“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


To continue following Trader Dan, please sign up for Trader Dan's World at the link on the sidebar to receive a 1 month, no obligation, trial membership



Friday, December 20, 2013

Weekly Gold Chart

I think the chart speaks for itself. Gold has managed to put in the worst WEEKLY CLOSE since July 2010, three and a half years ago.

The bounce today was feeble, considering the extent of the downdraft on Thursday. It did manage to close above $1200 but just barely. The fact that the HUI could not hold its gains on the day is alarming to me. I would have hoped that it could hold its bounce without attracting more selling.

Based on this, I would have to lean towards saying the gold market still looks heavy to me and could come under additional pressure next week. The one saving grace that it will have working in its favor is that the Bears have made a lot of money this year and might still be looking to cover some additional shorts and book those gains before the end of the year. That, plus the fact that rarely do traders pile on large positions heading into the end of the year; they generally tend to do the opposite. That might take some of the pressure off of the market, temporarily.

Bulls need some serious help very soon....



78 comments:

  1. Hi Dan,

    Looks like my intuition over the past few weeks was right - the market took a swing towards the summer lows and we broke through the 1225, 1210, and 1200 levels, closing just slightly above 1200 today.

    What I appreciate about your blog is that you are balanced in your perspective - as I gather it, you allow the market to tell you the story, rather then forcing the story you want to hear or see upon the market, as many traders and market commentators seem to mistakenly do. I suppose this is why most do not succeed in building wealth from the market, though it is in fact in my opinion the greatest vehicle to personal wealth creation if one learns to understand it and maintains humility in the process.

    As a beginning trader, I'll admit that market swings do rattle me, often to the point of exiting positions in the short term even though those positions may have paid off in the intermediate term had I held on. For example, I sold to close a few GLD put options that I bought around the time that GLD was hovering near 1230 when we saw that spike to 1260. Had I held out, I would have broken even if not profited on that position.

    But in reading your blog I've learned that swings are to be expected, and you're right in the observation that some of one's best learning experiences are through failed trades. I suppose any advice you have or personal experience along the lines of timing position entry and holding on despite unrealized losses would be appreciated.

    The gold chart is broken and will take time to heal - as you've noted, I feel the bears are thirsting to trigger the stop losses undoubtedly set by many longs below the 1180 price point. Would you forsee a possible 100 to 200 dollar price drop in such a scenario as a consequence? You've noted the 1180 support area as being as significant as the 1530 level broken in April, so was just curious to get your thoughts on that.

    Happy holidays to you sir and thank you for the service you provide for free. In a world of youtube know it alls, its good to read articulate and well thought out analysis that is balanced and acknowledges both the bears and bulls in the liquidity game that is the market at work.

    ReplyDelete
    Replies
    1. Syncubate;

      Yes, your intuition has been pretty doggone good. Congrats.

      Something that I have found is that the more time you spend watching/trading markets, IF YOU ARE OBSERVANT and can think things through, you do tend to develop a sort of sixth sense at certain times towards individual markets. Sometimes you can just "sense" something in the price action. I know that sounds weird but it does happen. Something stands out that catches your attention or something and you can almost know that something is getting ready to happen. It does not occur very often, but it does occur.

      Even at that, I am always careful not to get too overconfident but to still watch price action very closely to confirm ( or to disabuse ) that feeling. That is hard to do but is essential if you wish to remain in this occupation for a long time.

      and Yes, trying to read the swings in these markets today can be very challenging. The sheer size of the price swings leaves you guessing at times as to whether this is just a retracement in price or a reversal. Each market has its own personality and you more or less have to try to filter the price action through that personality.

      I can tell you that I do tend to get tripped up a lot on some of these intraday moves but I have learned to just adapt to the new action. I do not mind getting out with a small loss because if the market shows me something that tells me my original position was the right one, I will go right back in, even on the same day, if need be. The big thing is to keep your losses small. That is cardinal rule number one for trading.

      Also, one does not need to carry as large a position as they might have in the past because of the size of the price swings anymore. It helps to hold a smaller position because if you are wrong, the loss is bearable. If you are right, you will not make as much money as you might have had you "LOADED the BOAT" as too many of these amateurs out there on the various gold sites keep telling their victims to do.

      A little goes a long way. Greed is also a killer for a trader - that is another tough lesson for many to learn. Sadly, some learn it only at the cost of losing their entire trading account!

      Merry Christmas to you

      Delete
  2. Hi all,
    I searched on Google and best results for ex Dan Norcini are indeed now :

    1) Dark Vadorcini - 155644655 results
    2) The Dark Lorcini - 132456789 results
    3) Dan Vador - 110564565 results

    I personally prefer Dan Vador, but let's vote :)

    http://i39.tinypic.com/zoajoj.jpg

    If 1180 breaks next week, next support I see is the mlh inf of the blue pitchfork at 1150 $. Maybe it could stop the fall.
    Also the red median but it will be at or very close to 1180 still.
    Resistance now on the daily time unit at 1230 $ for me.
    I'm shorting that level.

    ReplyDelete
    Replies
    1. Hubert;

      Thanks for a good laugh buddy!

      by the way, I think you are spot on with your analysis.

      Merry Christmas to ya!

      Delete
    2. Thanks Dan,

      Merry christmas to you and all readers of your blog!
      Whatever the religion, the message is the same : compassion, love, empathy...are the heart of happiness.
      Being self centered and thinking only about making money is not a road to happiness. So I hope everybody will share this nice year end with their families and friends, and forget their problems for a while.
      My best whises to Dan and his family.


      Delete
  3. Merry Christmas Dan thanks for your reports all the best for the NY. I guess what stirs up a lot of Gold bugs investors is the bashing Gold is continually given in the MSM. Gold backed currency is still the only way other than plain honesty to get the worlds financial system back to something which the common man can have faith in. So ever since the US removed the option for swapping Gold for Dollars in 1971 Gold has been ridiculed by people in power using whatever tools necessary, obviously as an attempt to support the system we have now pure FIAT which is increasingly failing as all FIATs have done before. I guess that's where the claims of manipulation are based, there is no reason why there could not be a true free market for Gold where at any point you could front to a bank and ask to swap your FIAT for Gold obviously the Gold price would be continually adjusting by market demand up and down. And at least if citizens were not happy about their Government in the case of the US printing 30% of Government expenditure out of thin air they could choose to keep their savings in Gold. The more citizens lose faith in Government the more Gold demand and the higher the price of Gold would go telling the Government to start living within their means. Gold would act as the safety valve and keep economies and politicians honest. To good to be true but it would work, politicians would hate it no more pork barreling.

    Gold is now at record low sentiment levels normally associated with a bottom, I suspect we could get a last spike or two towards $1100 or below but with sentiment this bad and still a lot of demand for the metal itself the downside has to be limited. China increasing it's reserves massively India restricted a bit but many suspect Indian's are getting supplies anyway, lets face it if it's going to take seven years to return 300 tonnes to Germany there has to be a shortage currently not indicated by the price movement. The Gold shares have taken a disproportional whacking and appear to be flat lining to showing signs of resisting the downward moves in the metal, maybe just a plain lack of sellers. I feel the metals stocks will have some huge upside when this market turns. Any way just some thoughts leading up to the NY.

    ReplyDelete
    Replies
    1. rlm;

      I agree with you about the current fiat system. It is increasingly unstable and like you, I believe at some point, we are going to have some sort of currency crisis. The question is the timing. I had thought it would have happened by now but apparently the market is just not all that worried about it. IF anything, the majority applaud the Central Bank actions with all the money creation.

      I still wonder just how the end game is supposed to play out with a Fed balance sheet nearly $4 TRILLION and which will no doubt surpass that rather easily. How do they sell all those Treasuries without spiking rates? Or have we reached a point where no one cares if the Fed's balance sheet were to never be reduced but keep on growing?

      I honestly do not know but when the Euro underwent a huge blow to its confidence during the European sovereign debt crisis, it was pretty obvious when it occurred. That is why I think we will be able to recognize when confidence in the current monetary system begins to erode.

      In the meantime we just watch the market for a bottom and for a turn in sentiment. Right now, as far as the majority of investors are concerned, there isn't a care in the world. The VIX is flatlining near multi year lows and the equity markets continue heading nearly vertical. Hey - everything's fixed Don't worry - be happy - that is today's motto.

      Merry Christmas!

      Delete
  4. "Gold is now at record low sentiment levels normally associated with a bottom"

    But all categories of specs are still LONG.
    "with sentiment this bad and still a lot of demand for the metal itself the downside has to be limited"
    I would be extremely caferul with any certainties one may have in this market. Long or short. Especially when short-term prices (a few weeks) are not so difficult to suppress. I don't know if we'll go there, but I can't exclude the possibility of sub 1000 $ prices for a while.

    Btw and about that, Eph mentioned that the game of the BBanks is to buy some major miners for a penny. If they achieve that goal, won't they be then able to suppress the price of gold for a long, long time??

    ReplyDelete
    Replies
    1. Some big money (money center banks, govts [China], etc) will vertically integrate the whole gold industry. They will own the shares, take the other side in any hedging agreements, and manage the price forever. This is why I will NEVER again own a miner. I only own gold eagles - as an American.

      Why do I know this? Because the amount of money required to do is available to a sovereign like China, and if I were a consultant to the Chinese govt I would be recommending that. I would say that if the Anglo-American establishment threatens any action, I would recommend the Chinese to start dumping treasuries.

      Chase is not riding a 400-500 ton long position down 300 with their own money. They are doing it for someone who doesn't necessarily have an intermediate profit objective. Sure it looks like its Chase's money, but only a sovereign can take that beating. That sovereign can only be China.

      I say this is a likely scenario, because if I had enough money I would be buying shares, carefully placing my hand picked board of directors on the major miners, work out swap and hedging arrangements, buy the LME, corner the COMEX, open up trading centers in Shanghai. I would own it all. I would buy all the companies that make up the HUI.

      Theoretically a trillion can do it, lock, stock, and barrel. Then I would accumulate enough gold to offer an alternative currency to the fiat USD. I estimate the Chinese govt must have at least 6000 tons now. They are getting more than 1000 tons a year, with the entire China accumulating the entire world mining output every year.

      Delete
    2. not the first time I've seen this scenario and it does make sense.

      Delete
  5. "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."

    So that's really the question for long-term investors.
    Can Gold prices ever bounce higher someday?

    If :
    - they manage to buy and take control of some major gold miners
    - they manage with that production to suppress this monetary barometer vs the dollar thanks to gold production, etc... while the rest of commodity sector keeps going up...

    then it could be checkmate for gold buyers for many years... couldn't it?

    ReplyDelete
    Replies
    1. HdH- interesting--if you look at COPPER:GOLD, it has been steadily rising since Fall 2011 (also look at Freeport McMoran's performance relative to precious metal miners). Same with WTI:GOLD.

      Merry Christmas.

      Delete
  6. Dan, you have been a great help to me when I am wearing my "trader hat" and need to manage inventory for our cash for gold operation. The current gold market is controlled by the will of those who trade paper derivatives of physical gold. This paper gold arena is winding down and eventually will be replaced by a physical only market that does not arrive at "price discovery" based on trading the eqivalent of global mine production within a few week time span. The $50,000 gold figure does not require a world you would not want to live in. Monetary expansion, and paper gold expansion has already occurred that creates a need for gold to be price at or above this level to recapitalize debt bloated global financial system. I know at first hearing that sort of number thrown about sounds ridiculous but it is the level of debt and derivitives that is ridiculous, not the price of gold that is required to repair global balance sheets.

    ReplyDelete
    Replies
    1. Polly Metallic;

      I am pleased to hear that some of my writings have been of some use to you in your occupation there as you don your "trader hat". Thank you for sharing that.

      You do make a good point about the size of the debt load and the massive derivative markets. The whole thing is unstable if you ask me but the market seems oblivious to it as a whole. They are convinced that prosperity can be created nearly at will without any consequences. Based on the current stock market rally, you would have to say that they are right, FOR NOW....

      I try to look at it like the Greece, Spain, Portugal situation. Everyone knew for years that those nations, and some others, had a huge debt load for the size of their economy. It wasn't as if it came as a surprise. The assumption was that everything would continue as it always had - the nation would merely issue more new debt to pay off the old with and to fund the current needs of the country.

      One morning however, something happened, almost as if a switch was thrown, and a near panic began to sweep through bond holders. Interest rates spiked, the country was on the verge of collapse, etc.

      Now the US is not yet there even though the size of its unfunded liabilities is so large that it boggles the mind. That plus the fact its currency is still the global reserve currency. However, I try wrapping my mind around a $90 TRILLION in unfunded liabilities number and quite frankly, I am glad that I own some physical gold.

      Sentiment and confidence is a very fickle thing - it can swing faster than a weather vane. I guess in the meantime we just enjoy the ride, prepare the best we can but remain realistic.

      Merry Christmas to you

      Delete
    2. Hi Polly Metallic,

      It seems almost everyone thinks of $50,000 gold as insane but they fail to recognize the insanity of the monetary system as it exists today. Regarding the commodity style price discovery for gold in today's markets I am reminded of this video.

      Delete
  7. Gold has much lower to go.

    Too many CIGA and GATA boys refuse to let go.

    Chris Puplava explains in the last paragraph that he's still having way too hard of a time convincing investors to get out of their bunkers, sell their gold and start investing in U.S. stocks instead.

    I don't think the market will stop falling until the last gold bull gives up and throws in the towel. And like Dan says, even many hedge funds are still long gold trying to pick a bottom, LOL...

    http://www.financialsense.com/contributors/chris-puplava/maximizing-profits-identifying-major-market-turning-points

    ReplyDelete
  8. Oh, yeah, one other note.

    I don't think we'll see a bottom in gold until the popular gloom and doom sites stop posting "Spectacularly Frightening" headlines day in and day out.

    Maybe once they stop with this nonsense and start interviewing the CEO's of consumer product companies like Nike, Buffalo Wild Wings, Under Armor, etc. we can declare that the gold bear market is over.

    But for now, its the same old "Any Minute Now, I Swear!" and "This Is It!", yada, yada, yada......

    Seem like no amount of pain or loss in their trading accounts can change their minds yet, but maybe next week's $200 move down in gold will get it started.

    ReplyDelete
    Replies
    1. There is so much one can say about gold as it has been around for thousands of years. One can make a case for 50,000 gold and I suppose one can make a case for 1000 gold. And both make sense. Right now the case for lower gold is that the chart is bearish. Period. In all your interesting posts, the sarcasm is interesting in that I think you state the facts correctly with the idea that its the greatest of all time to be alive, but it shouldnt be. Stocks shouldnt be going to the moon and gold going down given all the money printing. But today, you made a prediction about the price next week. Not unlike anyone else's prediction about prices. So you will be held accountable for that, just like you want to hold others accountable for their predictions.

      Delete
    2. Mark. Agree with you sentiments on gold. Interesting that there is a lot of 'phase change' and 'inflection point' chatter coming up in the world of blog & letter writers. A lot. Probably because the equities markets ex-miners are at the top of the non-bubble range. As with gold, it seems that the best advice would be to follow the money/price action.

      Delete
    3. Your nuts Mark, nobody listens to that gold site you mention. Those sensationalistic headlines read much like your constant gloating, hyperbole, and enjoying of their demise. Be bigger than they are unless you are a paid basher. Making decent people feel worse about their mistakes in investing in gold is certainly not in spirit with this time of year or anytime. If you have wanted to see gold promoters get their comeuppance you got it. In time it will be you. Markets work like that. Unless of course your do this for a job.

      Delete
  9. I’ve been following Dan for almost two years and feel he is literally one of the best sources of information I have. Heck, I even consider some of his regular posters like Herbert Du haut in my top 20. However, there is a reason I finally got around to making my first post recently and it is simply that I think things are going to change soon, as in no later than end of first quarter 2014.


    First, while I wholeheartedly agree with Dan that the “backwardation” talk misses the mark , my feelers go up when too many unprecedented things happen at once. Facts are facts, 1) prior to last six months only 7 negative GOFO rates in 14 years while in last 6 months we’ve had well over 11 weeks of them. Never happened before so it must at the very least demand some thought. 2) Unprecedented percentage decline of gold inventory at the COMEX coupled with unprecedented lack of deliveries. Percentage-wise has never happened before and it demands our attention. 3) Unprecedented increase in leverage at COMEX. I know there are many reporting 100 to one leverage and I don’t buy that. I do however buy a roughly 50% increase from somewhere around 45 to one increased up to somewhere around 65 to one. If correct, and I’m almost certain it is, it is a tremendously unfair playing field for the bulls at the moment. 4) Even Bloomberg (mainstream as can be) is reporting massive declines in London’s gold inventory. One has to wonder how and why all the above is occurring over the course of one year while the price of gold plummets.


    Now the Fed tapers 10 billion a month which is of course smoke, mirrors, and monkey dust. The simple fact is they have purchased nearly all the mortgage backed debt, so at this point they can decrease total QE, but actually increase Treasury purchases. I want to stress this point… Nearly all the mortgage backed securities have been purchased so we are near a turning point.


    The simple fact is the Fed knows the ONLY way out of this mess is to weaken the dollar. Weakening the dollar is the Fed’s goal and I want to stress it won’t be the end of the world. I am not a gloom and doomer. 80% of what the Fed has printed has remained in the banking system. Bank reserves (which are not part of M2) have gone from nearly zero to around 2 trillion while at the same time bad debt has been almost completely removed (at face value mind you). All this occurred while the dollar remained remarkably stable and we’ve seen way too many “never befores” in the past year.


    What does this all mean?


    Well, if you agree the only way possible out of this debt mess we are in is a sustainable GDP to debt level you agree the dollar must weaken. I feel very strongly this is the Fed’s ultimate goal, but our banking system needed to be prepared to survive such a tumble in the dollar.


    I submit to you that the U.S. banking system is now prepared to handle a rapid decline in the Dollar. We are now about to enter a declining dollar phase, so forget about gold technicals and focus instead on the dollar. If the dollar declines 10 to 30 percent gold will handle it well. They may not have announced a weakening dollar as their ultimate aim, but it is in the end our only way out and as such must be their goal. Don’t fight the Fed.


    Finally, back to gold and all it’s oddities over the last year. I have strong feelings on the subject, but compared to the above my thoughts/our thoughts on the matter are simply a side-show. Gold will do well. Enough said.


    ReplyDelete
    Replies
    1. Matt Bighouse;

      Thanks for a well thought out set of comments. There is no emotionalism in them; just a reasoned opinion. Those are always welcome! I know it took a lot of time for you to contribute this (if you are as slow of a typist as I am! ) so thank you.

      I do agree with you in this sense - once a commodity begins to get close to the cost of production, the downside becomes limited. That does not mean it will stop declining - it means that the risk to reward ration begins to shift in favor of the upside.

      With leveraged markets however, even a downside risk of $100, or $150 or whatever can be catastrophic to a futures trader. That is why a trader has to respect the trend in the market until he sees signs that the trend is showing signs of coming to an end.

      Physical market buyers can have a different mind set than we traders. They are not exposing themselves to the kind of leveraged risk that we have to respect so they can acquire a commodity when prices to begin to decline into its cost of production, PROVIDED that they have a LONG TERM VIEW and are able to sit on the commodity while they WAIT for something to arise which begins to drive the price higher.

      Right now the sentiment in the market is that gold is an asset that is declining and throwing off no yield whatsoever. Equities on the other hand are soaring returning spectacular gains. That means the shorter-term investment/trading crowd will be shorting gold or selling out existing holdings and using those proceeds to buy stocks.

      I honestly do not know when this sentiment will shift but I would think that when it comes to gold, if we begin to read reports of mine closures or shut ins,etc. we should begin to take notice. Even at that, I would want to see a TECHNICAL CHART PATTERN OR SIGNAL informing me of any shift in sentiment in regards to gold.

      If this buying of physical gold is so strong that it can eat through the available supply at current prices, the market will bottom. If not, we will know it as the price will work lower.

      What worries me is the continued stubborn bullishness on the part of the speculative crowd towards gold based on their positioning in the Comex gold futures market. While the gold ETF, GLD, is dishoarding gold, traders at the Comex remain bullish, even though their bullish sentiment is dramatically lower. Yet they are still NET LONG this market.

      I have not seen markets put in lasting bottoms while this sort of thing is a backdrop. I am not saying it cannot happen, but I would feel a lot more confident about a permanent bottom in the gold market if I did see some signs of specs moving to the net short side of gold. Maybe we will get that - maybe not - I just do not know but I am watching and attempting to read what this market is saying.

      Merry Christmas and again, thanks for sharing your thoughts with us.

      Delete
    2. Thanks for the reply Dan. You wrote, “ Even at that, I would want to see a TECHNICAL CHART PATTERN OR SIGNAL informing me of any shift in sentiment in regards to gold.”


      I couldn’t agree more and it is why I will continue checking out your website every day. I think we’ll see some interesting days in 2014.


      Merry Christmas to you as well.


      Delete
  10. @Gene Bellamy: Glad to see your link to that video. Yes, "Freegoldtube" puts out some great, thought-provoking material and is "one of my crowd."

    @Matt Bighouse: It sounds like your thoughts may be similar to mine.

    @Mark and Trader Dan. I have nothing against trading but the real money to be made in gold will not be by trading paper derivatives. The field of thought I have studied and followed antici[pates that at the end of the dollar reserve's timeline, which will accompany the end of the Paper Gold era, paper gold will decline. Buyers who really understand gold and intend to take delivery in size (we're talking pallets of 400 oz bars when I say size) do not source from Comex or LBMA. The big buyers and smart buyers have abandoned this market as it lost credibility to actually deliver tonnes of gold. The bullion banks appear to be sourcing tonnes from GLD, as one of the last places to access major purchases of gold. I am not distubed by the price of gold declining as I expected this to happen and I am short "paper gold" while holding physical.

    In every major financial upheaval and paradigm change there is no warning as warnings defeat the purpose for those who are implementing the changes . It is unlikely that you will see anything in the charts aside from what you are seeing now, a declining price of gold with minor failed rallies until a new global financial architecture is implemented.

    ReplyDelete
    Replies
    1. Interesting…I am no expert but I totally agree with what Bighouse is saying. There are 3 truths (I think they are anyway)
      The way out of un-payable debt:
      1. default…or….
      2. inflate your way out.
      And last but not least
      3. Government cannot tax deflation.

      Over simplified but this is where the Fed and US Gov't find themselves. The Fed inflates the Dow…Washington gets a nice percentage…simple. If/when gold takes off…it will not be confiscated..it will be taxed..the sad part is that very few in the Western world will have any to tax.

      Delete
  11. Polly if you are a small fish(like me), how can you participate? Short paper gold and buy more physical as we drop to where ever the bottom is?

    ReplyDelete
  12. Yes, that's exactly what I'm doing. Gold on sale!

    ReplyDelete
  13. This is one of the best threads ever. Thanks to all who contributed the thoughtful, reasoned and articulate comments. Thanks especially to Dan for creating and maintaining this forum, it's a pretty special place.

    Merry Christmas to everyone!

    ReplyDelete
  14. Dan,

    What do you think of the US dollar chart, it looks like it is about to make a big move up or down, and I think it's likely u (with the Euro topping)?

    Thanks and have a wonderful and Merry Christmas!

    ReplyDelete
    Replies
    1. Jesse Livermore;

      With a "handle" like that Jesse, I ought to be the one asking you for your view of the US Dollar! :o)

      Seriously, I still looks rangebound to me right now. Rising interest rates have tended to support the Dollar at the expense of the other majors but there are other issues that weigh it down. Right now neither side seems to be able to get a clear advantage in there. I am watching to see if we get a breakout in either direction and if a trending move begins.

      If I had to guess ( and that is what this would be, merely a "guess" not based on anything from a technical analysis standpoint, I would say that the odds are a bit greater for an upside breakout rather than a downside breakout right now.

      Long term the US Dollar has serious issues because of the sheer magnitude of the debt load that it has run up but Japan has big issues as does the Euro zone as well. I think one can make a bearish case for each of the major currencies.

      Shorter term or intermediate term, I can see the Dollar moving higher mainly because it is the only major industrialized economy in the West right now in which interest rates are moving higher. That tends to draw money into the country in search of yield in this near zero interest rate environment overall.

      Down the road, longer term, at some point China is going to become a factor with their currency. They are taking steps to make their yuan more liquid on a global basis. They do not as of yet have a bond market sufficiently liquid to make their currency a major threat to the Dollar at this point in the game.

      I can see a basket of currencies replacing the Dollar as the global reserve currency but as to the timing of that, I am unclear.

      Delete
  15. Jim Puplava and Axel Merk are now both rabidly bullish on the U.S. Dollar:

    After 10 years of dollar bashing and pushing foreign currencies, citing the new "resource scarcity" paradigm, etc.

    Well, all that has been thrown out the window.

    Now it is the new "renaissance" of the U.S. in energy independence, manufacturing, and having the world's strongest currency.

    http://www.financialsense.com/financial-sense-newshour/axel-merk/u-s-more-able-to-kick-can-down-road

    ReplyDelete
  16. Here is a good site to look at for all you $ bears. http://www.mrci.com/pdf/index.php

    I totally agree that the buck has a plethora of problems. But why do you all ignore the plights of the Euro, Cable, Yen, and a host of other S American, MENA and Southeast Asian fiats? It is a business of relativity.

    On a lighter note, you can fade the Raiders today and load up on the 49'ers tomorrow nite in the Grand Finale for Candlestick. (Dan's favorite team, ha ha). Prospectors could hang a shutout on the hapless Falcons.

    Merry Christmas to all and be safe with your loved ones; sparks, swb

    ReplyDelete
    Replies
    1. Just to share point of views. I have no opinion about the USDX

      "The TDI indicators for the USD are currently negative in the daily and weekly time frames. In addition, the USD will clearly be in a negative TDI posture in the monthly time frame as long as it does not close higher than 81.25 by year end. This is a key benchmark to keep in mind and a supportive trend force for gold if that occurs."

      http://marketpendulum.blogspot.fr/2013/12/joyrides-journeys.html?showComment=1387733414510#c3672525705517339012

      Delete
    2. P.S : but Steve, maybe other currencies have their own problems, but I know no other countries with such a gargantuan appetite for debt, huge liabilities, and absolutely making no effort to reduce its deficit whatsoever in the US.
      In Europe, we have many problems, central one being how can a bloody single currency answer the needs of so many different countries / economies without ruining some of them? But "at least", Europe is trying here and there to reduce its deficit, to follow Maastricht criteria, with Germany and Buba pulling on the brakes of QE despite the pressure from IFM, etc... In the US, it sounds like utter carelessness, with a growing deficit every year and no effort to reduce it. Simply totally scary to me, scarier than Euro or any other currency at the moment.
      But I agree that USD is the center of the monetary system, the cornerstone of this fiat currency system, as it is still the reserve currency, and the main means of exchange, the deepest market.
      But I'm afraid we are going someday to reach a kind of critical point, from which the USD crach will be fast and furious. Maybe the krach will hapen in the USD later than in other peripheral countries. But I'm adraid that when the main earthquake finally reaches your shores, it will be much stronger than in other currencies. We'll see. As long as USDX > 79, I don't see any warning.

      Delete
    3. Steve Brassey;

      Steve is a much better trader than he is a football bookie! :o)

      49's suck... go Hawks!

      Delete
    4. Yeah, based on all the comments I've read ol' sparks has a better understanding of markets than NFL football. I'm not sure about all your picks on this board Steve, but the ones I remember have you at 0-3. You picked a couple of safe ones this weekend and there's still time left for you to come out with a winning record for the season. Good luck and Merry Christmas!

      Delete
    5. Gil, not a bad day; had Car, Den in morning and SD in aft, but blew on Dan's Seahawks who had their wings clipped; I guess the 12th man was hungover or maybe Russell Wilson is not God's gift to the QB position afterall? Tonite it is Philly -2 1/2 and tomorrow , like all the gold perma bulls say, you can go all in on the Prospectors -14; sparks and keep your head down, pardner!!

      Delete
    6. You were solid with your picks. Seattle was a fluke, the 12th man flaked out. I wouldn't put money against the Niners either. How'd you know I be layin' low?

      Delete
  17. Well, after scanning several ETF charts.....

    Looks like XLY will go down as "The Greatest Ever".

    Basically, this consumer discretionary ETF has gone from $17 to $66, that's nearly a 400% gain.

    The biggest drawdown during that time was in 2011 when it went from $41 to $35, a paltry correction compared to where it was today.

    Now, if Peter Schiff, Greg Hunter, Jim Sinclair, the King World News boys, and all the guys over at GATA had recommended loading up on this ETF back at the 2009 lows when everybody was screaming about the end of the world....

    All of them would now be financial "rock star heroes".

    Featured prominently on Bloomberg, CNBC, Fox Business, etc. and would be towering figures of success.

    All of them would be able to retire right now, and never have to look at a stock chart ever again.

    They could easily live off the proceeds invested in AAA-rated corporate bonds and investment real estate and enjoy the rest of their lives never worrying about the Fed, inflation/deflation debates, political gamesmanship, geopolitical concerns.

    It must kill those guys to look back and wonder how they misjudged everything.

    Goes without saying that the last 5 years will be a period of time few in the investment community will ever forget.

    Some made a lifetime's worth of fortunes in just 5 years.

    Others lost a fortune betting the wrong way.

    ReplyDelete
    Replies
    1. Gee Mark…I have never heard that kind of information before.
      Please..tell us more.

      Delete
  18. Dan , what does it mean 92 claims per ounce , its increasing at numbers not seen before ? I understand the trend is down … but is this not a warning bell at the time of entering a short trade at this levels ? Thanks ! and Merry christmas !

    ReplyDelete
  19. 92 claims per 1ounce , Comex has 430k registered oz, this means that if something crazy happened and everyone wanted their gold, comex would need to find 43 million oz of gold somewhere, ok let's say HALF of the claims want delivery, that would mean 21 million oz . Don't you guys think this is a little extreme?

    ReplyDelete
  20. US tax payer's both current and future are being lumped with the bill for this BS QE rally now 4 trillion plus and counting. The FED is supporting TBTF banks, hedge funds and large speculators in a game of pump and dump with a direct line of credit at 0% interest. The FED itself has 400 traders on L 9 33 Liberty Street working around the clock to keep this ponzi alive. They are buying 10's of thousands of stocks, Treasuries, MBS's and Agency debt at the same time shorting primarily FX Comex Gold all unbeknownst to the poor US citizen. Last Wednesday as the stock market started to dive just after the FED taper promise within a few minutes the PPT started a multi billion dollar intervention in the DOW and major indexes to prop up and flush out shorts at the same time FX Comex Gold was being shorted with tonnage dumps as we have seen throughout 2013. It's time main street US get behind calls to audit the FED to stop the inevitable collapse of the US as we have known it, a country honest hard working people. Anyone who believes the US markets are free and real would also have believed Bernie Madoff was an honest guy.

    ReplyDelete
  21. I have a several questions which have me puzzled.
    1. Why is JPM standing for delivery? is this normal?
    2. If the London vaults have been cleaned out to the tune of 26 million ounces (as per the bloomberg interview) what does this mean? the individual then goes on to say that gold will drop to $700.00. Why would the price drop if there is none left to sell?
    3. Why have the chinese been buying at these levels…why not wait for the price to drop even further? are they stupid?

    ReplyDelete
    Replies
    1. because there will not be enough at the bottom. in order to get 8-10,000 tons the chinese need to buy all up and down the price scale. the more volatile the more they can buy, especially on the downside.... they average cost, and know what's coming. a global nuclear war in which they will execute an offensive take out strike on the US and west. this, of course, is condoned by the anglo american establishment.

      if one can understand the concept of intermediate and advanced game theory, the gold market makes perfect sense and can be very profitable.

      Delete
    2. if comex has 400 k oz of gold and 92 claims …. wether they are chinese or papuans … what number of claims do you suppose at 700 bucks ?

      Delete
    3. I'm sorry to go on with the same topic , but wasn't this the very same reason we had a financial crisis in 2008 ?? the way I see it comex is doomed either way , wether price goes up or down , what happens if we get short covering rally , and shorts are force to buy ounces of gold comex does not have ? where does the claims per ounce go ? same problem if it keeps going down … I know this is trading blog and traders look at the very immediate future , but the spike in claims has happened in a matter of days . this is all puzzling … it doesn't add up

      Delete
    4. This isn't my blog, but you do have very legitimate questions. There is no doubt that the paper claims outnumber physical by many magnitudes, and this number is fairly constant regardless of price. Besides we only have rough guesses at this number. But this has been known for years, and despite all the fallout from the 2008 crisis, the fundamental issues remain unresolved.

      Many people buying into this comex stuff buy gold and then expect it to be resolved in higher gold prices. What is the likelihood of Chase Manhattan Bank going belly up? I mean what is the likelihood of all depositors withdrawing all at once? Not likely.... Same thing in gold. In fact, as the economy continues to perform its fake miracle, there will be less demand for people to possess the physical. there are better places to deploy capital.

      The economy is a sham. Why? Because essentially 75 billion a month of GDP comes from money printing. the deflationary forces have been overwhelming any inflationary forces. Dan discusses things like velocity, etc. thus the govt can basically spend this much more every month than the world can organically fund it. USA, Inc is consuming at least 100% of the world's net savings. But still the economy looks like peaches and cream. While the average guy suffers from lack of capital, deflationary forces, and increasing debt loads, the economy "prospers."

      In this environment, gold suffers much worse than most investors realize. Anyone bullish on gold will have a difficult time until this economic sham is exposed. and that may be another few years.

      Delete
    5. Dean are you asking about physical real gold or fake paper gold?They are not the same. Do you know anyone that has attempted to buy real gold in SIZE lately? My guess is that large (multiple ton size) gold orders are hard to source these days. Central Banks are not concerned with price action they want to gradually divest the $USD for real wealth (gold). At what price do you think physical gold will stop moving at all and what price will it take to get it flowing again? Just guessing but I would imagine physical gold in size will become very hard to find as the paper price falls.

      I think the Chinese are more concerned with acquiring physical gold than buying at the bottom.

      Delete
  22. So when gold was going up it was a great investment. Now that its going down its insurance. When gold was going up the gld had huge supplies, and now that it is going down the supplies are dwindling. We are told that the deliverable supplies are almost gone. Yet when the price goes down, the only conclusion is the supply is overwhelming. So I guess in the end we really dont know anything about gold, other then what the price is. Dan, clear all this up, please, for the whole world to know. What is gold really.l

    ReplyDelete
    Replies
    1. We don't even know what the price is. You can't go buy 10 tonnnes of gold and get it dropped off by Amazon.

      This paper gold to physical gold. Think of them as 2 different things. But sadly, for now physical, for us shrimps, is tied to this make believe fake price. People aren't buying gold here on this site. Dan is not buying gold, it is a derivative of gold "price".

      The more you trade of something, the cheaper it gets. So the paper price of gold has got to go to such a low # that is "breaks" and then we see what physical, real gold, is worth.

      This paper gold is pretend, it gets the oil-dollar relationship going. if you want to buy gold, spend your capital at a coin shop, take delivery. If you want to invest in a paper instrument, but comex paper gold.

      When the dollar blows up, you want a coin in your drawer, not a comex contract. Physical gold will reign. Bad money drives good money into hiding, that is soon to be complete.

      So to me it kinda all makes sense but it is hard to explain. I have thought since maybe 2012 the paper price MUST go to "zero", be worthless, for clarity to be brought back. I try to play the swings to move in and out of physical with fellow physical traders.

      Wealth is something you possess. Debt is something you owe someone. So I don't want a lot of digital 1's and 0's in my account. It is nice now to trade and stocks look great. But when the music stops, if you don't have a store of value, art, physical gold, land, you will loose all these current "hot" paper profits. I would rather be too soon and have a chair than late and miss the last chair when the music stops. The dollar will soon die. I want to own the least amount of them possible. That is why it is "currency" or "current" money. Do you think if you pulled out a $100 bill a thousand years ago it would mean anything. What is money is a mental concept and it is going to change again. I guess a better example would be in the late 1800s america. If you owned a banks paper and the bank failed, you lost your "money" your "assets" etc. If you used gold coins you didn't. Well the Fed is a private bank and the purchasing power of it's debt, oops I mean money, will fail.

      I don't get why anyone would buy comex gold. I think more and more people realize this and the price, as more and more contracts are sold means the direction for the paper price of gold must be down.
      Anyway, I just see a lot of confusion even here on the paper price swings and just tried to say I am not confused or surprised or anything else.

      What is gold. Gold is wealth with no counter party risk. It is a debt, a currency debt that is "paid in full".

      Delete
    2. Tdfxman, I agree on all points raised. Surprising how many don't get it. James Rickards (author of Currency Wars) seems to have a solid background and his point always has been that gold is not a commodity but is a currency.....mostly runs opposite to US$ and so of course doesn't pay interest or dividend any more than the $ pays interest.
      Bernanke in the recent past has made comment about not being opposed to negative interest rate. That really amounts to a kind of bail-in as it would cost you money to store your funds in a bank. Boy, talk about scaring people to invest their $ in the market rather than get negative interest rate in the bank.
      It seems to me the Fed is doing the best Houdini act ever as its all an illusion.....or is it? If (big IF) the US really has all the gold they purport to have (8000 tons) then they too have lost a lot of money on gold's downturn. If the bullion banks and others are long gold, when will the switch be thrown.
      Your final point is critically important: "Gold is wealth with no counter party risk". With paper gold price currently in and around the price of production for most miners, buying physical now is a no brainer. Physical gold is my core holding position and any non-gold equities are in my "jack be nimble" account hoping to exit before the music stops. 2014 should be a very interesting year.

      Delete
  23. http://blogs.marketwatch.com/thetell/2013/12/23/golds-safe-haven-role-is-over-societe-generale/

    we need to see more stories like this. Soc Gen was a firm the gold bugs used often to make their case, as they were usually more gold bullish than the rest of the street.

    ReplyDelete
  24. Well put Eph.
    1. I'd imagine we'd also want to see the "$ for your Au" shops shuttering (I have seen markedly fewer of these places).
    2. As @Mark puts it, the "end is near" crowd is looking more & more foolish, like the people on the street corners that used to scare you as a child & then look pathetic as you grow up. When they finally take their signs down and go home, the end will probably be closer to near.
    3. I would also guess that we'd want the ZH crowd to shift to pro-equities too. There was so much "new normal" talk of low expectations/returns through 2011 . I would guess that inflection point, phase change, etc. talk might just be cue that the meme is overworked. To my sensibilities it looks like all the bubble talk is about valuations that are pre-bubble, very high normal range.
    4. As an off topic point, I'm up in the US from Mexico visiting California & New York. Oddly, San Francisco looks less bubbly than it did in the summer, as does New York (few people in the streets, easier to get in restaurants). The part of the San Francisco Bay Area where I grew up looks like a disaster--homes unkempt, yards gone to pot--pathetic. Clear to me that we have bifurcated recovery at best.
    5. Capital Controls. This is for you @Mark. Whether or not gold goes up or down, it seems that capital controls & increased tax regime are here. I see this in Mexico when trying to wire money internationally--huge delays on the order of weeks for small 5 figure comes. Also, reports that larger sums are not being transferred until banks 'know' the nature of the transaction, i.e. seeing the assessment value of a property being bought. In the other direction, Mexico has revamped its tax regime, so while the opening up of the energy industry for private investment is good, it has also obliterated the small business (read cash transaction) level of tax payer & has put a 15% asset tax on sales of properties over a certain level (something like $250K us equivalent)--Mexicans are traditionally wary of banks and use property as a store of wealth.

    That is All. Merry Christmas & Happy New Year.

    ReplyDelete
  25. I don't get it, Embry and others still quote the whistle blower (the one who is a phoney) ….like…WTF ? the whistle blower still gets interview time on our favourite news channel that we love to hate….Is there something about "the guy is a hoax" that these people don't understand ?
    No wonder Gold is getting hammered…the people who represent it as an investment are a bunch of nut cases.

    ReplyDelete
  26. Dean; You echo my thoughts 100%; sparks

    ReplyDelete
  27. On the technical side of things, it does look scary.
    Because we are pretty close to year end now and therefore, we are about to close :
    - the year
    - Q4 2013
    on terrible red downwards marubozu once more.
    Look at the yearly candle charts and tell me you see a sign that this is over...? We are going to end this year at the lowest prices, which is not exactly a great sign.
    Of course, we are still on the edge with a major support zone in the 1200 $ area, but I'm hearing some cracks. Like the mlh inf of the monthly upwards pitchfork which gave way.
    Hope still?
    As long as the downwards median of the weekly pitchfork holds prices as a support, the downwards potential will be limited short-term, though we keep drifting down, down, down...if it breaks with 1180 as well, berk, we may have a very bad start of 2015.
    Besides, my CDUR indicators on the monthly time unit and 2 week time unit look quite bearish : the last cycle up is ending, and prices didn't bounce at all. Conclusion : the main trend is showing no sign of receding.
    Some support zone down around 1140-1150, but still, this slow motion train wreck seems to see no end yet. Maybe we'll have to wait for the dawn of the 5th year, not 5th day in this version of the movie.
    If Eph is right about this potential war, anyhow, one shouldn't own gold anymore, but rather a nice farm somewhere in the middle of New Zealand. Or maybe you fancy Ushuaïa?

    So I can clutch on hopes like this ratio at 92:1 now (yesterday at 40:1, tomorrow at 120:1?), or on the fact that 1180 is going to hold, but that's a pretty thin hope at the moment on the longer time units, which all seem to confirm the current downtrend.

    ReplyDelete
  28. On the positive side, "globalists" will be hard pressed to change the psyche of 1 billion indians, it seems.
    http://libertyblitzkrieg.com/2013/12/23/the-times-of-india-almost-every-passenger-on-a-flight-from-dubai-to-calicut-was-found-carrying-1kg-of-gold/

    Still, all one can reasonably see now is that we had a strong correction down on the gold market, that we failed on the way up at a 38% Fibonacci retracement level (1440 $ is 38% of 1805-1180), that we formed a "ligne de poussée" on the quarterly candles (middle of the body of the candle at 1415 $), which was a bearish signal, now confirmed with the prices at year end, and that there is not just any bullish signal in this mess, except the hope that the last support area at 1180 will hold, which is not a signal, but a hope indeed.
    I remember that not so long ago in 2008, gold price was back at 750 $!
    Visiting such prices as 900 $ in 2014 would be no big surprise to me.
    I should add that visiting 2000 $ would be no big surprise either, depending on the materialization of any potential black swan.
    The right way imho is to short the paper (as long as the trend tells us to do so, and at appropriate levels, i.e NOT just now at 1190 right on a strong support area...) but keep and stack the precious physical, just like indians do.

    ReplyDelete
  29. "Until a whistleblower speaks, we cannot know for certain, but my conclusion is that the Fed understands that it must protect the dollar from being driven down by QE and that the orchestrated takedowns of gold are part of protecting the dollar’s value, and perhaps also the cutback in QE is a part of the protection by signaling an end of money creation. The Fed also understands that it cannot forever drive down the gold price and that it cannot forever pour liquidity into stock and bond markets. To retreat from this policy without crashing the edifice requires successful orchestrations. Therefore, we are likely to experience more of them in the days to come.

    Allegedly, the US has free capital markets, and globalism is bringing free capital markets to the world. In actual fact, US capital markets are so manipulated--and now by the authorities themselves--that manipulation cannot stop without a crash."
    Paul Craig Roberts

    ReplyDelete
    Replies
    1. Hubert;

      What bothers me about those comments from Roberts is that there is an assumption therein which is unproven. Here is the assumption:

      "that the orchestrated takedowns of gold are part of protecting the dollar's value".

      What orchestrated takedowns? By whom - the hedge funds??? for that is the entities that are currently selling gold. How are they orchestrating this takedown when the same group was the ones responsible for the meteoric rise in the price of gold a couple of years back.

      Roberts is stuck on the same channel talking about stuff that was applicable two years ago but has not recognized that market conditions have changed and that the current climate is one in which the majority of players are not concerned about any inflationary impact from QE or any erosion in the value of the Dollar.

      Can Roberts explain, as part of his view that the gold takedowns are orchestrated, WHY THE OVERALL COMMODITY SECTOR HAD ALSO BEEN MOVING LOWER. Did the Fed orchestrate the takedown in the price of corn/wheat? Did the Fed orchestrate the takedown in crude oil prices/gasoline prices that we were witnessing a while back? How about the takedown in the sugar/coffee?

      So we are to believe, as part of this "orchestrated takedown" that the Fed has agents at work across the entire commodity sector, not to mention the universe of gold mining shares which have been pummeled.

      Also why then is JP Morgan standing for delivery for the bulk of the gold during the December contract delivery process? If they are selling gold to knock it down how can they be buying gold at the same time at the same location? I explained that in the article I posted not all that long ago.

      Also the Dollar is being held up because long term rates are rising here in the US while they are flat in most of the other western industrialized nations. Those nations, Japan, England and to a certain extent the Eurozone are all engaging in their own versions of QE.

      What Roberts said here was TRUE in my view back when gold was soaring higher during the last phase of its bull market and the Dollar was threatening to implode.

      The Fed did have a vested interest in managing the gold price in order to try to keep the dollar from falling too sharply and setting off alarm bells globally. Right now the Dollar is in a range trade no thanks to what gold is or is not doing but rather because investors want to own US stocks and US interest rates are rising making Treasuries attractive to those investors globally who are in search of higher yields.

      The problem I have with this kind of stuff, which makes for great headlines and feeds into the idea that many of have of a government that answers to no one, is that it keeps a false sense of hope alive in those who are exposed to gold who were unable to recognize that a change in the trend had occurred. Instead of selling or at least getting some downside protection, if not getting outright short the metal, it kept the true believers from protecting their wealth. In the process most of them have been saddled with massive losses in their portfolio, not to mention their psychological well being.

      As I have said many times, those who have a long term view of the Dollar and the US fiscal mess, should acquire PHYSICAL GOLD and then just tune out all this sensationalism until the market sentiment turns in favor of gold.

      Traders however should dismiss this sort of thing and not be influenced by it but should approach the market OBJECTIVELY to see what the current sentiment is and then trade accordingly if they wish to not only survive but to prosper.

      Delete
    2. Thanks Dan.
      You are absolutely right, indeed.
      The whole commodity market is down, so the manipulation theory is not enough to explain the general change of mood.
      Thank you for the explanation.

      Delete
  30. consistently the best objective view on the markets, Dan.

    Merry Christmas!

    ReplyDelete
    Replies
    1. boatman;

      Thanks much. Merry Christmas to you as well!

      Dan

      Delete
    2. Hubert and Dan and Others; Roberts, like Greenspan is an economist and as such does not know how to trade markets; Any time you have to ask yourself what the hell he said, you know that they, along with another clown from a time long ago (Kissinger), are confused in their own minds. These guys are hazardous to your health and wealth, as they always have unspoken and hidden agendas.

      Take care and Merry Christmas! sparks

      Delete
    3. Steve

      Kissinger is no clown. He was the architect of the Petro Dollar.
      Where would the mighty USD be today without that agreement?
      America and every Fed Governor since owes Kissinger enormous gratitude for that one.

      Delete
    4. Dean; oftentimes when I use the word "clown", it is to avoid using adjectives like sonofabitch, bastard, p---k, which sometimes can offend those more well-healed than yours truly; sparks

      Delete
  31. I know this is subjective…but….Bernanke basically stated that they would not hesitate to step up purchases if required…that is a put…that is not allowing the market to do what it would normally do…that is manipulation.

    Trillions of dollars are in the hands of gamblers and sociopaths who are operating inside of financial institutions that are guaranteed not to fail.
    No jail time … zero risk.
    As traders, if you were given unlimited backing with no personal risk to play in the markets..what kind of shenanigans would you attempt? what damage could you do?

    Like I say, I'm being very subjective here but I think there is not a single market that is not being gamed somehow.

    ReplyDelete
    Replies
    1. Dean;

      Manipulation of a market is one thing - setting and engaging in policies that you know will influence investor decisions is another. do not confuse the two.

      I think we can all here agree that the Fed is interested in creating a rising stock market with the hope that it will influence sentiment and confidence and that economic performance will then follow that. In effect, they have created a mechanism in which the tail wags the dog. That is a new method of influencing sentiment.

      That is however, far different from an active intervention in the actual market in which real positions of enormous size are being put on by the authorities so as to deliberately move that market and thus impact the actual price.

      In that sense I would then have to say you are painting with too broad of a brush. Let me ask you a question... when you say that there is "not a single market that is not being gamed somehow", are you including the corn or wheat markets? what about the cattle market? Hogs? How about coffee or sugar? Natural gas?

      See where I am going with this? I would counsel that you be careful about sweeping generalizations. Let's agree that the Fed wants the equity markets higher and let's agree that by its very nature QE (bond buying) is a policy in which the Fed actually does intervene into a market and distort its price by taking actual positions ( holding and buying treasuries and MBS debt) but that does not mean that the Fed is active in the gold market at this stage or any other market.

      The bond market is therefore one subject to "manipulation" by the Fed to deliberately impact price and drive down long term interest rates.

      The Fed however, in my view, is not currently engaged in the stock market even though they we can agree that there does exist a Plunge Protection Team. They do not need to take actual positions in the futures market because investors are buying stocks based on FED policy.

      That is something that is not manipulation of a market in the strict sense. ( I am referring to equities).

      Delete
  32. Hi Dan

    True, I was using a paint roller (bigger than a brush).
    I suppose the algorithms play a role in some of the market actions that do not seem right.
    I think the over reaction to the upside in equities on the taper news raised a few eyebrows..just didn't make sense. The Dow has not stopped climbing since the announcement, is the economy really that good?
    I use two different brokers and the firms they work for are not recommending buying right now.

    I'll take off my tin foil hat for the Holidays ! :)

    Merry Xmas Dan

    ReplyDelete
  33. Hello,

    One chart to make something quite clear about my current position.
    I took the luxury to be short gold recently because I shorted from 1220 $ level, so I could afford to wait and see if 1190 would hold.
    A very important thing I must mention is that my stop loss is now positioned already so that I suffer absolutely NO LOSS should prices bounce back up.
    It is very important, because as long as 1180 is not broken, there are also hints showing that the short-term pressure may diminish.

    First, on the weekly time scale, we met the long term upwards support you can see represented with 2 thin lines (they've been here on my chart since Mathusalem). As they also cross the last june bottom and the red median of pitchfork simultaneously, as explained earlier, it reinforces this area as a support for the time being. Also, the Stochastic on this time unit reached some lows which usually coincide with a bounce on prices.

    But then, a potential bounce should be noticed on the daily time scale. Well, after a few candles above 1180, it starts to be that way :
    Daily time scale is indeed showing a bullish divergence on the prices vs MACD 9 20 7.
    So indeed, we may see a bounce soon, propelling gold once more towards and above 1225 $, a critical support area to be kept imho (on my charts) because of Fibonacci levels I'm following.
    I am very cautious at this moment, as long as 1180-1190 confirm their role as a support.
    Maybe we'll see another wave of short covering.
    Can't be too cautious, best to protect my capital.
    So, given those elements, once again, I'm not crazy short now, my stop loss allows me already to be safely out of trouble should gold reach 1210 $.
    The above mentioned hints triggered my alarm bell, and I prefer to wait for a confirmation that 1180 area is going to be broken.

    http://i44.tinypic.com/2yvw7pj.jpg

    ReplyDelete
  34. Out of my short position with a very small gain.
    Totally flat now.
    Long-term time units might contain the short-term downt trend.
    That's what I see on the chart.

    http://i44.tinypic.com/2yvw7pj.jpg

    I think that gold is now at a quite important crossroad.
    It it can't keep the 1200 $ area, it will probably drown further towards next fibo level (on my chart the 50% is at 1045, which would be my target, but I took liberty with the top of the move, I chose it to be 1805 and not 1920).

    But if it can hold and bounce above this 1200 $ area, then there is also a serious possibility that the bleeding is over, and that gold will remain in its long term bullish trend, as long as this upwards support from 2007 (on monthly candles) holds.

    Definitely not a level where I'd risk a short (or only on the very short term, just under the ma20 / ema15 daily as I did last time, but this time I prefer to wait, given the bounce).

    Especially not when :
    - the red median is still holding prices
    - bullish divergences appear on the MACD

    ReplyDelete
  35. Sorry for the X consecutive posts.

    I summarize even more, because I think I have a case study for a trading decision now on gold, and I'll try to explain what I'm doing (so that hopefully Dan can correct me if I'm wrong, hey it's christmas :) :))

    Weekly time unit : we are reaching a support zone. It is the area of a double bottom, besides crossing the median of the red pitchfork heading down. Also the stochastic is bouncing from a low level usually witnessing bounces.

    Monthly time unit : the support is confirmed! A long-term uptrend support is coming, joining the lows at 3 occasions since 2007.

    Daily time unit : the bounce and support zone are being confirmed by a divergence on the MACD 9 20 7.

    Conclusion : heck, this is a real nice opportunity to try a LONG trade. So why am I not doing it just yet? Because of the volumes. On daily time units, I see large volumes when we dropped on 19th december from 1220.
    Since then, we are bouncing in low volumes and still are capped by this resistance at 1220 $. I am waiting for a CONFIRMATION on the volumes, or at least that 1220 (ema 15 daily area) will be broken at the close before I try to go long.



    ReplyDelete
  36. Dan,
    The persistent dollar weakness and a ten year at over 3% are they saying something is changing in regards to commodities?

    ReplyDelete
    Replies
    1. Concord;

      Yes, I have been watching that as well. It is almost like the RISK TRADE is coming back on into the commodity sector with both the safe haven currencies, namely the Dollar and the Yen, seeing weakness.

      The problem I am having reading it is the volumes are so low and the end of the year stuff that is occurring is clouding everything. I cannot tell whether it is just the usual end of the year book squaring and thus part of the Silly Season or if it is the start of a new trend for the next year that is shaping up.

      I hate to take positions during any of this end of the year book squaring business and those can bite you but with these markets run more and more by unthinking computers, the price action, regardless of when it comes, moves those machines and thus the technical chart patterns are impacted, which then feeds back into moving the machines even more.

      I would trade small if you do anything and then wait for the New Year to see if you can add to that or need to get out.

      Delete
    2. Concord and Dan; Yes, it is spooky year end and so forth, but if there are gaps, I would pay a lot of attention to them. The classic was this year jan 2 the s&p gapped up from 1420 and never looked back; also, currencies have made important tops and bottoms before around the new year and I would respect them if they gap; same thing for int rates and pm's. I do not care if nothing makes sense; only the price makes sense; take care and have a good wknd! sparks

      Delete

Note: Only a member of this blog may post a comment.