"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


Tuesday, December 3, 2013

What's Up with the VIX?

One of my favorite Sentiment Indicators has been and continues to be the Volatility Index or VIX. I prefer to call it the Complacency Index. Low readings, such as we have been recording for some time now, indicate the absence of investor fear or concern. High readings reflect worry or uneasiness. Sky high readings indicate PANIC.

I am not sure what is going on but the VIX has scored a five week high today for some reason. I tend to watch this indicator in conjunction with the action in the equities as a way to gauge any potential shift in overall confidence.

In my view, the only thing that can bring a firm bid into gold and reverse the current bear market in the metal is a heightening of fear/unrest/unease or better, a growing lack of confidence.

Yesterday we had a move higher in the Dollar. Today that has been erased. With the Dollar weakening gold is getting a bit of a bid today. Also aiding the metal is the sharp, and I do mean 'sharp' rise in crude oil. It touched $96 ( basis WTI ) in today's trade and is currently up over $2.00 barrel as I type these comments.

Let's continue to monitor the progress of the VIX and especially monitor the price action in the S&P 500. Upside momentum continues to wane in the latter market but then again it has been for some time now. I keep picking up one negative divergence after another but the market keeps shrugging those off with dip buyers continuing to come in. If the stock market does finally actually respond to one of these negative chart signals, I expect the VIX to jump even more. At that point we will watch gold closely to see if it can gather some better buying interest.

Stay tuned...


  1. Dan, in last 3 mos we have broken $15 in crude and now are entitled to $5-$10 pop to upside and another chance to re-sell; let them throw some MENA bullshit fundamentals at a hugely over-supplied mkt in a world-wide contained depression; that is all from snowy sparks, nv

  2. Personally I tried a small short once again today at 1800 on the SP today, my cdurs being negative on both daily and weekly time units, plus double divergence down on MACD. If we manage to break through ma20 at 1790, I'll target 1765 mlh inf of upwards daily pitchfork, then 1730 support of weekly time unit rising wedge, then...1600+ support on a monthly time scale.
    Too tired to post chart, will try tomorrow, 23h00 here already.
    Have a nice day all

    1. Hubert; I think we all know that a huge move is coming in stks to the downside; just do not frustrate yourself top-picking the sonofabitch; sparks

  3. and so much for the metals rallying off a weak $; sparks

  4. HUI. So the HUI continued to sink today & I decided to look back to the end of the last bear market. Just eyeballing it, it looks like the HUIs lowest monthly close was in Oct 2000, 38.63. Gold was about $264 then, so a HUI:GOLD ratio of .146. Essentially the HUI:GOLD ratio decreased until the HUI bottomed (HUI proceeded to rise even as gold skittered along the bottom). So the HUI to gold ratio is still about 8% too high, if the end of the last bear is any indication. Hope we see it soon + can get on with it.

  5. Some bid. Dollar down and gdx being driven to Hades. ABX being formally run by GS. Just like the USfed and Treasury. But there's no conspiracy...

    Why anyone would ever own a miner is beyond me... The large ones are run by globalists. Who do you think is taking their production? There is enough gold to dump until 850.

    All the talk about production costs being equal to market price is silly. Before the miners got complacent with a high price they were efficiently producing for 500 to 700.

    1. Have you looked at effect of increased costs on production cost? Gut feel is that energy is way up vs that older costing. Need to analyze this and grade of deposits mined and etc.


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