“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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Wednesday, November 20, 2013

Gold Crashes through Chart Support

So much for quiet trading ahead of today's release of the FOMC minutes from their last meeting! Volume had just dried up with the market killing time as the hour of the release drew near when a batch of large sell orders came out of nowhere and caught the market sleeping. The intention was to run the stops sitting down below yesterday's lows - guess what? They got them!



The surge in volume caused a temporary halt in trading. When trading resumed, momentum based selling then entered in large size dropping gold further. It fell through $1258 which was acting as a temporary floor.

Here is another example of how hedge funds can push price by taking advantage of lulls in liquidity. I am sure some in the gold camp will once again credit this "takedown" to the big bullion banks but that is simply not the case. They continue to lift their existing short positions and add to their exposure on the long side of the market. It is hedge funds who continue to reduce long side exposure and add to their growing, and profitable, number of short positions.

We will get to see this as the December contract enters its delivery period soon. I suspect we will see J P Morgan taking delivery of a rather large amount of gold. Either way, we will see.

One bummer is the fact that this move lower through support occurred today, Wednesday, so unfortunately this week's CFTC report ( Commitment of Traders ) will not pick up the positioning of players.

Silver is dangerously flirting with the $20 level. If it loses support there, another 50 cent drop will come rather quickly with potential for further losses down towards $19.

More later today after the release of the FOMC minutes. Let's see what they might say and whether or not it has an impact on the markets or if they have correctly anticipated the contents.

Crude oil is sinking further today having bounced back above $93 yesterday. That seems to be a general pivot region with the market oscillating around this level.

11 comments:

  1. Hi Dan

    What stops the miners with a higher production cost (e.g. $21+) from buying silver at this price ($20.20) and then just re-selling it to meet contracted orders ?

    (Besides difficulty obtaining physical)

    ReplyDelete
  2. First yellen says there is no stopping QE. Then then they send out this guy bullard who says they might stop. Are they completely nuts? It used to be that talk was cheap. Not anymore.

    ReplyDelete
  3. Here's the good news.

    First thing the IRS and NSA will be seizing in a crisis is gold bullion held by individuals. Probability of that happening is probably 65%.

    Now that gold is crashing, there will be less of an urgency to seize bullion, since it is worth less and less.

    Second thing to be seized may be a 20% "bail in" of retirement accounts. But I would only assign that a probability of 15%.

    That won't hurt very much, since anybody smart enough to invest in the S & P 500 have already gained 42% this year, so a 20 "haircut" will only set you back to levels seen last summer. No big deal, it will be for the greater good.

    Lesson learned? Stay in the System.

    ReplyDelete
    Replies
    1. S&P 500 is up 25.5% this year.

      Delete
    2. Mark,

      Your non-stop cheerleading of this absolutely corrupt system is downright disgusting. This isn't a damn game. These policies have negative effects on our and our childeren's lives. We will remember which side you were on come the revolution. Please shutup.

      Delete
  4. Negative rates anyone?? system full "matrix"? Bullard view on..improving employment? New normal is going to be totally apocalyptic. Good luck all keep your gold guns.

    ReplyDelete
    Replies
    1. If banks hand out NEGATIVE % LOANS then here comes free money. Do I have that right? NO INTEREST, NO FEE, FREE MONEY? Come on!

      Delete
  5. I believe that lead can be distributed to government employees who ever they may be when they come knocking. Gold will not be given them.

    ReplyDelete
  6. Gold crashing, who never saw that one coming? The invisible man always said US citizens would suffer the least during this deflation period on a worldwide basis until the very end. Also noted the S&P would be a better play than the DOW for about the next year or two. The letter writer will temporarily post short term projections (daily/weekly/monthly) in many world markets... http://armstrongeconomics.com/market-watch/ Very interesting as excuses for every move are explained away in media but is simply liquidity looking for a home in the private sector for the near term.

    ReplyDelete
  7. Gold went through 1268 horizontal support area and so ran towards convergence of Bol inf weekly (1245) and daily. I'll watch tomorrow if there is an eventual buy signal on the daily time unit confirming that prices will remain within the range of the weekly time unit. If not, odds will favor further weakness.
    Silver, I was spotting a support which became resistance at 20.60 daily time unit. Staying under it is not a good omen either.

    Smells more and more like the june lows on PMs will be tested once more, but one thing at a time...

    Mark I think you are the reincarnation of Andrew Mellon.
    I saw your picture and speech of the time here :)
    http://edegrootinsights.blogspot.com/2013/11/extreme-bull-runs-rarely-end-from.html

    ReplyDelete
  8. Enter spot gold at $1,000 minus about a 100 bucks for the final spike low. The faster we get there the quicker the pain will be over. Time line is my only question, might take a year to bottom. Happening within a couple months would be a gift but the climb back up will be hampered by dumping into higher higher highs as disbelievers try to still get out and not realized it is the start of a new bull move.

    Is that gnashing of teeth I hear in the background?

    ReplyDelete