The rectangular area shaded and marked support is an important inflexion point for the metal. If it does not bounce from this region and head back up again, in effect reinforcing its range trade, odds will favor a continuation lower to $20 and possibly down to $19.
The 50 day moving average is resuming its downward trend after having leveled off back in late August. It should now serve as an overhead cap to price on any rebound higher unless there is a solid, discernible change in the fundamentals and more important, in sentiment, towards the precious metals.
Gold has also lost an important level of chart support in today's session. This level, $1280, was very important as the price has tended, since August, to uncover some decent buying down here. In the middle of October, it did fall below this point, but its stay down there was only a couple of days in a row at best. If gold can recover in Asia this evening or by Thursday of this week, it will have dodged a bullet. If not, look for the next key support level to come under a test. If the Dollar takes out 81.50 on the USDX, gold is going lower.
Yes, it sure looks like the PM's are headed for another "Frightening Collapse".
ReplyDeleteNo doubt the mining business is currently experiencing a continuing, record breaking, and accelerating period of "Chaos and Crisis" as many will be forced to shut down operations completely and start fire selling assets.
Unfortunately, the "Sword of Damocles" now hangs over many heads of mining executives who are staring in shock at the complete reversal of prices with no bottom in sight and no catalyst, either.
They will get bail outs and remain operational. There are some opportunities here. Never let a good crisis go to waste.
DeleteBailouts?? They will give up equity and blood to their BB lenders. They will beg because they will be forced to. Then the banks will strike a pointed sword deal that they have to take. Control of their bounty and Wall Street Celebrates. Bonzai had excellent art on a depiction of Blanfein about ready to be beheaded a Jamie on a flogger. It was hilarious. I wonder who the Lenders are on many of the operating revolvers and the equipment lines. I bet Jamie and Lloyd have their fingers in there somewhere.
DeleteAnd some believe that GOLD and SILVER will crash J.P. Morgan. Isn't that all too humorous? So who owns the GOLD and SILVER? And they can do with it whatever they wish. It's the art of deception isn't it? They sure have the LITTLE GUY chasing various baits from their tackle boxes and are never afraid to set the hooks.
Deletefracking and normal weather = $75 crude and $6 beans and maybe $2 corn if the moron Bush (whore) never allowed ethanol disaster to come into being ; sparks
ReplyDeleteandy maguirre where are you? sparks; nice call 1300 and I seem to remember a 1600 call also; take care son
ReplyDeleteWow, the way crude oil prices are falling, looks like we'll be at $2.00/gallon by next spring.
ReplyDeleteNo wonder stocks like Winnebago are up 375% in just the last 24 months.
Who would have figured that the "unintended consequences" of printing money like there is no tomorrow would be imploding commodity prices.
That gives Yellen the green light to double QE to send the Dow to 20,000, heh, the most gold will do on that run may be crawling back up to $1,650 where the battered "Angels" are still hanging out in rehab.
I heard the Tesla collectors are being asked to take out a "explosion" addendum and pay huge premium increases in order to cover the future spontaneous combustion crashes in the near future. They (insuance companies) are considering dropping all home policies due to the charging concerns. Guess those wonder vehicles are "HOT".
DeleteMark
DeleteYou want a new Winnebago?
Be my guest !!
Smart buy!
I love the reality in here. It's a great escape from YOU TUBE and other FORUMS. I'm glad I'm no longer an investor but a trader. I can't hold a single position overnight anymore. I'll stick to this CATCH AND RELEASE kind of fishing the market. Much safer.
DeleteOn COT commercial net shorts are just not low enough to be bullish especially in the eyes of conservative traders.
ReplyDeleteIn order to clean up the excess supply of gold I would assume the metal would have to linger in the abyss, say sub $1000, for several months for miners to close their doors before a real gold bull could start.
ReplyDeleteHas anyone seen that happen in the commodity sector, where companies are filing for bankruptcy left right and center? Dan any thoughts?
the prophet Elijah;
Delete"What doest thou here Elijah?" I have been very zealous for the Lord God of Hosts...
I could not resist typing that so forgive me! :o)
When it comes to the commodity sector, I have seen many instances in the past where low prices really hurt a lot of farmers, cattlemen, hog producers, etc where some of them decided to throw in the towel and hang it up. However, the ag sector is different from the mining industry in the sense that it only takes one growing season or one generation of breeding to bring demand back in line with supply or vice versa. With mining, it can take years for permitting, exploration, etc.
this leads me to think that gold would have to stay down near or below the cost of production for some time in order to induce mine closures or shut ins as you state. We are in total agreement about that.
Even at that however, we would need to see the demand for metal pick up enough to absorb the supply to the point where a shortage in terms of the then current demand would occur which would drive prices higher.
Right now gold is falling because there simply is not enough demand to absorb the amount on the market and what is coming from the mines. the question becomes at what lower price the potential demand arises that is strong enough to eat up the available supply or what conditions would be necessary to originate that demand. I think it comes down to confidence in the Dollar/monetary system/etc.
Gold is not like corn, wheat, beans, cattle, etc in the sense that it is necessary for life. Drop corn prices from $8 to $4 and lots of demand surfaces because people need to eat, livestock needs to eat, etc. Folks buy gold mainly because they want insurance not because they need it to survive. A time might indeed come when gold will be necessary for financial survival but it is evidently certainly not here right now at the moment.
Dan,
Deleteon what numbers are you basing your comment " we would need to see the demand for metal pick up enough to absorb the supply"?
The demand/supply numbers show that demand exceeds supply.
The supply out from the Gold ETFs is only half of the increase of chinese demand.
Where is this oversupply coming from you are talking about?
"I could not resist typing that so forgive me! :o)"
DeleteThx for the response Dan, and the quote! I sensed you are a man of some spirituality - Muslim right? ;)
Elijah - thanks for a good chuckle! :o)
DeleteEndzeit;
DeleteThe way I see things is if gold was to tight as far as available supply - price would be rising and not falling. This allows for even surreptitious Central Bank supply being added to the market. In other words, even if one allows that CB's are currently moving gold into the supply out of their vaults, demand is insufficient to absorb it all at the current level. Price then is falling because buyers are not willing to buy enough to eat through the available supply.
So what do we do as traders? Answer - we let the market tell us when supply and demand are in equilibrium and hopefully we can make some money out of the situation. That is why I put a lot of emphasis on studying the price action and looking to see how markets react when they near support or resistance levels.
What we are really looking for is changes in market perception or sentiment.
Dan,
Deletefollowing your argumentation would mean, if a country was using the wheat reserve to avoid a suffering population, that falling prices would be normal.
All numbers I know show, that the increasing demand from China can't be explained witht he known supply. So there must be other sources.
It is one of the core myths of capitalism, that free markets were anticipating all available facts. But if the supply can't be explained and central banks leasing gold into the market remains as one of the best theories, why is the "market" not caring about this very bullish situation?
Can you imagine oil demand exploding 25% and the price falling while the strategic reserves are used to feed demand?
Ofcourse not.
With all respect, but to me it seems you are feeding the anti-gold propaganda, by claiming that there was oversupply. Your blog more and more is looking like a blog of FIAT-fanatics where the long term view seems to be that all problems have been solved and that people should sell their gold.
I know that you are not advocating it, but this is the crowd you are attracting. They are turning your words as trader against precious metals as long term INVESTMENT. They try to create the mood, as if it was normal that 85 bn$ per month being printed and that Gold was crashed, while demand exceeds supply.
Beware, there is a war going on. My impression is, they try to use your blog to discredit the very few people in the world, that are opposing the FIAT-fractional-money-as-debt-scam and try to make people aware of the mathematically determined outcome of this scam.
endzeit;
DeleteI see your point about using reserves but what I am saying is that my view is PRESENT DEMAND IS NOT EQUAL TO PRESENT SUPPLY and that is why price is falling. I have to wear two hats my friend - one as a more short-term oriented trader and the other is a more long-term oriented investor. I can therefore recognize a market in a falling trend that is more of an intermediate/shorter term issue while still being extremely concerned about where all this massive money creation is going to take us long term.
What I have to do as a trader is make a living out of the money. That means recognizing the present reality and accepting it if I am to profit. there are way too many people who make their livings selling newsletters or writing fee paid blogs, etc,. who have the luxury of selling their ideas to others who more often than not lose money by following them. They make their living OFF OF THE MARKET while we traders have no choice but to make our living IN THE MARKET. there is a world of difference between us as a result.
In regards to the blog - I would dare say that the majority of those who read here and post are realists who have the same sort of duel hat mentality that I do. I think that this is what attracts them to this blog. It is different from many others that deal with the precious metals because they are always uber bullish and one will hardly if ever get anything that deals with the reality of a market in a bearish posture. It would kill their subscription base or readership and their ad money earnings would then suffer. They are obviously not making any money trading by always being on one side of the market.
@RUI - isnt it the other way around? If net shorts are low, that shows that they have room to add additional shorts. If the net shorts are significant, they would probably look to cover.
ReplyDeleteIs that right(ish) Dan?
RUI and John -
ReplyDeleteI generally look for gross imbalances in the positioning of the various category of traders to see if the conditions for any sort of reversal are present. The problem is that markets can move into unbalanced or lopsided positioning and stay there for far longer than many expect. Generally it takes a trigger event to reverse a market when it becomes too lopsided but who knows when that might happen. Lots of time it will occur with the grain markets when a USDA report is issued but for gold, it is anyone's guess.
When it comes to gold, the pattern has been for the hedge funds to pile onto the long side, with the commercials taking the short side as the market rallies and then waiting for the imbalance to become extreme after which the market corrects in price and then eventually begins moving higher once again. That was the pattern as long as gold was in a bull market. Right now however, the intermediate term trend in gold is lower and that means hedge fund long positions are not all that large while they are moving more to the short side, although they still remain net long as of the recent COT report.
I personally would not put too much stock in the COT at this point other than monitoring it to see the extent of the buying and selling by the various categories but there is certainly no imbalance in the gold market right now.
Thanks for clearing that up! great site Dan.
Deletewhy did I ever buy silver at +36 bucks, I am the stupidest guy in the world for believing Morgan and the rest of that gang on KWN. I am an idiot!
ReplyDeleteMistake is natural in the human. But repetition of same mistake is called stupidity.
DeleteRegards,
Hydraulic Installation Kits
Steve,
Deletewhat was the reason why you bought Silver?
No reason why I bought precious metals from 2004 on has gone away, no problem has been solved. More debt today than ever with more indebted USA than ever.
Steve
DeleteDon't beat yourself up…a lot of people smarter than us bought at higher levels.
There will be a day when multitudes will be asking "why did I ever buy the DOW at 25000 ? I should had never listened to that gang on CNBC "
Silver will re-visit that price, you just have to be patient.
Shanghai deliveries 9 trading days into November Gold 120 tonnes and Silver 96 tonnes. To put that in perspective Germany could get their 600 tonnes of Gold from Shanghai in 10 weeks versus 7 years from the FED! Must be why they've opened a new rail link from Germany to China.
ReplyDeleteWell, another nail in the coffin for those who keep predicting the "Endgame".
ReplyDeleteMacy's beat handily and the stock is up 8% on above average volume, getting all the way back to lifetime record highs.
And don't look now, but the stock market is down today yet XRT is now printing another world record high.
Just wait until these collapsing agricultural and gasoline prices start having an impact on the consumer, we are going to witness the greatest spending boom ever recorded, possibly one of the best Xmas seasons of all time.
...to draw the attention away from the never-ending gold-topic:
ReplyDeleteAnyone an idea why COPPER (CME/Comex, HGZ3) (or LME 3mths) came off today?
(useless to discuss the contradiction, that the S&P500 did not...)
Regards, Alex
And the bloodletting begins... Venezuala is looking to dump its gold reserves, as their balance of payments and inflationary woes mount.
ReplyDeleteI wonder who was talking about this first?
http://www.google.com/hostednews/afp/article/ALeqM5gj_PJx34GYgDXJAy762JURFmcUcw?docId=550c9f8a-2cbb-4afc-987e-9da94be26964&hl=en
Wasn't this the country that had a parade after repatriating their gold only a year or so ago? How fast things can change, if so.
DeleteYeah, who the heck needs gold when you can own consumer discretionary stocks which are up 478% since 2009 or Bitcoin at 420?
ReplyDeleteSo much for PM's as an "insurance" or "store of value".
More like a "wealth destructor", LOL.....
New lows for DBA, the cost of that that $2.50 Starbucks brownie has now sunk to 7 cents after reaching a high of 14 cents back in 2010, LOL....
ReplyDeleteProfit margins are surging for consumer plays.
We are now luxuriating in rapid deflation which is making consumer goods much cheaper, except for Obamacare which will be cancelled by the end of the year.
Speculators who shorted commodity ETF's and went long retail stocks have just reaped the biggest windfall ever.
Best decision I made was to stay in the system and ignore the "hyperinflation" hysteria bleatings so commonly found in the blogosphere.
Hello,
ReplyDeleteI posted on the other line because here is written silver and there the title was gold, but everyone seems to post here so I'll switch as well :)
I'm still long on that trade, as MACD 1 hour still didn't cross. The Bollinger inf going up gives me a bit of freedom and I decided to raise my stop loss near 1364, one can see why in 30 minutes candles.
I'm going to bed (yeah...Armenia, just check on a map :) so I'll probably wake up being stopped because no thanks, I'm not going to program an alert waking me up in the middle of the night because a bloody MACD crossed its signal.
Have fun :)
Hubert,
DeleteAre you staying at the Armenia Hotel? Have a good stay.
Bye-Bye silver, wow, relentless destruction.
ReplyDeleteAnother fresh record high in the S & P 500!!!
Does anyone know who is buying into the Bitcoin craze? Usual it's big institutions that move markets but I can't imagine it's them.
ReplyDeletemore and more nations like Venezuala will be dumping their gold into the streets to make up for BofP deficits. Very miopic decision makers populate the halls of govt. They will increasingly decide to dump their gold reserves, since it doesn't pay them interest. the same people buying all that gold at 1600-1900 will be selling it at 1000-1100
ReplyDeleteYep, everybody and their brother will be looking at the fresh, record highs in the Dow and S & P 500 today, and wonder why the heck they are holding gold which keeps going down.
ReplyDeleteLots of doomers who have already been humiliated are going to start throwing in the towel and we will probably see a flash crash in GLD and SLV as the last of the "hopers" throw away their bullion right into the hands of Goldman Sachs and JP Morgan, who are pre-emminent long term investors.
Mark - you are so right about Morgan and Goldman... That is what is so frustrating when attempting to explain to those who see every move lower in gold as the result of some nefarious force seeking to discredit the metal and blame Morgan and Goldman. Morgan is standing for delivery for their HOUSE Account at the Comex delivery process. When the December contract goes into its delivery period, I expect to see their name continue to be among the large stoppers of the metal. They are buying it from hedge funds who are doing the selling right now.
DeleteMorgan and Goldman sell gold on the way up, not on the way down.
This is worth paying attention to.
DeleteIf JP is standing for delivery...what does this say about future price?
Hedgies are selling and the commercials are buying, It doesn't take much to figure out who is the smarter of the two groups.
I'll stick with what the Commercials do.
Dean - ultimately the commercials tend to be correct but that is LONG TERM ONLY. Short term the hedgies have all the firepower and fighting them means losing money for all but the most deep-pocketed of traders. I have learned to monitor what the commercials are doing but do go with the hedge funds as a trader until the market gives me a signal to go the other way.
DeleteThanks Dan
DeleteGood info to know for us Newb's
BitCoin $445.
ReplyDeleteSheesh......coulda, woulda, shoulda....
LOL....
Joking about glam Tesla yesterday, but now this! Hope all the progressives bought the dip. They are about to get it. LoOK OUT BELOW.... http://www.zerohedge.com/news/2013-11-13/car-b-q-part-4-tesla-plant-fire-sparks-stock-stumble-live-feed
DeleteNOW THAT THERE IS A glam lib stock ready set. Crash
Mark
DeleteThrow a dart at the S&P and it is pretty much the same story no matter what the company.
If I had put all my money in CAR and HOG in 2009....I would be so well off right now that I would be intolerable...even more annoying than you Mark ! (just kidding)
These are just two of the average performers.
Never look back...it hurts too much LOL
Wolf
DeleteYikes, still not as bad as a gold miner.
Not to fear, the Fed will save Tesla...probably a good buy.
I am having trouble getting my head around Bitcoin.
DeleteIt is more efficient as a way to pay as it eliminates the middleman (like paypal)
but if you want to buy Bitcoins you still pay somebody 6% for the pleasure of doing so.
You still need a form of payment to buy bitcoin it is not currency in itself (your employer does not pay you in bitcoins)
I still have not figured out how you convert a bitcoin back to a currency you can use on the street.
Plus, the future supply of bitcoins decreases until no more are created...this causes the value of bitcoins to increase over time. If that happens then why would you spend your bitcoin?
Not quite seeing a big advantage yet.
Dean,
DeleteI hate to admit it but I held on to the small miner position, and bought more day before yesterday. I think the Miners are bottoming, and hopefully NEM is an example that they have done some adjustments, hedged some production, cut costs to the bone. Maybe just maybe the boost over 1280 will play out to the miners advantage and I can escape again. That is a pitiful hope, always to escape with a 5-10% return, back to cash. I am not investing in a market where the P/E's are run so high that the floor is established by the Fed. Not going to do that. I know, I know, Stawks are the buy. Eventually the market is going to puke, and INFLATION EXPECTATIONS will overcome. Stagflation is here, I know it, the MOMO chasers and hedgies are eventually going to blow up the mining sector. I am not in alot, but I am a bull on gold due to the money printing around the world. It has to happen and I believe when it does it will happen so fast that you will not be able to get in fast enough. That is when I will be looking for the exits.
By the way, Mark was pumping Tesla when it was 150 or so, it went to almost 195, then, now, if you bought at 160 and it goes back down to 100, you only lose 60% in a matter of 1 month. Me really hates glam, lib stocks. Hates em with a passion. Would never invest in anything energy related until the infrastructure is built otherwise, it is a minor market share stock. I am thinking the propulsion of autos of the future is the LNG, LPG. Currently the costs to own a fleet of these vehicles for small and large fleets with domestic local daily travel where the companies have filling stations at their POB are neglible. They will eventually overtake the electric vehicles and certainly have alot more marketshare right now.
Deletenervous fx and pm mkts to rally off old, tired, dovish Yellen statements; sparks
ReplyDeleteDan -
ReplyDeleteWhat happened after hours on Wednesday? Unreal. Are they trying to get back at you for the "silver on the ropes?". Or they capped gold for too long today . . . and it needed to break free?
hey Preditor1976, where are you? Laying in the weeds or on extended vacation? sparks
ReplyDeleteI am also in trading profession and doing in commodities now a days. I am following Best Agri tips provider for successful and profitable daily trading.
ReplyDelete