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


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

Trader Dan's Work is NOW AVAILABLE AT WWW.TRADERDAN.NET



Monday, December 30, 2013

Gold Down below $1200

Gold is getting hammered down below the psychological support zone at $1200 as we move into the last day of trading before the advent of 2014. The break, coming in spite of a weaker Dollar, does not bode well for the fortunes of the metal to begin the New Year. The story remains the same - gold performed abysmally this past year as big speculators were chasing gains in the equity markets and yanking money out of gold and many other commodities in general.

I see nothing on the near term horizon to suggest that this is going to change as we begin 2014, barring some sort of catalyst such as an event that comes out of nowhere. Right now the VIX is indicating complete complacency and a total lack of fear/concern anywhere.


The daily chart shows the price moving down into a most important technical support zone. Gold has been able to garner enough buying on forays into this zone to force a rebound in the price, even if that rebound did not last all that long. Whether or not these buyers remain willing at this level is unclear. If not, gold is going to break the bottom of the support zone near $1180 and will easily lose another $30 for starters. If the buyers show up, then the metal can continue to grind sideways above this support zone but without a catalyst to kick it higher, the intermediate trend dictates that rallies in the metal should be sold.

I am noting that the ADX is moving sideways indicating that the downtrend has temporarily halted on the daily chart but that the bears remain firmly in control of this market. If support at $1180 breaks, look for the ADX to turn up as gold will resume its downtrend and might then target the $1100 level depending on how many hedge funds decide to exit from the long side of this market. Remember, they are still net longs in there and that is what concerns me that the bleeding in gold is not yet finished.

We got the CFTC Commitments of Traders data released this afternoon as the report was delayed due to the Christmas holiday last week. It did indicate some long liquidation from the hedge fund community occurred last week but they still are NET LONGS in this market to the tune of some 28,700 contracts. The Other Large Reportables actually increased their net long position about 3,800 contracts with the result that the two groups of large speculators remain net longs. The small specs, or general public, actually finally moved to a small net short position.

The big, bad bullion banks were generally buying again this week but never fear, the "gold is always manipulated at all times crowd" will swear up and down that these banks are the ones that are knocking the price lower. Both the Producer/User/Merchant category and the Swap Dealers were Buying from Hedge funds who were selling this past week.

All in all, the report provides further evidence that money flows are coming out of gold and into equities. This is the reason the gold price is continuing to sag lower. It will until this process ends and then reverses.





16 comments:

  1. Absolutely horrific selling at the bell. Probably another monstrous gap down in GLD and GDX tomorrow as the last of the GATA hopers jump ship before the year closes out.

    The differential in performance between GDX and everything else which is economically sensitive must go down as an all time record.

    Transports vs. GDX
    Retail vs. GDX
    Financials vs. GDX
    Industrials vs. GDX
    Social Media vs. GDX

    Truly off the scale, as the gloom and doomer and hyperinflationists crowd made a judgement error which ended up being the most fantastic of all time.

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    1. Agree totally with the sentiments above which could equally describe the DOW and SPs March 2009 just 5 years ago.

      Conclusion GDX is a screaming BUY, big money is made from gloom and doom most fantastic buy of all time!

      Happy New Year to all and a prosperous 2014

      Delete
  2. *everything will be ok when gold is at 50.000* mark. Just hug the dogs and enjoy a holiday with the grandchildren in, say, africa. Have a little faith and do as i say not as i do.

    ReplyDelete
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    1. Hey Jasper, you interested in going to a Q & A session?

      LOL!!!!!

      Delete
    2. Clearly not! I wont be buying tanrange ever again anyhow. Have a great 2014 everyone.

      Delete
  3. OK relax on the perma-bear stuff. The rhetoric can often prove very costly as people marry positions and views.... Gold will form another bearish wedge for the February settlement. whether that is near 1100 remains to be seen, but it is becoming easier to finally see my 1,000 COMEX print come sometime at the June seasonal nadir. I have standing orders to cover all at 1,000. Whether that comes next month or for April's or June's settlement remains to be seen. I shorted about 130% of physical holdings all the way down from the 1632 bearish wedge failure. Lot's of volatility along the way, especially when trying to offset my trading positions, but it is working out as planned. I have learned to keep my hands away from the trade buttons in the process.

    A HUGE buyer is averaging down to acquire perhaps several thousand tons with the explicit agreement of the anglo-american establishment. I suspect there will be another two bearish wedge formations in this process down to about 900-1,000, with ChiCom globalists proving the support at those levels as well. I would look for a swift drop from here, perhaps down to 1,100 over the next two to three weeks, in preparation for February delivery.

    Asset classes all take dirtnaps from time to time. It's gold's turn. This is OK. Equities have their times as well. Yes, my DIA and SPY calls have been a five figure returner over the past month. But I have sold about half off over the past several days.

    Every dog has its day.

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  4. Thanks, as always Dan. If you don't mind sharing, what figures do you use for the millennial bottom to 2011 top in gold for Fibonacci retrace purpose? It seems to me that if the Maginot line of 1180 falls to the panzers, the 50% retrace level (1085?) comes into play very quickly.

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  5. Dan, what size are the "Other Large Reportable" group? In other words, what weighting to I give them compared to the Hedge Funds?
    So they moved a bit to the long side? Ouch. I am taking comfort (being bearish) in the fact that the Hedge funds are trending toward less and less on the long side. But I am not comforted by the step toward bullish of the "Other Large Reportables." Nor am I comforted by the Small Specs being net short (as they are sometimes a contrary indicator).

    By the way, I noticed that the GDXJ (juniors) came up some, but I think this is the usual end of year short-term trade in which certain traders buy the tax loss bottom in the juniors. I am hoping for the GDXJ to go down after they get their bounce.

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  6. http://www.ingoldwetrust.ch/china-accumulates-gold-world-dream

    Interesting article....

    The whole world wants a fair and stable monetary system. The Anglo-American establishment does not. How else can the globalists acquire the world's wealth? With a fair currency they cannot. With a mirage currency they print they can own it all. They are currently finishing up on that consolidation in preparation of what's coming.

    They want to mangle and destroy gold's link to that connection of sound currency, so we do not look at it (and do not own it).

    But as Daddy Bush famously once said. Trickle down economics is trickle up - into righter, whiter, and tighter hands.

    ReplyDelete
  7. Reminds me of an old WHO song ...Squeeze me. EPH seems like the perfect straddle. I sense the SPX liquidation ...getting closer to another "big short" time , or, will Yellen actually reverse course and increase purchases so more hot money can take it even higher?

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  8. Hey Dan,

    I wrote a technical analysis report on the Russian ruble, and it includes analysis of some commodities like crude (briefly mentions covers some others). I wanted to get your opinion on the analysis. I posted it here. Nice blog by the way:

    http://seekingalpha.com/user/794933/instablog

    ReplyDelete
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    1. Rouble is just a derivative of oil... :)

      Delete
  9. Dan,


    I hope you have a good year ahead. I value your insights and your hard work and efforts towards teaching those of us how to fish. I do however have a very big angst at the Fed, and the Banks such as JPM. I know they are buying gold, but that is not my beef. My beef started in 08-09 and since that time these guys (heads if you will) are playing both sides of the fence. They should have blown up with their MBS's, CDS's and CDO's. The fed is their primary backer and Ben himself made all the exuses in the world for the actions of the bailouts. Lets face it. All markets are rigged. After the reverse repo action today, it should seem obvious to all that if they just did that by 10x's, poof, the American Bail In would be complete. $200 Billion when there is approx. 2Trillion in excess reserves (CASH)..OUR CASH in the system. So please we know, you have told us and we understand that JPM is the GREAT STOPPER, but please, I hope you don't let the Bankers off the hook and the GREAT and wonderful Federal Reserve. It is all a giant Scam. When Jesus overturned the tables, I am praying that he was practicing, because when the Bail in does occur and everyone is standing around looking half witted, I hope the wrath of god comes down and the whip is laid correctly where it belongs!!!
    http://www.zerohedge.com/news/2013-12-31/wtf-chart-day-fed-soaks-record-200-billion-year-end-excess-liquidity


    Merry Christmas

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    1. White Wolf;

      Thanks for the kind wishes for the New Year. Same to you and yours.

      Just keep in mind that in our modern markets, nothing is a problem until the market thinks it is a problem. Sometimes that occurs long after others recognize it as such. I cannot say at what point all this bond buying/massive indebtedness, etc. will become a problem as far as the broad market is concerned, but we will know it when it does.

      Until then, you just have to be realistic enough to understand that we live in a shallow, superficial age in which the majority seem to dwell in the land of denial until it no longer becomes possible to ignore reality.

      Delete
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