"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


Thursday, November 7, 2013

Golden See-Saw

She's up - nope - wait a minute - She's down - hold on - She's back up a bit...

No, I am not referring to a horse running a race but rather to gold. Talk about some wild price action. So many cross currents and so much volatility... trying to trade gold on a day like this is an exercise in futility except for the most short term of traders, namely the scalpers.

The first mover this AM was an "out of nowhere", surprise rate cut over in the Euro Zone. The initial reaction to gold was "Yippee". Up it went on ideas of ultra loose monetary policy in that region of the globe. Shortly after that sent gold higher, US GDP data came in much better than expected and that pulled the rug completely out from beneath the metal as the Dollar surged higher on notions that the "TAPERING" was back on once again.

Traders were whipsawed severely this AM as both sides found something that they could trade off of but neither side got a clear advantage, YET, although it appears that the bears are attempting to seize a bit more ground as I type this up.

Bulls looked like they had seized the short term advantage when they powered gold up through $1325 on the rate cut surprise and European easy money policy. When the GDP number came out in the US it further bolstered the US Dollar and that sent the new longs scurrying and the bears began growling. That combined selling dropped the price below the important "13" handle level with gold sinking to as low as $1296. However, bulls came back in and regained that $1300 level.

Although the metal remains lower, it is still holding that 13 handle. It is IMPERATIVE that it do so. If it does not, look for a new push to begin soon that will test the resolve of the bulls as the bears try to take it down towards $1280 and perhaps even $1270.

As stated here frequently over the last couple of weeks - the key driver for gold right now remains the US Dollar. When the Euro is sinking over 1% against the Greenback and the USDX itself is up nearly 0.9% on the day, gold will face formidable selling pressure.

Also, crude oil is sinking yet again today having given up yesterday's short-covering rally induced gains.

Let's see what we get as the session wears on today before drawing any further conclusions at this point.

Have you noticed that today the "good news" ( I say this with all manner of sarcasm) about the US GDP number which has started the early TAPER TALK once again, seemingly has no impact on the S&P 500 for now?

Gee - I wonder if it can reach 1800 before Thanksgiving? Yep - there isn't a worry in the world about the state of the US economy. The VIX, Volatility Index, remains mired down near multi-year lows. Complacency rules supreme here in the US.


  1. Hi steve,

    To answer your last question, bah I don't try to find a reason why there was such a whipsaw on gold today. I'm trying to remember the times when I was day trading and it was very often intraday that I could see this kind of move when you had a boring range.
    Bim. Boom. Blood both ways outside the range and back in the middle.
    I still think it's an algo thing most of all, to casually hit stop losses.
    In that exercice, I'll be very transparent, because I have no idea if I'm right or wrong, except I saw that being persistent usually eventually brought a positive gain.
    Today I bought stop at 1323.x just above yesterday's highs, and I had an automatic stop sell order in place then at 1315. So both went and I lost 8 pips on a small line.
    I'm back buy stop at grossly the same level, with a line a bit higher.
    It happens, but is very rare that I am stopped like that many, many times without getting out of the range and eventually getting back my previous losses. It happened a few times, and it's hard psychologically. Many times it worked fine and the trend out of the range more than compensated the whipswaw.
    I'm not lecturing anyone, for everbody has his trading method.
    We'll see what it gives on this one.
    Today I lost 8 points on a small line.

    Eurodollar, statu quo imho around 1.30, and each CB is making the most of an imbalance to depreciate further their currencies (lower rates, etc...). OK babies crying, gotta go.

  2. DBC now plunging to 52-week lows.

    Check out the chart of coffee if you want to see what the future gold price is going to look like.

    Zero inflation.


    Looks like the "currency event" has already happened.

    A huge upside explosion in USDX.

  3. Mark
    I am still waiting for your yes/no answers to my last email...
    as for coffee, if you put it in the same category than gold, up to you...

  4. Marks comments this morning stocks exploding higher...WRONG

  5. Judging by the strong GDP I'm also guessing tomorrow NFP numbers should reach expectations. This might be the final death knell for gold. But who can say for sure, gold is always full of surprises.

  6. I guess inventory stuffing now means strong GDP? LOL...

  7. http://www.zerohedge.com/news/2013-11-07/q3-gdp-roars-28-despite-weakest-consumer-over-two-years

    1. One thing I've learned from all this is be carefull about getting info from gold pumper sites, like ZeroHedge. Watch the charts and what the market is doing, that's the real story, no matter what John Williams of Shadowstats says. He might be right but you gotta go where the money goes to be a winner in this game.

  8. Prophet
    Not going where anyone goes at present. Staying out...buying physical only for now. Market is not a market. Gambling pit in a world I know longer trust.

    1. So gold is now at 1308, and you buy physical at that price. What is your physical worth when gold hits possibly $1000 3 months for now? $1000, correct? Maybe you could finally be the one to explain this paper vs physical which I just don't seem to get. All miners also sell at the paper price as per the Comex, so they move up and down with this price, no so called "phzzz" as the goldbugs fashionably call it.

    2. For all the "stackers" buying physical gold or silver you have to remember that these dealers are immediately shorting your purchase so the more physical buyers the more short interest increases in the futures.

      Suppose the physical buyers aren't aware that all this hedging going on is actually driving the price lower. So you might be better off buying paper bullion instead?

      Just a thought.

  9. Let's see where GOLD goes when all currencies devalued by % which will occur is occurring and will continue to occur. Let's see the MSM PUMPERS continue to keep attention spans glued to fake markets while all CB s devalue untill all currencies become toilet paper and market volume approaches 25% of pre 2008 highs. Right now volumes of trading down to 35% from 2007. Phantom algorithm driven markets will disappear.

  10. right on Wolf; the true volume from the old days has vanished; it is all about the hose jockeys now; algorithmic pointy heads; sparks

  11. A quick observation about gold prices today.
    Gold bounced exactly on the mlh inf of the upwards pitchfork you can see on my previous chart in daily chart units. Usually, I would have been inclined to put a buy order right there, but you remember, I mentioned the fact that my experimental indicator, the CDur, was going down with both its lines, which was rather bearish in terms of cycles of impulsions, therefore a bearish bias for me, so I didn't and still do not buy on this support. But anyhow, it held today and Andrew's pitchforks show once again that they are a nice tool to have to follow price actions. I love pitchforks, Fibonacci, Bollinger sometimes only, and then some axis to follow on MACD or OBVD. A few indicators only, I try to keep it simple, but understand them well.
    Also not very bullish is the fact that we didn't reach the median of this pitchfork, but stalled, and are testing the mlh inf. But hey, as long as this support holds, I'm not bearish, simply once again neutral and bored regarding price action.
    Also, many time units show 1270-1275 as a support zone, on prices, on Bollinger Bands, or on mlh inf of monthly pitchfork.
    Right now I have a blind buy order in this area, just in case the market drops abruptly and I'm not there :)
    I feel better to buy at 1270-1275 than 1296 because of the short term CDurs goind down in sync.
    So my current positions : long stop above the range once more, and long 1270 area as well limit. Nothing else. I don't like being on the short time of gold even via CFD paper speculative position :)

    1. P.S : but should we break through 1270, I'll probably revert and short the market, targeting once more 1225 as first target.

  12. To French speakers / readers, a good address to discuss about fundamentals : http://cafebourse.wordpress.com
    I'm sharing the thoughts of the webmaster there from his last post.
    He compares recent years of QE with the situation of a stalling plane.
    An unexperienced pilot would have the reflex to pull on the stick, which is extremely dangerous. Instead when stalling, you should let the plane accelerate a bit down to get back some sustainability.
    Same with last years : the velocity of money stalled. Velocity of M2, or of MZM. But instead of accepting the stall (accept some deflation), our pilots are pulling the stick with QE, QE and other "inflationary" policies, which is extremely dangerous.
    We are closing to the ground now, and more QE will eventually break down the confidence in the dollar. That's where we'll see a crach in many markets now in bubble territory.
    The When is impossible to forecast with accuracy, but I like the image.

  13. If nothing is happening on gold, it's not the case of other markets.
    I'm not usually talking about them because it's not the theme of this blog, but short term, very nice config shorting the SP500, first target just reached 1750 second target 1730 last target mlh inf going up of pitchfork around 1710. Nice config spotted with both MACD and Bollinger bands for the short entry point (double top played). So much easier than trading gold lately...


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