"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

Friday, November 15, 2013

Gold Knocking on the Door of Overhead Resistance

Take a look at the chart below and you can see that gold is trying to clear chart resistance near $1290 but thus far has been unable to do so. Incoming Fed Chairperson Janet Yellen's testimony has put to rest any fears of bond tapering in the immediate future and this has spurred a round of short covering once again in the gold market.

It seems as if every single time the Fed either seems to shift gears and become more dovish or economic data comes in worse than expected and dispels Tapering fears, we experience a round of short covering in gold. However, these rallies have tended to be fleeting at best as they are viewed as just another opportunity to establish fresh short positions by some of the larger speculators. In other words, the bearish chart posture in gold has traders selling rallies and not looking to buy dips at the present time.

Notice how gold tends to spike higher, followed by a period of a narrowing range only to then drop down and form a fresh new leg lower.

Bulls need at the very minimum to push past $1290 and reclaim a "13" handle in front of the metal or bears will quickly reassert themselves and press for another leg lower. 

Note the sentiment among the large hedge funds when it comes to gold of late. Can you see the rapid build in short positions? In the last two weeks alone, hedge funds have added a massive 34,800 brand new short positions while they have dumped or liquidated 10,450 long positions. That is a sizeable swing no matter how one measures it and reflects the increasing bearishness that is gripping the gold market.

If support at this week's low does give way for any reason, look for additional fund long liquidation and even more momentum based selling to take hold.

The flip side to this is that any breach of overhead chart resistance will have some fuel to run as short positions will be vulnerable.

Frankly, QE expectations/lack of tapering seems to me to be losing its impact on the price of gold. My own view is that it is not proving to be inflationary in the least bit ( the money is not making its way into the broader economy) and therefore gold is beginning to have only fleeting responses to talk of uninterrupted continuance of the bond buying program. I continue to maintain that until CONFIDENCE is lost that gold is going to struggle, QE or no QE.

Look at the VIX, or Volatility Index. I prefer to call it the Complacency Index. It remains parked down near multi-year lows indicating a near complete absence of any fear or concern in the marketplace when it comes to stocks. The very concept of "RISK" has literally been rendered obsolete as Wall Street gorges itself on the liquidity being provided by the Fed. The addiction is hopelessly incurable in my opinion as the Yellen-led Fed will undoubtedly do nothing to upset this new normal.


  1. Thanks Dan,

    What about those good ole boys Sinclair was mentioning? Are they going to save the gold bulls anytime soon? They'd better bring their magic wizard's wand with them, because the bears are quite a strong opponent on the way for now.

    A small daily chart to show the support area I anticipated recently.
    If I want to be very accurate, it is located at 1268 $, but a support level means an area, and a line to be held at the close.
    I'd say as long as 1268 holds its ground on a daily time unit, I am neutral in gold within the range offered by the Bollinger Bands, which means that potentially, I still think that we may also see gold bounce once more towards 1400.
    The CDur on the daily time unit reversed upwards, so the pressure downwards may possibly diminish for a little while.
    Anyway, it means that now that my trade is secured, I don't have an urge to sell the remaining 2/3 too fast at the moment.
    I raised my next target to sell 1/3 at 1315, though some resistance is on the way as soon as 1300.
    So be it, the market will decide.
    Have a nice weekend,
    (by the way, time to go to bed! crazy traders :))


    1. Hubert;

      The way I see it, the bullion banks will end up being long with the hedge funds on the short side when gold finally does bottom out. Not sure whom Jim might be referring to.

      Thanks as always for your analysis and comments. much appreciated.

  2. Dan

    Could you ask Eric King to look into the kingworldnews website please? For the last three weeks l have not been able to connect from Korea (tried using different computers (and the iPhone) at different places, different web browsers, and proxy ISPs). I have checked using an intermediary, and the website is up. Just strange that we can't access it. Thanks!

    1. If it's like in Iran, you may want to try using a private VPN access to internet, and use a Tore to connected (anonymous IP).
      Maybe they blocked direct access from Korea.

    2. One thing about KING WORLD NEWS is he does the interview with Bill Haynes and Dan Norcini and gets it uploaded right away but when it comes to anyone else he can take a WHOLE WEEK before you get an upload. What is that all about? Although I don't listen to most of it anymore in fact I don't even go to the site anymore until Friday to get the METALS WRAP.


      Dan you might actually consider just doing your own MARKET CAST on YOU TUBE where you could use a nice SCREEN CAPTURE and just do it yourself. You'd get a load of views and make some pocket change in the process---GUARANTEED.

      I'm not bashing Eric from KWN or anything but you need some VISUALS to go with the AUDIO. Has anyone ever suggested this to you?

      EPH 6.7:

      I thought HDTV and LCD SCREENS were safe compared to the old tube style CRTs. I guess not?

      As for all the other worries and concerns it is certainly good to be prudent about all this evil. But you have to admit all we need is to be content with food and raiment. That's really our every day priorities. What do I wear? What do I eat? Time for bed....REPEAT....

      I have to admit though I think it's a good idea to have a GOOD WATER FILTER or TWO and probably do the 25% INVESTMENT STRATEGY of Marc Faber. I'm actually going to buy some gold on the next dip.

      Remember Abraham was rich in cattle, silver, and gold. He just used 400 shekels silver to buy the cave at Machpelah:

      And Abraham hearkened unto Ephron; and Abraham weighed to Ephron the silver, which he had named in the audience of the sons of Heth, four hundred shekels of silver, current money with the merchant.
      --GENESIS 23.16

      (I think that equates to roughly 12 OUNCES of SILVER)

      Get ready for President Hillary and CLINTON-omics. Also get ready for Obamacare to be overhauled and called CLINTON-care. That's my own opinion on that and I think I'm right.

      <a href="http://www.thenewsunit.com>The News UNIT</a>

    3. John Kitcher;

      I sent an email to Eric asking him if he knows anything about this.

    4. News Unit;

      I can tell you one thing about Eric and his wife Liz, they work tremendously long hours trying to get all these interviews posted. I have to keep telling him to take some time to get some sleep before he wears himself completely out.

      Just yesterday he was working on an interview with Art Cashin and trying to get it posted. It is now up so that is a very quick turnaround time. He is a really hard working guy and does the best that he can. everyone needs some rest and time off from time to time which is what he will do to try to actually have a life away from the recording equipment and website.

      On the Video Market Cast idea - that is a pretty good one. I had never thought of that before. I would have to figure out how to do something like that as I am not very good with the video side of things when it comes to computers/youtube, etc.

      Then again, I guess I would not be able to skip a day from shaving if I started something like that. What might be good is if I had some hand puppet named Trader Dan and used it to talk sort of like Jeff Dunham does!

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  4. with up to 20% of the population on SSRIs, the hypnotic effects of HDTV, GMO food, ubiquitous porn, electromagnetic radiation polution, chemtrails, debt slavery, dumbed-down language (the inability for people to express clearly what they are feeling), etc, all leave people defenseless and completely exposed to any life-altering dangers.

    Under this unprecedented dynamic, the equity markets will no longer climb a wall of worry. People are losing their ability to worry. The markets will just climb, and people will not even think about the repurcussions of a collapse.

    You will see it over then next couple years. Entry points and cost basis will be meaningless. The people will put all their money into the stock market and when the time is right the globalists will collapse it all.

    All done by design. You think there is no conspiracy? This is all too methodical for there not to be one.

    I submit to you that the general population is now so amoral, reprobate, self-absorbed (isolated), unprincipled, and ungodly, that they are already primed to receive "the mark," whatever that may actually be.

    1. Even the intelligent, savvy people, like hedge fund managers with Ivy League degrees are all falling victim to this "magic spell." It's not just the morally and financially bankrupt idiot on the street.

      Here in Albuquerque, you should hear the conversations I have to listen to at the gym, on line at the stores, restaurants, etc. The average person is gone, he's been replaced by some sort of zombie being. Sadly, some of the worst conversations come from older people. The older people used to be held in high regard in society and were protected like a cherished asset - at least in my family they were (I miss my parents dearly). But younger people now look at older people as liabilities and obligations.

      Do you blame them? The average older person no longer provides the needed wisdom and insight that provides the needed restraint and sensability for society. Their topics of conversation are vapid and meaningless, and show that years of self-absorption have left them void of any worldly understanding. They have been compromised by govt largesse, benefits, and propaganda.

      There is nobody left to provide restraint. Society is off its leash, and the Master is no longer in the minds of people.

    2. You observation on society today is about how I saw it last night. I decided to go out and try and "socialize" with people in my area. I find the same thing really across the board anymore and it doesn't matter whether it's a coffee shop, bar, or church it is all filled with basically meaningless conversation.

      Around here in Wisconsin they need to get the booze into them and then they get chatty.

      I told my friend and his 19 year old son that we should go catch a sandwich at the local cafe some time and sit and visit. They looked at me like I was from another planet. They couldn't wait to get home and watch the next episode of DUCK WHATEVER THAT IS CALLED with the bearded guys on their HDTV with 1000 DISH CHANNELS. (I honestly don't know the name of that show and I'm not looking it up either) I'm thankful my brain hasn't been fully DEFRAGED by the world.
      O no I just remembered the name here---Duck Dynasty. :-(

  5. Looks like heavy short positions added to Yamana, Kinross, Elderado ending Oct 31. But interestingly short covering on Barrick - figured this one would be the one to short since they continue to dilute.


  6. Caterpillar closing down its mining equipment business

    No doubt, the mining sector is now in a huge depression.

    Meanwhile, the "Resilient Consumer" marches on, unfazed and undeterred by all the ills of the world mentioned by KWN, Zero Hedge, etc.

    XRT traded at $17 in March 2008 and is now $88.

    XLY traded at $15 and is now $65.

    Anyone who bet their retirement account on the U.S. Consumer at the peak of the financial crisis and held fast is now:

    - Done

    - Finished

    - Retired

    They could sell their positions now, reap the profits, and never have to look at a stock screen ever again.

    Meanwhile, the F12-punching gold bugs hitting the "refresh" screen at Kitco every 5 minutes, who bought the "Endgame" story hook, line, and sinker:

    They have lost so much money, they may never recover, and will have to work until they are 80.

    And not only that, it must kill them to see their buddies reap fantastic gains by investing in Fed-approved and sponsored stock sectors such as financials, retail, industrials, etc.

    And not a word about the huge chasm, missed opportunity, and epic wealth destruction from all the "acclaimed experts".

    They act as if nothing has happened, the crash is going to happen "Any Minute Now, I Swear!", and gold and silver are still going to go to the moon and make all the gold bugs rich.


    1. Mark,
      I think one can compare the US dollar to the French assignats of the 1790s.
      We'll see how far the charm go on.
      I'll bet with you it won't last forever, maybe a few more years, but that at some point, confidence in fiat will collapse just like the Assignats (and all we need is an acceleration of QE instead of tapering, or such kind of black swan to start the domino effect). Then mechanically, I feel that gold will do just as it did in the last past 2000 years when such monetary crisis occured.
      Let's watch the movie until the end.

    2. Mark

      Really, all of this hindsight coulda woulda shudda stuff is meaningless.
      Do you know anyone who bet their retirement account on XLY, XRT and Dominos Pizza? At the lows in 2009 ? After they just lost close to 50% or more on what they had?
      Does any of this sound familiar? As in "who would be so stupid as to invest in mining after it tanks 50% plus"?
      There are people who are buying everything the defeated commodity investors are blowing out.
      Probably the same folks who had the balls to back up the truck on XLY/XRT in 2009.
      If you have the same courage as your hindsight investing, what is a bargain right now? What market has been bombed out that nobody in their right mind would buy?
      That takes real balls…that is where fortunes are made.
      I'm not that brave…anybody else here on the buy in commodities?

  7. I think the one thing that should be added to all of Mark's posts, even though it should be self evident, is that all the stuff that is happening, should not be happening. So instead of making predictions, I will only ask the following question. Why isn't a 17 trillion debt, 0 % interest rates, QE , deficits forever, and a deeply flawed dollar, having any positive effects on gold?

    1. arnie - the velocity of money is still falling. People still have CONFIDENCE in the Dollar in spite of everything that you have rightfully pointed out. AT some point that will go. When it does, gold will move higher. Just am not sure when the illusion will vanish.

    2. free guesses here :
      - it had an effect on gold, as ten years ago gold was worth 300 $ and was lately worth 6 times more. Maybe gold went ahead of itself? Speculation generated more speculation? I noticed end 2010 that gold prices were going higher must faster than the monetary base. Is so, this might just be a correction because gold went too high, too far.
      - manipulation of paper gold, the rival of the us dollar, see recent links towards zerohedge regarding strategy as far as back in 1968, 1974 such as : http://www.zerohedge.com/news/2013-11-11/what-confidential-1974-memo-paul-volcker-reveals-about-americas-true-views-gold-rese
      - because volatility is the nemesis of Safe Haven function.
      - because many people now think that because QE supposedly didn't create any inflation since 2008, it will never create it in the future except in the stock markets. I'm not betting on that, sorry.
      - because many countries have no interest to see the dollar be destroyed...yet. Watch GEAB LEAP of november (now only in French but in a few days probably you will have it in english on their website)
      - because the usual suspects are still accumulating gold (the real one), by selling paper gold. Sinclair calls them the Good ole boys. Thus, my previous question on this line.
      - because as Eph explained, lower prices make people sell, not buy, and at some point maybe not just people but central banks too. I hope we won't see it happen, but just watch Venezuela!
      - because no market is capable to endure 12 candles up in a given time unit without risking an imminent correction. It's called series of Sakata. 12 or 13 occurences are already very rare. It happened in gold in the yearly time unit.

  8. I have been working with the http://www.mutualfundstore.com and it seems that they have some very good financial advice to give. Your advice has me wondering if I should have another Advisor on the side. Not that the MutualFundStore isn’t good, but having more than one advisor can’t be all that bad either. Should I do this?

    1. Definitely not. Don't do it.

      Thanks Dan...the KWN site is only accessible via 3G here in Korea. Via Wi-Fi or broadband is a dead end.

    2. John KItcher;

      ERic asked me to ask you if you are on a military base over there?

    3. No I'm not. I've tried to access via broadband at four different places now (as well as via one proxy server) and they all failed to enter the site. The message I kept on getting on Chrome was "Oops! This link appears broken". On internet explorer "this page cannot be displayed". Thanks

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