"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


Friday, December 20, 2013

US GDP increases faster than expected

US 3Q GDP was revised higher from its initial 3.6% increase to a surprising 4.1% increase. The Commerce Department stated that a revision in consumer spending was behind the higher number. The data sent stocks on a tear higher as they set yet another record high. All is well as far as investors are concerned especially if the consumer is spending money. Again, I am merely repeating what the sentiment is in the market right now.

Gold seemed to draw a bit of strength from the number. The thinking was that the Fed's rosier assessment of the economy coming out of the recent FOMC meeting was being confirmed. That led some traders into thinking that if the economy is growing at a faster clip, job hiring will begin to pick up. If that were to occur, there might be some modest pickup in inflation.

Also, Asian demand for gold was stirred last evening as bargain buyers stepped up to grab the metal near 6 month lows in price. Coming at the chart point that it is, technicians are closely watching to see if the critical support zone near $1180 can hold. Gold will have to regain the "12" handle and maintain it to convince bottom pickers that they can wade back into the water. That will buy the bulls a bit of a breather but until they can take price back above $1220 - $1225, rallies will be suspect.

Short covering and bottom picking were the features in gold in today's session. Some shorts are closing out their bets on lower prices and taking their profits with them as they leave for an extended Christmas break. Many will not return until after the start of the New Year. Next week promises to be one of volatility as liquidity begins drying up in earnest. Do not be surprised if we see some strange moves.

By the way, just to have some fun with the Flash Crashers - Gold shot up sharply near mid-morning as some sizeable buy orders entered. One trader quipped that " No LEGITIMATE BUYER would act in such a fashion".

It never seems to end does it? We are even back to backwardation talk once again... sigh.... let's just say it once again - gold will bottom when it is good and ready to bottom. Not a minute sooner and not a minute later. Traders just take the market as it is and attempt to deal with that rather than dealing with conjecture and speculative theories. When the market becomes concerned about something, it will be reflected in the price. Until then, it is just a huge waste of energy attempting to keep up with the latest sensation in the gold market. Honestly, I sometimes wonder if some of these guys have a life outside of the gold price.

I have stated it before but will do so again - Gold is insurance against currency debasement. One buys insurance to protect themselves against unforeseen events HOPING that they will never have to use it. One does not buy insurance and then OBSESS over the policy. You buy it, obtain your peace of mind and then get about with the business of life. Owning gold provides you with the peace of mind that if events unfold that are deleterious to the health of the US Dollar ( if you are an American citizen - obviously citizens of other countries would be focused on their own native currency) your assets are shielded as much as possible.

It does seem to me however that those who keep yearning, pining, hoping, wishing, and even perhaps praying, for a higher gold price are yearning, pining, hoping, wishing and even perhaps praying for the house to burn down so that they can collect on the insurance policy. I find that rather sad. I am interested as much as anyone else in honest money and am more than ever concerned over the mounting US mountain of unfunded liabilities. That is why I own gold but I really marvel that so many seem to almost welcome the chaos that would engulf our society should the price of gold indeed reach some of the levels that many of these prognosticators assure us it will reach. As a father with children, I do not wish to see a society that would more closely resemble something out of a "Mad Max" movie just so that I could bathe in all the Dollars that my $50,000 ounce gold bar would bring me. There is almost a morbid mentality that would wish for such things.

Back to the technical charts - With the S&P 500 making new highs, traders are confirming that money flows are continuing to move into equities as the "go to" investment sector of choice. Until something occurs to change this psyche, I still think gold is going to face some serious headwinds to any sort of SUSTAINED move higher. There will continue to be rallies as shorts book some profits and bottom pickers emerge but the intermediate and short term trend remains lower until proven otherwise. I understand that some of those in the gold community will swear, curse and rant at me for saying this ( Norcini has crossed over to the Dark Side), but the market is what it is and that means accepting it and dealing with it if one is to make money as a trader.

By the way, I am thinking of temporarily changing the name of this blog to "Darth Dan's Market Views" and posting a picture of Darth Vader below mine to show the former Trader Dan and then the transformation to the reviled Darth Dan. When gold finally does bottom and resumes a SUSTAINED uptrend, then I can change the name back to Trader Dan once again with Luke Skywalker having rescued me and turned me back to the correct side of the force.

The HUI is seeing a bit of a bounce today as some shorts cover and some bargain/value buyers move in to take advantage of low prices. That being said, considering that the broader equity markets are soaring into new heights, that this meager bounce is all that the mining shares can put in for right now is rather disappointing. Unless we can see some more concerted buying efforts in the mining sector next week, the HUI is on track for the worst MONTHLY CLOSE since May 2005. That is even lower than the monthly close that occurred during the depths of the credit crisis in 2008. Very depressing stuff indeed.

At least bellwether Barrick Gold remains above that chart gap posted last Tuesday ( Dec 10). While it is not that much, I am sure the beleaguered bulls will take all the consolation that they can find right now. Maybe we will see some guys step in here and buy the miners in anticipation of a short pop higher. Year end book squaring could bring about some selling as investors throw away losers for the year to offset some of the gains that they have made elsewhere in the equity world. Once that selling is finished up, there might be a reduction in willing sellers at these levels, especially as the end of the year draws nigh and traders avoid putting on any sizeable positions as they wait for the advent of the New Year to do so. We'll watch and see what develops.

One more time for emphasis - be prepared for all sorts of strange and inexplicable moves in many of our futures markets. Traders are squaring books for year end and are moving to the sidelines to take some time off. That sort of thing is going to result in some bizarre price swings. Day to day gyrations do not matter as much right now as the longer term trends.


  1. nobody seems to consider the worst of all worlds and that is that 1180 is the bottom and 1550 is the top for the next 20 years; pollyannas and cassandras and traders all get chopped up, but, it is what it is; sparks

    1. If your range for gold is right Steve, gold miners will be profitable. I just sold some gold equities yesterday thinking we could go to 1050 or so. Gold producers probably pray your range is right.

  2. I have followed you for some time and respect you and the data you present, but I’m not sure I agree that gold is just an insurance policy. Up until 2012 gold was a pretty good investment too. Up until a period of time in the not too distant past-investing in mines was a good investment too. At THIS time-our gold is insurance-but it wasn’t always. At this point the “great economic thinkers” have created a situation that MAY lead to gold prices as we have never seen-I’m not wishing this to happen-But some aspect of wanting the price of gold to rise IS fair to the many people invested that have had their brains shorted out my “strange” movements of paper. Precious metals IS an acceptable investment like any other commodity and it’s clearly been targeted to decline-no one can look at the gold chart of april 2012 and state that was a “normal” correction.

    1. Dan has made his case for how gold should be regarded. You have the right to yours.
      I am hurting as I got pulled in by the permabills.
      I believe Dans approach to the market is sound.
      I believe yours worked for the speculation period. Now that gold is poison the trend is my friend.

  3. Replies
    1. levi strauss made $ and the miners died drunk and broke; let the Indians and Chinese buy all the goddamn gold and are you moving over there or telling your daughters and sons to? No, oh,why not?

  4. Exactly, absolutely nothing is going to happen to gold or the xau anytime soon, better off chasing Dow stocks like CAT and CVX which are slowly coming out of monstrous bases stretching over many months and could have huge runs very soon.

    Gold clutchers who refuse to let go will be setting themselves up for huge disappointment as it is probably dead money for years to come.

    1. Mark

      With miners/commodities having the snot kicked out of them I would not be backing up the truck on CAT. You can't have it both ways.

  5. Hilarious to hear Ron Paul flapping his gums about how its time to "end the Fed" after 100 years.

    Wherein we have just witnessed the most fantastic recovery and stock market boom in world history, courtesy of Ben Bernanke and at the same time we have printed trillions upon trillions yet no inflation whatsoever and 45-year low interest rates for so many months I've lost count.

    I say keep the Fed for the next 200 years, as every economist, PhD, and future central banker will be emulating the Bernanke Fed as the most fantastic program for years to come.

    Wow, talk about a guy who is way out of touch.

    By the way, his Vista Gold holdings have now evaporated as that stock is probably moving to the pink sheets soon.

    1. Still trying...very hard to understand the future cash flows on these stocks. GDP was upgraded due to consumers having to pay more disposable income on health care and energy. So other than the massive run up, or melt up due to Fed liquidity, I do not see GROWTH, and higher revenues. More unemployment, thinner payrolls and further stock buybacks? Mark please enlighten us.

    2. You seem to be one of the people Dan is referring to in his 8th paragraph.

    3. Yes, I was hit from 2011 Unknown, and have suffered some losses. Only occasionally have I nibbled hoping to find the bottom. However, I have lost what I lost. I am not going into stocks at these p/e's nor with the only thing below a Fed Reserve pillow. If it was up to me, I would never have gotten into gold, but for the massive money printing, bailouts and other assorted items. I refuse to get clipped twice, and risk hard earned capital in a blow hard stock market. So Unknown, yes I am frustrated, and angered, but not at golds demise, rather the fed, MSM, and all those who perpetuate non sound money. If all the members were DEER, there would be plenty of meat on the Christmas table and very little left in Washington DC. Hubert, Dan, and several others are enlightening, but Dan himself knows how much air is in the market, and I am sure he has one of the fastest triggers in the west. As for me, I am going to wait to short the market due to the rage in me. I am patient now, not caring just reading complete lies from Bernanke really pisses me off. But I can only change my actions, my anger and resentment still reside.

    4. One other thing, if you think that one of the most elite members of the Seals is wrong when he privately discloses that their is a very REAL potential for large civil unrest and you do not act on that information I would call you ignorant. Personally, the last year has allowed me to accumulate an M-1, and two very accurate .45's. Now, if you ask if I ever owned anything other than a shotgun prior to this, the answer is no. Plenty of lead, plenty of DEADLY ACCURATE firing devices. Lots of targets with Bonzai art pictrures of all the Fed Chairmans, Summers, Krugman, and others that I get to shoot at all the time. Have fun unknown and from Scrooge himself Merry Christmas

    5. An "elite" Navy Seal knows no more about whether Americans will riot than you or I. He is just guessing or stating his opinion.

      As for your anger, have you ever considered the possibility that your view on matters is incorrect, and that those whom you direct your anger towards are correct? What if that is true? If it is, then you are getting angry over nothing. Or, more precisely, you should be angry at yourself for being so gullible rather than blaming others.

      I'm not saying that's the case, but you don't seem to consider the possibility that it might be. You're so certain you are correct, you let yourself get angry to the point of using pictures of Ben Bernanke as target practice. Do you have any idea how that looks to a dispassionate observer? Let me put it this way: Lots of people think people like that should be locked away in the loony bin.

      If you entertained the possibility that you could be wrong - which would be the rational and mature thing to do - and those whom you direct your anger toward might be right, you wouldn't spend so much of your time getting steamed up over the price of a stupid piece of metal.

    6. It is not the price of the shiny metal that bothers me. It is the faces of those in the shelters, the homeless, the destruction of society that hurts me. I am feeding 65 people in the near future at a local shelter. Their faces tell me all I need to know about our society. The money printing has been tried for centuries. History is the guide. My anger is with those that created the "shadow banking system", derivative markets, CDO's, and the consolidated power in the CB's. There is plenty of greed to go around. If Jesus could feed thousands with little, I can feed 65 with modern day kitchen technology. Ben Bernanke is evil because he is blind to his own intellectual pride. Trillions are not even countable to most, but if the target practice bothers you, why is it not the homeless, the downtrodden? What is it that you want to believe. You want to believe, I see what it is doing. Right in my own community. Act and help. That is what I have to do. I am not blaming others for my mistakes in the gold market, I am blaming others for misleading and manipulating LIVES. I can only try to help and protect myself. So, no, I do not believe I am incorrect, just early. As for using targets, they help me resolve anger issues without hurting anyone. They are targets just that. The individuals who are responsible for this grand experiment will find themselves blameless, but we all know where "money conjuring" leads us.

    7. There were homeless, poor and hungry people long, long before derivative markets, CDO's and modern banking in general were around. In fact, they've been around as long as humans have been around. So, placing blame on modern banking for the existence of society's downtrodden is a vast misdirection of blame.

    8. Unknown, you keep your misguided ignorance and faith in central bankers I will keep my guns, GOLD, and bible and faith god. They are pathetic pitiful ignorant. The mass theft and redistribution will continue. As fast as I am concerned your opinion of my character and concerns are meaningless.

  6. hey Dan, only Yoda can bring you back from the dark side. lol. in line with your take on things as I've posted before now is the time to sit back and enjoy the holidays. I'm picking the wine for a little get together I'm having sat night. the markets will be around come Jan 2nd.

    1. northwind;

      much wine drink you! Christmas Merry have you!

  7. http://www.caseyresearch.com/cdd/too-far-off-center
    Here is the PE and market graphs. The Ecclesiastical CB s will at some point FAIL. Mark explain this recovery, or ratios, and the IMMINENT take off of future earnings that refute this.

  8. Dan

    Like many other people you continue to make fun of anyone who thinks the gold market is manipulated.

    I think being a trader in a market where you can sell a commodity at leverage and never have to supply and receive that product has warped your understanding of what a market really is.

    Go get a dictionary and get a definition of market.

    The so called markets are an abomination when compared to what a market should be.

    How can a market be representative of the underlying product when 99% or more of trades never receive or deliver the product.

    When you say ignore everything else but the market I sit here reading it bemused when the 'gold' market reacts to everything but GOLD demand and supply.

    IF the 'gold market' was efficient and fair do you really think the price is fair value.

    I don't. The april and june dump set a tone for this 'market' that is being reflected in all the comments on this board and many others as well as the price.

    1. John Range;

      If you are looking for yet another web site detailing every single move lower in gold as part of a nefarious campaign to discredit a market that is already moving lower on its own accord, you are not going to find it here.

      I am already on record as agreeing that the feds have a vested interest in keeping the gold price under wraps. But that occurs only when gold is soaring and the Dollar is sinking lower. That is not occurring now.

      These same bullion banks that your crowd are always crowing about as manipulating gold lately are steady BUYERS. Your prejudice refuses to allow you to see the facts that are right before your eyes.

      As far as commodity futures markets go - it is evident you have little experience in dealing with them. Do you trade soybeans? What about hogs? What about Corn? Every single one of these markets are highly leveraged and every single one of them have very few contracts actually delivered or sold compared to the total amount of overall open interest.

      You parrot the same old crap and somehow believe if you say it enough or say it loudly enough, it will somehow magically become true.

      I will give you the same advice I give to all who hold to your screwball views - if what I say offends you so much, why do you waste your time coming here to read it? I for one could care less about your opinions on these things because I can tell that you have very little in depth knowledge of how the futures markets operate. You should return the "compliment" and care less about my views on this matter.

      I have made it clear where I stand on this issue. You ramblings are not going to change that one iota so stop wasting your time and go and frequent those websites where you can listen to those who preach to your choir.

    2. I am with you that gold is treated and traded like any other commodity but how is it OK when paper gold goes UP but when it goes DOWN it is manipulation?

    3. Does the fed want the gold price higher or lower?

    4. Dan

      So the fed does manipulate the market. But only at certain times. Just curious as to what price that actually occurred.

      But at other times the market is fair and efficient.

      Isn't that I little hypocritical of you.

      The banks. Yes. how many charges have been laid against them for manipulating markets.

      And yes this is a waste of time and effort.

    5. IMO the Fed would probably be happy with Steve's range at the top of the page. I don't think they care if it goes up, they just don't want it to go too high too fast.

    6. John Range:

      Goodbye John. Have a nice life and a Merry Christmas.

      What I leave you with is very simple - if the gold price drops lower through major chart support and REMAINS mired at low levels, AND if the rest of the commodity complex were to somehow begin to sink lower ( I do not think that this is going to happen however), the Fed will not want to see a stubbornly LOW gold price as it would signal DEFLATION is reawakening, something which they want to avoid at all costs.

      Happy New year to you as well...

    7. Ok Dan I will try one last time.

      My defense of 'the crowd' that you lumped me in with was based on macro views not the micro views that you attacked me on.

      I was trying to make the point that I understand where ' the crowd' is coming from.

      Look at the charges and impending charges against banks around the world for manipulating markets.

      Look at debt that continues to rise, Trade deficit that stays stubbornly high, the US economy that is based on internal consumerism not exports, the way statistics (GPS, inflation unemployment etc) have been changed many times reflect better appearances for the economy never worse and I could go on an on as you have indeed done over the period I have been reading you.

      Do you see a good outcome at all for the US? I don't.

      Am I alone?

      Not long ago Australia decided to dump the $US in trade with China. Do you think that is a sign of things to come? Given that we both know that this would hurt the US if only a little why would an ally do this?

      So, my evidence is a bit thin and I could waste a lot more space with examples but in my view countries are aligning themselves against the US dollar and against the US. If the $US was to crumble quickly we both know what happens to the US economy. So the fed is trying to maintain stability while it hopes the economy picks up and grants more time to fix structural problems that plague the US.

      So in this context (my context) how can the fed NOT influence the gold market. As you state in your final message you see the fed fighting both ways.

      Are you not admitting to thinking that the fed manipulates the gold market both up and down?

      You said you thought the fed may cap the price. How do you know when this occurs? At its highest? When they want to crush sentiment? When they want to take gold out of the MSM conversation as has happened now? I don't know? Do you?

      I understand where you are coming from. You are sick and tired of every nuance being analysed as manipulation. That is not where I am coming from.

      My contention is that the markets are broken for a number of reasons. Your contention is that I do not know what I am talking about because all markets and basically traded the same way - by speculators. Have you not stated that markets are not what they used to be? Why is that?

      I feel the structure of futures markets make it easy to manipulate price. This is the reason I asked you to look at a definition of market. In the history of markets has there been a time where I could sell a huge amount of something I did not have nor would be able to get.

      So my point. When the fed actively manipulates markets with QE and or lowers interest rates to 0. When banks are found to manipulating all manner of markets for profit. When you yourself and many other observers suspect the fed plays a role in the gold market. How can you ridicule people who then suspect it as happening all the time. Do you have hard proof that it doesn't happen every day?

      On that note I also wish you a good life. I hope you a have a Merry Christmas and happy New Year


    8. Hi John, sorry to keep butting in here. I understand what you are saying completely. You have to think like a trader to get it. You have to train yourself to look at the trees and not see the forest. This is difficult for me also but I would guess most here see the same macro perspective you see but to be a good trader you have to see things as they are, not how you wish they were.

      Cheers, GB

    9. HI Gene

      Not butting in as far as I am concerned.

      Everyone is entitled to their opinion right or wrong (depending on perspective.)

      The point I was trying to get across is that Dan has taken many swipes at 'the crowd' for this manipulation angle. But he opening admits in the next sentence he believes that the gold price gets capped from time to time.

      The only reason I bring it up is Dan keeps taking shots at them.

      So Dan is a trader and from all accounts a good one. He is rational and logical. But that does not make him correct on the manipulation. He like everyone else is guessing as to what really is happening behind the scenes.

      So when he says the market will tell us I think to myself is the market efficient and free. Well from all accounts of all markets around the world the answer most likely is no.

      So I don't disagree with what he says but I do not see how he gets the right to ridicule other peoples opinion when he does not have hard facts other than to say the market will tell us.

      You mention forest and trees. I always thought the phrase was ' You can't see the forest for the trees.' I believe that means look for the bigger picture.

      Look, Dan obviously feels strongly about this and since it is his site this will be my last post. I will continue to read.

      Just before I go. I am not a trader. I very luckily put money into gold in 1999 at the $250. I did this as I saw the US on an unsustainable course. So 13 years down the track I am still invested and watching a slow motion train wreck unfolding before my eyes.

      Best of Luck


  9. the usd does not matter any more

  10. In TRADER DAN WE TRUST! Keep up the great work.

    1. John;

      While I appreciate the comment, I would leave you with a comment made by the Puritans during Cromwell's time - Trust in GOD and keep your powder dry".

      Trust not in prices nor in the sons of men but trust in the Lord - men, including myself, will always let you down because the best are still mere humans who are flawed and make mistakes!

      Merry Christmas John

    2. There you go. That's music to my ears. I still like to read your articles. :-) And I actually am a fan of Marc Faber. He seems pretty real to me.

  11. Those criminals in the government and the CME and NYSE MAFIA are at it again. Right Dan? :-) Merry Christmas.

    Keep stackin' (and shorting too). In other words: KEEP ON STRADDLING!

  12. I have been a long time follower of this blog. Dan, I very much enjoy reading and learning from what you write about. Just a general comment, but I find the tone of many of the comments to be juvenile and rather arrogant. Mark, in particular, to you all I can say is every dog has his day. Hubris is the downfall of many, and to you and some others here it seems to be in abundant supply.

    I have been mostly invested in precious metals since 2005. During the many good years I took some profits and never considered myself some kind of genius. During the past couple of lousy years I've taken it on the chin and never considered myself some kind of fool. I simply consider myself an investor, and am quite committed to my beliefs. On balance I am ahead of the game and can live with that--sure, could have been better and also could have been worse. But I have a vivid recollection of many people whom suffered from total abject fear in the meltdown of 2008, and I just find it curious that so many can be so convinced that either it won't happen again or that they can nimbly get out of the way if the time comes.

    Just saying folks. We are all doing the best we can and trying
    to make the best judgements. But please everyone, give the arrogance a rest. I am a surgeon by trade, and learned a long time ago to never take any surgical case for granted and assume it's a piece of cake because you are convinced of the outcome. Arrogance of that kind is just asking to get burned, and I see a bit much of that here for my blood so I am going to stick to reading Dan and forget everyone else here.

    1. Well said DME! Merry Christmas!

    2. Emotions are certainly running hot and heavy here of late; but you all forget what I keep telling you, and to repeat, Dalio, Grantham, Gross, Roubini, Paulson, Hendry, and a host of others do not have the answer, folks. The answer is in Sparks and it is simple. To wit, "there is no answer in these very trying times, so stay loose and trade light!" Take care all, and Merry Christmas. That is all. swb


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