"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


Monday, September 16, 2013

Gold Cannot Shrug off Bearish Sentiment

Rallies continue to be sold in the yellow metal as the bounce higher ran out of steam near a tough resistance level at $1330. Many traders were watching to see how gold would react on any approaches to this level and whether or not it could maintain its gains having secured a foothold there. It did not... that triggered some long liquidation as well as bringing in fresh short sellers.

Bears are trying to break the market down below the $1300 level. Bulls are attempting to hold it above there. We will know very soon which side has the advantage near term. Rallies however continue to be seen, for now, as fresh selling opportunities. It is going to take some more positive performance on the price charts for that to change. The failure to hold above $1330 is not helpful to the bulls in that regard.

There seemed to be some strange goings on in the Treasury market today with the long bond soaring to 131' 12 overnight only to puke out most of its gains as the trading session wore on. Treasuries look as unsure of their next move as the gold market does right now. Higher yields seem to be here to stay but no one knows exactly "how high" those yields will be before stabilizing. The truth is that the US economy is in no shape to handle higher interest rates and most bond traders realize that. They are also trying to come to terms however with any Federal Reserve "tapering" or "lack of tapering" to gauge whether they should be buying bonds or selling bonds. Each piece of economic news is therefore having an overexaggerated impact on the long bond as it confirms or denies traders' perspectives. The result is more volatility and herky-jerky type price action as firm convictions are lacking.

Markets like these are the realm of the one- three minute bar chart geeks and scalpers.


  1. yep, Dan, you said it; tough call in here for sure; swb

  2. This market is bs. If QE4 didn't help gold price at all, why would taper even hurt the price? All are excuses used by big guys to manipulate the price.
    Dan, you think this price action is dragged by HF selling short. My question is how would they have gold to back their shorts? What happens if someone takes delivery?

  3. It's management of perceptions nanny-state control. Society's become a self-fulfilling prophecy Chal!
    Take the blue pill and presto! Slaves accept irrational exuberance, whistling past the graveyard while they work hard at conspicuous consumption, surpassing ever lower expectations of industrial strength recovery statistics. The highest standard of living is declining purchasing power and quality of life hedoniccally deflated. The beauty of it all is in the eye of the beholder, all-seeing, lodged by degrees and standarized stress-free testing. Circuitous power projection, until it tastes its own medicine, or the curtain is pulled away...

  4. Since the beginning of August and into September note the mirror reverse correlation between Gold and the DOW, during August holiday period less TBTF and PPT interference Dow down and Gold up after the holiday you guessed it Gold down DOW up, more than a coincidence I think. This is all about micro managing support for USD and economic expectation DOW while at the same time covering inflation expectation Gold. Yes it's a battle between bulls and bears or more correctly between free markets and manipulators.

  5. I think I remember a show on TV, opposite the many loves of Dobie Gillis, called where are they now. So I ask the gold bulls, you who had the power to take gold from 500 to 1900, under circumstances that are not even remotely as bullish as they are now, where are you now?

    1. Hi Arnie,

      Maybe they are the same culprits?! They haven't disappeared into thin air, they're just playing it on the short side now. This is my guess.

      Ie the hedge funds that move the price, short the market--bear market ensues
      When the hedge funds go long-- bull market ensues.

      I don't think hedge funds are emotional about this, ie I'm a gold bull, or I'm a gold Bear, especially because they are in the business of making as much profit as possible and hence couldnt care less making money shorting it or going long, as long as there is money to be gained from it

      I don't know...just my guess.

  6. Hedge funds have made once in a lifetime gains by gunning retailers, financials, tech stocks, and the "Glam" stocks like Tesla, ULTA Salons, and various other Investor's Business Daily Top 50 screamers.

    Any hedge fund who had the guts to go long these stocks AND short gold stocks made an absolute fortune.

    Never before in financial market history has so much money been made at the expense of the gloom and doomers, endgamers, and stackers.

    Many Wall St. notables like Ann Barnhardt who "got out of the system" 2 years ago suffered a huge opportunity cost of not staying fully invested in stocks.

    People like her now have a huge challenge to "catch up" to her peers who didn't buy into the "Frightening Collapse" theories.

  7. The stock market is so inversely correlated to gold now it may be a better indicator than the dollar. Stock market up results in gold down.


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