“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



Monday, March 24, 2014

Gold loses nearly 2%

Last Friday's COT report showed a fairly large build in new longs among the hedge fund community. Unfortunately for them, those new longs BOUGHT HIGH and ended up SELLING LOW; not a particular good way to impress their clients.

Nearly all of those new longs were immediately under water as soon as the FOMC issued its statement last week. That and the fact that WWIII did not break out, as many of the perma gold bugs were predicting, was enough to turn the momentum back and that did it for the momentum-based funds. They are now selling.

In looking at the Daily Chart, it has now turned negative once again with the loss of downside support near $1320. Gold has currently encountered a bit of buying support at the 38.2% Fibonacci retracement level from the $1180 low to the recent high shy of $1400. Failure to hold here, and a test of PSYCHOLOGICAL support ( there is nothing as far as Technical chart support about this level ) at the $1300 will be shortly in order.

If that is not enough to bring in dip buyers, then the next logical chart level that I can see is closer to $1287.

The ADX turned down last week suggesting a halt in the recent uptrend. That has certainly been confirmed with the crossover by the Directional Movement Lines. The Bears have now seized control of the market once again. We will have to see whether or not the Bulls can seize it back again but they are going to have to resurface very, very soon and at a bare minimum recapture $1340 - $1345 to run out some of the new shorts.



If you notice, the short-term uptrend line has also been broken.

Silver is actually holding up better than gold today as it thus far seems reluctant to move below $20 for any length of time. It might be drawing some stability from the fairly steady copper market.

Mining shares are of no help whatsoever to the entire metals complex at this point. There is a zone of congestion on the HUI chart between 210 - 220. That index looks like it is headed there. So far the miners are down nearly 4% today.

By the way, bonds are getting some money flows into them today. Interest rates have dropped a wee bit on the Ten Year to 2.737 as I type these comments.

No much else to say except the week has started off poorly for gold bulls. Maybe it will end better.

13 comments:

  1. Hello!

    Hope that buyers will come in to the market soon, tired of waiting!!

    ReplyDelete
    Replies
    1. Yvonne; your patience will be tested, as I can see no reason to get friendly the pm's in here as we head into tax season and summer weakness. Attention now goes to grains and beans and possibly energy; sparks

      Delete
  2. This comment has been removed by the author.

    ReplyDelete
  3. Alex, yes its a correction and also worries about Yellens tapertalk and the problems in Krim!!

    ReplyDelete
  4. This comment has been removed by the author.

    ReplyDelete
  5. Thanks Dan. I should have mentioned last Monday (17th) that my wife woke saying that she thought it was going to be a good week for gold and the miners. I should have seen it coming. I'll let you know when she's ready to capitulate, which should be a good time to close out your shorts & go long. She's been able to ring the bell for the gold tops since Sept 2011 (In all fairness, she has perfect pitch for real estate).

    At least we can still afford a good ribeye.

    ReplyDelete
    Replies
    1. $12 lb. for choice rib-eyes here in sparks; swb

      Delete
  6. we got triple hit … war sell on the news last monday , FOMC meeting last wednesday , and now options expiry this wednesday , I am still hopeful for whatever is with … if you are going to buy for a trade its here not at the top , today and tomorrow could be it … i think 38% fibo is important , but shorts may take it below 1300 …. in the mean time Tymoshenko out there saying she is going to nuke the russians … that won't help the USD , since her major ally is the US … that and 4 other trillion reasons

    ReplyDelete
    Replies
    1. Anon...thanks for the expiration reminder....gold has been smashed on every one. True to form once again.

      Delete
    2. yes , this could very well be a bear trap though … if you are buying and the market is over extended , what a better way than to smack it down to keep on buying it . The exact inverse of what we saw last year … the guys with the big guns making money both ways . The question is … which way now … important cross road ahead . I am of the opinion that the Ukraine is not going away , in fact , it could very well become another pillar in the fundamentals behind gold … I some how don't expect Tymoshenko and Putin go have a Picnic with king Barak Hussein any time soon … Its been 25 years there is no conflict in Europe . Someone opened Pandora's box with the Ukraine . How gold reacts to it is anyone guess , I would say it deserves a premium . We shall see , other ways we run for the door , just as we have become accustomed !

      Delete
  7. Thanks Dan - note that the 200-day MA is at $1300, so that should count as technical not just psychological support.

    ReplyDelete
  8. Biotech soon to be Superstar MNKD (Mannkind) holding its own today in the continued biotech slaughter. Get on board before Apr 1. There is still time.

    ReplyDelete
  9. Hey Dan, this is Dave from Australia. I have listened to you on KWN for a couple of years now and you have been rarely wrong in all your calls despite going against the main mentality of people on sites like KWN, I am very impressed... I'm not sure if you have covered Palladium much but I think there is a great trade opportunity right now if it breaks $800 it should reach $1000 and beyond in no time especially since Russia (possible disruption of supplies due to responses to sanctions) and South Africa (no outcome to strikes) account for over 80% of worlds Palladium supply. I know if there is a resolution to one or both of these then the price could come down but with a stop loss below support at around $750, the odds would be in the bulls favour IMO. The new ETFs coming online could further crimp supply. Once again love your work Dan!

    ReplyDelete

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