of the hill; have a good wknd, steve in sparks
ReplyDeleteThanks Dan & hope you had a good holiday! I would welcome a washout sooner rather than later. This slow bleed is horrible. Let's just get on with it.
ReplyDeleteOn a separate note, I can't imagine that the low volume rally in the Dow is offsetting the worry that rising yield on govt. debt is causing Bernanke.
Argentina Applies Law That Jails Hoarders as Bread Prices Double
ReplyDeleteArgentina plans to apply a law that forces holders of wheat and flour suitable for bread making to sell stock on the domestic market in a bid to contain inflation.
Interior Commerce Secretary Guillermo Moreno announced the measure in the official gazette today. The 1974 law allows authorities to freeze prices and obliges companies to maintain supply. Those in breach are subject to fines and imprisonment.
“If the law on supply is applied, the one who should go to jail is Moreno himself,” former Economy Minister Martin Lousteau said in an interview with Radio Mitre today. “He’s to blame for the lack of wheat in Argentina.”
Supermarkets Closed
Moreno closed stores owned by Wal-Mart Stores Inc., Carrefour SA (CA) and Cencosud SA (CENCOSUD) for a few hours yesterday after the government found shortages of some goods. Grocers agreed last month to freeze prices of 500 goods and ensure supply as part of the government’s efforts to stem inflation.
http://www.bloomberg.com/news/2013-07-05/argentina-applies-law-that-jails-hoarders-as-bread-prices-double.html
Dan, did you write this zerohedge article?
ReplyDeletehttp://www.zerohedge.com/news/2013-04-16/if-gold-was-just-commodity-what-would-be-its-support-price
No COT today because of 4th July?
ReplyDelete(Or delayed as with API-figures, when Wednesday is a holiday?)
Here is a good video from Martin Armstrong on gold valued in different currencies:
ReplyDeletehttp://armstrongeconomics.com/wp-content/uploads/2013/07/Texas-Conf.mp4
Just wait for the video to load. It will come up on its own.
http://goldtradercommentsaugust2010.blogspot.com/