"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

Trader Dan's free work will soon be available at www.traderdan.biz

Tuesday, November 4, 2014

GLD Holdings Continue to Fall

Gold continues to rapidly lose friends over here in the West as the steady fall in holdings indicates the growing disillusionment of those who bought the metal thinking it would respond upward during this period of Central Bank actions to provide low interest rates and more liquidity.

One gets the distinct sense from watching the price action that even some of the more resolute bulls are now reading the handwriting on the wall and getting out as the bear market in gold becomes more deeply entrenched.

Look at the updated chart of the holdings of GLD, the big gold ETF. They fell another 2.39 tons since Friday of last week to sink to 738.82 tons. That is the lowest level of reported holdings since the last week of September in 2008. In other words, a fresh 6+ year low!

To further add insult to injury, both the HUI and the GDXJ, the latter which is especially pulling a disappearing act, surrendered their feeble gains from yesterday closing down near session lows.

As a matter of fact, one must go all the way back to October 27, 2008 to find a LOWER CLOSING PRICE in the HUI. Just for the record, the closing price of the HUI on that date was 151.57. We are talking about 6 years here as well. Prior to that, we are talking about going as far back as July 2003 to find a lower closing price. In other words, we are a mere 3 points away from seeing an ELEVEN YEAR LOW.

Of course we have the gold perma bulls talking the usual "capitulation" but such a "strategy" is the last resort of those who have lost so much money in an asset class that they have nothing else to lose at that point. Capitulation does one no good whatsoever if the stock they are invested in disappears from sight and the company ceases to exist as a viable entity. I expect we shall be seeing this occur.

There is no lesson that bites as harshly and stings so fiercely as a financial one. Listening to others without listening to the voice of the market itself is courting financial ruin. No man alive knows the future and those who speak with a feigned authority as if they do, prey on the unsuspecting and the na├»ve.

 The vast majority of people who have set aside some money with which to invest have worked very hard to secure that. It represents their life, their dreams, their hopes for their children or grandchildren or their security in their old age. To lose it, to watch it go up in smoke is a bitter, bitter thing but to realize that they have blindly followed someone else to their own ruin makes it an even more bitter pill to swallow.

It would be well to keep in mind an admonition from the Scriptures against those who mislead or deceive others.

"Hear this, you who trample the needy, to do away with the humble of the land, saying, "When will the new moon be over, so that we may sell grain, and the Sabbath, that we may open the wheat markets, to make the bushel smaller and the shekel bigger, and to cheat with dishonest scales, so as to buy the helpless for money and the needy for a pair of sandals, and that we may sell the refuse of the wheat."
The Lord has sworn by the PRIDE of Jacob, "Indeed, I will never forget any of their deeds... Then I shall turn your festivals into mourning and all your songs into lamentation; and I will bring sackcloth on everyone's loins and baldness upon every head, and I will make it like a time of mourning for an only son, and the end of it will be like a bitter day".   Amos 8: (4-10)


  1. Thanks for the update and the thoughtful words and guidance. I know lately there has been some bashing of ZH, but I thought this recent article was worthy of linking...

    1. I think its better to just post the source article straight from the author and skip mentioning the junk middle man aggregator website.

      The article is from http://www.firstrebuttal.com and written by


  2. Hi Dan, I have read your thoughts for many years, I am no trader but greatly value your perspective.
    I am trying to gain a clearer perspective on recent GLD inventory activity. I have tried to read the SPDR prospectus but find the language challenging. Since shareholders can redeem a basket of shares with their AP for delivery is there any way we can tell what percentage of the fall in inventory is due to this activity?

  3. Dan, it's hunchtime, and I am going to say something sacreligious, and I hope I can be forgiven, but I think we are going to have a small bounce in gold; and the gold shares, which have been utterly slammed, could rise substantially. All in the next few days. Don't try to catch a falling knife, they say, but this knife is quivering in the floor, saying: "buy me, buy me."

    Now, to get my credentials in order, it won't last long and gold probably will fall considerably after that. After all, we are supposed to be opportunistic traders.
    So, if I'm wrong everyone can have a jolly good laugh!

    1. You would think a bounce of some type up to $1200 or so would occur fairly soon.

      But the metals are just laying there in a coma. It might be a long one at that.

    2. @Peter & DPH - I thought the bounce was from 1190 -> 1250. To me the pause of the last two days constituted the bounce. MACD (9,20,7) & Slow Stocastic look to be still declining/neg.

      The break of the triple bottom, collapse of the miners, & renewed joy of BOJ QE would seem to presage the next sharp decline. In any case, I'm prepared.

      To paraphrase Kris Kristofferson, capitulation is just another word for nothing left to lose.

  4. bring it Dan on election day hey hey!!

    In Second Chronicles 7:14, God said, “If my people, who are called by my name, shall humble themselves and pray, and seek my face, and turn from their wicked ways, then I will hear from heaven and will forgive their sins and restore their land.”

  5. The quiet words of the wise are more to be heeded than the shouts of a ruler of fools. - Ecclesiastes 9:17

    There are plenty of noteworthy foolish figures shouting out loud in the Gold blogsphere, Human nature hasn't changed one iota since wise men put pen to paper over 2000 years ago.

    1. 2 Corinthians11:13 For such men are false apostles, deceitful workers, disguising themselves as apostles of Christ. 11:14 No wonder, for even Satan disguises himself as an angel of light. 11:15 Therefore it is not surprising if his servants also disguise themselves as servants of righteousness, whose end will be according to their deeds.

      this one especially for you Turd.

  6. Dan,
    Do you agree now that the Fed policy finally did make a charm?
    About a year ago I posted a reference to one of the Eggertson's paper at FRBNY, which sheds a light to the Fed reasoning:


    Basically, it says that the government should purchase assets to prevent their waterfall devaluation during the crisis. Doing so, it should change the mind of market participants and economic agents from deflation (devaluation) to inflation. The amount of purchases can vary from 70% to 400%(!) of GDP, depending on severity of a crisis and efficiency of the policy.

    So, as you can see, the Fed just followed their theory, by creating the assets revaluation and changing the mind of participants from deflationary fears (and the currency crisis!) to the inflationary expectation - which drove the gold buying.

    Now, as the extremes of the deflation-inflation pendulum are behind us, gold is not needed anymore as an alternative to the usual assets (stocks & bonds) in mind of the "investors" (or, more clearly, mutual and other big funds, including hedgies). They have changed their mind exactly as the Fed wanted them to do so.

    So, what follows? According to the FRNYB paper, the pendulum should continue to swing between deflationary and inflationary expectations, but with diminishing amplitude, until the economic shock conditions (reflected mainly by the sharp change in the asset prices) is fully behind, and the market returns back to the stable equilibrium(!) - i.e. moderate 2%-inflation in the Fed's model.

    So, we are now just in the 2nd phase of the inflation-deflation pendulum, which is swinging to the deflation side, but with a smaller amplitude. Well, at least, this is what the Fed scientists are thinking.

    Do you still think the Fed don't understand what they are doing to the economy? ;)

    1. RussianBear, notice that as the Fed stopped printing money that the bank of Japan is now printing money and even admitting they are buying foreign stocks in the markets. This is amazing really.

      We might be at a point now here where money printing cannot even be ended for any period of time without risk of the asset bubbles deflating.

      Not sure about the economy but it seems the Fed sure understands that the asset bubbles they have created depend on money printing to keep the air in them.

    2. @ barney

      Every 5 to 6 years, there are recessions. It is normal. This is the first time that the US will go full circle with interest rates being zero at the start of the recovery all the way until the next recession.

  7. Lower low this week, bounce for a few weeks to sucker in the last bulls then collapse into yr end/new year maybe under $1k to break backs of bulls once and for all . That's my thinking.

  8. I agree with you, but not once and for all. Gold is like a Phoenix and when all the multitudinous problems around the world start hitting home, some time next year perhaps, it will recover. Anyway this is what the illustrious Greensapn thinks, though he doesn't say by how much, or when. His reasoning is based on the parlous state of the world economies, including the U.S. economy, which he understands all too well as he contributed to them, and which he has stated are in a state of turmoil. He probably knows a lot more than the rest of us, after tenure as Chairman of the Fed for 19 years.

  9. I'm surprised gold broke support at 1180 like it did and didn't fall further.

    I think we see a bounce to 1185 and a reversal there to at least 1150, but this is just me thinking out loud.

  10. Leeb+Embry+Russell+whoever else has no pride and allows their names to be used at kwn=Donkeys

    1. This comment has been removed by the author.

    2. Russell is demented. Sadly. His 'interpretation' of New Yorker covers was absolute fantasy.
      This one is supposed to 'mean' a teetering stock market:

      This one is supposed to 'mean' the middle class can't afford wine & has to drink beer & eat hamburgers & fries. Really just a parody of Brooklyn/Portland Hipsters.

  11. Fascinating to watch this unfold.

  12. Yes. It is fascinating. At some point, according to many of the TA/EW crowd, we will be seeing bottoms within the next 2-8 months (somewhere between 2015 Q1 to Q3). The question then becomes, IF this proves to be the case, are the metals going to (re)enter a bull market, or languish in obscurity for a decade or two?

    1. @ Scruff.

      The last time interest rates were this low was in the 60's. In that time gold went from $35 to $200. Then gold fell all the way back down to $100. The same discussions were being had then. It was determined that the Fed was not ahead of the curve. (interest rate were net negative) Gold then went on a 2000% run until rates were net positive.

      Last time I checked, the Fed has not even begun to tighten. Much less go net positive. Their goal is to be net negative this time.

  13. This comment has been removed by the author.

  14. Synopsis

    1. Bottom, bottom, bottom surely there is a bottom here somewhere.... {because of the masses of stealth physical buying and ASE sales and West to East and COMEX scheduled to default in [insert any random date after 2003, but preferably not too far in the future]

    2. As soon as [insert here] happens the Gold price will be emancipated and will recover its True Value rising overnight to [insert improbably large number and add 3 zeros], whereupon a bell will ring and the Chosen Few will be given a brief opportunity to offload their precious metals onto a host of eager buyers just when all the juice has gone out of the market, whereupon the World Will End and the Righteous Goldbugs will ascend to sitteth on the right hand of someone moderately important (probably Dave Hodges)

    3. Its all because of QE and Ponzi and they can't raise interest rates and Belgium and printing helicopters and shadow banking and painted charts

    4. It will be alright "In The End" [because there always is an "End" and this is, after all, just one big mawkish Hollywood script with overtones of Ben Hur and Charlton Heston in there somewhere wearing a dress and a teatowel on his head, probably carrying a staff]

    5. Williambanzai or some dozy bint on TF Metals will draw a silly picture explaining it all to the Hard of Thinking

    6. Leeb and Russell will remind you they were right all along, that Rule is still richer than you will ever be, and that Egon von Greyerz is still a moron whether or not the Swiss ask for their gold back or Paypal close down Silverdoctors's account; Harvey will tell you its not real anyhow, and some cretin on TF Metals will religiously cut and paste the entire thing, every day from Here to Eternity

    or something like that

    1. apologies - it appears I was wrong with my Comment above: apparently We’re Close To One Of The Most Dramatic Reversals In History so all bets are off

      Sorry about that


    2. ...uh, sure. True. But, what I'm interested in is if the traders at this site are inclined to believe that we are in for a long bear/flatline (a la 80's and 90's) or if it is possible that we may (soon) see a significant resumption of the bull market (a la Avi Gilburt, et al.).

    3. Hi scruff

      there is a third possible outcome. Can you guess what it is? Sure you can! (I knew you could....)

      what if - and it's only if - Gold and Silver were to...

      naah. you don't want to hear it, do you. Just "average down" and wait for the Inevitable Correction

  15. Gold and silver getting crushed at the moment.
    Look out below :-o

    1. wow, indeed. we may be able to get a glimpse at how gold reacts at 1150 quite soon.

    2. This is a genuine question:

      Is there a possibility that we might soon - this year - witness Gold below $1000, Silver in single digits, and a Gold:Silver ratio over 100?

      Not so long ago that question would have been ludicrously absurd; is it still?

    3. Dude, totally could happen. I think most of the TA folks have said just that. In fact, I am positioned for that to happen...but that wasn't my question at all.

    4. $1000 gold is only $151 away. Doesn't seem unlikely to me at all. 100:1 seems a bit extreme for the Au:Ag ratio since silver's industrial metal aspect would hold it higher than $10.

      1150 support always seemed weak to me so I would think that it would go right down to 1050. But this is just armchair quarterbacking.

    5. ... and in the midst of all the turmoil and all the anguish spake a Still Small Voice of Calm:"


    6. @MDLGTO...unfortunately, I do things on nights like tonight and watch Netdania GOLD/SILVER ticks. Man, your poo-pooing of 1150 was on the money. First stop at 1151...gap down to 1148 in a split second.

  16. The 10 year period of 1970-1980 the BoE increased it’s balance sheet by 300%.

    Gold went from £15 to £371 in 1980. This is a rise of 2500%

    This is not rocket science.

  17. "Of course we have the gold perma bulls talking the usual "capitulation" but such a "strategy" is the last resort of those who have lost so much money in an asset class that they have nothing else to lose at that point."

    That's my case about silver for the latter.
    If I average my long positions on the physical, I guess I bought silver around 33 $. Contrary to gold, I didn't hedge those positions (weird!!), because every single person who "knew better than me" told me that 30 $ was a long term bargain price. I don't know why I was deaf to my technical signals about silver, but when I woke up it was too late, and I decided to simply let go.
    Now that silver is sub 19 $, this is a bearish signal because 19 $ was the 78% fibo of the 10 - 50 $ move up. So...if we correct the whole move, we are headed towards 10 !!!
    And indeed, the support area I was watching at 15.90-16.00 failed to hold prices, after provoking a very weak and fast upwards reaction. What's the point to hege now? If you lost 20 $ on your silver cost, you don't really care losing 5 $ more. So I'm focused on my trading and hedging gold as I've done since it broke 1550.
    Eventually, this lesson gave me confidence and told me to never listen to anyone's advices in this world except from that of traders who have been successful in their business for more than 15 years :)
    I'm not ruined at all, because I was diversified.
    Silver was half my position in gold, and as a total of my "cash" without real estate, they represented together 30%, which is a significant amount (10% s / 20% g).
    But I never averaged down my positions.
    And meanwhile my trading keeps bringing some 20% per year to my account.
    So the silver position is representing less and less of my total portfolio, which is still growing.
    Yes I was not so many years ago a "gold bug" but at least I didnt get swallowed by the BS and I managed to wake up, a large part of it thanks to Dan, whose recent comments convinced me to short and short again gold on my trading account.
    Maybe gold is headed towards 1000 and silver towards 10.
    Everything is possible when major supports start to fail.

    1. Hubert, you are a winner because you can take losses and admit it. For most people, the opposite is the case.

    2. "Maybe gold is headed towards 1000 and silver towards 10"

      I love that. Better 900$ to kill gold bugs completely. Their last Halloween, indeed

    3. And Dan is King of Sell short gold.Thanks


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