A fresh 6 + month low was made in the commodity sector earlier this AM.
Some might recall a while back I mentioned that the forward curve in the commodity markets was suggesting LOWER prices ahead, not higher prices, as the backwardation that existed in some of the major futures markets was dissolving with the structure moving more towards the typical contango structure. That was especially true between the old crop ( 2013) / new crop grains spreads.
With the US Dollar attempting to gain some further upside traction and with the commodity indices plunging, as well as the idea that interest rate hikes are coming to the US sooner rather than later, the headwinds against gold are gathering.
Gold bulls had best be thanking their lucky stars for all the geopolitical risk in place right now. Were it not for that, it is unlikely gold would be maintaining itself above key support near $1280.
I noticed that we finally got an updated number for the gold holdings in GLD yesterday. The number had not changed for nearly a week. The new number is a DECREASE of some 1.8 tons. Interestingly enough, the newly reported 800.05 tons is about the same amount that gold holdings have increased since the last business day of 2013 when the ETF reported holdings of 798.22 tons. Another way of saying this is that over the last 7 months, there has been a increase in gold holdings of a paltry 1.8 tons. Clearly Western-oriented investor demand for gold is comatose at the current time. Perhaps that will change as we move forward into Q3 of this year but that remains yet to be seen. With Chinese demand falling off and with Western investment demand on the wane, gold bulls need something to spark this market. It is very sad but that essentially means that they are either going to have to wish for, and even pray for, bad news for someone.
I am not worried about Gold at all. Bo Polny has got my back. ;()
ReplyDeleteBear Mkt, plain and simple
ReplyDeleteHard to get bullish anything in here. My favorite though is Denver Dave who calls for 15/1 gold/silver ratio. Stks are getting very interesting in here also.
ReplyDeleteHa! I wonder if dave has seen the latest GSR movements.
DeleteCompared recently to the other 3 metals, silver is the only metal failing to rebound from the down swings. Ouch to the Silver bugs......
Well said, Zhang!!!
DeleteYep great bit of info you posted there Zhang!
DeleteAdding to your point about Silver being a waste/byproduct, its shown simply by the fact that there are a handful of mines that focus only on extracting only Silver.
As an Aussie I know that locally amongst the vast amount of mines that dot our huge countrywide we have only one mine focused on extracting Silver. Thats in Twin Hill QLD and is run by a small cap miner 'Alcyone Resources'. AYN.ASX (Check out the eye watering share price devaluation since 2011)
Actually I've just discovered that Alcyone has had its shares suspended last month and its Silver only mine at Twin Hill has been put into care and maintenance mode.
DeleteIt's a very bad time to be in the Silver game.
Situation is escalating in Ukraine.
ReplyDeleteIf Donetsk doesn't fall quickly, the slaughter there may push the russians to intervene into Ukrainian territory. From there who knows what next? I agree with Roberts : Russia should have taken those two eastern cities and proclaimed them as part of russian territory along with Crimea.
The situation is even more dangerous as it is now,
Meanwhile, everywhere in the world, tensions are rising.
The border between Armenia and Azerbaijan is no exception.
Wish for bad news for someone ? Since when do markets determine what is good or bad ?
ReplyDeleteHi Dan, you make very good points but I think there are two potential problems with your analysis. First, you assume the charts you rely on are correct, not corrupted and accurate. Second, you assume that the charts you rely on are the primary source of information and in essence "paint the entire picture".
ReplyDeleteIf either if these assumptions are incorrect, your conclusions are incorrect.
I personally believe that pretty much all data today , published by organizations whom have a bias or interest in the data, is corrupted.
Megaprophet, lets say that your correct and the markets are entirely fictional and corrupted. Why would any sane person continue to get his little weenie chopped off fighting the Fed/Banksters? Isn't the old adage if you can't beat them join them? I guess you could continue to go broke fighting the impossible task of going against the grain. Good luck with your gold bug fantasies.
Deletemegaprophet;
DeleteI would suggest you cease trading and/or investing altogether then because apparently the markets are an illusion for you.
Those of us who trade for a living take the markets as they are; not what we might want them to be.
I believe the charts are accurate because they reflect the sentiment of those who are trading them. That is very real to someone in my profession.
Same goes to you Mr. Cobb... you have no business trading or investing in the markets since they are all fake in your mind.
This website is for serious students of the markets. We deal with what is in front of us not what we HOPE or fantasize what might be.
Good luck to you.
Cordially
Dan
Price is Everything...
DeleteThose corrupted, illusory prices are what determines my gain or loss. That is very real indeed. It is the only reality, imo.
DeleteUnless you like to sit around saying, "Well, I lost my shirt, but hey I really took a stand against those banksters."
That crap is for losers with a capital L.
I think the data is corrupted. Did you watch the charts today on the US DOLLAR verses the EUR? That's enough to make anyone believe it's corrupted. By the way most of us are trading at least a second or two behind real time. That's also corrupted data.
DeleteDan has good advice but don't take him the wrong way. And I don't think anyone should give up trading regardless. This is a battle that's hard to win lately but some of us like to fight. And some of us aren't afraid to go down swinging either. (...and I'm not just talking about the markets...)
DeleteI agree megaprophet. The data is basically useless at this point, corrupted by politics. For the the financial services industry it makes no difference, they will use anything to justify their existence and keep getting their fix. At a cost to society as a whole , I might add.
ReplyDeleteOne day the "professional" traders who sheepishly follow the corrupted charts will try to log on to their computer and there will be a blank screen. When they try to call for assistance, there will be a dial tone. It doesn't matter how much fiat money a person has when the banks go on "holiday" because the global ponzi scheme ceases to exist. The only reason the stock markets are up is because of corporate share buybacks using near zero interest rate money. In 1991, IBM had 2.5 billion shares outstanding and today less than a billion. IBM sales revenue in 2007 was the same as it is now. The global money printing is immoral, executed by greed. The Fed and other Central bank Ponzi's make Bernie Madoff's Ponzi look puny in comparison.
DeleteWell nothing goes up forever, and nothing goes down forever either. The GSCI looks like it could be hitting a triple bottom soon, bullish if it holds.
ReplyDeleteAlso seems like energy (crude and NG) have had an inverse relationship to the rest of the commodities since mid 2012 where they have been steadily climbing.
Since QE didn't seem to have the inflationary effect most expected, perhaps rising rates will also have the opposite affect - rising commodity prices to a certain point.
Heating oil also looks to be forming a bullish wedge pattern on the weekly chart - from the mid 2012 starting point.
DeleteDAN - any idea what the scoop might be behind the energies vs the rest of the commodities?
Elijah;
DeleteI am not sure I understand your question. All of the commodities are tending to move lower right now. The situation seems to be one of abundant supplies of crude. We should be getting some data from the EIA tomorrow...
Oil and gas has moved down with the rest of the commodities complex in the last month - however most other commodities have been trending down for a couple years other than some rallies here and there - whearas O & G has been trending up last couple years other than a pull back here and there.
DeleteDan I seen you mention live cattle recently in the past, are you bearish currently in the futures
ReplyDeleteDan,
ReplyDeleteThanks for doing your blog. I’ve been reading it almost every day for the past few months and I really enjoy it. You’re smart and knowledgeable and I appreciate your frankness and bluntness.
A couple of questions/comments:
- You mention that Chinese gold demand is falling. Isn’t that a consequence of the change in reporting of gold imports in China (i.e. imports are not necessarily reported through Hong Kong)? In other words, it seems like demand is falling but it might actually be rising. We just don’t know for sure.
- I’m a long term investor trying to better understand short term movements to better position myself. When you say the charts are your friend, it seems that I need to better understand how to read a chart. Would you have a book recommendation on the basics of technical analysis?
- Also, the way I see things is that ultimately what really matters is supply and demand. If there is a lot of demand and supply is tight, prices will go up in the long term… It is that simple… Then it is just a question of being patient!
- I’m not a gold bug but I can see that men haven’t been able to resist the sirens of money printing…. Having a currency tied to gold or silver or any tangible/rare assets is like Odysseus having his men tie him to his mast. It’s a way to ensure you are not going to do anything stupid. When people realize the scale of the current money-printing disaster, gold and silver prices will surge.
Thanks again,
Eric
Hey Eric,
DeleteThis is a great blog, and as a writer and trader myself, its truly an invaluable service that Dan is providing in not only posting charts but also including detailed commentary to go along with his analysis so that readers can get a better grasp of what may be happening in the market.
I can't speak for Dan but I do know that he's never held it against anyone for having some physical gold/silver as an insurance policy of sorts, should things ever get really messy in the world arena.
The issue arises when people portray gold and silver as ever approaching an exponential rise in price, despite the fact that they both trade like any other asset, with up days and down days. These calls for prices shooting to the moon have been going on for decades; in the mean time, as traders, we can try to make sense of what the charts are telling us at the present moment.
The reference to Odysseus is well put. Who knows what the outcome may be for gold and silver in the long run, but for traders, we can still try and make a buck in the short and intermediate term.
You've defined your time frame as a long term investor, so the swings prices see day to day or week to week may be irrelevant to you, and that's all good! Knowing your time frame before taking on any position in the market is the first step to being disciplined as a trader/investor.
Hi Syncubate,
DeleteThanks for the kind words.
I invest for the long term and don’t mind volatility. I know that what I’m buying (gold mines these days) is dirt cheap and that ultimately the market will realize that. But I wouldn’t mind be able to better time my purchases…
Eric
Whose turn is it to tell Shikah to eff off?
ReplyDeletePost, her type have no conscience; you can not even insult her kind
ReplyDeleteHahaha!!
ReplyDeleteLook at this automated message :)
It's the third time they use this.
When you create a Spamming Bot, Capital Sharks, euh...sorry, Capital Stars, lool, at least make it look a bit real, not that everyone laughs at you and your stupid website.
I'm wondering, if you use bots like Shika...do you use Bots also to provide totally useless content on your silly website??
Noone here is going to click on your stupid link, but everyone here is going to make sure your website becomes famous soon in terms of Blacklist. I'm sure doing so with my own network.
Talk about counterproductive indian donks.
SP500 is coming close to the long term support level of the 2 week candle chart near 1900.
ReplyDeleteI'm watching for the MACD turning up on the 4 hour now and if I'm behind my screen at the right time, will put a solid bet on the long side here.
At the moment, I'm long near 1902 for safety.
Eur Usd had better bounce quickly on 1.3340 or it may accelerate down big time towards 1.3150...
What does that mean EUR/USD? Is that a RATIO of EUR to USD? How is the number derived? I'd ask the same question for the USD/JPY and other symbols.
DeleteHubert: I just read it's the definition:
DeleteEUR/USD: The abbreviation for the Euro and U.S. dollar (EUR/USD) currency pair or cross. The currency pair tells the reader how many U.S. dollars (the quote currency) are needed to purchase one Euro (the base currency)
So then ONE EURO is worth $1.33US.
Maybe the world banks want the dollar on even par with the EURO. Are we heading toward a ONE WORLD CURRENCY?
Well Hubert your /ES is moving up now. But for how long? In order to get that 20% correction we need the DJIA down below 14,000. Although I wouldn't be surprised by a late summer rally taking this to near DJIA 20,000 levels after Labor Day. I was surprised to see GOLD hit 1310.06 though.
DeleteTrading is like riding the waves like a surfer and watching out for the sharks.
Trader Dan:
ReplyDeleteAre you a GOLD bull or are you a GOLD bear?
news unit;
DeleteI own physical gold as insurance but hope I never have to use it., As far as being a gold bull or a gold bear, I am neither at the moment since gold continues to remain rangebound. Geopolitical concerns are supporting it but sentiment towards higher interest rates and a stronger dollar are working against it as well as lower overall commodity prices.
I'm neither a bull or bear on anything anymore. What I have come to realize is that these markets have no fundamentals and the technical charts are just a grown man's ETCH-A-SKETCH to give him some toys to play with. Do you disagree?
DeleteWe are at the mercy of some very high performance HFT ALGORITHMS now unlike ever before. It's just a casino now to place your bets. Every once in a while it might seem like you can get a read on it but then all of the sudden you wonder in astonishment.
news unit;
Deletetrendless markets, like the one in which gold currently finds itself in, are indeed the playground of the big specs and their machines. When a market is trendless, it is always like this - bouncing around and careening higher and then suddenly collapsing only to shoot higher before falling lower again. It is like playing with a yo-yo. Best to either stand aside in a market like that or take very small positions and do not plan on holding them for anything other than the shortest of time spans.
One thing that someone who trades futures can do is to use the Comex gold market as a hedge for their physical metal holdings. That means buying put options when the metal rallies or shorting the futures. Each contract is 100 ounces so if one owns 500 ounces they can short 5 contracts as a hedge. You have to manage the hedge however carefully so I would not recommend that be done expect only by very experienced traders who can move quickly into or out of the market.
Actually after all the reading and compiling of news and views that I've done on The News UNIT since the Japan Fukushima incident began in early 2011 I have now come to a few new conclusions summed up in one:
Delete--There's no such thing as INVESTING anymore as we used to understand it. (savings accounts, CD's, IRA's, 401K's, mutual funds, stocks, bonds, real estate, other assets...) If you don't make over $100,000 a year after taxes now without any substantial net worth you're not doing very well financially. But then I think in terms of having NO DEBT. I'm probably way too old fashioned.
Well Dan, I'm becoming an 'experienced trader' slowly. I had to take my hard knocks first but you're right on about that above. Isn't it fun working against the CME? Now I get to stay up 24/7 and work those charts. And I absolutely hate the weekends now. :-) What a life! It is what is though. Good luck trading. I have a saying now that I tell myself:
Delete"Pick them when they're GREEN because when they turn RED you're dead."
I'm right with you Dan watching the /ES, /CL, /NG, EUR/USD, USD/JPY, /GC, /SI, /6E, /6J, etc. Isn't this fun? Back before I never did this but now I graduated into the abyss of trading. Count me in. I jumped in with both feet.
DeleteThanks for the thread here Dan. All the bells and alerts are going off here now. I notice the /ES and so forth rising again here. Looks like Hubert was right. At least in the short term. :-) It's all short term now. No such thing as investing right? Only trading.
DeleteMetals and GOLD going up again with GOLD above $1,300. I'm wondering if those perma GOLD bulls like Jim S. know something after all?
ReplyDeletenews unit;
Deletegold goes up when buyers of the metal are worried about geopolitical events impacting equities in a negative way. Right now it is Ukraine and fears of Russian troop movement that is supporting it.
other than that, I see no other support for the metal at the moment. if events over there escalate then gold will stay firm. If fears over Ukraine lessen, then the metal will go lower. It is that simple.
How do you feel about the CRUDE OIL price behavior over the last 4 months? Does it all make sense?
DeleteYes
DeleteThis comment has been removed by the author.
ReplyDeleteXAU and HUI both gapping up impressively, like 5-6 weeks ago or so. That gap has not been filled and whether this one is a breakaway or a bull trap of course is what keeps us all interested, no? We have trapped both bulls and bears alike here of late, so stay loose, and don't marry anything, unless you enjoy getting spurned.
ReplyDeleteWar,
ReplyDeletehttp://www.marketwatch.com/story/threat-of-ukraine-invasion-has-heightened-polish-pm-2014-08-06
Disease,
http://www.bbc.com/news/science-environment-20341423
I'm still looking for the third knght of the apocalypse, starvation, but it seems that they are getting closer...
Zhang, I do not know about Asians and Europeans, but Americans basically have about a 2 week attention span, and as you know, the 4th Estate died years ago, so it looks like nothing is forthcoming. But you remember 9/11 and how that phony investigation went also, right?
ReplyDeletenow now everyone. We all know that there is no such thing as conspiracies, cover ups, false flags, lies and manipulations.
ReplyDeleteJust the usual delays in a standard ongoing investigation into a commercial jet riddled with bullet holes.
Remember the Maine, Lusitania, JFK, Gulf of Tonkin, the first Gulf War thanks to Zapata Corporation Daddy Bush, son of monster Prescott, and I think you get my drift/??? Oh, forgot Pearl., and of course WTC 7.
ReplyDeleteWhat about the WMD's of Iraq ?
DeleteGod bless America
Gold continues to forcast deflation, that has got to be worrying the CBs and Ponzi peddlers. The treat of deflation led by Gold and many commodities is now creeping into stocks and markets worldwide. If this continues it will end the Ponzi and cause debt defaults worldwide, I suspect we will see massive intervention more QE soon. For Gold and associated stocks a windfall. Volatility is on the increase even in Gold. Use futures hedges on pullbacks to fund physical Gold purchases as presented.
ReplyDeleteA 2nd Lehman cannot be allowed because it will be fatal to confidence in Fed/Ecb.
DeleteThis my earlier post clearly mentions monthly charts at at critical longterm support levels.
Deflation threat will soon be diffused via Money Printing.
Gold : it is interesting to watch the bollinger bands on the weekly candlecharts.
ReplyDeleteThey are getting closer and closer (1260-1340), so we are still in this period in which gold is look for a price equilibrium after the big collapse of 2013.
In a word : there is no trend. This is still a decrease of volatility, and one can trade only on the very short term, as Dan mentioned.
Rtm
ReplyDeleteOther than being your catchphrade du jour do you have any idea what a "ponzi" scheme is, or are you just saying it because you think it sounds clever & grown up? Ponzi.
....., and here is a chart of Gold volatility http://finance.yahoo.com/q/bc?s=^GVZ
ReplyDeleteThanks. Volatility is low and it appears since 2010 all volatility has been to the downside.
DeleteA real "trend" will begin only when the weekly bollinger bands start to diverge. At the moment, it's only luck and pinball short term within them, i.e within 1260-1340, watching Fibos 1277-1307-1337.
DeleteToo small ranges for me to be tempted.
But, hey, I already made 20.000 $ this year on gold alone, so I'm fine waiting a bit more!!
Besides it was a one shot 20.000 $ decision.
DeleteFantastic. But I think many readers here also made 20.000 $ just like me...
...by not subscribing to Bo Polny's gold forecast newsletter.
DeleteHop! 20.000 $ saved, one shot.
This comment has been removed by a blog administrator.
ReplyDeleteZZzz....
DeleteNo Nidhi, we won't click on your stupid Spam link.
Weve got mineset where we can be screwed with biased and partial investment advice. Thank you.
DeleteEvery day a new Indian parasite
ReplyDeleteThe "Panic", "Mega-Crisis", "1987-style Crash", "Most Dangerous and Frightening Period In History"
ReplyDeleteWell, its here now.
In the commodity complex.
And which of the 45-year veteran "acclaimed experts" saw this coming? And warned investors to get out of the way?
None.
LOL.....
However, our own esteemed Dan Norcini noted the outrageous lopsided futures positioning of energy traders when oil was over $110.
ReplyDeleteAnd allowed me to sell ALL by UGA and XLE within one day of the EXACT TOP.
Thank you Dan!
Dear Dan,
ReplyDeleteThe only way US can repay its $ 17 Trillion National Debt & $ 50 Trillion Unfunded Liablities is via INFLATING & DEBASING AWAY ITS DOLLAR.
If you agree to the above fact then do give a thought to the below charts & comments.
Since 2000 Dot Com Bubble Burst, the world has realised that US will come out of all financial troubles via Printing of Money & Debasement. This got reconfirmed after Lehman, Tarp+QE123.
Since 2000, MONTHLY charts of GNX, CRUDE, GOLD, are in a SECULAR BULL MARKET.
We are currently testing the lower trendline of this bull market and this is so because FED is Faking its taper when even GOD knows that US can never repay its Debts. Alongwith faking the taper, it is at the same time fueling the DOW via zero-rate loans to dow companies who are buying back their shares to the tune of 1.9 trillion dollars since 2009.
Fed can misguide and play the 'Recovery' Card only until markets realize that QE is only momentarily being reduced in this SECULAR INFLATION BULL MARKET.
There are two other alternatives.
Delete1) Default. War even cold, is a good occasion to reset some debts.
2) Never repay the principal of the debt. Why should they? When should they?
Oh yes, I forgot :
Delete3) Confiscation. Bail ins. Cut of retirements and pensions.
No really, you live in a one scenario world, just as jsmineset.
Hope you're right as it seems you bet the house on that one.
Hubert, are you putting your stock selling shoes on again?
Delete1).Default: IMO the absolute least likely scenario. Politicians and central bankers have shown no appetite for default. They will literally print to keep the tired wheels of commerce moving. The public simply demands it. Remember Ben's helicopters? Think that was just rhetoric?
Delete3). Bail-ins, confiscation, austerity: Also unlikely IMO but a better (at least short term) possibility than default.
2) Does the debt matter? This is the real question in my mind. I think in the end it will. I think the USG and it's central bank will defend this debt with the printing press. The question is how long this farce of an economy can stand on it's own.
This can go on until all nations allow US the Right to Print Money!
ReplyDelete