"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


Thursday, August 15, 2013

Gold Breaks Free From its Range Trade

The metal has been knocking on the door at the top of the range trade/consolidation for some time now but has been unable to break through. Today it did so in a very big way.

Note the change in the indicator which I have posted previously on the metal. Positive Directional Movement, or + DI, has now bullishly crossed above the Negative Directional Movement line for the first time since NOVEMBER of last year!

Also, both of the shorter dated moving averages have completed upside bullish crossovers of the 50 day moving average.

Lastly, the move off the low is not yet at 20% so we can not officially state that gold has entered bull market territory as silver has done, but the chart is significantly improved and looks quite strong at the moment. A change of handles from "13" to "14" would be very significant as it would signal that WESTERN INVESTMENT INTEREST in gold has returned.

Thus far it has been very strong Asian demand for the metal that has kept it supported. That has provided the solid floor of support that we have been seeing of late. What is necessary to drive it higher however is that investment demand which is not as price sensitive as the physical markets over in Asia are.

One more thing - the seasonal tendency is now firmly on the side of the bulls as the bears have run out of time. Generally speaking the latter part of August into October is strong for gold prices as the festival season buying commences. Combine that with a renewed investor interest in the metal ( based on what I am seeing in the ETF) and the bears are going to have to look around to find some recruits for their side in a real hurry.


  1. A pleasure to stop by for your cool calm commentry.
    I wonder how the Indian buying season will go now that
    Gold imports are being denied to the citizens.

  2. Thanks Dan,
    Great charting and commentary SOP from you.
    Thanks again for all you do.

    I hear the Indians already have devised several plans for a black market entrance.

  3. I was fully loaded in the GDX two weeks ago and got scared out when my losses reached almost 15%. The next day, GDX was up over 8%. Since then, my 15% loss would have been a 10% gain -- in just two weeks! I can't justify going back in at 30 when I sold recently at 24. Does anyone have an opinion on when to buy GDX? It looks too overbought short-term to take a risk.

  4. Great day for the tired long-term bull investors :)
    I don't have the chart but long-term, silver shot up from 5 to 22 $ and then corrected to 9 $...before rallying to 50 $.

    If the lows are in at around 18 $, silver could rallye towards 100 $ on the next move up on the same basis. It's good to dream a bit sometimes and see the bottle half full instead of half empty :)

    1. Hubert Du haut,

      Would love to see that 100 silver sooner than later~~ im dreaming that same dream ;-)

  5. ok, so we still have a big obstacle on the way, it's the ma20 on a weekly basis, at 1366.
    If we can overcome it, I'd like to meet at 1460 $ in just a few weeks.

    1. last but not least, I think a stop loss is still mandatory.
      I bought when we broke above the top of the day around 1345 when I saw the plunge reversing up.
      But 1366 on a weekly basis is still here.
      I think a stop loss somewhere under the last lows of the recent days could do it, say around 1310 $.
      It joins the mlh inf of the most recent upwards pitchfork I traced.
      So I keep my fingers crossed so that this area around 1315 $ holds.
      As a reminder, I'm only sharing my "strategy" here, I'm not recommending anyone to do the same, nor am I convinced that it is a very good one. I'm simply trying and sharing.

    2. Thanks for your always insightful comments Hubert!

    3. P.P.S : to be honest, I don't like having bought stop here. Creates a big gap with closest stop loss.
      I had a buy order at 1305, should have seen that last days support was around 1320 indeed.
      So I'm in the train, but not quite comfortable yet as long as 1366 is above prices. Good night all,

  6. Played NUGT for the bounce, bought in last week mid 5's, today sold all mid 9' s on mass volume or enough profit for me. Then started buying DUST for any correction and set a sell price. Set NUGT to re-buy maybe catch a correction before continuing a run.

    These are 'Direxion' 3X bull/bear EFTs so the action is fast and volatile, the only way to make a quick buck if you can get it right.

    Will be interesting to see if this short term move keeps running up without resting or a pullback.

  7. nothing more bullish than a scared bear; I do not know if my comments are going thru or not, so again, I will say that nothing has changed fundamentally and economically, so that is why the copper and energies remain range-bound; watch this week to see what the fed whores do to shore up the stks and bonds, as everyone can see that the bond chart is getting itself in trouble; grains and beans are a gift short covering rally and that is all; steve in sparks

  8. Hey Steve,

    What do you think of this trade record. Rookie Hilliary made a few trades early in her career. They estimated the odds of her making this money at 1 in 31 Trillion. She must have had one heck of a hunch...Think?


  9. Think the debate moderator will ask her about her trading skills? Haahahahah

  10. Dan,

    Hilliary sure should have been teaching cattle futures trading as good as she was. Straddle Trades. Man, I bet she went from Law school straight into the pit and just hit it out of the park day one. To think that lady must be a genius I tell you.

  11. Gold's sudden positive action is proof positive that the FOMC will "do whatever it takes" to keep rates low, which means QE is about to get stepped up.

    Look no further than the resilience in DBC and the shocking moves off the lows of many homebuilder stocks.

  12. OK, so if the trend is reversing up and propagating to the longer-term time units (weekly soon?), what are the figures that would validate / invalidate the scenario?

    On a daily chart, I guess the important support to hold during next few days is around 1315. ma20, median of long-term red pitchfork and also mlh inf of the new upwards pitchfork. To me it is critical that 1315 holds so that I don't eat my hat. It is friday, the raid day, so I'll keep my fingers crossed. It would be magic if the mln inf of upwards pitchfork held for a few weeks and led us towards 1450.
    On a weekly basis, we were capped during the last 3 weeks by the mlh inf of the red fork once more, which is now at 1310. Once again, 1310 more or less seems to be a support zone.

    I'm nervous because every time gold seems to set free, you know what happens the day after...let's see.

  13. "The days of being able to rely on an endless stream of foreign fools to supply something for nothing may be numbered."
    I don't always agree with Clive, but this article is Worth reading imho.


    I'm not as desperately optimistic as he is, but my strategy is to reinforce my long bull positions EARLY, so that I can sell later on in short-term tops, buy more on the dips, and also maybe buy a bit more above if 1366 is broken, with an acceptable average cost for my buying, under gold prices, and a solid long position to make a profit on the way up.

    BUT I'm not yet leveraging crazy at the moment.
    Usual suspects are powerful enough to make you regret the day you forget to be careful.

    1. Hubert I am also looking to build back my long gold position I sold half of it before the collapse but am now waiting to see if this is a good time to add. You say you would add some at 1366, but I interpret you to mean you would add more if we go back toward 1315 or so.

      Basically if we rise into the fourteen hundreds on a spike would you be less likely to add or would you take the ride to 1450 or so and get off? A Summers appointment could knock gold back strongly I think. Armstrong seems to think January is when things will turn in a big way for gold.

    2. hi Concord.
      First, my trading décisions depend on a lot of personal factors, like the size of my position and cash in my account, when I sold before, etc...I always prefer to remind that entering the market is always a personal and specific decision.

      This being said, I think that there is a chance that we see over leveraged hedge funds being overrun and running for the doors if the upwards pressure continues. Upwards rallyes exist as well, see silver this week. So if gold keeps showing some strength, I prefer to buy now, and even a little more above say 1370, targetting 1460, and probably with a stop loss at 1340 for a part of my position.
      It's late and I'm very tired, I'll try to be more specific this weekend.
      Suffice it to say that, as you saw at 1345, I decided to buy stop (but being uncomfortable with it) rather that risking to miss a rallye which may, because of short covering, not correct and go directly to 1450.

      I don't want to add to my long positions above 1400. I want to build it now, at lower prices.
      And pay a small price with a stop loss should the trend brutally reverse down.

    3. P.S : also I consider that what I'm doing now is more risky than my long position at 1200 $.
      Indeed at that time, we were totally outside the monthly bollinger bands. It gave me a strong feeling of oversold market and I thought it was likely we'd go back towards 1300 in july.
      Also, if I was wrong, I could wait and reconvert this small position as a long term investment position, because we were already close to the production costs.

      So here at 1350+ I'm already gambling pretty much more than previously. But hey, no risk, no money. So I put my stop loss and I hope that 1366 will give way next week. If the market is capped, I can also quickly change my stop loss and raise it at 1340, reducing my potential loss to nearly nothing.

  14. Thank you Hubert, buying before 1400 was what I thought made some sense for the same reasons. Dan's just release report only encourages this thinking for me.

    Thanks again

    1. You're welcome concord.

      Remember really : I may not be a newbie, but I'm not a veteran trader. I'm writing a lot, but please don't rely on me as a reliable advisor, it would make me uneasy. I'm trying to explain what I do so that you can compare with your own thoughts, so that we share what we do, but please make your own décisions and rely on Dan's advice for the rest ;)

    2. Don't worry Hubert, I may sound like a newbie but I have held gold for a long time. My decisions are my own. It is good to get a sense of traders, I am an investor so of course I have to think longer term.

  15. JPM long physical, Hedge funds will have a lot less firepower, tough spot for feds (do they buy long curve and try to cap the rates to keep market fed, or, let if fall and fall big?), gold demand increasing even when India, Pakistan and others trying to cap it, middle east is a timber box, etc..etc.

    I just bought some more longs w/o stop, can always sell in a day, with less fire power in hedgies, I do not think they can crash it like before, but who knows. Always a gamble this gold!!!

  16. Hi white wolf...

    I am all in at 1200, and silver at around 18.00 , my average at 1270 for gold and silver at 19.2...

    I will post total contract i have purchase and price sold once i close all position..


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