“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






Saturday, November 23, 2013

Trend Analysis of Gold

As we draw near to the close of November, I thought it fitting to provide a look at the gold chart over several time frames, near-term, intermediate and long term, in regards to the trend of the market.

For this purpose, I am using an old but reliable indicator known as the Directional Movement Index, which is as good as any others out there when it comes to determining whether a market is in a trending phase or is moving sideways within a range.

Let's start with the Daily Chart first....


Notice, Negative Directional Movement ( the Red Line) continues to remain ABOVE Positive Directional Movement ( the Blue Line ) indicating that the bears are in control of this market. Further, the ADX line is rising indicating the presence of a STRONG TRENDING MOVE. Because -DMI is above +DMI, we know that the trend is therefore DOWN.


Let's now shift out to the intermediate or weekly time frame. There is one very noteworthy item that immediately stands out to any technician:  Negative Directional Movement has been ABOVE Positive Directional Movement since late November of LAST YEAR. In other words, the Bears have had control of this market for a full year now. That is why it particularly distresses me to read so much of the foolishness that keeps coming out of some quarters of the gold community talking about such things as BACKWARDATION, GOFO rates, COIN DEMAND, etc. It makes for interesting reading and such but is of no value when it comes to interpreting the language of the gold market itself.



Furthermore, the ADX line had been steadily rising since the beginning of this year indicating the presence of a strong trending move lower until the middle of July when the line turned lower indicating a disruption in the ongoing downtrend.

As the price of gold recovered from the spike low near $1180, it rallied up to near $1420 relieving the downward pressure for a bit. However, and this is important to note, the -DMI remained above the +DMI during this time frame. That means the rally was merely a pause in the ongoing downtrend and that the bears still had control of the market.

What gives me reason for concern with gold is the fact that the ADX is showing signs of turning higher once again. It is likely, not guaranteed, that line will show a definite turn higher if gold cannot close higher this next week. Also, the market is moving down into a dangerous area. If it cannot attract the same kind of buying that it did back in the summer of this year, when demand soared higher, chart support will not be able to hold. It is imperative for this market that demand for the physical metal ramps up significantly right away or there is the danger that gold could start yet another leg down in price.



The last time frame we want to look at is the monthly chart. Something that stands out to me on this chart is the fact that the ADX has never yet ( since 2001 ) moved higher while gold was in a corrective phase lower. In other words, on the monthly chart, we have not yet had a period during which the market was in a DOWNTRENDING PHASE. All corrections lower in price were just that, corrections, not changes in the ongoing UPtrend. As you can see, the Negative Directional Movement line remained BELOW the BLUE or Positive Directional Movement Line even in 2008 when we had the debacle in the market. Bulls were remained in control of the market, even if they did just barely manage that.

However, in March of this year, for the first time since the bull market in gold began back in 2001, the Red line or Negative Directional Movement crossed ABOVE the Blue Line or Positive Directional Movement. The BEARS had seized control of the gold market. Shortly thereafter, the ADX line began to rise for the first time in over a decade while the price of gold moved lower, indicating what looked to be an incipient trending move lower. However the price recovery off of that spike low when gold moved up some $240 or so in price, dented the downtrend and the ADX began moving lower once again showing that the market was going into a consolidative phase.

Significantly, with the fall in the price of gold from $1400 to its current $1242, the ADX is threatening to turn higher once again. It is not yet there but it is certainly not falling. Translation - gold is flirting with indicating a trending move lower on the LONG term chart.


This is the reason I have been bearish on gold now for some time - the charts are indicating that bearish pressure is building in the market and is hinting at building across all three time frames. It is imperative for gold bulls that the price recovers strongly before the end of this year to prevent heading into the New Year with a strong bearish bias. Index fund rebalancing might help somewhat but with hedge funds plowing money into the short side of the gold market, Asian and middle East physical offtake is going to have to be large enough to absorb Western-based selling.

What worries me about gold is that the hedge funds still remain NET LONG, even if that position has shrunk to relatively low levels. That means that there remains more than enough firepower to take this market lower if those remaining long positions have to be jettisoned in the event of a breach of downside chart support.
Keep in mind that the first chart to respond to any upside movement in the metal will be the daily time frame. Thus we will continue to closely monitor the price action so look for any signs of a market turn higher first on that chart.

108 comments:

  1. Thanks you for the detailed explanation. I have been thinking that the $1180 spike low would hold but be tested. Looking at this price action and directional indicators I feel we could go right through. Any forecasts on how low? $1000? $800?

    I fully agree with the financial analysis saying QE must result in inflation but as long as the other nations continue the beggar thy neighbor plan and the sheep believe in "Change" gold and silver will suffer.

    Holding onto my PM stocks and miners but not at all happy here. As a result I am starting to acquire dollars and S&P as trades. May as well let the FED make me money too.

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  2. If Gold makes the move lower (from 1240, re-testing 1180, possibly below), what do you expect for Silver ?

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    1. Cop Watcher - go right down alongside with it. I tend to also watch copper very closely as potential clues to what silver might do. If the sentiment were to shift from one of the current slow growth scenario to one in which growth was picking up and inflationary pressures were rising, I think copper would take note of that and then silver would as well.

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    2. Thank you.

      What I meant was, what do you expect for the Gold-Silver ratio ?

      I remember at the end of June, the GSR climbed to 65, then 66 and 67 at times.

      I tried to find more detailed data, but Kitco historical curves are a little imprecise - hard to determine exact numbers from pixellated curves. I remember $1180 & high $18's as the approximate lows.

      $1180 with a GSR of 67 yields a Silver Price of $17.60 - I don't remember $17-anything for Silver in that time-frame.

      In early July, I think Gold bounced off its lows faster than Silver, and that's when we saw the GSR opening up.

      I use Gold to finance Silver purchases, so that relates to my interest in the price ratio.


      This time around, it seems like Silver is a little 'stickier' - the ratio is staying in the 62's.

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  3. You tell it like it is Dan.

    Anyone want to know where gold is headed, simply look no further than the long term chart of coffee on Finviz.

    Coffee has already broken the 2009 lows and the meltdown continues.

    Silver is getting even worse.

    And BitCoin is now trading over 875, nearly doubling off the lows of last week already. That is where the Chinese are putting their money.

    They are probably now dumping their gold to put it into BitCoin as the new "reserve currency", LOL....

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  4. Dan,
    I was very surprised at the way the dollar dropped hard Friday. I wondered if that is an indicator of a continuation of the downtrend we saw not to long ago in the dollar. Gold did not react, but it stopped going down.

    The dollar will go kerplunk at some point and it will be sudden and catch everyone by surprise.

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    1. Concord; The $ is a bull mkt; sparks

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    2. It is?

      https://www.tradingview.com/x/LgjK30ht/

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  5. We'll use Trader Dan has the very short term contrary indicator, small bounce here in spot until the second week in December then the selling of gold continues taking miners down further.

    Bitcoin is probably in a blow off phase. No government wants competition from a currency they can't control. The US congress will deem it a tax dodge and that will be the end of bitcoin.

    If any currency encounters inflation, it will be China's. Reports of China not buying US paper (debt) is actually a good thing for the US as we resort to further buying more of our own debt, at least miniscule interest payments stay within our borders (not sent overseas). Over taxation (health care funding) will add to the coffers until Congress invents more new ways of spending that future generations can't afford.

    If the US is going to be made the bad bank, it is not going to happen tomorrow.

    Silver going back to being an industrial metal and there is no world economy to create any huge demand. Later on after a bottom is put in, silver will recover along with gold for general reasons and principles that happens when governments fail to address economic issues properly ending in more uncertainty than there already is.

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  6. Dan -

    First of all, this is great! Thank You!! You did not have to do this . . . so kudos to you.

    I get it about GOFO, backwards crap, etc. Forget about it.

    Question, when Andrew Maguire goes on the air (KWN) and says Asian premiums are getting high/moving up for precious metals. Lets assume he is correct that premiums are in Asia, and assume the premiums are going up for argument.

    Does that figure into your mind that the charts might be a little stretched beyond normal, and if they reflected these premiums, maybe the ADX would be more flat if it was true about Asian premiums?

    Thanks in advance!!

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    1. jmsvett;

      You're welcome.

      Asian premiums are a measure of demand in ASIA - NOT IN THE WEST. Right now it is Western investment demand that is declining. That is an unavoidable reality which Maguire seems content to ignore.

      The West is currently enamored with soaring stock prices and falling energy prices. Until something occurs to disabuse the West of this "investment nirvana", the trend is lower in gold no matter what is happening in Asia.

      Longer term, increased demand for gold from Asia will help establish a solid floor for the metal beyond which it will not fall. However, we still need Western demand for a bull market to emerge once again.

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    2. While the West is enamored with soaring stock prices, the East is enamored with Gold and they are taking full advantage of the price smashes. I agree that the trend is bearish but it is starting to look to me like the physical buying just intensifies the more the price drops. This can only go on for so long. Sooner or later everybody will realize what is happening and the paper owners of Gold will get concerned that their allocated and unallocated Gold holdings may no longer be there. I am amazed at the anti-Gold sentiment in the media and to a large extent on this blog. It is almost like their is an all out war on Gold in this country and anybody who owns it for protection is vilified and ridiculed.
      I find that rather odd given the underlying fundamentals of exploding debt and unprecedented money printing around the globe. It's as if mostly everybody in this country has been dumbed down by the media to believe that Gold is only a useless relic and everybody who owns it should have their head examined.

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    3. AK;

      Where do you come up with the idea that this blog is "anti-gold"? It certainly is not from an objective reading of the articles or many of the comments. Most of the readers here are just as concerned about the huge levels of debt in the system and the endless money printing schemes as you apparently are.

      What is different about this blog however is that it is not a mindless "gold is a screaming buy no matters what happens" blog. Instead, we try to be realistic enough here to read the charts and analyze the price trend. The trend in gold is currently lower. That is a fact. If it changes we hope to be able to recognize that sooner rather than later.

      In the meanwhile, we are attempting to gauge sentiment towards the metal. One can make every argument in the book about why gold should be moving higher but the facts are that UNTIL THE MAJORITY OF PLAYERS COME AROUND TO THAT SAME VIEW, the market is going to move lower.

      Why do you think western based investors continue to sell off their GLD shares? Answer - they are rushing into stocks instead of mining shares in general. Maybe that will change very soon. I do not know; when it goes, it will. It really is that simple.

      Just keep in mind - everyone and their dog knows that the Central Banks of the West are engaging in a nearly limitless paper money creation scheme. Everyone and their dog also knows that huge amounts of debt are in the system. Gold knows that too but it has not mattered thus far. One day, it will. Then and only then will we see a shift in sentiment.

      Who can say when exactly that will happen? I certainly cannot not.

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    4. Dan - I wasn't referring to your posts as anti-gold but many of the bloggers here seem to ridicule the "gold pumpers" as a bunch of fools.
      Two quick comments. As far as the GLD selling off, could it be that the big players are dumping their shares and converting to physical? It requires 100,000 shares to convert into physical, so these are the big players and it would not surprise me one bit if a large part of the GLD sell-off is a move to liquidate GLD shares for physical gold as the smart money is getting increasingly nervous about Gold migrating from West to East.
      The current price action is so counter-intuitive to the underlying fundamentals that I just wonder if in this country we are completely missing the big picture and while the prices continue to move lower, Asia and the smart money is taking full advantage and accumulating everything the market will yield at these prices. Trading paper gold and silver is one thing but if someone is waiting for "THE BOTTOM" to accumulate precious metals at the best possible price, it may just be too late.....

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  7. One other question, sentiment is not something you put a whole lot of thought into. For instance, silver sentiment right now is where you normally would see bottoms right now. But on KWN, its obvious you are not really high on silver.

    So the question is, is sentiment ever more or equally important that the charts such as indicators as Directional Movement Index, Coppock or TRIX?

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  8. Dan -

    Something to help you out, because you give so much to us. I did some math over time using the CCI index. Generally, in commodities bear markets you get a 20% to 38% (2009) year over year decline and then the index starts to go back up.

    This time might be slowly worse than 2009, however.

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    1. So I would look to accumulate gold at 450 on the $CCI chart. Or about 10% less than where we are at. But it could drop a lot further.

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    2. jmsvett;

      thanks for that... it will be one more item we will be watching as we look for a potential turning point for the market in the period ahead. hopefully we can spot the trend change from its current bearish decline to a more friendly one.

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  9. I have no clue what Maguire is talking about.

    The physical price I see on the major gold dealer websites trades TICK FOR TICK with the spot price at the COMEX.

    And just wait until that Singapore exchange opens up.

    The prices there will also trade TICK FOR TICK with the Comex, but with the usual $20 - $30 premium over U.S. dealer prices.

    And that premium is very puny compared to the violent price drop gold has experienced lately.

    Like Dan says, all this talk about manipulation and "Central Planners" is simply hogwash.

    Another tool to be used to keep a leash on all the gloom and doomers who are still flocking to the gold promoting blogs and websites.

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    1. This is exactly it and what I keep saying. When gold got clobbered this year the gold pumpers switched gears to paper vs physical garbage, oh its not gold that is going down it just "paper gold". Then why were miners in a free fall along with it?! Premiums between paper and physical are so small that who gives a turd, the premium is usually based on delivery and storage costs, not so much value from what I've seen.

      Still trying to figure out how this so called Singapore PM Exchange will affect things or how it's going to get gold to $50,000. But likely it'll be the same thing as the pumping of gold coins and physical shortages which did nothing to boost price of gold, and the official price that markets follow on the Comex - which apparently according to Jim Willie is experienceing a slow lights out death as membership seats dwindle. Likely just more gold pumper nonsense.

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    2. The gold community has always claimed that there is far more paper gold than physical gold, that is not a new argument since the price decline. The fact that miners are in a free fall along with the price of gold and silver is a clear indication that they are struggling to operate profitably at these prices. Many miners are incurring huge losses and some are resorting to desperate measures such as "high grading" to keep the mines open. These lower prices are not sustainable and will result in many mines closing their doors or being acquired at record low prices.
      The price premiums for physical are low for now, but who is to say they can't dramatically diverge from the paper price if prices get smashed even lower and the physical demand overwhelms the remaining supply? All indications are that the physical market is tight and the enormous flow of Gold from West to East is not slowing. This can't continue forever without some kind of default in the physical market where paper owners of allocated or unallocated gold are suddenly told that they will be settled in cash rather than Gold. We have already seen this with ABN AMRO and it's only a question of time until we will see this around the world if the physical demand does not subside.

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  10. This comment has been removed by the author.

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  11. Now President Obama is LIVE on a Saturday night. That's odd in an of itself. This is one of those SPECIAL REPORTS:
    WAR with IRAN is brewing

    Now you know this will directly effect THE U.S. DOLLAR, GOLD, and SILVER. There's no way around it.

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  12. In a world where you can make money on the short side of markets, and knowing that bear markets plunge much faster than bull markets take for going up, the largest fortunes can be made on the short side, not on the long side which usually requires patience.
    The short side feeds on fear and panic.
    They want the gold bulls to stench fear and see with despair when 1180 gives way.

    I'm not sure how many readers from gold bull communities or even jsmineset, etc... came here and read regularly to try to see a more balanced advice about price action, but my thoughts are the same as Dan when he speaks about permabulls and their bullish bias on gold.
    Imho :
    1) the name of the game is to scare you out of your positions. A bear market oftentimes ends into a capitulation event. It can be in shorter time units and happen within a few hours only, with dramatic drops (you had a taste of it mid-april, and I'm accurate about my words. It was a taste. An appetizer. If 1180 fails, maybe you saw nothing yet. Consider it.)

    2) Capitulation phase usually doesn't last long. Instead it is very brief. But it washes away most long position who panic simultaneously and throw the towel, creating a massive sell volume with unbelievable price action down, which feeds the panic and générâtes more sales until everyone who was bull at higher levels except the most long term investors are OUT. Consider a capitulation is now what is being whished by those large speculators and hedge funds. They dream about it. And they may get it because capitulation IS A SHORT TERM EVENT. So you can witness a capitulation before 6 months later, gold prices are much higher once more.

    3) Gold production costs are probably around 1100 in a pessimistic scenario (Hattaway considers already 1200) and are not likely to go down, but rather up. This is a long-term, and I repeat, long-term safety net regarding gold prices. It won't protect gold prices from a massive price panic nor sub 1000, yes sub 1000 $ prices during many months, yes months. But in years time scale, gold will not, cannot remain at sub 1000 $ because of this cost reality.

    4) So to all long term bulls who bought gold as a protection, worse, as a wealth protection asset, as an asset supposed to guarantee your wealth and purchasing power preservation, I can' be more urging you to Watch the enemy in the eye and understand the rules of this game :

    - rule number one : PAIN. until it becomes untolerable and you take your hand out of the box. Understand this 100%. Understand you are being tested this way right now :
    http://www.youtube.com/watch?v=yIDtN8CDQmk

    - rule number 2 : those guys make money with volatility, i.e price variations. The goal is to push the bear trend to its maximum and squeeze out a maximum of profit from this current bear trend.

    - rule number 3 : what can't go down...must go up. Once the juice is squeezed out, the game will reverse, and they will probably play the long side. Funny, that's in fact exactly what Sinclair is seeing when he talks about "the boyz." reversing their positions. Market will probably reverse when most bulls gave up because of 1) pain.

    - rule number 4 : how far can gold prices can go. Answer : ALWAYS lower than you can imagine during a capitulation event, which is why so many traders, investors, bulls SELL at the lowest price during a capitulation. Because they just can't believe such prices. All their belief is destroyed, they see only the possibility of prices heading to zero and sell with disgust.

    Conclusion : consider the real possibility to see gold going to sub 1000 $ in the year to come. Analyze NOW what would you do in this case. If you will panic and sell it all, only sell a 1/3 of your gold holdings now, but promise yourself to stick on the rest of it for the LONG TERM. Above all, don't ever sell all your position during the capitulation. You will recognize it : prices will drop the deepest during the shortest period of time.

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    1. The last piece of misinformation (and I'm not calling you a liar Hubert) to be realized is that we are at or very near production costs for GOLD and SILVER. I simply just don't believe the reports and I don't believe the numbers. These mining companies did fine prior to 2008 and there's no way GOLD and SILVER would do them harm to fall back to those levels. I think it's a farce.

      Once again, I'm not calling anyone here a liar that believes the misinformation I'm just not buying it. The buying opportunity is coming so take another 50% off the current prices at least.

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    2. unit - how are you getting costs? it seems unbelievable that the miners were soaring on when gold hit 1K 7 years ago. but how much can their cash flow statements lie? Pretty much no one is generating free cash flow at $1,300 gold-If they were, why would ABX need to have a massive 2ndary share offering to pay down debt (rather than use internal cash flow) They were barely making money at $1,600 gold. Unlike the pundits who told us that gold miners would be utilities and shed off 5% dividends at that price.

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    3. @HDH - Interesting and sober. It looks like gold will test 1180 this week. I would guess that there is a lot of demand (myself included) for gold sub $1,000--I sold off 2/3 in April and have set that as my goal. It seems that that's where you get, as Trader Dan mentioned, the 50% retrace of the entire 01-11 rally and then some, it's also where many people who soured on the equity markets after the 2008-2009 collapse entered the the gold market. That would constitute a washout in my mind (though I'd buy in weekly chunks to price average sub 1k).

      Mark, I think you're off point a little in "staying in the system" -- 1. the wealthy and many of the self made have ALWAYS been outside the system, accreting assets in real estate - both trophy and income earning - internationally, buying art, and having equities as a portion of the portfolio. In fact, here in Mexico, the wealthy have always sad on real assets due to the instability of the Peso and unfavorable tax regimes.

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    4. Hubert, hard to argue with your assessment. The one thing I always tell friends who are new to the game that there is simply no way to predict what Gold and Silver prices will do in the near term, but if you don't own any physical Gold or Silver you should start accumulating at any price. Start small and add to your stack when prices drop. The problem I see with waiting for a "bottom" is that you simply never know when things could unravel. With $1.2 quadrillion in derivatives you never know when there will be black swan event that could very quickly dry up the physical supply of Gold and Silver in a panic situation and you may not be able to procure the protection that you intended to accumulate.

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  13. Dan,

    From a fundamental standpoint - while the Iranian oil deal should be negative for gold, the Iranians were taking gold for oil payments, and then dumping gold for currency. Could this help gold going further?

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    1. jmsvett;

      Right now, the way I see things, is that it is going to be WESTERN INVESTMENT demand for the metal which will be the key to the near term fortunes of gold. Until that re-emerges gold is going to continue to attract selling on rallies.

      I keep saying, that it will be the issue of CONFIDENCE that will be the driver for gold. That entails a wide gamut of factors but included in that are stock prices, currency matters and monetary and political leaders.

      Human nature is such that it tends to move in herds or packs. When the pack gets worried, the pack then moves in one direction. Determining when and at what points this will occur is the business of a trader which is why we study the charts and price action and try to make sense of it all.

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  14. The deal with Iran seems another headwind for gold with all that is stacked against it. We could really drop now. The world is perceived as a safer place today than yesterday. That is not how gold thrives. As Dan has pointed out very little except for the dollar weakness Friday was setting up for gold.

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    1. I keep wondering in what alternate Universe those people live who seem to be convinced that things are getting better. Apart from the stock market going up, it looks to me like everything else is going in the wrong direction.

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  15. Exactly.

    I'm expecting a huge gap down in crude futures and gold futures Sunday night as a result of the Iran deal.

    See?

    All that chain posting on certain websites about "Iran This", and "Iran That" to spook investors was a complete and total waste of time.

    Things in the world are getting better, no worse.

    In fact, right now, we are in the most glorious age in history with respect to financial markets.

    Soaring stock prices

    Zero inflation

    Cheap interest rates

    Slow growth which assures the Fed accomodates even more

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    1. Mark - I am going to also be extremely interested in seeing what happens to crude oil when trading opens up this evening.

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    2. Yes, cheap interest rates but you didn't mention soaring debt, no jobs and a shrinking middle class. What happens when interest rates go up? Please don't say they won't. This is the Achilles heel.

      Or maybe I am wrong. Maybe we are in a "new paradigm" like we were before where there actually is a free lunch and the financial wizards have all the answers. You know, just like Alan Greenspan's dream team when they were saving the world. Good luck with that.

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    3. I'm with weeble on this one. Mark, it sounds to me like you been drinking the main stream media cool-aid. The market is being fueled by cheap money, not a growing economy. In fact, if you exclude the QE and adjust for real inflation (not the fabricated CPI) we are in a middle of depression as evidenced by a rapidly shrinking middle class that weeble referred to. How can you have a growing economy that has lowest labor participation rate in decades and good-paying full-time jobs that are being replaced by part-time and minimum wage jobs. How about nearly 50 million Americans on food-stamps and nearly 11 million on disability, both of which are exploding in numbers. Are those signs of a growing economy?
      There is no new paradigm and there are no free lunches and markets will eventually reflect reality regardless of much cheap money there is.
      In the mean-time, I can't argue that the markets are the place to be for now regardless of how unreasonable that may appear.

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  16. TraderDan..

    I seem to be the only one who has made the point since the spring, in terms of the bigger monthly charts.

    Just about everyone continues to get hysterically excited about the micro-moves, but virtually no one talks about the bigger picture.

    We saw the break of a decade long trend..in April..and yet..people were calling a floor at the time of a critical trend break?

    As I said at the time..with such a trend break, you can add at least 18-24 months...and that takes us into late 2014/early 2015 before ANY chance of a floor.

    The notion that we break a decade long trend..only to then rebound within the same year....utter nonsense!

    Just how stupid is everyone out there? Ohh , thats right..they are the 'gold bugs'. Frankly, I revel in their continued bemusement..and trail of 'excuses'.

    Indeed, if only I got $1 for every time I saw one of the bugs start droning on about backwardation and the COT report.

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    1. What price target do you have for a late 2014, early 2015 bottom? Do you think that China's aggressive accumulation on any price decline at some point should be factored into that prediction? Do you think that a complete draining of all physical metals from Western vaults could prevent any further price declines? Looking at the current inventory trends, I don't see how we won't be running out of Gold before then unless of course China and the rest of the world suddenly change their mind and stop accumulating. At what point do lack of supply overcome your technical chart predictions?

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  17. Question: Any of you guys like the GLL or ZSL?

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    1. Both are 'reasonable' ETFs..but as..only for VERY short term trading.

      The problem remains for the typical retail trader..if trend goes against them..they have no trading stops..and the position falls away.

      Worse of all, the leveraged ETFs suffer dire statistical decay across the weeks and months.

      Arguably...the 2x are viable only for 'days at a time', most certainly not multiple months..even when the trend is broadly in favour.

      *no doubt some might tout a chart of AGQ showing it did work out 'across some months in 2010/11...but generally..that is a rare instance.

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  18. http://henrymakow.com/2013/02/What-is-Ailing-Gold.html

    This is an article I wrote from Febraury. Henry is a friend of mine, and he asked me to write an article on the gold and silver markets.

    I still have those shorts in place and will ride the gravy train all the way down. It was obvious to me, and I am not all that bright. But I understand trends, and the conspiracy. When gold is back down to triple digits, govt's could then ask for it back.

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  19. http://henrymakow.com/2013/04/Goldbugs-Can-Expect-More-Losses.html

    http://henrymakow.com/2013/04/the-precious-metals-massacre.html

    two more articles

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  20. Wow, gold crushed in Asia.

    Another horrific gap down in GLD and GDX tomorrow morning.

    Good call, Dan.....

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  21. Whatever happened to www.silvergoldsilver.com? He was quite cantankerous. :-)

    Hey I just listened to Andrew Maquire. I thought he was a phony. So many conspiracies!

    It's really going to get wild these next few weeks. Am I over doing this? :-)

    I better knock it off.

    Hey Mark:

    Keep stackin'

    ReplyDelete
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    1. I thought you are Mark. You are broken record News Unit. You think gold is going down.

      Delete
    2. Concord

      Word of advise.
      Do not take much of what you read from some posters here too seriously. This place is no different than many I have visited, Trolls, flamers, etc.
      There is a lot of sour grapes churning around here.

      Delete
  22. Dan:

    Would you consider doing a YOU TUBE CHANNEL? It would be great if you did your own updates every once in a while apart from the KWN Weekly Metals Wrap. All you need to do is some good screen capture software. Or are you on there somewhere already?

    You'd be a refreshing channel on YOU TUBE.

    David
    The News UNIT

    ReplyDelete
    Replies
    1. News Unit;

      I would consider it although I do not know how I would find the time.

      Delete
  23. Tonight I'm The News UNIT with an attitude. I better go for a walk. I'm in the newzy mode here and just can't stand mainstream media and alternative media anymore. If it wasn't for Dan's oasis here and this other guy from the church at Ephesus above that left his article links I'd have to listen to KWN or Max Keiser. :-)

    Whoever posted that one video here a while ago you really gave me an extremely good laugh. I've put it up now on The News UNIT so many times I almost have it memorized:
    Gold Manipulation Exposed

    ReplyDelete
    Replies
    1. hey, I get a kick out of Max Keiser! I love his special effects/toys with his vids. KWN, well that's a waste except for Dan late Fri night wrap.

      Delete
  24. Dan, exclusive of the charts, what about silver going below cost of production? Many say we are already at the mean cost of production price. How long do commodities typically exist below the cost to bring them to market?

    ReplyDelete
    Replies
    1. Kansas Farmer;

      I do not know what the cost of production for silver is. Some on this blog might be more informed about that and perhaps they have a number we could work with.

      In other to really impact production, the price of the commodity has to remain below the cost of production long enough to erode the earnings of those companies/entities that are engaged in their production. Since every company has a different set of books, with different cash flow and different debt loads and expenses ,etc. it is almost impossible to give a sort of blanket answer to the question as to how long the cost of the product would have to remain below its selling price at the current market.

      What you sometimes see is many hanging on and continuing to produce in order to be the last man standing sort of thing. I have seen it in the cattle and hog markets many times over the years. The more efficient producers manage to weather the storm while the less efficient, or poorly managed fold.

      In the case of silver, I I am sure it would be the same. The thing about it however is that the weaker producers would be bought out by the stronger producers who remain so the overall amount of silver production would eventually move back up to present levels after suffering a bit of a lull as the weaker miners are forced to cut back production on their high cost mines first as they shut those in an attempt to survive.

      As you know when it comes to wheat - if the price falls low enough below the cost of production, farmers will attempt to grow something else on the land, if possible. That reduces production but it is generally only for one season as prices tend to then recover due to the decrease in supply. In that case we are looking at months.

      STill, the old adage is best: The cure for low prices is low prices" as it will eventually bring demand/supply into balance and then lead to a recovery in price.

      Delete
  25. "When gold is back down to triple digits, govt's could then ask for it back."

    @Eph, not sure I understood. You mean confiscation?

    ReplyDelete
  26. i would not put it past the govts to confiscate gold outright, or to register it with the tax authorities. at that point it could have been driven down.

    people think that most fads, trends, etc, are organic. But trends like tatoos, fashion, zombies, etc. (and stocks and gold movements are promoted by the globlaists.) there is no difference between trends of lifestyle and assets price movements. This is why I say that gold back in 2002 rose for a number of reason, chief among them that it was time.

    Now understanding the conspiracy for world govt and the upcoming global financial dictatorship, it could be argued that gold was allowed to rise and then fall, so that when a gold recall was announced it would have been disparaged and maligned already by most, so that a confiscation would not be as controversal.

    What I am saying is that we should expect anything.

    ReplyDelete
  27. zero hedge "gold hammering"= see naivety; from sparks

    ReplyDelete
    Replies
    1. Naivety?

      I would love to hear you explanation for the following:

      Shortly after 1 a.m. EST this morning someone with no apparent fiduciary duty to their clients for best execution or any apparent trade allocation expertise decided it was time to dump 1,500 contracts into an entirely illiquid gold futures market.

      The 150,000-ounce notional sell order ($184.5 million), captured graphically by Nanex, sent the price down $10 instantaneously, tripped the exchange's circuit breakers, and halted the market's trading for 20 seconds once again.

      This is now the fourth market halt in the past three months (and this time on no news whatsoever) as the manipulative monkey-hammerings from who knows whom (the Bank for International Settlements?) are becoming increasingly obvious

      Delete
  28. Forex Kong has made fantastic calls in the currency markets all year, and is still leaning heavily "bearish" on USD, feeling that "around now" is as good a time to start building positions in both gold and silver.

    http://www.forexkong.com

    ReplyDelete
  29. Not sure whats up with this surge in gold but miners aren't going for it, atleast not as I type. Could be a sign it's a head fake.

    ReplyDelete
    Replies
    1. Elijah - there was some chatter that the US Senate might kill the treaty bill....

      That forced some short covering in both crude and in gold.

      Also, pending home sales fell and the Philly Fed forecasters came out with a rather sluggish view of US growth for 2014

      Lots of cross currents.

      Delete
    2. Thanks for the timely response Dan, wasn't sure if I should have exited my short or not. Looks like the rally it topped for the day though.

      Delete
  30. Wow, Citibank now about to break out to new 4-year highs.

    Been in a consolidation since June.

    Dump those mining stocks and pile into the "Too Big To Fail" banks!!!

    Stay in the System!!! Forget those Q & A sessions, total waste of time, LOL........

    ReplyDelete
  31. GDX/GLD plummeting to fresh, new, world record lows.

    This collapse in this sector is hands down the worst in history.

    - Worse than the dot com collapse.

    - Worse than the collapse of the financials and housing stocks.

    - Worse than the 2009 equities crash.

    A truly historic plunge. Look no further than the epic collapse in names like McEwen Mining.

    ReplyDelete
    Replies
    1. Just imagine the opportunities in that sector once this starts to reverse. The returns could be epic.

      Delete
  32. I think I read that part of the Iranian agreement called for all Iranians to sign up for obamacare.

    ReplyDelete
    Replies
    1. arnie;

      that is one of the best guips I have ever read! Thanks for a great laugh....

      Dan

      Delete
  33. http://www.zerohedge.com/news/2013-11-25/beware-head-fake-taper-markets-have-now-discounted-their-own-dishonesty
    Everything is fine. Get in the recovery..Will happen. LOL

    ReplyDelete
    Replies
    1. White Wolf--James Howard Kunstler is full of it...He cites his 2005 book 'the long emergency' but what of his 'A World Made by Hand' where he imagines a world w/o oil--written at the peak of the oil bubble. This self styled 'long thinker' totally missed the tight oil & gas boom.

      We have plenty of oil, thank God. Bringing manufacturing to the US is going to be hard. I spoke with a friend who has a manufacturing business in China and is experimentally on-shoring some back to the US next year (started all his manufacturing in the US 50 years ago). He is not sanguine about it--It's easy enough to find low wage line staff, the problem is the whole manufacturing infrastructure is so much better in China now--engineers are good & cheap, tool & die makers johnny on the spots, workforce very flexible, etc. etc.

      Delete
  34. Hi Eph,

    Why would any government need to confiscate gold now? Do you view this as possible in an attempt to save the $USD based system? BTW I agree that anything is possible but we have to weigh the probabilities and plan accordingly. We live in an entirely different world (with a different monetary system) than in 1933. FDR confiscated gold simply because there was a shortage of money (gold) which was fixed via the $USD and it's role as a bank reserve. The dollar was interchangeable with gold so there was a genuine shortage of real money. With central bank accumulation of gold as a reserve asset in recent years I fail to see a scenario in which governments would confiscate citizens gold. IMO having real wealth (gold) spread around an economy would be better than having it centrally concentrated.

    ReplyDelete
    Replies
    1. But what about what the Fed does, and central banking in general, is EVER about a "better" economy. If I told you in 1950, even post Bretton-Woods, that this is what is going on, you would have said no way.
      Nothing about the economic system and Fed policy makes things "better" except for them.

      So don't make plans based on what is rational and what TPTB should do etc.

      With that said, since gold isn't money now, I don't see them taking it. And people won't give it up like last time as well. No one was ever charged with not turning it in. But again, now they have the NSA to tell them how has what. Anyway, just a thought.

      You should be right, which means you most likely aren't.

      Delete
  35. Here's an article about China poised to exit the US$....if true, could be the correction upward that gold needs as well as much lower equity market?
    http://etfdailynews.com/2013/11/21/china-to-stop-stockpiling-u-s-dollars/

    ReplyDelete
    Replies
    1. Chuck, there may be some lightening up, but basically there is no deep, thick, liquid alternative to the $; all the ongoing hype about India, Russia, China and their currency deals are just that, retread, tired hypes. On a lighter note, play <47 tonite in the 49'er/Skin game; steve in sparks

      Delete
  36. Steve, maybe you're right about limited alternative to US$ as it is the reserve currency....at least if it continues to be used by those countries you mention. However, IMHO the whole US economy is somewhat fake, a ponzi scheme come up by Wall street. One in five on food stamps, hifgh unemployment, minimum wage $7.25 compared to $10.25 Canada, $10 UK, $16 Australia....and all those countries have free universal health care. Something wrong with this picture. I realize that one can't ignore the current uptrend in equities and a trader must do what is the smart move and go with the flow. Just saying the change in direction could be fast and deep. QE is all about money printing and said money goes to buy US bonds that countries that used to hold no longer wish to buy; the remainder goes to big banks who should be making loans more accessible but instead are using these funds to bid up the equity market so all looks rosy and the Fed looks like genius on steroids. Regardless, there'll be many books written about this current era in the future. Interesting times indeed.

    ReplyDelete
    Replies
    1. Chuck; Could not agree with you more; the mkts are broken, the rule of law has been destroyed, the Constitution trampled on and so forth, BUT, that is all in there. We must look forward, and as it stands, the overwhelming amount of debt out there trumps any money printing all of the CB's combined elect to engage in; So, as it stands, commods are NG, stks and $ are still bullish, and the bonds and notes are still confined in a trading range; we all know this will not end pretty, but if we want to stay involved, we have to stay with the trends, and check our egos at the door; Sadly, morality and ethics have died; steve in sparks

      Delete
  37. Okay - here's my Mark moment--UAL hits $40 / shr. $14.5 billion market cap with tangible book value of $-8.6 billion. Neg FCF at top of business cycle.

    ReplyDelete
  38. The deflationary perspective and arguments, in French, but with many links towards english sources.
    If you are interested, I may translate a few points. According to the author, most reasons creating deflation are now deeply rooted in the economy, whereas QE is trapped and invested mostly into financial bubbles.
    I'm not saying I'm sharing the opinion of the author 100%, as there are too many variables for me to see the big picture anymore, but he anticipates gold going down to 800 $ before the bleeding stops.
    http://www.forum-monetaire.com/?p=10280
    All I can say is long-term investors on gold be prepared for this possibility and act accordingly now (hedging, sell a bit if you have too much,...) so that you have no regrets if it should occur.
    As I'm no medium nor economic expert, the only way I feel I can protect myself is by diversifying my assets. Cash in a few currencies. Gold. Real estate. Bitc...no, sorry, not even now, no bitcoins :) and of course an account for my trading which allows me to speculate on every market.

    ReplyDelete
    Replies
    1. Thanks for sharing. I agree that $800 Gold in the paper market is a distinct possibility. I do wonder how China and the rest of the Central banks who have been accumulating Gold will react. It is no secret that China has far more U.S. treasury holdings than they want and they have already made it clear that they will no longer buy the longer term treasuries. China doesn't care about the price of Gold today or tomorrow, they only want to accumulate as much as possible and I got to believe that they would back up the "container ship" to buy every last available ounce of Gold at prices below $1,000. I just wonder if the physical demand would not finally overcome the deteriorating paper prices.

      Delete
  39. With the unmerciful drop in spot, even 7-9 days down will pause for a bounce. If you went short just hold. If you went long, don't hold for more than a week or so as the downdraft will continue.

    Fundamentally, the talk of Iran wiggling out of further sanctions might release some black market gold back into the system but with Israel and other countries still worried about Iranian nuke bomb makings, it still keeps the area unstable and on edge. Gold is reflecting that unease. Iran won't have a bomb tomorrow or a day after tomorrow so thing will calm down short term, temporarily.

    ReplyDelete
    Replies
    1. Any idea how long the bounce lasts? Or is this it. I think there is ADP payroll numbers coming up.

      Delete
    2. Not much of a bounce leading to a lower high should be over in the first two weeks of December. There is usually a sell off about that time of year anyway as funds try to square their books for end of year numbers. Volatility will make for intraday wild swings, a real test of conviction, like today.

      Delete
    3. I covered my short when the NYSE opened and hope to open a new short next week. I was expecting some profit taking from the shorts (ie, that which failed to materialize on Friday). As anonymous says, a little bounce now should pull in some more gold bugs attempting to buy the bottom. The HUI was really weak...looks like it is about to give way. How low can it go??? Nothing but air below the 200p resistence level.

      Delete
    4. Really don't think that even the gold bugs are stupid enough to buy right now..but…you never know.
      Tomorrow morning another hedge fund smash will come, Friday at the latest. Friday smashes are guaranteed.
      150 on the HUI (maybe lower) is also a slam dunk. Stay short gold and long DOW….easy money.

      Delete
    5. Wrong! Just bought a little more physical after the last smash. Hopefully will be able to buy a little more next week at a lower price and rinse and repeat all the way down. Yeah, I'm pretty stupid....

      Delete
  40. THANKS DAN for telling us the straight story on gold, and for teaching us stuff like the Directional Movement Index. All this really helps. THANKS AGAIN.

    ReplyDelete
  41. Amazing
    America is untouchable.
    USD - Use it or perish.
    Oil - America has so much it's a glut, unlimited and cheap.
    Food - ha..cheap cheap and plentiful..no worries. Throw away item.
    US Equities - buy them or perish !

    Doesn't get much better than that !

    ReplyDelete
    Replies
    1. The sad thing is that people actually do believe that....

      Delete
  42. wow 1230 to 1250+. I didn't see that coming. I am hoping for 11 handle, big time. Is today just a lull in the down-slope? Didn't think there was much in the chart to stop the decent, that daily bol band didn't seem like enough.

    ReplyDelete
  43. Don't worry…a couple of hundred tons dumped on the market early tomorrow morning and you'll get the 11 handle easy. The hedge funds will guarantee it.
    I added to my short position today…like shooting fish in a barrel.

    ReplyDelete
    Replies
    1. yeah sold some today, not short. Hoping to buy in again around 1180. But if many people are thinking like me over the weekend, gold sentiment lowest I have seen since 2008 when I started dealing with gold. I am just starting to look at more tech analysis stuff, besides support and resistance. But lightened up on this. We'll see. I hope you are right about 11 handle and I hope this year.

      Delete
  44. Richard Russell has even succumbed.
    He used to say that "gold will be the last man standing" he has now changed "will" to "may". I would say it more like "slim chance but maybe"
    DOW up today confirmed by the transports, S&P and Russell 2000.
    There is no end in sight.
    Pretty much unanimous among analysts that 2014 will add another 20% plus.
    30% by the end of 2015.
    Remember that this is backstopped by the Fed, dips will be short lived and shallow.

    ReplyDelete
    Replies
    1. Dean on Nov. 21 Russell said he would allot money this way:25% Dow.25%Gold, and 50% Cash. Russell is not the man he used to be but he is never going to give up on gold. I am not either, but it does not mean gold won't go to 1000 or less. Don't feed the trolls. Every day Mark has nothing to say but what he did the day before. This board is a breath of fresh air, but a few here to knock gold and that is all.

      Delete
    2. Concord

      Hope you're right.
      Sure doesn't look good at this point.
      I think he is light on the Dow...I would think 50% or more.
      Anyone who is 100% Dow will be enjoying an early retirement.
      That may sound foolish at first, but really, we know the Fed will never allow another market correction let alone a crash.
      Panic starts to set in when the Dow has a -1 % day, if that happened 3 days in a row, total panic would set in and spark a crash.
      Can you imagine the Dow losing 10 % ....impossible.
      The Fed would step in at -2%.

      Delete
  45. Technically speaking ( I am too dumb to understand the whole intricacies of fundamental influences and their end result on gold to make any forecast about where gold will stand in a few months, and I find relief in the knowledge that T.A finally works better for me than guessing where gold prices will go), I don't see a signal to go long, but I don't see how I could go short or reinforce any short positions now.

    Indeed, sorry I can't post a chart, but it is what I see on the daily time unit that everyone can monitor. The Bollinger 20 periods (standard) are indeed in phase 3 downwards but as expected, prices stopped and bounced when they met the Bollinger 100 period (ie the ones of the weekly time unit represented in the daily time unit!!) in a range in the 1240 area. It is neat and clear. The area of a Bollinger is always approxiamtive, and here the area is rather 1230-1240, but the support held.
    Now the inf bol is giving way downwards, but unless "they" dynamite the support areas once more as in middle of april, I don't see an opportunity to go short at this level before the bol inf 100 period is broken and reverses fully down.
    I remain in my feeling of prices slowly drifting lower, lower yes, but so slowly that it's not really worth getting involved.

    ReplyDelete
    Replies
    1. P.S : and of course, an important support zone just under prices, first at 1220 and then of course at 1180. Plus the median of the weekly time unit pitchfork which, though going down, is supporting prices as well.
      That's a lot of supports to take into account to decide to go short right now.

      Delete
    2. Yeah - hard call right now. I think that downward pressure is a bit overheated, so we'll see 1280 or maybe 1300 again before the next selling wave. For me, the HUI breaking down shows that sentiment is also for lower gold prices. Will be interesting to see where the HUI ends the month.

      Delete
  46. Digital Money is what we need... :(

    "This month at the IMF annual conference, former Treasury Secretary Larry Summers said that to achieve full employment in the US economy would require negative real interest rates. Negative real interest rates could only be achieved by eliminating cash, moving to digital money that can only be kept in banks, and penalizing people for saving."
    http://www.paulcraigroberts.org/

    ReplyDelete
  47. GDX getting destroyed again today as gold and oil hammered.

    Tiffany's gapping up 8%, breaking out to world record highs.

    Those who stayed in the system, fully invested in consumer discretionary are reaping huge rewards beyond belief.

    Hedge funds shorting gold shares and using proceeds to buy retail stocks have enjoyed the biggest financial windfall in stock market history.

    ReplyDelete
    Replies
    1. Mark

      Shorting anything to do with gold is guaranteed money.
      It doesn't get any easier than this.

      Delete
  48. See…just like clockwork.
    Tuesday morning dump which will be followed by a Friday dump.

    Short gold…long DOW

    ReplyDelete
  49. Gene Bellamy,
    Gold is an escape hatch out of the financial system. The globalists are making increasingly difficult to own it. Why? because of what I just mentioned in my first sentence. It doesn't matter what price it is. the market value is easy to determine, and it doesn't have to go to auction. Just go down to the local bullion dealer. hedge it on your passive trading account. It's easy and it is a FUNGIBLE commodity, and the globalists don't like that. That makes it different from all other tangible assets. Its inherent qualities are despised by the powers in high places. You can see the restrictions worldwide being clamped down. These will only increase.

    Thus, the reasons why I state gold will have future restrictions this time differ from 1933. We need to stop looking back at the depression to extrapolate into the future. The anonymity of gold ownership is what will be fought against over the next decade. I have written about this in the past. India says it's about deficits, others like Vietnam and Pakistan say it's money laundering. Here in Albuquerque, banks are notifying bullion dealers and pawn shops that they may close their bank accounts on money laundering fears. I see increased paperwork and reporting as a result. With this said I still own lots of gold and will continue to do so. it still offers the best protection. However, the volatility in its price is the globalists best friend. We really do not know who is doing it. Yes, we say it's hedge funds, and the COT says so, but I do not trust the COT anymore. Who runs the hedge funds? That's globalist money, too.

    We are on our own and only price action and order flow as our allies. Learn to feel it.

    The remnant will have to increasingly rely on instinct and the Great Comforter.

    ReplyDelete
  50. Anyone know what day the durable goods report comes out and what expectations are, is there a schedule for it?

    ReplyDelete
    Replies
    1. Elijah

      Tried to find it myself but cannot.
      I doubt it will have any effect whatsoever on market direction, the market will continue upwards regardless.

      Delete
    2. Gold might pop thought if they're not up to par.

      Delete
  51. This comment has been removed by the author.

    ReplyDelete
  52. Wow, wow, wow, new highs for XLF, IWM, XRT, XLY, new lows for GDX.

    Stay in the system.

    ReplyDelete
  53. Fresh, new, world record lows in GDX/GLD and plummeting like a rock.

    Total and complete annihalation.

    http://stockcharts.com/h-sc/ui?s=GDX:GLD&p=D&yr=1&mn=0&dy=0&id=p80776200645

    ReplyDelete
  54. How about a Q & A session and parlay on how many mining companies go broke or become delisted in 2014?

    Wow, total destruction in these names, much worse than the dot.com bubble washout in July 2002.

    ReplyDelete
    Replies
    1. I was just told three words: "10 ounce Pegasus"

      You might want to check it out for yourself. What do you think Mark?

      Read the COMMENTS

      Delete