"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 free work will soon be available at www.traderdan.biz

Thursday, October 17, 2013

Still Searching for My Stomach

Apologies for little postings of late - I have been having a love/hate relationship with my computer as has been giving me grief. That and the fact that these markets are grinding me down as I try to read that which is nearly unreadable right now.

I have had my kids drag me on enough amusement park rides to know that I hate the blasted things but compared to what gold has been doing the last few days, I am beginning to have second thoughts about that. As a matter of fact, if I could make a living riding roller coasters and barrels of fun, etc. instead of having to trade these markets, I might just retire from this madness.

The kind of volatility we are seeing favors one group only, the HFT crowd, who love this unpredictable and meaningless "noise" that so many different commodity markets are currently exhibiting.

Take gold for example - most, including myself, believed that as soon as we got resolution on the borrowing limit deal here in the US, gold would sell off while equities would rally. Guess what -  equities rallied and gold did too. Prior to that most of us thought gold would move higher on threats of US default while stocks would sell off. Guess what - gold sold off just like equities.

The two markets have been moving in the same direction more than they have been parting company it seems. Counterintuitive, is a word one hears bandied about when it comes to gold these days. Counterintuitive seems to sum up most of the commodity markets in general anymore. Not much makes the least bit of sense.

Gold seemed to use the government shutdown and budget deal as a reason to rally today based on comments being made by various Fed governors. In a rare display of unanimity, the governors all stated that there was not going to be any Fed bond buying slowdown ( NO TAPER) because the government shutdown had resulted in a slowing of economic activity, not to mention the fact that not even the Fed had any access to the usual government economic data.

When traders figured out this Fed speak as being brutal for the Dollar, they proceeded to beat the snot out of the greenback. That was all that gold needed for an excuse to rally. Keep in mind that this is something I am trying to repeatedly emphasize - since there are no visible inflation signs as far as the investment class is concerned, and since there does not appear to be any chance of the economy growing rapidly with an increase in the  Velocity of Money, it is going to take an issue of CONFIDENCE to get gold moving higher. That is what we saw today. Traders took note of the response of the Chinese to the US fiscal mess and lack of serious leadership in Washington DC and combined that with the ultra low interest rate continuing into the indefinite future based on those various Fed governors, and ran en masse out of the US Dollar.

You can also be assured that the deal that our feckless leaders came up with ASSURES us that we will be watching another replay of the dog and pony show come late January/early February next year once again. In other words, the circus show taking place at Versaille on the Potomac hardly inspires any sane thinking individual or gives them the least bit of confidence that those buffoons heading up the political parties have the faintest clue the kind of long lasting damage that they are inflicting on the nation as a whole.

Personally the establishment elites disgust me.

Either way, once the Dollar dropped through chart support, some strong buying in gold tripped the overhead buy stops and up, up, up she went. By the way ladies and gents, this was another one of those stunning short covering events in which hedgies were leaning on the short side and got caught off guard and were forced to run. One thing that concerns me about these kinds of rallies - as a general rule they tend to be rather short lived; furious, exciting, dramatic, but not enduring. Specs have had a tendency to sell into these rallies of late so we will have to be careful and not read too much into the price action of one day but at least gold managed to recapture that "13" handle, which takes some of the excessive bearishness out of the market, at least for a day or so.

The key for gold is whether or not bulls can build on today's performance and actually take out some more overhead chart resistance levels or whether the bears will show up at these areas and meet them as willing and eager sellers. We will know soon enough, especially with the Friday curse ahead of us. If the bulls can close the market over $1300 for the week, they will have dodged a serious bullet. That does not get them out of the wood however' it just buys them some time and a bit of breathing space since the intermediate trend is still down.

If you notice the market broke down below the bottom of the recent trading range but recovered quickly and negated what looked to be a bearish wave lower. Until I see the price break out of the topside of this range however, and that means clearing $1330 for starters but particularly $1350, I cannot get too excited about the metal's future prospects, barring a further collapse lower in the US Dollar. If the Dollar cracks up, gold will take out overhead resistance and will see a further wave of short covering that will set up a run towards $1380 and then on to $1400. Right now, I am watching to see where the various sides will manifest themselves for further clues into this market which has been nearly impossible to predict of late.


  1. Dan, like Peter Schiff pointed out, raising debt ceiling is positive to gold price. It's because more inflation will come, and gold is seen as a hedge against inflation now.
    Unfortunately, gold is not treated as safe heaven any more lately. That's why it was smashed below 1300 when there was an uncertainty during the shutdown. That's also why you think it's negative to gold when the crisis is solved.
    However, this stock market is like immune to ANYTHING! It's pushed to all time high almost every day during the uncertainty. It seems the only thing matters is that Fed will keep injecting money. All the others don't matter. Fundamental, jobs, debt, ...

    1. I dont understand why some think debt ceiling raise could be bad for gold....i thought it was allllways good for gold, o...obviously its good for other markets in general too cos the game keeps going but yeah it means more debt, more inflation, more everything that makes gold go up...i think not raising the debt ceiling could make gold go up out of a spontaneous mass fear, but then gold would drop too cos it means its forced fiscal discpline (albeit the most dramatic type) so gold would drop.....shutdown i think proves wht i mean too...shutdown is a forced fiscal discpline too, forces the U.S. to spend less, etc...and so gold drops....that should atleast follow (austrian) macroeconomic thoery....although gold could have rallied cos of speculative fears, that also would have been temporary...so basically...anything that means less spending/borrowing/printing should forces gold to drop and the opposite vice versa...

  2. Hi Dan, glad I'm not a trader given the markets these days!
    I think if Gold can close out the week above$1333 its up she goes, if she closes below $1327 we could see the lows below $1200.
    Do you think $1020 is even possible??
    always look forward to your posts,

  3. For what most of us thought would happen last night to translate into today's action is a mystery to me; very tough, very; swb

  4. Gold popped then plateaued, next it will be heading down, like when no taper was announced. No news is good news when an asset is in a bear market.
    Gold needs to retest its bottom and until then I wouldn't expect much.

  5. Actually if you've paid attention all of this has been very predictable. I have been 100% spot on for the last few weeks. I did miss the rally by 24 hours as I predicted gold would fly tomorrow instead of today. The question now is does it pull back as typical or move up. That all depends on da boyz. The criminals who manipulate in the middle of the night. This time I feel we may see a stronger gold price building into the fall. Any other time I would call for a smash again but I believe even those whores are getting tired.

    1. "Actually if you've paid attention all of this has been very predictable. I have been 100% spot on for the last few weeks. I did miss the rally by 24 hours as I predicted gold would fly tomorrow instead of today."

      Hi Got It Right.
      You have all my attention, as Dan admits that he is a bit lost (just as me), and if I re-translate your first sentence, it means if we didn't predict it spot on, it's because we didn't pay attention...

      I don't want to be angry with myself missing the forecast of your 100% spot on analysis, so please, could you enlighten me here by replacing your "maybe" and "depends on" by a clear anticipated forecast of the next move, not into the fall, but rather into the next few days, right?
      Thanks in advance,

    2. " I did miss the rally by 24 hours as I predicted gold would fly tomorrow instead of today."
      Why, that's too bad then, because those 24 hours were making all the difference between yesterday's 1260 and today's 1320.
      But I'm sure as you are spot on every other time, you'll be happy to share with us what gold will do today and monday right away.
      It's so easy to trade when one pays attention :)
      Thanks a lot,

    3. well said, Hubert; as for me, just staying short; swb, Yen, Bean Oil, PM

  6. At 330 pm on the day of no taper I told my broker sell, this is the high. 100 percent spot on to the minute. Then I said they will crush gold going into the debt crisis even the opposite happened last time. I followed that with upon resolution the Dow will take off and gold will be down or flat. 48 hours later look for a full reversal on the Dow and gold. Missed it by 24 hours.

    By pay attention I mean any news that is bullish for gold has been sold off. Any bearish news has resulted in a big crush. This has put the investors over the edge.

    I believe that is coming to an end and the big take downs are over. On that I could be wrong.

  7. I love this site, I learn a lot = I'm not trading, just aiming to add to long term holdings at good value. I go to yoga! I feel energies! I call the Ascended Masters to guide. There is a lot of shake out coming. You guys seem to have a lot of courage to trade, the antics would make me barf. The truth will come out, is all I just desired to wish you all - it is coming sooner than later. Cracks, wide cracks ... the people are going crazy, and some are waking up. A new and better system is coming! Keep the faith! Be gold of heart! Build a peace commanding Presence in your heart, you will shine. Namaste! thank you. from Canadian Yogi!

  8. Just read a thursday update by another well know analyst (who i subscribe to)

    His outlook of the economies of the US, Japan, Europe, Asia and Mexico are so bullish it almost does not seem like I am reading about the same planet.
    He also describes a healthy US housing market and a US consumer that is ready to spend spend spend.
    Compare that with what a well known statistician is telling us, or even what Armstrong is saying.
    This just gets stranger by the day, the divergence among analysts looking at the same data is simply mind boggling.

    He may be right...crisis, what crisis ? what could possibly go wrong?

    1. Armstrong and Dines are bullish on US equity markets. Armstrong because he's expecting capital to flee Europe and leave public assets, Dines because the trend is your friend. I live in Korea...lots of hot money pouring into the county, so seeds for future volatility being sown. I want to go long the Dow but waiting for either 15,600 to fall or a big correction so I can buy cheap. Investing is too hard right? My short on gold at $1270 looks a little foolish...

    2. @Dean, part of Armstrong's argument for global money flows that will continue to send money the US equity markets is that Europe and ROW is taxing assets + dollar is strong relative to other currencies. So 'bail ins', increased taxes on foreign assets/cap gains/div/income what ever might erode that argument...

    3. @MDLGTO rather than saying the dollar is strong, he says there will be one hell of a dollar rally (before the final dollar crash). War next year is the big variable as it could put back the sovereign debt cycle (gaining fruition) by years.

  9. gold looks not too bad today either...may go test its earlier high of 1327...could end above 1330 today but i guess its too early to make any hoping predictions with friday being its doomsday....after going through 1300, it chilled at 1305 for a little melee and it hasnt been below 1310 since...just high teens and now frequently in the 1320. me likes!

  10. @Dan, I know you wrote that the market move comes mainly from the hedge funds, but :

    - do you think the Exchange Stabilization Fund is actively capping gold prices as soon as it has a chance to do so, by defending key resistance levels for example?

    - if so, do you think that there are some circumstances when they can act without problem (speech on the coming tapering, come back of a growing economy, lower unemployment and other MSM BS...) and some when they have to back off for a while (devastating "agreement" on the budget deficit, chinese statement, Dagong degrading US debt rating)? Or so to speak, is there a limit to their manipulative activity if it exists?

    Seems everybody's having a break and is gone on vacation today after yesterday's roller coaster :)

  11. do not judge it immediately as conspiracy theory.
    for me it is the only explantion what is going on and why.

    first the zerohedge one about the interbanking interest which spiked in june:

    remember what happened to gold that time.
    i think so dan wrote about that also.

    the whole house is rigged.

    about china, the precious metal market and where all is headed.

    for the believers also take not what is written in the bible about it.

    this was one of the most explanatory video what is going on and why.
    for your own sake watch it complete and compare it what you see in front of you.


  12. Its a bit disgusting that a market that can go down 30 in 2 minutes or up 30 in 6 minutes cant get a rotten 10 to get over 1330 and get the fundamentals to start working.

  13. Just a bit angry today. Hearing that moron obama saying he cut the deficit in half, when in fact his deficit was 4 times higher then the previous guy.Is he that stupid?

  14. Google up 10%, now trading at $980 along with Priceline, headed for $1,000/share.

    What are the odds that a gold stock even makes it over $100?

    The combined cash reserves of AAPL and GOOG alone are high enough to buy the market cap of the entire XAU in one fell swoop.

    1. And Mark which of these glam stocks do you own? You never bring up the same ones so I assume you own known of them.

  15. Arnie

    OBama isn't stupid...the voting public is.

  16. Ps, GDX/GLD ratio up today, again.

  17. Pps, were you whining about aapl back to 7 bucks down from 30 bucks in 2000 while the internet `glam stocks` are performing by the thousands percents too?

    Just dont give up the dayjob since you are pretty much clueless Mark.

  18. Between now and the new year I don't know what news can make gold move. We already had the heavy weights step up - no taper and raising of the debt ceiling - and gold still can't hold 1320. Sorry the time is just not now unless we get a black swan event.

    1. Cant hold 1320? It was at 1280 less then 30 hours ago.

      Well. Go short again and see what happens coming weeks.

  19. VIX is once again approaching all time lows.
    There is absolutely no fear in general equities.
    I know it runs contrary to what we foolishly read every day but running with the herd is pretty lucrative.
    The numbers do not lie..I just don't see how gold can possibly rally from here.
    There simply is no real threat of any kind of collapse or black swan event.
    The US equity market really has become impervious to everything.

  20. Dean look at the P/E's on FB, Pandora, Amazon, and Netflix. They are partying like it is 1999. I almost was going to buy FB and it has a 149P/e. Doesn't mean it won't go up but we have seen how these things end. It happened in gold.

  21. Hi Concord
    I know what you mean.
    We are once again at a point where no one believes a stock market correction is possible. We all knew that gold needed a correction but I am beginning to think that this has gone beyond that.
    There is no FED to come galloping to our rescue.

  22. My point is that we regularly hear from "acclaimed experts" with 30+ years in the investment advisory business, professionals who work full time analyzing stocks, market, economy, etc.

    Yet not one of them ever suggested owning the "Glam Stocks" featured, or even the basic leading ETF's such as IWM or QQQ.

    It's always the same old mantra that "The World Is Going To Collapse, Any Minute Now, I Swear!!".

    I'm just amazed that not one of these guys (except for Jim Puplava) actually admitted their errors and changed the way they look at investing, particularly for their own clients.

    1. And my point is, no point in selling a bottom because you were wrong at the top. Use your brains not your emotions.

  23. Nothing to add to Dan's post today. It says it all.
    I just have to reread it to have full assessment of situation.
    Sometimes a news is going to suprise the hedge funds and they'll run for cover intraday, with a big short covering move, and it will stop the day after, with gold being capped once more and surely held in its downtrend.
    The bounce bought some time for the bulls indeed, but not out of the woods.
    That's exactly that.

  24. Here comes that GLD and SLV takedown again. The whole list of these equities and funds just moves so pretty together. All you have to do is make a list that looks something like this and watch it:
    GLD, SLV, PALL, PHYS, PSLV, SPPP, AGQ, GDX, NUGT, DSLV, GLL, ZSL, AUY, NEM, SWC, SLV, CDE, and TRX just for good measure.

    GOOG, AAPL, PCLN, CMG, LNKD, NFLX doing well. BRK/A is also a good safe haven.

    Buy the QQQ's. DJIA to 16,400 and beyond. Why did I chose that number? First one who guesses that one wins.

    The News UNIT

    1. All things gold move in sync, it's all computerized based on price of gold. Only difference i notice is on turns, when gold is inching up but miners are a bit in the red or neutral, it just means gold is going down the next day or two, then the miners following back in sync.
      Really to play the gold market just find a bull and bear ETF and go long and short on turns, pointless to have a portfolio of miners. And pick ETF's with velocity if you have the balls.

  25. Yet more pronouncements today of imminent collapse.
    I mean really..I don't even read the content anymore but the headlines are becoming hilarious.
    I just do not get why people discredit themselves that way.
    Do they really believe what they say?

    1. I think these collapse guys obviously have large holdings in gold, I mean everyone remembers the 100 to 900 run in the late 70's and was caught up in the dream.
      Sorry to hear about your relative. Funny how the mind works, you "releive" yourself by selling even at the bottom. But how much more pain it will be watching it go back up and you missed out. I know cause I've done it.

    2. Hi Prophet

      I know...I panicked in 09 and sold all my stock holdings then watched as they slowly climbed back from the abyss.
      A lot of people got caught in that one.
      Even Armstrong has stated that this is the way it will be with gold. Once the bull market starts no one will believe it and will sell on all rallies.
      I am lot more patient now.

  26. Sorry all..having an off day.
    A close relative finally capitulated and sold all his gold related holdings at a terrible loss. He just could not take it anymore.
    Young guy with a family, it will take him many many years to recoup.
    This is the type of real life damage that happens when a market (no matter what it is) gets over hyped.
    The FED will just continue to create one bubble after another, the savings of hard working people ravaged in the Casino run by the FED, Banks and Wall Street.
    Damn them all anyway.

  27. Yo Mark
    Still want your glam tech stocks?

    Just another bubble...thanks Ben!

  28. Nothing to see here folks, move along please. So you guys really think US$ exorbitant privilege will just continue forever? The rest of the world will continue to honor the amazing USD because we are so special? The dollar will blow up at some point (I wish I knew when) and I would rather be 10 years to early in my preparations than one day too late.

    1. The problem is they've been saying this for years. I bet there is people from the 70's gold bull who didn't sell still hanging on to their gold waiting for the dollar to implode. If it doesn't happen this time around well there is always another 40 years so hang on. Gold is too mind blowing volatile for a buy and hold strategy.

  29. The best commentary I've seen on this market can be seen right here:

    To Fearmongers and GOLD and SILVER pumpers

    Have a nice weekend. Don't worry keep stackin'. And hedge your stack:
    Don't Worry Keep Stackin'

  30. My point is this shit works until it doesn't anymore. For me personally I sleep better not playing in the casino. For me physical gold is a place to save my excess production. This has nothing to do with investing. I guess I figure God gave me a brain for a reason. This "market" is a counterintuitive, illogical clusterfuck and if I close my eyes and blindly follow the herd I deserve to get crushed.


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