“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


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Tuesday, August 27, 2013

Syria News Sends Gold and Safe Haven Treasuries Higher

There are two news stories serving as catalysts for the move higher in gold in today session.

The first of these is talk that the US is planning on lobbing some cruise missiles into Syria in response to unsubstantiated reports that the Assad regime has used chemical weapons against civilians. The has the attention of not only the safe haven markets, (the Yen is also getting another one of those goofy safe haven bids) but also the crude oil market, which is soaring moving above $109 at one point in the session.

The second news item is that the US is up against that pesky debt ceiling once again. It never ceases to amaze me how damned inept these politicians are and how they cannot live within their means.

Either way, that has the focus of the markets back on the US fiscal house disorder which is helping to put a bit of pressure on the Dollar in spite of the fact that global investors want to own the thing whenever a crisis or shock event appears on the radar screen.

I mean the entire thing is weird. Here we are talking about a nation that is running over $17 TRILLION in its national debt ( and remember we are not even talking about unfunded liabilities here) and there are those who are dense enough that they want to own more US Debt as a SAFE HAVEN. I honestly cannot stretch my mind around the two sets of words ever being coupled together in the same sentence; it is a fact however that the global investment community has been conditioned as well as Pavlov's dogs to buy the blasted things every time they get nervous.

Gold has run into some pretty good selling at the highs made back in late May/early June after putting in some sizeable gains since Thursday of last week.  Working against further gains in today's session is the weakness in the mining shares ( HUI ) as those are following the broader stock market lower due to Syria fears.

Remember, gold buyers never like to see the shares going lower with the metal moving higher as it makes them nervous and more likely to snatch profits rather than dig in and buy more at the highs. Additionally, gains in gold due to geopolitical events tend to not hold as a general rule unless the events indicate a worsening of the situation. It looks to me like the market has priced in a missile strike; whether that escalates into something further is unclear.

I personally think it is ill-advised for the US to be meddling over there in Syria as I see no strategic interest of ours being threatened. Assad is a dictator of that there is no doubt but whose business is it of the US what he does or does not do in his own country? As long as he is not threating us or any ally or ours, why should we be lobbing million dollar plus missiles into that nation? To do exactly what anyway? If he were to go, who exactly replaces him?

Also where is the US Congress on this? Apparently Congress has ceded its war making authority to the executive branch. That seems to be a pattern nowadays.

No doubt some of my political views on this will offend some but that is a perk that comes with writing at ones own blog!



Back to gold however - the market has run into a band of resistance just shy of $1440. You can see how price has met up with selling at this level since late May of this year. Bulls have taken it firmly above the 100 day moving average however and three major moving averages ( 10, 20 and 50 day) are all moving higher with price trading ABOVE those levels. Also, the ADX line continues to rise and is at 23.45 indicating the presence of an incipient uptrend.

The lower indicator is nearing overbought levels however so some caution is warranted if you are long. That does not mean price is ready to collapse; it merely means that one might wish to protect some profits while they wait for another entry point if we get a correction lower in price. Any correction should encounter dip buyers just above psychological support at $1400 and again at the confluence of the 10 day moving average and the 100 day moving average in the vicinity of $1375 - $1370. The trend is up and that is the key right now. If it changes, we will try to pick that up using the indicators.

Syria is a wild card however and no one can predict exactly how events are going to unfold over there so traders with a short term horizon need to be vigilant. If that band of overhead resistance  gives way gold will catch some upside wind due to the plethora of buy stops sitting just above there that should carry it on towards $1480 where I would expect some formidable selling to appear.

The miners need to find some sponsorship.....

by the way, Silver knocked RIGHT ON THE DOOR of its April high today before setting back a bit. That is near $24.80. Frankly, I do not see much in the way of resistance to a move higher if it clears that until one gets near $26. This market is extremely overbought and can spin on a dime so caution is also warranted. Bulls, do not get too complacent but stay alert for any shift. A 25% gain in the price of the metal since late June is nothing to sneeze at.







39 comments:

  1. thanks Dan, this is exactly what i needed to read up on....i dont expect gold to drop to 1370/75 area but i think a test and bounce off 1400 would be healthy...if you could let us know what levels are most significant for the HUI, twud be much appreicated...cos i saw it test 280 and come back to 263 today..thats madness! but yeah, thats attributed to late general stock market sell off...i still think HUI near 260 is a bargain, especially with gold this high....thanks for all your work...

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  2. Many hedge funds are going to be piling into DUST, hope to catch another lifetime's worth of gains, similar to what they experienced between November to July, over a 500% gain in a few months.

    Heh, almost as good as riding those Investors Business Daily Screamers like TSLA, FLT, NUS, JAZZ, and all the other assorted "market leaders".

    Never a dull day on Wall St., there are shenanigans going on all the time.

    ReplyDelete
    Replies
    1. "Many hedge funds are going to be piling into DUST ..."

      Mark cannot be serious. Regardless of very short-term orientation, there is no good info coming from these kinds of posts like this from Mark. Scare tactics or ego chest thumping. Not analysis. Where was "Mark" when $GOLD and $HUI bottomed?

      Mark talks like someone who is paid to try to influence the markets by posting stuff on blogs.

      Delete
    2. I told everyone when the GDX turned, I mentioned that NEM was the biggest % gainer on the S & P 500 that day on way above average volume.

      It occurred the day after yet another "expert" who said the lows were in at $1,300 and the market crashed that same night.

      The next day we took off and blasted past $1,300, evidence of a classic "shakeout".

      Not one follow up comment from anyone else here, they were too busy discussing other tops unrelated to the price action of any of the mining stocks.

      Delete
  3. I agree with you Dan. We have absolutely no business doing anything in Syria. The powers that be are merely staging a diversion from the real issues. Unfortunately, the leadership in our country is psychopathic and what is really needed is a very large booby hatch in which to throw them into.

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  4. Thanks for mentioning JAZZ. I see insiders sold 3.5 million shares in may at 58 dollar, the share now trades at over 80 dollar and was trading at under a dollar in 2008. Ill have a look into that one.

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  5. Don't fight the bullion banks. JPM will make sure gold runs higher.

    ReplyDelete
  6. 7 countries in 5 years
    www.zerohedge.com/news/2013-08-27/7-countries-5-years

    Another conspiracy theory turns out as conspiracy fact.
    When will the peace nobel laureate and the other criminals from the ziogang hang for their wars of aggression?

    ReplyDelete
  7. "No doubt some of my political views on this will offend some

    Your views are not offensive enough to the idiots, as far as I am concerned.

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  8. Dan, your political views do not offend me. (Perhaps the NSA, as they are listening in to our conversation.)

    I am happy to read someone who thinks the Congress and the Executive Branch of our government are a bunch of idiots.

    IMO, it is the military industrial complex that pushes for these kinds of wars, they are the only ones (that I can think of) that makes any money out of war. Plus they have all their new toys they have to play with.

    Franklin Sanders in his blog today put it like this: "By the way, the government's propaganda machine has really kicked into high gear suddenly, which indicates that somebody in the US wants that war. The stupidity of meddling in another nation's affairs and trying to overthrow its government, even a very naughty government, ranks right up there with the stupidity of the German, English, French, Russian, Austrian, and Serbian governments in the summer of 1914. Apparently nobody in authority has caught on: wars kill people. "

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  9. Currently I am sure the Adm is checking all the wires, phones, emails, blogs, and any and all data they can find as to whether or not the WAR will hurt or help their cause whatever that is. I think they are good hearted but without a clue, so that is what we get. Policy that reacts and finds how they can make it work rather than looking at the real issues and long term interests. They are focused on immediate, building of consensus with whoever they can until they no longer need them. It is typical of leadership, but that is a contradiction, and antonym for this regime. Nope, lets triple down on stupid. God help us.

    ReplyDelete
  10. Take a look at the GDX after market. There was a 6% spike then back down to a .5%. REALLY REALLY STRANGE.
    7:45 or so, wow??
    It is like someone was shuffling money around. Putting it up in front of the poker hole then pulling it back? Or was such a sell order right behind it?

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  11. GDX did 63 million shares in a low volume environment. Gold was up strongly over the 1400 mark and GDX cratered much more than the overall market in the last hour and a half. Were the hedge funds up to something we should be aware of? That is huge volume number on an up day for the commodity.

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  12. 100% agreement with you Dan. The New World Order needs to be distroyed
    They high jacked our country with the creation of the Federa Reserve.

    ReplyDelete
  13. Dear all,

    The next fibo level of the 1950-1180 retracement gives me a target of 1473 $.
    Given the strength of the current upwards move, I hardly got back in the train at 1416 $ the other day after selling at 1413 $, thinking 1415 would hold. Stop loss Under 1410 $, fortunately never hit.
    As Dan explained, we are going up quite fast and without consolidation right now, so all I'm trying to do is to find where the market will at last choose to make a pause in order to sell a bit of my long position, make a profit, and try to buy later on inside a short-term dip.

    Immediately on a daily time unit, the ma20 is still a straight line, and the // to this ma20 joining the last top is now at 1435 $, which is therefore a nice upwards resistance to me. It may very well cap the prices and initiate a correction. Meaning : if it was too late to buy at 1380, it is now really much too late to buy! :)

    On the 2days time unit, it's on this time scale that my most ambitious short-term target appears at 1520 $, mhl sup of the andrews pirchfork I posted before. To be honest, if we go directly there without a correction, I'll definitely choose that spot to sell a good part of my current long position.

    On the weekly time unit, here as well, clouds are coming, Fibo 1473, but also the previous fibo of 750-1950 wave at 1490, the mlh sup of the downards pitchfork at 1485 and the sup bollinger band diving towards the prices around 1480.

    So agreed with Dan : 1480, or say 1470-1490, should we go directly in its contact (1435 may prove enough to stop prices), will imho show a lot of resistance and I'd carefully sell a bit here for sure.

    ReplyDelete
  14. Dan, do you think it's possible to see a bullish pennant formation in the crude oil chart after the (apparent) breakout we have seen in the last hours? Like this one:

    http://img547.imageshack.us/img547/2/n76x.jpg

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  15. 50 years today...nearly perfect.
    "We hold these truths to be self-evident: that all men are created to be bombed equal. I have a dream that one day on the white house of Washington the sons of former slaves and the sons of former slaveowners will be able to sit down together at the table of Nato's brotherhood to happily agree on sending hundreds of tomahawk missiles over all the evil terrorist islamist communist extremist Middle-ist.
    Anything wrong with the text? Hmm...oops, sorry.

    ReplyDelete
    Replies
    1. on the other hand, we don't have much choice, as we just received concrete evidence that Assad's government is in the final stages of the worst, as you can perfectly understand in this confidential document.

      http://s16.postimg.org/s0feqk57p/image.jpg

      Next stop (and real target of all this mess?) : Iran.
      But first things first, right?
      Can't invade 3 countries at the same anymore, can we?
      I guess I woke up with a bit of a cynical mood today, sorry...

      Delete
  16. GDX/GLD ratio crashing back towards world record lows again as the miners are getting chain-sold while GLD remains well bid.

    http://stockcharts.com/h-sc/ui?s=GDX:GLD&p=D&yr=1&mn=0&dy=0&id=p80776200645

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  17. Mark I was just convincing myself you are not a velvet basher in disguise. Yet you can't stop. What "glam" stocks will you feature today.

    ReplyDelete
  18. seriously; i cant believe the HUI is at 257 at the moment....gold meanwhile is chilling in the 14teens, and looks strong still, like its more likely to pop towards 1440 than bounce around 1400. I dont get it...plus the general stock market is still green, maybe its lost a bit of steam. strrrange.

    ReplyDelete
    Replies
    1. Precious wood,

      Enormous selling pressure has surfaced the last two days at the same time 2:30 or so and GDX gets crushed losing gains to significant losses. Is this the hedge funds? It smells like some kind of manipulation. I admit I have no idea though.

      Delete
    2. yeah true. i didnt reallz realise the similar timing of the whacking but the trend was obvious once it started....very strange though, honestly...the only reason i have is that the war plans of the syrians were discovered to target every PM mine in the west...ima wait for Dans comments

      Delete
  19. Sports Fans; I am long term pm bull with no current position; having said that, it has been quite a 3 wk run for sure; what strikes me though is that it feels very similar to Sept '80 in the run-up to the Iraq invasion of Iran, in that it started on the weekend and on Monday, gold could only rally $37.50 which was the Comex limit then and could not hold limit up; what I am saying is that when this ill advised French/Brit/Yank involvement is a fact, if gold can not pop $75-$100, you should be looking for the exit doors; after all, really, why buy pm on account of a war, and please do not tell me safe haven argument because I would rather just have cash; have a good weekend everyone and ttyl, swb in sparks

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  20. Steve,
    I am starting to see how silly my belief a big rally is around the corner. That said, who is it who comes in the last two days at 2:30 or so and literally crushes the gold mining shares in its tracts on tremendous volume. Yesterday alone GDX traded 63 million shares.

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  21. The PBT and Marks buddies Concord. They are doing everthing in their power to smash this thing anyway they can. I am 50-50 oil so I am only getting the brunt end on the miners, while the Oil ETN's are still going up, up, and away.
    Only so long can these guys hold on. They will do this as long as people sell so they can get the shares. Eventually they lose in a big way. The 3X and 2X bears are actually in a downtrend, and these are the "dead cat bounces" in my opinion.

    ReplyDelete
    Replies
    1. I think oil is the best play here. That said I am weighted more heavily in gold and gold shares. I think the middle east has changed forever with the power being gained by Putin and the Russians. Oil is what Putin wants to control and it appears right now he has a very good chance of doing so.

      What I wish I could figure is how to play this development. Iran, China, Russia and others in the middle east will all line up eventually with this group if Syria blows up.

      Delete
  22. 35% gain in DUST in just 48 hours.

    GDX/GLD ratio plunges again, now back below .21

    Amazing.

    Looks like the share are pricing in a $100 drop in gold any day now.

    Chalk up another "Epic Fail" for those predictions of $10,000 gold and $500 silver.

    Sheesh, gold cannot even make it back up to $1,650 where the "Angels" are still stuck in the battered women's shelter.

    ReplyDelete
  23. Mark; You are a funny guy and really can be a burr under the saddle for a lot of bulls; looks like double top in hui and xau; Asian em's a wreck and we all know sept is not a friendly month for commods or stks; swb in sparks

    ReplyDelete
    Replies
    1. I thought Sept. was a good month for precious metals Steve. July and August being the worst months.

      Delete
  24. i do think gold could bounce off 1400 but not really go lower, especially when so close to war and given all teh hype....plus macro news generally supports gold..as does general trend...but HUI does not belong where it is...its strange to see DUST gain so much with gold going up so much..

    ReplyDelete
  25. sept is good for pm but on balance weak for commods in general, Concord; swb in sparks

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  26. well now that 1435 has been validated as a resistance (see my last post), it gives even more ground to the upwards channel // to the ma20 which keeps being straigth.
    And guess what? It's support is indeed much lower than its top, around 100 $ lower, so :
    - of course, gold may drop 100 $ from 1435 and that would not even endanger too much its short term uptrend.
    - of course, gold can drop Under 1400 $ for a while.

    And to tell the whole bad news, there is still a risk that gold collapses again as long as we are Inside the weekly downwards pitchfork on the daily and weekly scales.

    Gold made a nice rallye in a short time. Not long ago we were Under 1300 $. Not to mention silver.
    There is nothing unnatural in seing a correction at some point. Dan said that a missile strike was priced in already.

    So, gold at 1340 within a few days?
    Sure real possibility imho.

    ReplyDelete
    Replies
    1. P.S : here is the chart.
      median of pitchfork and top of upwards channel meeting around 1435 and acting as resistance.
      Correction towards 1370 perfectly possible within 2 days imho.
      http://s24.postimg.org/7nrelc1xh/gld.jpg

      Delete
    2. Agreed Hubert Du Haut; pretty good little shake-out in order I would think; also beware end month profit taking over Labor Day wknd; hedgies like to square up also and get flat; swb in sparks

      Delete
    3. Thanks Steve,

      @pretty wood and other optimistic bulls :)
      "i do think gold could bounce off 1400 but not really go lower".
      Don't change your emotions from over pessimistic to over optimistic too quickly.
      - we dove from 1940 to 1180!
      - 1435 bounce is not even 36% fibo retracement of this dive.
      - we are still within the long-term downwards pitchfork you remember on a weekly time unit.
      - volatility is high, and the upper bollinger band is plunging towards prices on a weekly time unit.

      I do HOPE that gold ended its bear trend, but we are still in the danger zone. 1420 area is more or less the +20% off the lows awaited to say the "bear" market has ended. Let's see where we close at the end of the week.

      I do NOT wish for an upwards explosion in gold. Because explosions do not last, and are followed by violent corrections as well (silver 50$ and....).

      Psychologically, Bulls don't like volatility. They like a gentle slope with a steady uptrend.
      The best imho which could happen to gold is that it takes a bit of time to build a solid basis.
      The fork I Drew on a daily basis is already going up with a too steep angle to my own taste. I would like to see it hold for a while, but then see prices gently follow the green channel // to the daily ma20, with maybe a re-test of its support (the 3rd one) in september. That way, if the support holds, gold would become easier to trade, and the trend would become more credible long-term.
      We are still in the yo-yo trading here, Syria events, JPM main stopper, lots of stop buyers covering their shorts...this rallye still needs to prove that it can propagate to the longer time units, i.e WEEKLY candles.
      I'm still very careful as long as it didn't.
      I don't overleverage, and I don't buy chasing prices now, I wait for a consolidation and the test of a support first.

      Delete
  27. The Problem in Syria and US intimation for war is badly affected world market Oil Price hiked
    NSE BSE Share Market updates and Tips

    ReplyDelete