“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


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Friday, December 13, 2013

Commitment of Traders and the Reverse Flash Crash

Today's release gives us a pretty decent glimpse into the activities that gave rise to what I have dubbed the "Reverse Flash Crash" in honor of those who see nefarious evil doers behind every move lower in gold recently.

You might first recall that on Friday of last week, the day when the last Payrolls number was released, gold plummeted lower hitting a low near $1210 before violently rebounding higher. That action alone resulted in a significant number of speculative short positions being squeezed out. There then came a bit of a breather on Monday before the market shot higher during the Reverse Flash Crash on Tuesday which kicked off another round of buy stops.

The action was caught for us by the CFTC in today's report and reveals the reason behind the sharp moves - hedge funds were doing a good bit of short covering. Some in that camp were also fishing for a bottom and moved back onto the long side of the market. The result of that was net buying by this group to the tune of approximately 6600 contracts.

Interestingly enough, the entirety of that , and then some more, was offset by Swap Dealer selling. They were net sellers to the tune of some 8,200 contracts.

The Producer/User/Merchant category were also net sellers for the week to the tune of some 2400 contracts.

The Small Specs were bottom picking this past week as they rushed back onto the long side to the tune of about 2270 contracts. Ditto for the Other Large Reportables who were net buyers of some 1700 contracts.

Note to some: These are approximate numbers for the purpose of quick and easy illustration from which to draw some analysis.

Here is the takeaway. Specs were squeezed in the push back down to $1210 and subsequent inability to break through that support zone. Then as prices moved higher on Tuesday, more buy stops were run. The BULK of the BUYING DONE BY SPECULATORS THIS PAST WEEK WAS THEREFORE NOT FRESH NEW LONGS BUT RATHER SHORT COVERING.


This is hugely significant as it confirms my views held for some time now. Rallies in gold are occurring that have been quite fierce but which have not tended to last because they consist almost entirely of short covering. At this point in time, these rallies DO NOT reflect a wholesale shift in sentiment among this important segment of traders. Until sentiment changes and we see eager NEW BUYING across the speculative categories, gold remains under the control of bearish forces.

I should note here that all market bottoms are first GENERALLY reflected by strong waves of short covering but that gives way to FRESH BUYING that begins to outnumber the short covering.

Gold is not there yet. Keep this in mind before getting too bulled up.

Also, I wish to note here as I did last week - those who keep speaking of capitulation when it comes to the selling in gold are doing so in spite of the fact that the speculative community generally remains as NET LONGS and has been for many years now.

The Small Specs were net short this gold market only in July of this year ( and that was for only one week)  but have remained as net longs even as their overall positioning on the long side has indeed decreased. They have not gotten short.

The Hedge fund community has not been net short this market for the entire 7 1/2 years of this data set. Only the Other Large Reportables camp had been net short for more than one week and that was back in July of this year. During that month they remained as net shorts in gold before moving back to net long the first week of August where they have remained since.

With speculators continuing to play gold from the long side of the market, the risk remains that we could yet have one more good downside flush before killing the bullishness that stubbornly remains among the speculators. I can see that happening only if chart support gives way, first at $1210 but more importantly at $1180 - $1178.

In this present case, we might be better served by closely scrutinizing the action of the gold mining shares for clues of a solid bottom in this market. They led the price of the metal lower and will more than likely, although not guaranteed, lead the way higher. I for one would feel a whole lot better about a solid bottom if we could see the hedge funds on the net short side of this market with the entire speculative community all effectively as net shorts as well.


One last thing - with Swap Dealers doing the brunt of the selling this past week, I am beginning to wonder if we are seeing some mining companies working out some hedges/forward contracts with these dealers as prices move higher.

52 comments:

  1. Mining stocks slammed hard at the closing bell while GLD closed up.

    Everybody knows what that means.

    More pain next week.

    ReplyDelete
  2. Need to see any of the following:

    * Inflation
    * Currency crisis (i.e. Japan surely first to go)
    * Geopolitical tension resulting in outright war

    Until any of the above happens, sit back and enjoy the ride. Each of them are inevitable in their own right. Which one comes first is the question.

    ReplyDelete
  3. willydog, they have been predicting hyperinflation, currency problems, and geopolitical turmoil for years and years.

    We now have deflation, collapsing commodity country currencies, and strong U.S. dollar, and the stock market absolutely sailed right through the Arab Spring, Fukishima, and other geopolitical turmoil with no problem whatsoever.

    Just look at XLY still pinned within a dollar of lifetime highs.

    The outlook for the consumer has never been stronger.

    No cracks yet in the banking indexes either, so enjoy the ride.

    ReplyDelete
    Replies
    1. If there's any "strong outlook" at the consumer front then there should not be a deflation. Optimistic consumers would go out there spending and bidding the price up to create a boom like that of 03-06. That just does not make a whole lot sense.

      Delete
    2. Mark, do you not understand the only reason the stock market is where it is is because of the money printing. Like Dan has said, there is HYPERINFLATION in the stock market. It looks all fine and dandy right now, until it starts to spill over into things people need to live. I know though that you, being a paid agent of disinformation, would never admit that.

      Delete
    3. The trend is up...don't fight the trend.
      My counter trends short on the SP500 are purely on the smaller time units at the moment.
      Yet this time we might start seeing a bit deeper correction if 1770 breaks. We'll see. First time I have a few red signals on my indicators simultaneously on.
      Anyway, the real big correction will happen as usual when noone expects it, i.e probably later. Probably too many sceptics and people out on the sidelines still in this bull market.

      Delete
  4. Thanks Dan N. for the analysis.
    It was some weeks ago when you noted that the hedge funds were still net long that I was finally totally convinced to quit being net long the gold and to quit trying to pick "the bottom" in the miners. Very thankful for your help in saving me the extra losses.
    Yet I am still astounded that there is a net long position by the big speculators. Wow. After all of this fall off in prices? And after all the "no inflation" data? And after all the momentum in equities? This is strange. So, maybe the average large speculator is still leaning toward an inflation scenario as the most likely future yet to unfold?? Or, at least, they are invested in Gold as a Currency rather than a commodity and are rather permanently committed to it as an alternative to fiat currencies?? Otherwise, with the momentum downward in gold and the lack of perceived inflation, I would have expected all major specs to have jumped off the long side of gold a long time ago??? Or maybe they are actually awed by the Asian physical buying (to enough of a degree to make them willing to hold onto positions which were bought at lower prices).???

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    2. Or maybe the majority of hedge fund algorithms are not so very short-term oriented but are rather MEDIUM TERM oriented and these will be kicked into selling off when the Medium Term ADX kicks into downtrend ???

      Say, by the way. The idea that a DJIA selloff would help Gold may be somewhat wishful thinking in view of the fact that after the Lehman news in 2008, the price of gold fell at first with the DJIA while the USDollar initially rose (as a "safe haven") But then the price of gold began to rise even previous to the DJIA recovery??? So, potentially, I suppose, the final sell-off in this gold bear may occur at the time when the DJIA goes into a bear market??? A reason for this could be because of the need for liquidity among large speculators during an equity plunge???

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    3. Peter;

      Yes it remains unclear to my why we still have the large hedge funds net long gold considering the carnage in the mining shares as well as the massive bleeding of inventory in GLD. One would have thought that by now they would be net short the metal, especially considering its technical posture is so poor on the charts.

      Keep in mind that they have been net long this market since the early stages of the bull market that began in 2001 and peaked in 2011, ten years later. Now gold is in an intermediate, but NOT LONG TERM, bear market, so it will take further downside deterioration in price before they will actually move to a net short position.
      I do think if for any reason $1180 goes and price does not rebound back above there almost immediately, hedge funds will then be net short.

      So much of what this market does depends on how strong Asian demand is for physical. That corner of the world can put a floor in gold but by and in itself, it cannot drive the price higher. That needs Western investment demand from these big funds and speculators.

      Maybe we have reached a floor in the market and grind sideways above support. I am just not clear right now on that but I am very clear in my own mind that $1210 had better not give way or we are going to probably lose the "12" handle.

      Delete
    4. Dan,
      Do you think the guys who sold 500 tons of gold mid-april still have the necessary ammo to sell another few smallish hundreds of tons of paper gold within 3 nanoseconds to provoke a new waterfall decline? Maybe the game is getting too dangerous, leverage already too big, or they don't want to pull the rope too far about physical stocks at the moment? On the other hand, Sinclair commented that those hedges have such leverage capabilities that you just can't stand on the way.
      I guess only future can tell...
      Have a nice weekend!

      Delete
    5. Hubert;

      The hedge funds ( NOT the same as HFT crowd) are still net long in this market Hubert. They have a lot of long positions left yet to liquidate IF SUPPORT gives way. I simply do not know if that will occur or if it will hold.

      All I can say is if it DOES NOT HOLD, there is more downside coming.

      Delete
    6. Thank you for correcting my confusion :)
      Btw, careful, Petunia can sniff when a trader is short gold and become very angry :)

      Delete
  5. Dan, if mining companies need to hedge do they set it up mostly via the SWAP guys? I thought it'd mostly show up in the Bank & Producer group.

    ReplyDelete
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    1. Rui;

      If they structure some custom designed forward contracts, then we could see Swap Dealers taking the other side of those and then hedging those via the Comex futures market.

      Hard to say exactly since that category is still very opaque so it is just a guess on my part Rui. The Swap Dealers could also have speculative positions on for their own private uses also. We just do not know for sure.

      Delete
  6. All good comments here today and good for my learning curve!
    It seems to me that the paper gold market is all US based....that is, the market goes up or down primarily when it hits the US Nymex although who knows how much up and down takes place via NY Globex overlapping others so very hard to gauge who is actually buying or selling. I presume that Asians have little interest in bidding up gold if they are accumulating as lower price the better for them, is it not?
    Question: if China holds $1.25 trillion US paper and should they decide to step back a bit, would this not be a major blow to QE? I mean if Fed is buying up to $85B per month (because other countries have backed away already and so Fed has to buy) and its only $85B because of China's support, what happens to QE and $ (and gold) if China backs away? There has been some recent press reports that indicated China is quite peeved with Fed policy and $ printing so might this be a possibility and what impact? We hear a lot about possible taper but never anything about who is buying to meet overall US obligations. Thoughts about this possible impact?

    ReplyDelete
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    1. chuck;

      the balance sheet of the Fed is now almost at $4 TRILLION and continues to rise. I was alarmed at $3 TRILLION. AT this point the market seems indifferent no matter how large it gets.

      Maybe the Fed will just buy everything that China doesn't want? Who knows? China will have to keep buying Treasuries to a certain extent as long as we here in the US keep buying all that stuff that they manufacture over there. They do after all have a trade surplus against the US trade deficit with them so they need to do something with all those Dollars flowing into their country to sterilize those flows unless they want to import runaway inflation. That means nearly automatic buying of Treasuries unless they can figure out another thing to do with those Dollars to get them either out of the country or into something else like raw materials ....

      Delete
    2. The latest from Armstrong…yet another voice in the world chorus of "I hate Gold"

      QUESTION: I want to thank you so much for helping me see the light. I was one of those lost goldbugs who expected hyperinflation and the only gold would survive. As you say. A loss is a loss regardless of the reason why. If these people know gold is manipulated, then why tell people to buy? Something is not right. Thank you for you are the only one who really helps people. That’s why they wanted you dead.

      Really Martin?? I mean really?? Just how bloody big is your ego?
      Out of the thousands of emails you must receive everyday it is this kind of self serving crap that you post…and this coming from a man who claims genius level intelligence?
      In his reply Martin claims that the bankers wanted him dead…Martin..I hate break the news to you but, if the Bankers really wanted you dead….you would be dead!




      Delete
    3. Go Marty go! It's just called poetic justice.

      Looks like his documentary The Forecaster should be coming out soon:

      http://www.bukerapictures.com/en/films/the-forecaster
      http://www.theforecaster-movie.com/

      Delete
  7. We will know something has really changed when instead of someone asking the question, "how big is the feds balance sheet" and you say 4 trillion and instead of him saying "ok", he says," did you say 4 trillion?" and then starts to cry.

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  9. For me, when I stand back and take a bit more of an impartial look at the metals market I see a couple things that stand out the most. The first is, if I rode the first ten years of this market, made a bunch of money and took profits along the way, I'm sitting pretty good.

    The second is that we have had ten years of a bull market, in the greater scheme of thing a couple or a few years of correction and consolidation is pretty normal. I like instant gratification as much as much as anyone, but a year or two investing in the stock market use to be considered short term.

    The third and most important is, if I have not gone short the metals market for any part of the last few years, especially this last year, I've missed one of the best bull markets for going short ever! I could have picked just about any of the hundreds of mining stocks or etf's to go short and watched myself making money for months on end!

    If Dan has taught us anything, it's follow the charts and trends rather than hopes, hype and dreams.
    Steins

    ReplyDelete
  10. Hi Dan,

    You recently mentioned that gold would need a loss of confidence in the stock markets.
    Having a look at the SP500, it seems that we are having increasing doubts and the bull market is a bit shaking.
    My indicators are flashing red, we dropped below mlh inf of daily upwards pitcfork, and are just on balance on the 1775 horizontal short-term support.
    Maybe that's why gold has a bit of respite as well.
    I'm still expecting a stronger correction on the SP500 anytime now, validated if this 1775 support area gives way.
    Have a nice weekend,

    ReplyDelete
  11. Regarding gold, it will be very simple on my side : we are on an important intermediate-term support zone on the 2 months / 2 weeks time units, so on this large scale units the area is 1210-1225 $.
    If gold manages to break through last weeks resistance (i.e the neckline of the H&S at 1268), I would not be surprised to see it rallye towards 1435 once more in the next weeks.
    Of course, we are not there yet.
    At the moment gold is hardly saving the critical 1225 support level (but it is!) on the 2 week time scale (hopefully soon at the end of the year and the 2 months time scale as well!), along with the support level of its mlh inf pitchfork on the daily time unit.
    On the daily time unit, it is capped by its immediate resistances ma20 and ema15, heading down (ma20 down is usually considered as bearish trend).
    So, not a hint of hope for bullsas long as at least daily ma20 and ema15 become a support for prices and start reversing up.

    And that is all from Du Haut, Hubert (dang, sorry Steve, you just created a new fashion :))

    ReplyDelete
    Replies
    1. Silver is also on a very important support level imho long-term, on the 2week scale, i.e 19 $. Just as for gold, it managed to close this candle yesterday above this level.
      19 $ is the 78% Fibonacci retracement level of the whole 9$ - 50$ latest bull wave.
      If you think this is exceptional, silver retraced exactly the same level before when up from 4 to 20$! :)
      Keep an eye on the close of those 2weeks candles imho, they give a good indication of the long-term support and trend.
      Daily, we are capped just as for gold under the ma20 and ema15.
      So gold and silver are on important crossroads.
      I'm not inclined to play bottom picking now. I need a confirmation. I need a support which proves can stand bear's assaults for more than a day. I need a break above immediate resistances which can also survive longer than a day.
      But I'm getting ready to become Bullor switch and be a Bear in the blink of an eye now, depending on what happens with those support areas.

      Delete
    2. >>>So gold and silver are on important crossroads.
      I'm not inclined to play bottom picking now. I need a confirmation. I need a support which proves can stand bear's assaults for more than a day. I need a break above immediate resistances which can also survive longer than a day.<<<

      My sense is and I think Dan's last paragraphs address this, is that we need capitulation.

      There are still way too many bullish attitudes toward the metals.
      There is still too much hope and rationalization.



      Delete
    3. Too many bullish attitudes?….where?…you have to go to very specific sites to find anybody who doesn't think gold is going lower from here.
      Just read the comments on this site…very bearish.
      MSM sites…bearish…all of them. As a matter of fact it has gone beyond just being bearish to almost outright hatred of anything related to gold.

      Delete
    4. Yes, I know the points you are making Dean and have seen a lot of bearishness also. But that does not mean it's enough yet.
      Just a for instance, per Dan:

      >>>The Hedge fund community has not been net short this market for the entire 7 1/2 years of this data set. Only the Other Large Reportables camp had been net short for more than one week and that was back in July of this year. During that month they remained as net shorts in gold before moving back to net long the first week of August where they have remained since.<<<

      On one board I am a member they have done some rough updates of letter writers and blogs and it's still about 50/50.
      There is still too much hope!

      There is a good chance we will have to get to a place "Where all is lost!"

      Delete
  12. Another weekend where Jim Puplava and the FSO crew outright laugh at all the gloom and doomers and say its never been better for stocks.

    All 100 books Puplava read on Peak Oil have been heaved into the garbage bin as we are now experiencing an "Energy Renaissance", LOL!!!

    No more gold topics, other than reminding everyone that it is now in a bear market. Guests like Dave Morgan, John Doody, Jeff Christian, Frank Barbera nowhere to be found.

    Basically 10 years of careful research heaved out the window.

    Now its all about social media, industrials, financials, etc. as the favorite plays.

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  15. Thanks Dan for your reply to my post above and thanks for all your major posts this week and your replies to other individual posts. I especially want to thank Hubert du Haut for the insights into how to make trades with what I guess I would call "defined risk". Also for that siver 78% fibonaci observation.

    I want to call EVERYBODY'S ATTENTION to several of the Blog posts at KingWorldNews . Rick Rules contribution of Dec. 11 is, to me, extremely informative and is, in my opinion, a great sign that I need not go away from the metals until 2015, but should be watching here.
    But, especially for those who can understand and afford the junior miners (not me)\, look at what Rick said about Chinese mining company joint venturing with Sprott. I think that is big news for the juniors as a trend indicator.

    Rick has been a smart and honest guy over the decades.

    What Hathaway of Tocqueville Funds said about the paper vs. gold trading volumes does help me understand those a bit more.

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    Replies
    1. Peter; You could have dated the interviews you referenced 12/15/11; these perma bulls have not had an original or novel thought in years; that is all in sparks

      Delete
  16. Hello,

    Trying to see things with a neutral eye :
    - it's the support of 1220 which is attacked and attacked again
    - bounces are weaker each time
    - last bounce was a mere pullback towards previous support neckline of 1268, confirmed now as resistance
    - there is no conviction from the bulls at the contact with this support, just a bit of short covering.

    Conclusion : I will watch closely the ma20 and ema15 daily time unit next week, around the 1245 area. If prices can't even go past them anymore, I think it is likely that I will go on the short side, with a stop loss nearby above. After all, for now, even if supports are holding, they are being threatened repeatedly and the bulls are desperately not there. If it's time for the kill, better be of the party on the short side like Eph from a safe spot, make money on the paper side on the way down, and then make the money on the way up on the physical side.
    You are right : a good damn capitulation and sup 1000 $ prices is what we need to put an end to this joke. I'll ride this bear market and profit from it before reversing my positions. I don't like to sell stop on a break of support, better on a failed rallye towards a resistance. Closest one seems to be the ma20. I'll see what happens there.
    I still hoped for a bullish reaction a bit strong last week but the resistance at 1268 holding and the prices going back so quickly down towards 1220 are not a great omen. Of course, nothing is for certain. But from the beginning of the week and if prices keep showing weakness and no willingness to bounce above 1240, I will short, short, and short. Enough is enough. If bulls don't come for a rallye from 1200, let them pay the price and disband towards 1040 $.
    Have a nice weekend all...

    ReplyDelete
    Replies
    1. P.S : short under the ma20 because it's going down day after day, so if prices remain capped under it, my stop loss should keep my losses small. Anyhow I'll try to watch the 4h candles on monday and post an update if I get in the market. NOT for decision making, just FYI. I don't advise readers to follow me on my trading attempts :) Never follow someone else's trade. It's much too frustrating when they get wrong.

      Delete
    2. Thanks for the reply Hubert.

      I think I finally got it a few months ago......

      From a couple hundred bucks an .oz to now the metals have been great. Even with a few hundred dollar pull back.
      I believe in the long run the metals will be a store of wealth.

      But just because they have been good to me does not mean I need to be loyal to them in believing they will to continue to just go up.
      I need to stay objective and indifferent to them. They are a commodity that is traded.
      When the trend and the charts are going against them, I turned and went with that trend.

      BTW, I'm not making any comment about what you are doing, I'm just making a point that I think is backing up what Dan has been pounding the table on for a couple years now.

      Your post are always of great insight and I particularly like the discussion.

      Anyway, It's the same old story of not falling in love with a stock.
      I don't want to be in love with the metals even if they have been great in the past OR what I think they will be like in the long run. It's all about what have you done for me lately?

      It does feel weird to have loved gold and silver so much for ten years and to now be rooting for them to go down even more. But being short now, that's the way it is.
      I will add that I'm in and out of positions in a heart beat. I could have done better just holding my short position but I find it better to just take quick profits and get right out. Part of that is just an exercise in being willing to sell early and not get attached. I'm learning.

      Funny, when I was shorting the financials back in 2009 or 10, not sure when it was, it was great fun!

      I don't think a lot of us "like" shorting the metals, but we've leaned that if we aren't ruthless in the market it will eat us up.



      Delete
  17. Hilarious that the same expert gurus who were dead wrong 3 yrs in a row are again predicting a crash in 2014.

    We'll have to laugh at them again same time next year.

    Faber, Stockman, Jimmy Rogers, etc.

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    1. Mark

      Ever read any of Jim Roger's books? Were you business partners with George Soros?
      Is your net worth close to 1/2 billion ?
      Jim Rogers has always stated that his market timing is awful…but when he says the equity markets are a fools paradise and it will someday end very poorly…I do believe that part.
      Jim gave the same warning about gold, he stated several years ago that it was due for a correction…he called that one.

      Delete
    2. Dean, I also have read all of Rogers' books and find him to be one of the most likeable and down to earth guys to talk about mkts. He was way early getting bullish commods in the early 90's, but tells you flat out that he is no good when it comes to timinig. He has never advocated chasing or going all in either. Same as with Faber and Zulauf, both of whom have never professed any wild-eyed claims that the KWN guys are famous for. In fact Faber made a ton in Asian stks over the last bull run; it is just that the sad and sorry lamestreammedia gives him these atds and moronic viewers only 5 min sound bites. As for Stockman, well I read him also and think that in the end he will also be right that it will not be pretty. Also, keep in mind that Hendry and Grantham have thrown in the towel, and the only prominent players still bearish are Hussman and Blackrock, as well as the aforementioned, along with Bass, and laying in the weeds is a guy named Burry, who you may want to watch. That is all from sparks, swb

      Delete
  18. Talk about negative comments, focus on the long term. The Chinese don't care if Gold goes to $1000, $800 or $500 they know one day if you want to get hold of real Gold you won't get it. By all means get fooled by Comex, LBMA if you wish and sell your Gold. I suggest hold what you have and set purchase points so as to average in even as Gold may go lower because the hands are getting stronger, mine production will fall off a cliff at lower prices. It will be impossible to pick the exact bottom however in the long term it won't matter if you've only got a 5 times or a 10 or 15 times move. Long term possibly towards 2020 there will be a huge catchup for the precious metals because the current economic system will implode unless there is a huge inflation not to far out. China knows it they are buying everything they can get their hands on Gold not Comex Gold, mines, real estate, farmland worldwide they know how to play the long term and win.

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    1. rlm,

      I think if one wants to "optimize" your gold investment, one should :

      - have physical gold and keep it whatever happens. In this, I fully agree with you and I am not selling a single ounce of the gold I bought.
      - have a trading account on the paper side of gold, to be able to do what you can't do with pysical : short the market sometimes to protect the value of your physical stock.
      - have an option account (if you Know how to use those things, wich can be very treacherous), in order to hedge your gold positions by buying a few Put out of the money at some strategic times, if you think that Gold has a chance to break a support and accelerate down in the short term

      If you are only invested in physical gold and are not interested in trading accounts, options, hedging, etc...then it all depends on the commission rate and taxes you pay. If you manage an account on BV for example, the commissions are still low enough that you can consider to sell a bit if you anticipate once more a strong decline, in order to buy it back at lower prices. But I would do so only with the "speculative" part of my gold. I would not touch the minimal quantity I bought as a long-ter insurance. That part is not for profit. It is for safety.

      Delete
  19. Rim, you're absolutely bang on....could not have expressed it better. I have cash, I have mid-tier gold producers (beat up but likely still 10 baggers from here), and I have bullion. IF bullion price go lower I'll simply start buying more and averaging down. Lower bullion prices are a gift to the Chinese and they have lots of surplus US$ to buy all they can get. It's inevitable but timing is anyone's guess. My wife spent some time in China recently and couldn't believe how wealthy and modern cities like Beijing and Shanghai are and guess that's where the rich Chinese go to live.
    Anyone who went through the dot com will recall how quickly bubbles burst. Printing huge amounts of currency maybe allows us to pretend all is well but we know this will eventually end very badly. The Japanese have done the money printing for many years (Yen carry trade) and currently are printing (at least my understanding) to triple the amount of yen over next couple of years.....its never worked for them in the past. Interesting times indeed!

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  20. Chuck and Rim

    Good to hear from investors with a longer term view.

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  21. Eph, this will sound familiar to you... :

    "The fatal war for humanity is the war with Russia and China toward which Washington is driving the US and Washington’s NATO and Asian puppet states."
    http://www.paulcraigroberts.org

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    1. "Faced with the George W. Bush regime’s alteration of US war doctrine, which elevated nuclear weapons from a defensive, retaliatory use to pre-emptive first strike, together with the construction on Russia’s borders of US anti-ballistic missile bases and Washington’s weaponization of new technologies, has made it clear to the Russian government that Washington is setting up Russia for a decapitating first strike."

      If this is true, guys, you have to wake up and do sthg to prevent this from happening. Clint Eastwood, maybe?

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    2. I like Paul Craig Roberts, but he doesn't understand the conspiracy for world govt. Joel Skousen does, and I study what he says. Unfortunately for Americans it makes the most sense. Once one comes to Skousen's conclusions then much of what we are seeing makes sense. Why is the financial system past the point of no return seemingly intentionally? Because it is planned that way. The planets are aligning and the only thing that offers the best response to why is a planned thermonuclear war is in the works. I don't get my upset anymore with what is going on. I understand that certain steps need to be taken by the globalists to set the stage. They are being played out like acts in a play. Remember that they do not want you and I owning gold. They want to be able to track everything. This is why i understand why gold has been behaving the way its been. The next global war is already planned and has a pre-determined outcome. That will be the dollar's repudiation moment. the force majeure of US sovereign debt. We have a while. the anglo-american establishment needs to continue to build up China. There is still tie to prepare.

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    4. What I can't imagine is those guys are crazy enough they believe they would be able to make a preemptive strike vs Russia or China before they can retaliate. Or that they believe they would be able to survive a retaliation strike from hundreds of ICBM launched towards US at the same time, from multiple locations, including stealth SSBN, airplane bombers, etc... each warhead equipped with MIRV and more, counter measures, plus missiles like Iskander and others which each can perform sophisticated evasive manoeuvers with 30 to 40 G acceleration if necessary to avoid anti missiles.
      In whose crazy dream do they think they could control the destruction at home in only Washington, even if it was the game plan? It still makes no sense to me, the end game would be total destruction

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    5. Men, your immaginations are running wild; sit down and have a Grey Goose and make love, not war; sparks

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