"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 Work is NOW AVAILABLE AT WWW.TRADERDAN.NET



Sunday, September 22, 2013

GLD compared to Comex Gold Futures

In response to those who dismiss the idea that GLD is a measure of Western investor sentiment towards gold and therefore as such has little if anything to do with the price of gold, I present the following composite price chart as an illustration.



Please note that this chart shows the MONTHLY CLOSING PRICE only and therefore eliminates a lot of the daily "noise". Can any objective, unbiased observer of these two plotted lines state that the two lines are NOT IN PERFECT SYNC? They both rise together- they both fall together. If instead of plotting the two lines on separate scales for comparison's ease, I overlay the two price plots using no scale, the lines become indistinguishable from one another.

Keep in mind that I have no desire to enter into any discussions or arguments either pro or con as to the theory that gold is being withdrawn from GLD in order to meet higher demand in Asia and to take advantage of the higher premiums on gold in that region of very strong offtake of the physical metal. That may or may not be true. As a trader, speculation such as this does not particularly interest me as it is useless when forming an approach to a market in which one wishes to trade. Buying a market based on hunches, guesses, theories, hearsay, etc., is a very quick path towards ruin for any trader unless one has extremely deep pockets and is quite content to absorb potentially large losses.

To make money as a trader, one needs to understand market sentiment. Market sentiment is gauged by price action as well as studying the positioning of traders against with one is competing in this Zero Sum business.

My theory in trading is the KISS rule. Keep It Simple Stupid. I find it ironic to say the least that when gold was moving on to make new all time highs, and when GLD was reporting new record tonnage amounts nearly every day, we did not hear a peep out of anyone suggesting that the build in GLD reported holdings was in anywhere a bearish development. Quite the contrary; nearly everyone that I am aware of pointed to the surge in GLD holdings as evidence of superb investor demand for gold. I distinctly recall reading breathless reports about how GLD was eclipsing individual nations as one of the largest holders of gold. All of this was excitedly detailed as strongly bullish for the metal.

Now as the reported inventory of GLD shrinks we are also told by many of these same pundits that someone this too is bullish for gold because it indicates strong demand for gold, this time in Asia. Seriously folks, it seems that no matter what the holdings of GLD are, whether they are rising or whether they are falling, that it is always a bullish development! "Heads - I win; Tails - You lose".

All that I am saying is that when the price of gold was rising and moving into new all time highs, the reported holdings of GLD were rising right along with it. As the price of gold has fallen, the reported holdings of GLD have been falling right along with it. While there is no doubt in my mind that the gold being held in GLD has been sold to SOMEONE, the facts are that the reported holdings are sinking.

Since we know that Asia loves physical gold and the West seems to love paper gold, it is obvious that a large chunk of this gold has evidently moved from West to East as the inventory of GLD has been drawn down. This simply proves my point that GLD is a measure of WESTERN INVESTMENT DEMAND for gold and that currently, that demand is falling off as the large hedge funds are buying equities for return and not gold.

Is it not obvious from looking at the Commitment of Traders reports that the big Managed Money accounts are not building the kind of massive long positions that they once were back when gold was soaring into new record highs? Is it also not a fact that this same group of hedge funds has been adopting a more negative tone towards gold based on a  study of their overall short positions?

They may or may not be correct in their assessment from a longer term point of view but our modern markets have by nature become much more short-term oriented whether we like it or not.

Until I see something in the inventory of GLD that indicates GROWTH of their holdings and something on  the Commitment of Traders reports that indicates a solid shift towards a more strongly bullish view in regards to gold by the hedge fund crowd, and until I see a surge upward through overhead chart resistance in the HUI and among the various mining stocks that comprise that index, I have to go with my current assessment that Western investment demand for gold is lagging. As I have stated before, all of this could change at the drop of a hat. Those of us who have a bullish long term view towards gold will be vindicated and hopefully rewarded for our convictions but for the immediate time being, we still lack a catalyst for a sustained upward move in gold until we see some evidence on the charts that this has indeed taken place.

Lastly, for those who want to dismiss anything related to the Comex or to GLD as to having any real connection to the price of the physical metal, I would remind you that many may feel the same exact way, but until the MAJORITY of investors/traders come around to that point of view, railing against the chief barometers used by that sizeable majority will not cause a shift in the current ambivalence towards gold held by the Western investment crowd. Old habits die hard especially in the realm of investing. If you have any doubt about that, just consider the amount of money that large Western investment crowd has made by "NOT FIGHTING THE FED" even though there is a growing number of analysts who see the stock market rise as nothing but a massive bubble blown by 5 years of QE.

Fight the good fight in the meantime, continue to extol the wisdom of holding physical gold against the inevitable but do not be under any illusions about "the herd's" capacity to be irrational for longer than nearly anyone could have expected. It is the LOSS OF CONFIDENCE in the ability of the Monetary Authorities to keep this house of cards supported that will bring back Western buying into all things gold. We mortals have no way of knowing when that will occur but we will certainly recognize it when it does.

71 comments:

  1. Excellent piece, Dan. Thank you.

    ReplyDelete
    Replies
    1. Very nice synopsis, last paragraph. Have a laff on me, I HAD to write this one in my blog:

      http://goo.gl/rfb5Xz

      Delete
  2. Great article. Very true... GLD is a poor choice to use for trading, though it tracks gold. It's clunky and it takes a lot of GLD to trade vs. COMEX. I sometimes make up 25-30 futures trades in a 24 hour period. It is fast and easy.

    I frequent the bullion dealers here in ABQ and Santa Fe, and they all say that nobody is buying gold. Silver, the poorer investment choice of the two, is nibbled 5-10 oz. a time. The COMEX price is the true price - period, paragraph. I plow some of my profits back into gold bullion, 5-10 oz at a time, and I am sometimes one of the bigger buyers for that week. I bought eagles in 2005 for 4-5% above spot and that is the same percentage markup today.

    I just do not want to own too much metal, as it becomes a burden to hedge and day trade at the same time. I can't put more than 40% of my net into gold. It is a dead asset in many ways.

    For instance, owning rentals that generate cash flow and tax benefits are better choices, and I would rather own them for now.

    Learn to trade 24 hours a day. the real traders do. It is a much tougher and volatile market during the day session (8am-5pm). the overnight (6pm-2am) and morning (2-8am) sessions offer the best opportunities, and GLD is nowhere to be found.

    If 1325 is taken out here in any meaningful way watch out. Copper is lower, though gold almost hit 1329. It has to break 1332 to convince me of going long, otherwise I will take price spikes and short into them.

    ReplyDelete
    Replies
    1. i have my 3 contract 1319.4 sell stops in, with a buy 2 at 1313.1, just in case we see a falling knife here early.

      Delete
    2. I do like your posts. I would say this about "professional" traders. They dont trade 95% from the short side. They try to trade from the short side when the market is in a downtrend and they try to trade from the long side when the market is in a uptrend. Gold was clearly in an uptrend for many years and has been in a downtrend for a few. So being in a downtrend now, its sell the rallies. But not because pro traders are 95% short, but because the market is in a downtrend.

      Delete
    3. I say it's close to 90%. The traders I know approach gold from the short side, all other things being equal. I did go long on gold, for instance, when the shills on CNBC screamed "NO TAPER!" By the time my 1320 market buy stop was executed I received 1328. Pretty poor execution....

      Delete
    4. "Learn to trade 24 hours a day. the real traders do."

      Interesting. Does it disqualify Dan? :)
      My friends are out (those who trade for a living and make a profit. but still have a wife :))

      Delete
  3. I am short one contract from friday. That would give me four again. Gold trades aroound even numbers in 20 dollar levels, just like Dan says, plus in 10 and five sublevels. within that I see 3 and 7's. I place covers at the xxx3 price on the way down. short at the xxx7 levels. The boards dictate. Quiet now, though copper broke 3.30. It doesn't matter what handle gold has. the only thing that matters is the last two numbers. it trades the same regardless of what hundred level it happens to be in.

    There is a whole book I could write when gold approaches the hundred level. So many opps at that point.

    ReplyDelete
    Replies
    1. now I am off to nap. I will wake up around 9pm et for Hong Kong. I have my buy and sell stops in.

      Delete
  4. Dan, that chart you posted is bomb-proof. Also, you have really driven home the point regarding the influence of hedge fund buying and selling in the PM markets. Yes, I believe that the BIS, Fed, Treasury, central banks, etc. intervene in the PM markets but I also believe that they get the hedge funds to do the heavy lifting.

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  5. Lets assume that the US has 12,000 tons of gold and also that the "supression" scheme is to get gold lower. I just dont get how its in the best interests of the US to have a lower gold price. Someone explain that.

    ReplyDelete
  6. Thanks, Dan, you are exactly right.

    My gold dealer prices match GLD's movements tick for tick.

    Oops, 1325 taken out with a vengeance in Asia.

    China is dumping, not buying, contrary to all the crazy stories about the "West is losing to the East" hysteria.

    Time for the "acclaimed experts" to go back to the drawing board and dream up some other kind of story as to why gold is getting killed.

    ReplyDelete
    Replies
    1. Someone is dumping gold without any regard for price. As has been said before by others, thats not price discovery, thats manipulation. But it is what it is. Kind of makes a joke of a 17 trillion debt.

      Delete
  7. Official gold holding (as at June 2013): according to WGC.

    United States 8133.50 Tonnes; 70% of reserves!!!

    China 1054.10 Tonnes; Only 1% of reserves!!

    India 557.70 Tonnes; 7% reserves!!

    In a previous post, Hubert Du Haut asked the following:
    "will there be a day when we won't need western investment demand to see an uptrend in gold."

    I don't know if this is correct but I think the answer to this is, yes!,... if and when there is a shift of the Official gold holding from West to East. Ie Currently USA has higher gold holdings (supposedly and have no reason not to believe its true), then CHINA and INDIA combined and the price discovery mechanism is set at the COMEX (USA). They still have the power regardless of all the stories of wild and ferocious demand in Asia.

    ReplyDelete
    Replies
    1. Thanks Jim.

      According to Jim Rickards, China is probably closer now to the 4000 tons than to the official reserves (they update the number every X year...).
      He thinks they'll update the number again when they have bought enough (not to pull prices higher when they are buying...), which would probably be around 5000 tons. Maybe we are nearing that moment right now...
      I Wonder what effect such an annoucement would have on the prices.

      Delete
    2. Hi Hubert Du Haut,

      Hope this finds you well.
      Regarding the official reserves, the number I gave as per the WGC website was (as at June 2013). This IS the latest data, and not sure why WGC would have any regards to when "China have bought enough", before they publish any future updates as per Jim Rickards speculation.

      Delete
  8. KISS, Keep it simple stupid. I agree Gold increases about 1% per year. FIAT which most people measure Gold against increases at what ever CBs and politicians deem necessary. That's enough for me to take the side of Gold, history proves this the case so I am not going to fight history or any BS argument for why Gold is a bad investment. All I know is if the price is lower than average I buy more, if higher I buy less or may even sell some. Right now Gold is in the buy zone, could it go lower yes but in the long term it's got a lot of catching up to do, because it's easier to create an item of measurement on a keyboard or printing press than dig it out of the ground.

    ReplyDelete
  9. About GLD, I can be totally wrong about that as it is an observation and my own "theory", but there has been a spike up in the volumes from 2008 (nearly vertical), while the gold lease rates started to go to zero and then negative.

    Since end 2012, the gold lease rates are going up, and are now positive and growing.

    I think I read somewhere that, at the time the rates were low or negative, a large quantity of entities simply borrowed very large amounts of "free" money and went long gold.
    Maybe these entities are the same than those who had to sell lately when the lease rates went positive again?
    The cost of the money plus the huge leverage may have forced them to sell their positions?
    If it is true (I don't know, maybe I'm confusing things), then we lost around 500 tons in GLD, which is pretty much the same amount that was purchased in this vertical move upwards back in late 2008.
    Maybe this explains a bit the drop in gold prices, and could make us a bit more optimistic about the probability that the bottom is in?
    I'm no expert about this, just mentionning my observation.
    Gold lease rates are on Sharelynx.

    ReplyDelete
    Replies
    1. http://i41.tinypic.com/25ppi4l.jpg

      Here's the long term chart of lease rates and gold prices.

      Delete
  10. In regard to the GLD-stocks
    I have a different opinion (than the gold-bulls), but it is just a view:

    There were a lot of stories about the poorly backed ETFs.
    I remember when the ETF-instrument was invented and introduced, how "honestly" the industry assured us, that from now on you can possess the real bullion by holding (and exchange-trading) a paper.

    I think this promise has turned out a lie, just the same as the story, that the internet or a cellphone-call would be a safe way of communicating. (They promised so in the 1990ies.)

    So, when I see a chart showing the GLD-"stocks", for me it is not the stocks, but just money entering a bet. And when they don't want to bet (only long-bets are allowed !), they withdraw this money.

    There is no "who bought the metal that was sold by the west?", as there is no metal in the vaults, (or say, only a poor percentage.)
    So I am not looking for a hidden (Asian..?) buyer. Just money was taken off the table.

    Or in other words: GLD-stock-figures are the equivalent to OI-figures at the COMEX.
    (Just my opinion.)

    ReplyDelete
  11. Dan-

    At the risk of thinking "hey this article you wrote is all about me" I want to make a couple of points. In your article a few days ago, you wrote:

    " Take a look at the following chart of the reported gold holdings of this enormous ETF." Gold holdings. Tons of gold inside GLD. They are falling. And you suggested that the falling holdings represented a lack of interest in gold.

    We can agree that there is a lack of interest in gold this past year - and right now the interest appears pretty lukewarm. That much is clear from the price chart. All I was saying is, the HOLDINGS level might well be explained by other factors - in this case, a risk-free arb trade could be made between shanghai and GLD by the big players when Shanghai premiums were high enough. I'd also guess if Shanghai goes into discount, which it does sometimes, the arb could also play out in the opposite direction.

    Likely too this could happen using COMEX gold, but delivery there is so infrequent GLD seems like a better vehicle to use - especially if you are one of those participating big bankers.

    I'm a total believer in the rest of what you say, it all makes sense. Its just my opinion that falling GLD holdings datapoint doesn't prove a lack of interest; I think price alone does an excellent job of that. Holdings dropping is just a sign to me that the holdings of gold are valued more highly elsewhere than inside of GLD.

    I am a big fan of yours in all other respects, simply because 99% of what you say just makes sense to me. Only this one seemed possibly open to question based on the evidence I had.

    ReplyDelete
  12. Can anyone confirm that 5000 ton number for china's gold holdings. That seems to me to be a game changer number

    ReplyDelete
  13. 9 million iPhones sold over the weekend.

    Proof that Bernanke's money printing has indeed created prosperity.

    More proof that the financial markets are pricing in "the greatest consumer spending boom ever recorded", as evidenced by the outsized strength of the retail ETF's such as XRT and XLY.

    XRT is up from $22 to $82, that is hands down the biggest, fastest, steepest rally in market history for that sector.

    - Stay in the System

    - Ignore the "Frightening Collapse" predictions

    - Enjoy life, as we are about to embark on the greatest economic rebound in 50 years.

    - Keep your gold investments to a 5% - 10% minimum.

    ReplyDelete
    Replies
    1. Mark,

      I think everybody living in Detroit would agree with your point of view of the recovery. Along with the 60 million americans living in foodstamps.
      Along with the 4500 employee just fired from Blackberry.

      Do you have a look at the MUNI market sometimes?
      Seems Detroit is not going to be an isolated case.

      You really think prosperity is measured by the number of iPhones sold??
      Still, I agree with two words of your post : enjoy life :)

      Delete
  14. CAUTION.
    Dan's blog is gathering a vast community of readers, from scalpers (Eph 6:7 makes 30 trades in a 24 hour period!) to long term investors, from experienced traders (preditor, Eph, Jim...) to "rookies" who bought gold without any trading experience, because of the global economic situation.
    So my post is obviously to the "rookies" and long-term investors.
    It's a message of caution.
    We are getting close to end september and the end of the quarter.
    - Quarterly time unit : if we don't close above 1412, we are in a configuration of "ligne de poussée" in japanese candle charts, which means prices do not close above the middle of the body of the previous big down candle (called a marubozu because we closed that candle at the bottom). It is a figure of WEAKNESS.
    - On the 2 month candle chart, I see that we bounced right on the inf bollinger bands. So, it is a support on this time unit, and it is now at...1200 $!!
    Other time units such as daily show (bollinger 100 period, etc...) that it would be easy to test again 1220 $.
    All I mean is a drop to 1200 $ area seems pretty easy within the next weeks, considering the weakness of gold, also shown through news : no sustainable rallye after Syria, after No Tapering news...
    The last red marubozu seems so awful and powerful on the quarterly time unit, that 1000 $ seems a close and possible target on this time unit.
    Conclusion : if you don't trade dynamically or hedge your gold positions, be prepared to the eventuality of gold dropping to 1000 $ this year. I know many say it's very unlikely that 1200 will be broken and that the bottom is in...but if not probable, it seems still possible to me that we capitulate through 1200 $ directly to 1000 $.
    Better be aware of this possibility and know how you will react accordingly imho.
    Once more, I'm NOT saying we are going there. I’m saying it’s not impossible imho.
    Have a nice day.

    ReplyDelete
  15. Hubert you could not be more right. To see what is really going on you have to look outside your own world sometimes.

    ReplyDelete
    Replies
    1. Concord

      We are learning that lesson the hard way. I have all but stopped reading the usual sites that we are all familiar with.

      Delete
  16. Hubert,
    You got my attention. I am a long term investor who has seen my portfolio shrink at an inopportune time. I heed your warnings, we are in a fluid situation in the US but gold is very weak. Goldman Sachs has been right on gold and its call for gold to drop is like a warning from the FED and hedge funds.

    Funny that the no tapering rally lasted two days. The fed governors voted 9 to 1 in favor of the no taper and here they are out to jawbone and drop it.

    Hedging sounds like a good idea.

    ReplyDelete
    Replies
    1. There is no integrity with those morons. Remember when greenspan said, after he left, well, I guess I had the wrong model. Its a sad state of affairs, when integrity means nothing. Gold above 1900 will certainly right the ship. If Columbus made it in almost a canoe, then the bulls can get this thing there if they really try hard. Obviously harder then this.

      Delete
    2. imho gold is neither very weak nor very strong at the moment.
      Seasonality, bounce effect from big drop and asian demand are supporting prices. But paper short is not dead. Anything is possible.
      That's why we must monitor the price action on the smaller time units.
      Volatility can be high and it would be easy for gold to get back to 1200 (but now 1300 support is holding fine, so bulls are not dead).
      But maybe tomorrow a crazy news will make it rise 50 $ again in two hours.
      Not easy right now to take a position.
      Only wanted to say that a big drop seems still possible to me.
      As a big drop starts with breaking 1300, well, I'm watching 1300 now and I'm not worried yet, as long as it holds...

      Delete
  17. Mark

    You won't get any argument from me.

    ReplyDelete
  18. Only a moron could call a 9 to 1 vote a "close call". And that is what this country has to run the fed.

    ReplyDelete
  19. Hubert

    I'm also with you.
    Short Gold as a hedge. Going long DOW would also be a good idea.
    There is no way the FED will allow equities to correct.
    I have found that every time a well know entity (goldman, JP, Jim Rogers) mentions a possible lower target in Gold...it comes true.


    ReplyDelete
    Replies
    1. Dean,
      The Fed does not want another bubble in the stockmarket, that is why you have Bullard and others jawboning. Shorting gold as a hedge sounds like an idea, the question is how. Those gold stocks we have need to be hedged or sold in a downturn like Hubert talks about.

      Delete
    2. Concord

      In the past I have used GLL, and DUST
      DUST is a 3x short on the miners
      GLL is a 3x short on the physical

      Be very careful though. These things can move fast and blow through your stop loss very quickly.
      They can move up very quickly also, on average I will bail when I am up 10-15%.(sometimes even less)
      However...I have not made near enough to cover my losses on the long side as I do not use these very often, but at least it is doing something. Now is one of the times I am thinking of doing it.

      Maybe buying options is the way to go. You need a broker who knows his stuff to do this for you.
      If you do decide to use DUST or GLL make sure you have a good chat with your broker and use very tight stop losses.
      A lot of brokers are really just buy and hold type advisors. Some will not let you use these types of ETF's period, and for good reason.
      I might add that I do not put any large sums of money into these things. Play smaller than you think is rational.
      I am sure some of the experienced traders here will jump in with their thoughts on these instruments.

      I agree with you on Bullard flapping his gums. We are witnessing the mother of all bubbles.
      I agree that everything will look good and feel good for probably a longer period of time that we think is possible.
      I am also fairly certain that when it ends it will be a very bad ending.

      Delete
  20. Hi guy,

    I am closing out all long position....

    Cheer guy

    ReplyDelete
  21. Sports Fans Near and Far; We are 6 years into the platinum bear mkt and 3 years now for copper, silver, and gold. You all might want to start paying serious attention to the late June lows. That is all, swb in sparks

    ReplyDelete
    Replies
    1. Unfortunately, the "Catastrophic Collapse" which various pundits and experts are talking about has already happened to the mining sector.

      And it may not be over yet.

      Hands down, that is one of the greatest bear markets ever recorded in modern history.

      Delete
    2. There is one major gaping hole in this postulate. Testing at the zero bound... e.g. What happens when the volume of "gold" in gld goes to or approaches zero.

      Delete
  22. http://www.youtube.com/watch?v=dbt8VNUhU-Y&feature=player_embedded#t=120s
    Dollar charts, portentious indications

    ReplyDelete
  23. Mark

    Once again you will get no argument from me.
    I suspect the HUI will visit sub 200.

    I must say though, one of well known pundits you speak of has repeatedly stated that by the time the gold bull starts to go parabolic only the banksters will be left to enjoy it, very few others will have had the nut to hang on.

    ReplyDelete
  24. On shorter time units though, support is at 1300, and I don't expect the worse as long as it holds.
    If 1290-1300 holds short term, there is also no reason to panic for the bulls.
    That's why I'm waiting and watching.

    ReplyDelete
  25. ok can someone please exaplin the difference between the GDX and the HUI..ive got the GDX at -0.70 percent and the HUI up the slightest amount...i watch GDX for NUGT and DUST but the HUI im more accustomed to cos Dan uses it ..but which one does one use, and why? thanks...

    p.s. this is outrageous that gold is at 125 and the miners are below the pre(no)taper news...and some bullard twit comes out to speak overt garbage and gold drops the way it does despite a 9 to 1 decision not to taper...how is october possible..credibility gone, even by year end, ...etc..'nuff said'.x

    ReplyDelete
  26. fya
    Einstein and The Great Fed Robbery
    http://www.nanex.net/aqck2/4436.html

    ReplyDelete
  27. GDX/GLD ratio plummeting again under .20, charging to the world record lows.

    Juniors getting pounded again, some are down 20% - 25% from last week's FOMC spike highs.

    Meanwhile, the Russell 2000 is unwavering, only a couple bucks from world record highs.

    Eventually, the pundits and experts will be called out and will have to come clean with an explanation and/or apology to millions of bamboozled investors.

    ReplyDelete
    Replies
    1. Mark

      Millions of investors??
      Do you really think there are that many left?
      Millions of them have long since sold most of their positions. I have no idea who is left besides some of us here, and most of us have lightened up considerably.
      If you haven't noticed, nobody here has even remotely mentioned buying.

      Delete
    2. @Mark. Preaching to the choir. I agree w/ Dean in that there are far from millions left. It seems that many people in the gold - traders and investors are prepared for the likelihood of gold hitting $1,000 which at a .17 HUI:GOLD ratio would sink the HUI to 170...all possible, all likely. So 25% downside risk on the HUI, more or less. Obviously the ratio can go down and you go lower, but around those levels you pretty much flush out everyone out.

      Delete
  28. Which brings up another question.
    If the retail public,hedge funds and non-commercials all out and not participating, who is left to play?
    What are we seeing here ?, a few traders and the odd hedge fund all shorting each other on their gold positions?
    It has been well over a year since I have bought long and I personally do not know of anyone who is buying at these levels (probably should be)
    I have done nothing but bought short funds. Most everyone I know is short gold.

    As one well known commentator stated "eventually you run out of sellers"
    I can't believe there is still anyone out there who has anything left to sell.

    ReplyDelete
  29. The high print on COMEX over the past 24 hours was 1332 flat. It couldn't break 1332, like I said it needed to. Then during the day session an official wall at 1330 could not be broken. And it drifted lower into the 4pm GLD close. I scalp and cover on weak days at the 4pm market close. it's good for a couple bucks, and with a two contract scalp that's 400-500. I also raised the short book on the 1330 lift.

    If gold stays between 1320-1325 into the morning session, look for gold to crack in early european morning session (2-7am). This is a redux of the 1363 trade last Thursday night. Recall how I say to forget the hundreds handle and concentrate on the last two numbers, specially with the 20 levels. My 1319 sell stop was taken out last night, as predicted, and though my buy limit was not reached I took 4 out on the two contracts with a quick market order at hong kong open.

    gold is limping to the close. the buyers today were encouraged with all that dovish fed crap, yet they could not break 1330. This is a huge red flag. I am hoping to add to my two contract short with any lift tonight to 1327. I hope to ride 4 tonight. Unless a nuke is dropped in Damascus and fulfills the Prophet Isaiah prophecy, we will get no big lift, as the only man left standing will be bonds (for whatever reason).

    ReplyDelete
    Replies
    1. Roger that, Eph.
      I understand for you gold's behavior is based on its 2 last digits, but what about your system?
      You mentionned series of 20, then 10, 5, 7, 3... multiples of those numbers already give you practically all the numbers you want, so I don't understand very well what's basically your way of trading, especially when getting close to the hundreds handle...

      Delete
  30. $1550-1180 cut-up zone and all the Hoosiers trying to trade it will be history when mkt finally breaks out one way or the other; there is a time to stand aside, ladies; swb in sparks

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    Replies
    1. :) agreed, on my time scale as long as the 2day chart bollinger bands are in a quasi squeeze, I'm not playing ping pong between them, it's too random. I humbly don't have a clue what's next as long as we remain between 1300 and 1375...

      Delete
  31. Steve,
    Your advice is right on the money if you not in. What if you want to lighten up is the debt ceiling and obamacare crisis a possible chance to see gold get a bid up 1450 or so? As always thanks.

    ReplyDelete
  32. Concord; look how long we went from 18-1550 and bulls want to get excited? not going to happen; no doubt Obama is worst so called commander in chief of this country and I do not think that is even up for discussion, let alone argument; I have no position futures because I like to sleep and every $1.50 move in silver means nothing; short bean oil, corn , and my all time favorite, the YEN; swb in sparks

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  33. So...can the "im"balance of the Fed grow without limits?
    Is there a breaking point?
    Are we getting close to it?
    http://www.zerohedge.com/news/2013-09-19/fed-credibility-tatters-credit-agricole-laments-market-state-shock

    ReplyDelete
  34. Why I am comfortable being long gold . I know that its in a downtrend and thats its bearish. But if the price would go down to 1200 or even 1100 or even 1000, as some think it can go, every ounce of gold on the planet would be bought up by china and other central banks. They have the dollars to do it. If the euro keeps going up there would be no reason to keep holding dollars. I dont know when gold will explode to the upside, but lower prices will bring in massive demand, not less demand.

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  35. Agreed with Eph : I'll buy a bit more gold if it breaks above 1333 $.
    Meanwhile, I'm nearly at zero, sold most of my long positions.
    Wait and see, actually hoping for a new big drop, in order to re-buy again on lower levels, maybe around 1220 $ and the Bol 100 of the daily time unit.

    ReplyDelete
  36. Hi guy,

    I sold all position at 1328 -1330 range...

    I am going to step outside the ring for awhile, and go spend money ... Relax

    If I not confident in the market, I just close and wait and see...

    Cheer guy... Enjoy your trading

    ReplyDelete
    Replies
    1. Have fun, Preditor :)

      By the way, why I think that the june bottom in gold may possibly still be broken is simple.

      At the end of june, few people would try to buy and catch a falling knife. Bulls were scared, volatility was very high. You don't usually re-build your position right away in a market like that.
      Those who did imho did it on a shorter term horizon, like me, to target a "manageable" bounce from 1200 (oversold, way below bollinger bands monthly 1st of july) up to 1300 then 1400.

      But now take the same "weak hands" who saw finally that prices stopped collapsing in july, and those other long term investors who held by a fingernail their long position, watching this bottom constantly. Take some more who started to rebuild their long position because prices stabilized, and finally bounced.
      For some of them, the red line is now the 1180 $ level.
      Just as the red line was 1530 $ for them in spring.
      I'm pretty sure they'd get very nervous if gold prices should get closer to the june bottom once again.
      And of course, if the bottom breaks, after 3 months offered to rebuild long position, we would have fresh stop losses under that level feeding a panic once more.
      I think it's important to keep the long position that one can manage with calm and serenity should gold drop to 1000 $.

      The levels to watch imho :
      1330 $ : can gold break above this new resistance level??
      1285-1300 $ : danger if we break through this level : 1220 $ ahead.

      Though I see a strong support zone around 1180-1220, I'm not underestimating the forces pushing gold prices down for their own short term profit. No faster way to make money than to be short during a panic selling.
      Just make sure you don't become crazy or sell all your gold with a curse at 1000 $ if it goes there. If you think you will, maybe just hedge or sell some now, and put a buy stop a bit above.
      There is no need to be in a market without a trend.
      When gold explodes higher, we will all see it.
      And it will still be time to get into the train.
      Don't endanger your capital to grab a few more dollars in the gold price.
      Don't become greedy once more and over leverage long, thinking that the bottom is in for sure this time. Nothing is ever for sure.
      Have a nice day,

      Delete
    2. good thoughts and good explanation!

      Delete
  37. Great spirits think alike.

    Why do I know those guys are on the side of great spirits?
    err...because I think the same! :) :)

    "If the Fed does to decide to start to unwind in any significant manner, the U.S. economy, which has been weaned in recent years on ever growing money being printed and pumped into it, will crash - and the dollar with it. If QE is continued at least at current levels, which he feels it will now have to be, eventually the dollar will also crash as dollar holders around the world realise the ultimate debilitating effects on the current global reserve currency of just printing more and more money without any economic strength to back it. There will, Roberts avers, eventually be a huge flight out of the dollar leading to an explosion in gold. But, when questioned on timing he admits he has no idea how long this would take to occur. Indeed, he says that he would have thought it would already have happened by now."
    http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=205833&sn=Detail

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    Replies
    1. I remember a story of the early live of Jim Roberts in the 1960ies, when he was waiting for the outcome of his first bet.
      I don't remember, whether it was rates, stocks or commodities, but it was something the government had an elementary interest in, too.
      He invested every dollar free and ended up in an empty room with his wife. They just could afford a sofa to sleep on. that furniture was necessary.
      Some day he was right, but it was very close.
      He made a good profit, but he learned a lesson of never trust a natural timing.
      AND:
      I am sure, the authorities (+their friends) did much less of manipulating the markets at that time, than they are doing now.

      Delete
  38. Another overnight of classic scalping action. textbook and tasty. Should have made more. Just 5k so far since 6pm last night. Trading begins at 6pm everyday. Made enough since FOMC to buy another Outback. I should figure out which color to get this time. Looking for a drift up here to add to my short after covering some between xx17-xx13.

    I would be surprised if we break 1300 today, but nailed it on the lift to 1327, to relaod short, only to see 1320 melt away in early morning session. Te only thing that made me hesitate was that the 1319 limits went off, but the price didn't slice through xx20. It drifted lower in fits and starts. This is why I covered 2 of four contracts and my xx19 stops only a few dollars below xx20.

    Still have two short contracts from xx25 last night. The action is clearly bearish. i love the even hundred levels. I have a whole set of algos ready to go. All I can tell you is not to go long until 1285.

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    Replies
    1. Hi Eph 6:7,

      Congrat to your trade...

      Just one question... do you have stoploss if trade does not go according to your trade..

      Cheer

      Delete
  39. To all long-term investors in gold : very good news!
    You don't have to worry anymore about the long-term.
    In 3 months, you'll all be dead, especially if you live in the west coast.
    Thanks to Tepco, Japan, and our fantastic international community of Gx who cares more about Syria than a threat to all mankind.
    During 2 years, it's been a private company's problem only.
    Now it's only a national problem.
    I guess in 2 months, when the whole world bursts under radiations and a 15 Megaton accident, it might be offered to be discussed during the next meeting for a few minutes between Syria and US Budget Limit.
    Sorry the link is French, I'm sure you can find plenty of data about the dramatic situation there in English.
    http://blogs.mediapart.fr/edition/nucleaire-lenjeu-en-vaut-il-la-chandelle-pour-lhumanite/article/220913/fukushima-tepco-danger

    ReplyDelete
  40. Basically a "Perfect World" created by Ben Bernanke:

    1) Trillions in deficits without any consequence whatsoever

    2) QQQ and Russell 2000 near world record highs

    3) Bonds back on the upswing, borrowing costs going back down

    4) CRB Index getting crushed, no inflation anywhere to be found

    5) Banking system healthy again, financials continue to trade well

    At this point, there is no need to "Get Out Of The System" or hide in a bunker.

    Time to enjoy the upcoming economic boom.

    ReplyDelete
    Replies
    1. even more:

      6) Liquidity, spent to dampen the crisis, went to the entities who caused the crisis.
      So power was preserved by and for them who had been in power before (=banks and government).

      7) Some "measurement" of liquidity dripped down to the working force, so that they cannot complain and can afford more debts (=bits of recovery).

      8) The sheeps got shorn, but not slaughtered. They run the farm quite well (= doing God's work).

      Delete
  41. Mark

    Whodda thunk !
    Thousands of years of economic cycles, failures, recessions, depressions and collapses and all we had to do was print unlimited amounts of fiat currency and build debt to infinity.
    The easy answer was always right in front of us and only Ben was smart enough to see it.

    ReplyDelete
  42. capital one forex current promotions. 400% Bonus. 400% Bonus in all deposits a bonus will be giving to the client's all deposits; this bonus cannot be lost but can be used as leverage to trade with, the client positions will be closed if the client loses his initial deposit.

    ReplyDelete

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