The WGC just laid a heavy weight on the gold market this evening as their report detailing Chinese demand for the metal ( or more properly - its lack thereof ) is getting more circulation.
The reason? They expect demand from China to remain flat in 2014. That is a far cry from what has been the norm since 2002, from whence gold demand has increased every year since.
The report mentions what most of us who follow the gold market closely already knew - namely that Chinese gold demand in 2013 vaulted a remarkable 32%. Of course, that was the result of the very low price to which gold had fallen from its lofty perch up above $1900. China loves a bargain and gold was at bargain prices last year.
Dow Jones cites the managing director for the Far East at the World Gold Council as saying that they expect gold demand for 2014 to be 'on par with 2013'.
Gold began to drop sharply as the report circulated. My own thinking is that were it not for the current escalation in Ukraine tensions, it would have suffered much harder.
If WGC report is indeed accurate, and apparently many are thinking at this hour that it is, gold is going to face yet one more additional headwind. Remember, it has been this strong physical offtake from Asia, especially China, that has tended to bottom gold prices in the past especially in the face of reduced Western investment interest in the metal. If that Chinese buying fades, and if interest rates here in the US begin to perk up, gold could be in trouble.
It is too early to say yet, but bulls had better not blink or they are going to be playing defense. Funds, while still net longs in this market, are beginning to add to their short positions.
Trader Dan,
ReplyDeleteI haven't heard you say much in the way of silver in quite some time. With a third knock on the 1180.00 bottom in gold looking more and more likely going into this summer. Shouldn't silver be testing the all important 16.00 support and if that fails isn't a retest of 12.00 more than likely? Especially if gold breaks down and tests the 1000.00 level. I really hope you have time to go into detail on your thinking. I know this may be wishful thinking at the moment but it isn't completely out of the cards. What say you sir?
john taylor;
Deletewill try to get something up about silver later.... I still maintain its fortunes are tied somewhat to copper but more especially, to the inflation story. No PERCEIVED inflation means no silver bull, for now.
The Dollar will have an impact on the metal in that regards.
Dan,
ReplyDeleteAnother way of looking at the WGC report is that if Chinese gold demand remains flat - no increase or decrease from last year - then the Chinese will still be providing significant support to the market through their physical purchases.
The WGC does not say that chinese gold demand will revert to 2012 levels. Also, consider the supply side of the world gold market. Gold supply is unlikely to increase from mine expansion in this low gold and copper price environment. Scrap surely can't keep expanding at these low prices either.
IMO it is possible we see price spike(s) due to mine closures in the coming year if price remains low, or falls further.
Andyrama;
DeleteChinese demand has been making up for the loss of Western investment demand to a large extent but NOT COMPLETELY. Therefore any lack of INCREASED BUYING cannot be considered friendly to the market especially if interest rates rise here in the US. Lots of "ifs" but that is the nature of trading.
Funny how things come together for the Bears. Now the WGC nr about China going flat in 2014, they say consolidating but 20% up going forward ? Why would that be negative ? This just after GS prediction of 1050$ for 2014 ? This from an excerpt
ReplyDelete"Jewellery forms the bedrock of gold demand in China. In 2013 at 669t it accounted for close to 60% of all private sector gold demand. Its growth has been supported by rising incomes, the newly emerging middle class and the process of urbanisation. Looking forward, there are threats to gold jewellery demand but we expect it to continue to grow and reach at least 780t by 2017.Jewellery forms the bedrock of gold demand in China. In 2013 at 669t it accounted for close to 60% of all private sector gold demand. Its growth has been supported by rising incomes, the newly emerging middle class and the process of urbanisation. Looking forward, there are threats to gold jewellery demand but we expect it to continue to grow and reach at least 780t by 2017." http://www.gold.org/sites/default/files/China%20gold%20market%20%20progress%20and%20prospects.pdf And this executive summary, Hardly looks pessimistic to me.
Key conclusions
Chinese gold demand in 2013 was exceptional. Jewellery
buyers and investors in bullion products took full advantage
of the rapid and sizeable fall in local gold prices.2 They set the
bar at a very high level – private sector demand for jewellery,
investment and gold used in industrial applications hit a record
1,132 tonnes (t).3
We expect 2014 to be a year of consolidation. The sudden
price drop in 2013 meant some Chinese consumers brought
forward jewellery and bar purchases, which may limit growth
in demand in 2014. Expansion by the trade is also expected to
slow, particularly in terms of additional manufacturing capacity.
However, the lower domestic gold price should support
purchases by consumers, especially of 24 carat jewellery.
Over the medium term physical gold demand is likely to see
further growth driven by a number of factors, including:
• Rising real incomes will create many more potential
consumers with greater spending power, particularly in the
so-called third and fourth tier cities.4 Between now and 2020
Ernst & Young5 estimate that the number of middle class
households will grow from 300 to 500 million.
• The pool of private savings is vast with further scope for
consumers to increase their exposure to gold. Chinese
households collectively hold an estimated US$7.5tn6 in bank
accounts, while households overall allocation to gold – around
US$300bn7 – is tiny by comparison. In addition, domestic gold
prices will most probably remain at attractive and affordable
levels during the next few years.
• The traditional appeal of gold to the Chinese people and
consumers’ optimistic outlook for prices (Chart 2) should
result in private sector demand from all sources climbing
to at least 1,350t by 2017.8
Angelo;
DeleteA bull market has to be fed every day if it is to continue meaning a market needs bullish news to move higher. The news is not bullish; it might not be bearish but it is certainly not the former. Keep in mind that markets are never "logical". SEntiment is fickle and easily changes.
Angelo,
DeleteGoddess dan is telling you that the WGC told you bearish, so sell now as fast is possible : do not read what is inside : that is bearish : period. Why : because it is falling !
@ Roger, Trader Dan is not a Goddess! He is not female....But Angelo....well not sure what to say there....
DeleteThanks for the fundamental view on these things, which I miss most of the time.
ReplyDeleteTechnically on my chart, the 2-day candlechart showed horizontal bollinger (range) and horizontal ma20 which was once a support now and acts now as resistance near 1325.
The next fibonacci level of the main range 1180-1430 was 1337 and prices couldn't even reach and test it. I put a sell order of next 1/3 there yesterday because the daily upper Bollinger Band is heading down quickly towards prices at 1350 and that usually means that prices can't get through it and reverse its trend at the first attempt (too strong decline), but prices didn't even get there.
Now I'm raising my stop loss thanks to the mlh inf of upwards pitchforks on the daily and 2-day time units.
The mlh inf on the daily is at 1300, so we are in the process of bouncing on it right now...if 1280 is unable to produce a better bounce than this, it's not very positive for long positions.
Copper didn't get past 3.10 either, still capped withing its descending triangle, with a downwards resistance now around 3.20 level and this same horizontal support area in the 2.90s.
If gold doesn't go up, it will definitely go down... or sideways, and then either up or down.
ReplyDeleteIf it holds $1280, maybe it'll go to $1290, and then to $1300... If it doesn't hold $1280 it may fall all the way to $1250, but if it holds $1260 it might go up...
there's also 40% chance of rain.
Abraxas;
DeleteYou know full well by now that this is a blog written by a trader for traders. Outlining technical chart support and resistance levels hardly qualifies as predicting the weather. We are looking at areas where selling is likely to enter and where buying is likely to enter.
Trading is about probabilities. It is also about mastering one's emotions. Markets run on emotions but successful trading requires one not to succumb to that. Much easier said than done I am afraid.
Trader Dan,
DeleteSorry man, I was just messing about. I should have put one of those smily faces, or something. For an untrained eye, such as mine own, it does seem like bunch of "if this, then ..." and such, but I'm sure you guys know what you're talking about.
To go from your impression of "TA is BS" to "TA is useful", you must integrate the following concepts :
Delete1) how to monitor an expected level of price reversal in a certain time unit, waiting for a confirmation on the shorter time units in order to get quickly in the market with a stop loss put as close as possible from your entry price
2) identifying the next support / resistance level after the bounce and validate that the risk / reward ratio is good enough to get into the market.
3) money management
My most recent trade on gold was to go long at 1280 with a stop loss at 1276. It worked. Are you wondering how the heck it works so often with only a 4 $ gap between my entry point and my stop loss with gold's volatility making easily 40 $ variation some days?
I Sold 1/3 at 1312, raised stop loss at 1286.
Which already makes it a profitable trade.
I'm not going to make the whole list of other recent real trades I've made, such as long silver 19.10 stop loss 19.95, out 50% near 21 then out 100% at 21.80 which you can also find.
It's not about just saying that if it goes up, it may not go down.
Abraxas...so true. Called toilet seat predictions....up and down every 2 minutes....lol. The fact remains, no one has a clue about markets today. That is where the maybe it will go up and maybe down comes from. No clue so keep all options open and then say I told you so.
DeleteGot it Right;
DeleteThese so-called "toilet seat predictions" are how we traders make our living. It sure as hell beats your buy and hold gold strategy.
How has that been working out for you the last two years?? Don't bother answering - we all know.
Look - I have said it more times than I can remember at this point. This is a blog for traders. Traders work with probabilities based on price charts and areas where one can expect buying or selling to emerge. If you can do that well enough, you can make a living at it. If you cannot, then you have to do something else for a living, like peddling sensational claims every time the price of gold rises.
Traders deal with reality - not with hype or hope or wishes.
Got it Right,
DeleteIt is an art to show proudly to everyone that you know nothing about how to trade.
I'm making the effort to post my trades LIVE from beginning to the end to try and show you how it's done, and why it works on the long run and helps generate profits, regardless where the market goes (because noone knows that indeed), but I think I'll give up if this is the kind of comments we get from it.
Pure waste of time.
I'm out another 1/3 of my long position at 1302 $, short-term.
Won't even bother to explain why anymore, as T.A is clearly useless for you.
HDH, I look forward to following your trades on this board. TD provides a unique market analysis for free, which I greatly appreciate. But your detailed accounting of actual trades provides a very nice complement for novice and non-traders and is also greatly appreciated.
DeleteThank you Dan for your efforts to keep us informed and educated. Know that it is appreciated. Regarding the WGC, I also see that they issued a report Tuesday, April 15, that China has used 1,000 tonnes of gold for collateral in financing deals. That report made the connection with the same use of copper, as reported recently. Seem that such a report would also be responsible for the sharp drop in gold overnight and today.
ReplyDeleteAny thoughts on this? Thank you for the consideration.
Another horrificly bad forecast by the so-called "Experts".
ReplyDeleteAnother fax machine at Dan Duvall's office set ablaze from angry CIGA's screaming "But Jim, you promised!"
Any time you see the words "Catastrophic" and "End Game" mentioned, just think gold and gold stocks.
And by the way, a huge surge in buying of U.S. Treasuries this month, and record inflows into Pimco and Gundlach's funds.
No better place to preserve wealth than to buy U.S. paper assets.
Buy IBB with leverage my friend, and short silver with a 10 leverage, you will be able to upgrade tour chick, all good to support western and especially western oligarchy : but what I am sure that you are not one of them because you do not lose your time 10 times a day posting your famous I agree Stay in te system !
Deletei never sell gold , but when I do , I like to sell half a billion dollars worth of comex gold in ten seconds just as the market opens … and on the day when a country in europe is on a brink of civil war , and the us economic data sucks balls … but very importantly I read the very accurate wgc updates before i do … you know half a bill is a lot of dough … hahah ! hilarious !
ReplyDeleteAnon;
DeleteSpoken like a true believer - sadly that attitude will never make you any money.
Learn to understand the markets instead of what you would like to see. Markets are not logical - that is why most people fail at investing and/or trading.
You are not in the right place here : if you find a child with a usable kidney and if the TA is good (trader dan will help you for that), try to make some money, after all, that's the life purpose isn't it ?
DeletePS : to be forgiven you just have to put a Archbishop Chaput quote in front and everything will be OK !!!
Roger Dupont,
DeleteMaking such nasty comments towards Dan's trading and religious beliefs shows your lack of taste and IQ. If you don't like what he thinks start your own blog or join the hucksters monkeys screaming the sky is falling everywhere else on the web. We deal in facts not fiction here.
Thanks again Dan.
ReplyDeleteI'm guessing all the pundits out there who recently and continually claim that GOFO/Backwardization would lead to a rally are shocked at this downturn....or they're crying manipulation and all the other usual standby excuses for being wrong and unnecessarily/foolishly going out on a limb repeatedly based on nothing except perma-bearish (aka...obsessive) sentiment.
Cheerleaders are blind and they'll "rah...rah...rah/ go team go!" no matter what the score is or the trend seems to indicate. When their price indicator du' jour fails it's on to the next one...and the next one etc. It's always something.
Whether it's GOFO or JPM's long gold position last fall (laughable at this point) or an "imminent" phyz gold (or silver) shortage or a Chinese/Hong Kong gold or silver exchange opening up etc it's always been something that comes along that's going to light the fuse blah, blah, blah.
It gets old and transparent after awhile. The sky is always falling in some people's belief systems and they're always searching for a reason why or someone to blame it on.
Or they're looking to take credit for making some type of unique ability or intellience or inside contacts that they believe they possess that gives them some type of credibility that exists mostly in their mind and that of their groupies.
Anyone pretending they have insider industry knowledge (that they can't share...because lives are at stake (lol) who claims that it guarantees the price or direction of gold, silver or any other commodity because they're "certain" that the evil cabal will be defeated etc. is either deluded or they're pitching a subscription or both.
Regarding silver. It's widely believed that silver can't crash (it already did so since $48.48 was hit in 2011) because of it's unique electrical conductivity properties that make it irreplaceably rare and valuable.
I thought the same thing for quite awhile until I uncomfortably started looking into "graphene". I recommend that all silverbugs unfamiliar with it to look into it because at some point soon silver will start to be replaced by graphene in electrical applications at some point.
I'm sure everything above sounds bearish against PM's and that I've turned aginst them or the supporters of them. If being an objective, free-thinking (I'm not pimping anything) investor that's unemotionally attached to a "cause" makes me the enemy in some peoples beliefs then so be it.
As Dan has repeatedly tried to convey here...the price and trend are what matters most and everything else is just noise and an emotional love affair some folks have for shiny metals coupled with an equal amount of distrust or suspicion of some system they live or invest in that they have no control over.
It might just be as simple as that.
It's not strongly bearish as long as 2day pitchfork is not broken at the close (1287) or daily pitchfork at the close as well (around 1300), but the bad signs are gathering, especially impossible for bulls to reach the median of the pitchfork.
DeleteAnother missed target...sign of weakness.
Still, the Bollinger Bands on the 2-day timescale could give us a range much smaller than the wide 1200-1400 we can witness on the longer time units.
The mlh inf of the Bollinger Bands on th 2day timescale is 1270.
Conclusion (on the 2day time scale).
As long as mlh inf going upwards at 1287 holds, trend is up, but big warning signal as we couldn't make it to the median of the fork.
As long as 1270 bol inf holds, trend is neutral.
Below 1270, trend becomes bear once more.
I'm opting for the 2day timescale now in some of my trading decisions.
Dark Purple;
DeleteIf I had that "insider information" that I could not share because of fear of losing my life, I guarantee you I would not be cackling like a hen about it but would be quietly using it to secure my own fortune instead of peddling some overpriced, useless newsletter to unsuspecting dupes.
There are far too many people out there who take advantage of others. While those who follow their one-sided, never changing advice end up losing their hard-earned wealth, these hucksters enrich themselves in the process. They have no skin in the game like many who are merely trying to make informed decisions to protect their wealth and thus their families.
This is the reason why I try to teach others how to read the charts and thus the markets. Hopefully, they can learn to depend on their own judgments and make informed decisions based on what the markets are saying. They may not always get it right - indeed who among us can lay claim to such things - but at the very least they will be able to recognize when they have gotten something wrong and hopefully be able to minimize any harm to themselves financially.
He who learns to run away lives to play another day is the motto of all successful traders.
Darkpurplehaze : Always and always the same crap...
DeleteNo more backwardation for months you do know nothing, you have to love permabulls because it is a so sweet jackass/ennemy.
As mark says a a daily basis : stay in the system sheeple stay in the system
Sometimes an empty hat is just an empty hat. Glad you've come to realize that.
DeleteDan You have to like how they predict the fall of gold by selling the equities the day before even though gold rises. it is sad but true, these markets are contrary to any logic. I trade equity stocks and have been duped on many occasions just like yesterday as the Gold was rising. More often then none, the plunge in share prices with no apparent reason very often predict a dump in the gold price following. I have seen it much too often to make it a sole coincidence. There are no fundamentals anymore in the precious metal sector whether it be physical or equities, strictly black boxes and chart reading...fundamentals are out the window no matter what Sinclair states. It is strictly treated as a trading vehicle and moneys are made, as you say, only by those that treated as such.
ReplyDeleteThe market is always right. Don't fight the market.
DeleteIf silver goes under 19 $, so be it, and trade accordingly, don't try to reason the market.
The time horizon you trade in is very important.
Practically noone understands you must watch several timescales and know which time scale you trade before you made a trading decision.
Gold's trend can be UP on the monthly scale, DOWN on the weekly scale, UP on the daily scale.
Traders can make money up or down in every market, depending what is their trading horizon.
Fundamentals tend to have an influence on prices on the very long term.
Not on the short term.
Especially not since most traders are technically driven hedge funds and algos following price momentum.
Dan explained this several times before.
Angelo;
DeleteI second what Hubert wrote in his response to you. Believe it or not, there are fundamentals at work in gold. I cited them in my newest post.
Any slowdown in Chinese demand is a fundamental driver. If the market thinks that the Chinese economy is slowing and that means less money available with which Chinese citizens can purchase gold, then it is a fundamental in the negative sense.
You are only going to get ONE SIDE in reading the pro-gold web sites. That is not a recipe for profits. They are stuck on bullish and cannot get off of it no matter what happens. Markets change because perceptions change. If one fails to recognize that, they are never going to profit, NEVER.
Yes, Dan, there are fundamentals as there always is in any product or commodity, but in this environment, what were fundamentals then no longer are defined as fundamentals now..I am saying that supply and demand which is the pillar of the capitalistic system takes a "way-back" seat now especially when it comes to precious metals. You can join all the systems and play ball as you please as many are saying here, but in the end, the essence of what makes capitalism (supply and demand with regards to this sector) is pretty well non existent and can be described very simply as crony capitalism. Just as Lewis wrote that the "markets are rigged" but more so in this sector than any other. and yes, you are right, you can make money in a rigged market and I would be the first to propose it, but that doesn't change the facts and those that do so are a product of this market.
DeleteMy advice : leave the markets, a pure den of whores, you have here plenty of examples...
DeleteAngelo;
DeleteLet me try this one more time for you my friend - the market is running on what it perceives to be the fundamentals. Now, if its view of the fundamentals are different from yours, and if you do not respect the views of a larger majority than those that happen to share your view of those fundamentals, then you are going to lose money. It is just that simple.
You think gold and silver should both be higher. The market disagrees with you. Why - because it perceives no threat of inflation at the current time and it also perceives slowing consumption of both copper and silver due to a slowdown in Chinese credit growth. That is not hard to understand.
What is blocking your ability to accede to this is that you have somewhere along the line picked up a view that informs you that silver and gold MUST be higher in price because so and so says thus and thus.
here is the question you must ask yourself; " Why should I care what so and so says about the price of gold or about the fundamentals when he or she is obviously grossly wrong?"
Investing is about making money - it is not about arguing a point with the markets which do not care what you or I happen to think it should be doing. Learn THIS LESSON and you will succeed. Fail to learn it and you will always lose money.
Lastly - Arguing that the HFT crowd skims money out of the markets and serve no other purpose but to enrich themselves because of their ability to front run orders is one thing - arguing that because they do so that the markets are not pricing in the current perceived fundamentals and are therefore rigged, is something completely different. AT the end of the day the market price is that which current market participants have agreed to as that which is a fair balance between buyers and sellers.
It happens like that every and will continue to do so regardless of what the HFT crowd does.
As to crony capitalism - again you will have no disagreement from me on how corrupt our system has become but that in and of itself does not mean that the markets are rigged.
Your problem should be with the Fed which has created the environment in which these hedge funds move enormous sums of money around the planet looking for yield in an interest rate environment in which it is not possible for an average investor to find a safe and conservative investment which throws off a decent yield.
The above ought to be required reading for all first time visitors to this blog.
DeleteDan I have no disagreement in what you say when accepting things as they are because they are and thus that is what the market says it is. I have learnt many moons ago not to fight the market but accept it as it is no matter what the moral equation ends up being..You obviously have learnt many moons ago also and accepted this is as the way things are and judging the market does not make you money . You can certainly judge the market but still accept it and make money from it but to say that it is not rigged or perversely slanted is really not credible. Chart reading and tech analysis is a very sterile way of looking at it because who cares how those charts came to be as they are just a history of price movements during a specific period of time with a myriad of different studies developed by a myriad of .different people. In the end, there is no sense to make of it....it is what it is.
DeleteHi Dan,
ReplyDeleteYou are truly a genius for me : I want to trade human organs, please give me some advice to make money in trading, I would be please to have another sentence coming from Archbishop Chaput, that is useful to try to look at a "good person" !!!
All the best trade : my money my friend more and more trading money !
Roger Dupont;
DeleteHow about I have my administrative person delete your posts instead? You must either be drunk/high or mentally unstable. Nothing you write makes the least bit of sense. It is like trying to follow the sayings of a mad man.
Quite the cult of haters these gots / gold folks. Rooting for collapse that just wont happen quick enough.
DeleteJasper, it's amazing how the guys that buy the highs listening to the armageddon crew want to take out their anger/losses on the only people who have better sense than them. The world isn't going to end and if it did what good would gold and gold mining shares do you anyways? Aren't the streets in heaven paved with gold and silver? I'm not ready to find out just yet.
DeleteLots of vitriol tonight. Thanks Dan for all your posts. They keep me sane and solvent.
ReplyDeleteWas it the blood moon/total eclipse that activated all the nutters?
Delete