“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


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Monday, April 21, 2014

Gold Holds $1280 support; Remains Rangebound

Not much going on in gold today - it ran down to test the bottom of its trading range near $1280 and bounced off of that. Strength in the Dollar and a general sea of red across much of the commodity complex, undercut any reason to get aggressive buying it but enough interest was stirred down near that critical support level to prevent a sharper drop.

Gold shares were of no help for most of the day with the HUI exhibiting general weakness but towards the end of the session many of the share components of that index managed off their worst levels of the session. Gold over at the Comex seemed to come up alongside some of those shares.

I noticed that GG moved higher, gaining over 2% as I type these comments as management has effectively given up on their efforts to acquire Osisko. The market liked that in regards to GG but understood the implications for Osisko with that stock dropping 5.8% as I type this. That effectively clears the way for Yamana and Agnico-Eagle to pick it up. Both of those stocks were hammered lower. Obviously the market thinks they are going to end up paying too much for it given the weak gold price and its rather dubious prospects at this stage.

It will be up to the Asians to prop this thing up tonight here in the West ( in the morning over there in the East ). If they pull back for any reason, gold is in trouble. We'll watch the overnight trade and hopefully be able to see some clues as to their intentions.



The late comeback enabled the HUI to dodge the proverbial bullet today as it was flirting with a key technical chart support level near its session low. The bottom is holding as a result; however, any further strength in the US Dollar will probably see that fail. The currency markets, along with the US interest rate market, are the key drivers for gold right now.

Corn moved lower today, along with wheat which was derailed by talk of rainfall in the parched regions where it is badly needed. Beans were also pressured today although the bulls did their usual ramp job on the close as they came in and bought a bunch of them back. There was also a round of short covering as frustrated bears waiting for the funds to finally get out of these things got impatient and said, "the hell with it" and closed out some trades. Some large specs are convinced that the US is going to run out of beans before we get any of the early harvest from this year's crop coming in and that is why they keep coming back and buying the beans. When this theory/sentiment shifts, we will know it.

This afternoon we got the plantings progress number from the pencil pushers. Corn came in at 6% planted compared to last year's 4% at this time and the 5 year average of 14%. I would remind you that these numbers are not nearly as important as they once were given the significant advancements in the speed at which US farmers can get those seeds in the ground nowadays but old habits seem to die hard in the grain markets and there are some who still view these numbers as if they mean anything this time of the year. They still have enough clout as far as their buying and selling goes that one has to react to this goofiness but it is what it is and traders have to understand that and position accordingly. Both corn and soybeans have built up a nice demand base as prices retreated from all time highs last season. The question is, especially for beans, will that demand base remain intact given the potential for a large bean crop up here in the Northern Hemisphere this growing season. Along that line, any more credit related issues concerning the Chinese and soybean purchases is going to be ONE VERY BIG DEAL.

Cold Storage will be coming out this week so we livestock traders will be watching for that. I enjoy getting the emails and comments from some concerning the sky-high prices that they are seeing for both pork and beef in their local grocery stores. The drama is playing out as expected. What I can tell you is that I am very confident that we will see prices move lower this fall for both but this spring/summer is going to be one which is not going to be a lot of fun for those of us that enjoy bar-b-q. Sadly, this is what happens when we get back to back drought years  in cattle country ( 2011 + 2012) along with record high prices for corn and meal ( some blame goes to that pestilential ethanol crap). One simply cannot do a single thing to change the breeding cycle of bovine bovinus ( that is my pitiful attempt to throw some fancy Latin phrases around to impress the reader ) as it takes time to rebuild a cattle herd.

I hope the readers had an enjoyable Easter weekend. It is back to the sawmill now.



39 comments:

  1. Silver is looking to break either $5 to the upside or downside quickly within a few months. Take a look at a 5 year chart (Horizontal line at $18.65 intersects with Trendline from late April 2011 top). My guess we move down in a hurry. Good Luck

    ReplyDelete
    Replies
    1. Bob, lets hope you are right on this one. I will keep my fingers crossed and my powder dry!

      Delete
  2. As always, thanks Dan.

    I found it interesting that Reuters is reporting that China will directly import gold through Beijing instead of Hong Kong to avoid the public reporting of their gold buying activity.
    Kind of like cutting out the middle-man.

    I can't help but entertain the idea that it could also serve the purpose of hiding any short term exporting of gold by China (via HK) that might appear as them be sellers of some gold as they try to tackle their rickety shadow banking system and the burgeoning loan default domino chain reaction in progress.

    It's not hard to imagine a point in time where some liquidation of gold in China occurs as they start to set-up GLD-like ETF's and a highly leveraged (and profitable) paper/phyz scheme like the West has been running for a very long time.

    China deciding to curtail it's reportable gold imports/exports means something.

    ReplyDelete
    Replies
    1. Interesting point indeed.
      Gold is a small market.
      Short-term, any "big" event can move prices 200 $ one way or another in a matter of days.
      Eventually we will get out of this range, and it will probably start a violent move. Right now it seems we are in the eye of the hurricane.
      Every side is having rest...

      Delete
    2. I read the Reuters piece about as far as "China does not release any trade data on gold" before I stopped.

      This fellow linked below (Koos Jansen) has done a tremendous job of analyzing China's published trade data on gold.

      http://www.ingoldwetrust.ch/

      Delete
  3. I'm thinking in terms of the next 5-10 years. The bubble has burst. The goldbug industry will need to propagandize a whole new generation of suckers. I think Dan's range of 1200-1400 is pretty good for the forseeable future. I'd say 1100-1500, just because I naturally want some wiggle room.

    Furthermore, I think silver's days are done. More and more to trade like an industrial metal. Less and less with any sort of added monetary fanaticism. "Silver is the New Copper" is my favorite saying. In a five year window, lets take 1250 gold, and put a gold-silver ratio of 80 on it.

    There you go. Silver with a 15 handle. We'll see it. While gold waffles and whipsaws around going nowhere in a trendless market.

    I don't expect anyone to be happy with such a forecast. I'M not even happy with it. I still have physical I'd like to unload...

    ReplyDelete
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    1. I'm carefully watching the 19 $ level on silver, not merely because it became a horizontal support for the double bottom, but because of this is the 77% fibonacci retracement level of the previous move up (9-50 $).
      Historically, we had such a retracement before, and silver chose that level to bounce and explode towards 50 $.
      So it would be twice a bad sign if silver was not able to maintain this key level on a weekly candle imho.
      Still, as long as copper doesn't break its own support area near 3$, hope remains for the bulls.

      Delete
    2. Good to see you back in fine form Eric . . . . you always provided rational level headed comments and analysis of the PMS and miners. Thanks for your contribution here today.

      Delete
    3. Thanks, Andyrama.
      With all due modesty, the only good call I ever made on miners was to sell all of them in Nov. 2012. But...sometimes...one good call is all you need. :)

      They are still down about 50% as a group from where I dumped them. And I don't expect any serious recovery anytime soon, if ever.

      Delete
    4. One can "bottom fish" and just reflexively buy whatever has been creamed. Mean Reversion, yada, yada, yada. But only if you think there is actual fundamental value there somewhere.

      I no longer believe any fundamental value exists in the PM mining industry. Miners are all structured to eventually go to zero. Are you smart enough to determine which lottery tickets will hit?

      I'm not. I used to think I was. But I'm not. Nobody is.

      Bottom fish in something like Proctor & Gamble if you like. There is a company that is not going away. But not in miners. Zero is always a possibility with miners. More than a possibility. A dead certainty, sooner or later. 20 years from now, or 20 days. It's always a crapshoot.

      Delete
  4. I see it like this. Gold is range bound in the short term, and the dollar can be manipulated in the short term. The long term is the heavy lifting and as more and more direct trade for Yuans, Rubbles, Oil, and as long as the Saudi Kingdom seems to be shifting towards others, the weight will break the back of the Treasury and the dollar. The powers that be are going to have to come up with another plan for the worldwide currency. Trouble in paradise for Lew. I really think that if it gets too worrisome the "circus" on a new war will have to have the big tent and blasted around the world on various news channel to show what the dollar is backed by. The American people have spoken several times lately. NO WAR. Given that outlook, a large false flag has to be flown.

    ReplyDelete
  5. "General Jim" at jsmineset has Dan Duval posting 25+ articles a week on the unfortunate circumstances in Ukraine, Europe, etc.

    But in reality none of that matters.

    Gold is in a bear market right now, so any good news or bad news has a negative affect on price.

    Seems like General Jim could have avoided the chore of posting literally thousands of news tidbits since 2011 and just posted a gold chart with lower lows and lower highs.

    And he could have avoided having to replace hundreds of burned fax machines overheated from angry CIGA's who did not receive responses to "Dear Jim" messages.

    Oh well, live and learn. Maybe he should have featured interesting news articles on Netflix, Allergan, Men's Wearhouse, and Buffalo Wild Wings instead.......

    ReplyDelete
  6. Here comes the next housing bubble in full force guys.

    https://charlesedward.co/stated-landing-page/?utm_source=Yahoo&utm_medium=Ad%20Stream&utm_content=MB&utm_campaign=Premier%20Stated

    .

    ReplyDelete
  7. Stopped out of the CORN ETF trade on this mornings opening sales spike. Half at a nice profit. Half just over break even.
    Nice little profit overall and no sleepless nights. A good thing. Just need to so it a few hundred more times.

    ReplyDelete
  8. Goldman upgrades precious metals miners, Barrick Gold upped to Buy

    ReplyDelete
    Replies
    1. Well it does seem to be hitting the lower end of its channel. That said ????? Got real reservations about them and the other miners. Way too much G and A expense to exec salaries.

      Delete
    2. That is right, Mike. If you gonna invest in gold, then invest in gold and not in some hole in the ground in which you throw your money and it magically comes to the execs' packets.

      Delete
  9. Gold continuing to get pounded while stocks roar ahead on ultra strong economic news rolling out every day.

    Man the gloom and doomers must be pulling their hair out. Marc Faber's pony tail is probably on fire right now, watching the Dow soar and his 1987 repeat call looking rather foolish.

    And don't even get me started on the KWN boys, come hell or high water those guys are going to be chanting the same thing over and over again, even if the Dow reaches 18,000 and gold goes back to $900.

    Stay in the System!!!

    ReplyDelete
    Replies
    1. Mark, I suspect it doesn't get mentioned often, as I've seen comments directed towards you balanced more towards the negative side, but just so you know, those of us who "get" the situation and see the gold/silver community for what it is, have been getting good laughs from your posts behind closed doors. And I mean LOL. Those who have been involved in religious cults in the past, saw through it, broke free, and lived to tell the tale are the ones nodding and chuckling the most as the all-too-familiar (cult) behavior patterns surface one after another from the hucksters and disgruntled minions. When it comes to your commentary, we "get" the humour.

      The really clever out there are probably patiently biding their time, waiting for complete decimation and capitulation of the metals, not being fooled by the false hope/headfake countertrend rallies and the desperate sensationalism that accompanies them, before swooping in to pick up the bargains near the final lasting bottom, even if it takes years of gnashing of teeth and whipsaw activity like we're seeing now, to get there.

      Thanks for the laughs, Mark!

      Delete
  10. 3 Stooges @ their best today over in the kwn sewer; sparks

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    1. This comment has been removed by the author.

      Delete
  11. Hey steve, I'm ready to bail on that tin foil hat Q & A session, what about you?

    You won't find me stupid enough to swallow entire gold bars which are declining in value every single day and risk confiscation as I cross the border. I mean how dumb was that?

    I say you and me should go to Ukraine instead and seek out some nice looking women over there and enjoy some fine whiskey!!!

    ReplyDelete
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    1. Mark, I do understand that Ukrainian women are quite pretty; not much volume down here in gold for the last 20 mins, so I would think 80 does not hold as we get deeper into the day; sparks

      Delete
  12. Yeah, Richard Russell. "The dollar will crash in a matter of months".

    Ok, whatever, dude. Poster child for Alzheimers.

    ReplyDelete
    Replies
    1. wears a bib at the table, like my grandkids; sparks

      Delete
    2. he probably wears diapers too

      Delete
    3. Eric;Steve;Abraxas;

      Please refrain from any further personal attacks on Russell. I don't care if you want to take him to task for his faulty predictions and horrific track record of late, but let's not turn this blog into a place where it can be said that we attack people over their age or anything along that line.

      Look, he has been horribly wrong like so many of the rest of the perma gold bulls but we do not need to insult his character.

      If I feel the attacks are continuing, I will have no choice but to have those posts deleted. Again, you can go after those who stick their necks out there and make off the wall predictions that fail totally but leave off the attacks on his age.

      Thanks for heeding this.

      Dan

      Delete
  13. There really is no need or reason for ad hominem attacks plenty of material to hang em out to dry for failing to observe were in a bear market for not one not two but three years in a row.

    ReplyDelete
    Replies
    1. Jasper;

      Thank you for seconding that. I appreciate it.
      Dan

      Delete
    2. Which simply means that all the facts supporting a bullish position on gold dont mean a thing until the market changes from bearish to bullish. So repeating them day after day is useless. I dont question anyones intentions. Just sad to see some drawing conclusions from those facts which have no relation to current market action.

      Delete
  14. Good point, Dan, and well taken. I could have left off the alzheimers thing, and the point would have been the same. Just got a little over excited I guess.

    How about Egon and his $26,000 gold? Just shows age has nothing to do with it.

    ReplyDelete
    Replies
    1. Eric;

      Thanks very much for that...

      You know what is sad - is that some of these guys have the least shred of credibility left when it comes to gold. Maybe at some point we will see gold at those sort of price levels, but who the heck knows when that might happen or if it will ever happen? The truth is no one knows because no one knows the future. What we do know is what we have on the price charts NOW and that is what we should deal with and leave the prognostications alone. Some of those guys just cannot seem to stop. It is almost like some sort of addiction. Very tragic. Even more tragic is that so many continue to listen to them and invest or trade accordingly. They are being ruined financially in the process. I just hope we can get some of them to wake up and understand that for all the hype and hysteria involving gold, it is not going to obey the wishes of some of these men but will do what it wants to do in its own time. Hopefully we are wise enough to be able to interpret that properly. Reading markets is always a challenge and they can trip up the most experienced of traders. That is why humility is more fitting than the continual wild predictions. It reeks of hubris and self-aggrandizement which benefits no one.

      Good trading/investing to you.
      Dan

      Delete
    2. I find some of these comments quite pathetic , to be honest . Dan , I don't understand , how come you don't have and application in the blog by which one is able , at his choosing , simply to leave out bloggers at one's choice . For example , if Hubert , thinks that my comments are not worth his while , he just deletes me from his view , nobody will know , so nobody gets offended , and he doesnt have to keep up with my daily non sense . If at some point he feels that by some miracle I am giving some proper value by what he reads from others who may be referring to my comments , even though he doesnt see them , he could switch me back on . Don't you think this is reasonable ? The last thing I want is for anybody to get offended , when I was a child I learned that business should not be taken personal , hence my point . Best as always .

      Delete
    3. i have a better idea... just don't read the comments. how hard is it to ignore the bloggers that you do not like? isn't it enough that Dan provides his expertise for free? perhaps you would be better off finding another free site that has a philosophy that you more agree with, and perhaps is extra heavy on "group think". when i was an adult, i learned that people generally don't agree on many things, but yet can get along just fine. the exception are people in various cults.

      it takes little effort to find common ground, so why do the extra work to build fences? or ask Dan to pay for a feature he does not need.

      all IMHO, and feel free to disagree.

      Delete
  15. Eric The Red:

    He was better off saying $260.00 .. more chance of becoming a hero later.

    ReplyDelete
  16. While the upwards pitchforks have recently been broken, leaving only the horizontal support of the range at 1280 for bulls to hope another bounce (but the more a support is attacked, the weaker it becomes, and this is the third time already...), the nasty bearish pitchfork one can trace on the daily time unit is alive and kicking.
    No possibility to post a chart now, but I'll do it within 2 hours.
    Anyway, for the bulls still long out there, it might be time to stay out of the way...the daily ma20 is going down, upwards supports are being broken, horizontal supports are being tested again...doesn't sound very good.

    ReplyDelete
  17. The comment about the three stooges at KWN today is just too funny.

    Russell as Curly, Turk as Moe, Greyerz as Larry. I can't stop laughing, sorry.

    ReplyDelete
  18. 1.45 Eastern time
    Gold Price sharply down ( has not yet broken 1279 support) but ^HUI is up nicely- a ( bullish ? ) non-confirmaiton for Gold stocks ? Time to step into GDX and GDXJ again ? Need to wait for the close. SA in Gold and HL in Silver are showing nice strength and I am gradually acculmulating.

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