“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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Friday, November 7, 2014

LBMA Announces ICE gets the Gold Fix

In what will obviously make the Intercontinental Commodity Exchange crow to annoy the CME Group, the London Bullion Market Association announced that it has picked ICE to manage the Gold Fix.

The new electronic fix will commence in early 2015 with 11 firms intending to participate.

This will be interesting to watch as it ushers in a new age for the gold fix and brings it into the 21th century. One can only hope that is functions smoothly and efficiently and above all, with increased transparency.

At this hour, gold is showing excellent chart performance as shorts are getting pushed out. Here is a quick chart. We now have some solid technical support levels that have formed as well as resistance levels that will make analyzing this market a bit easier.


As you can see, it has pushed past the first zone of resistance noted on the chart. The market looks to be experiencing what I and some other long time traders refer to as a "melt up". It continues to work its way higher as one can see groups of shorts covering as the market refuses to give up much ground on the upside. That causes some who come in to sell into the rally to jump back out which then tends to feed the further upside progress.


I am still most interested in how this thing will close today. Mining stocks are having a nice rally as well with their upside performance bettering that of the actual metal. That is a good sign if one is bullish. Also, that HUI/Gold ratio is correctly somewhat today after striking all time record lows this week.

By the way, there are some reports circulating out of Ukraine that Russian tanks are moving. That is keeping some safe haven buying which can be seen in the upmove in the bonds and the unwillingness of the Yen to move lower.


35 comments:

  1. Interesting development indeed, thanks for the update.

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  2. Trader Dan, hats off to you yet again - that late night post on overnight gold volume was enough to get me to close gold shorts & sell DUST in pre-market.

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    1. MDLGTO;

      Yes indeed my friend. 'Twas a good time to get the heck out of Dodge if one was short.

      I am watching to see how far this bounce will carry and when the sellers will hit it again. Right now, especially with the Ukraine tank thing, no one is going to want to get too aggressive on the shorts side ahead of the weekend when you have that sort of thing to worry about.

      We also have a lot of guys long Dollars and short yen and euro so there is a bit of profit taking occurring in there ahead of the weekend as well.

      Next week will bring a fresh look at things

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  3. the etf round numbers at 15 SLV and 112 GLD are in play. in a downtrend a 3 day bounce isn't uncommon, so that would say wait til monday afternoon to sell any XAU HUI issues bought this week.

    Pork cutouts skidding to near year-earlier level makes #pork look cheap compared to #beef. gobble gobble!

    cocoa continuous chart held support and an initiation bounce today. fundamentals probably support with rebels and ebola in the producers countries.

    make sure you take time off this weekend, 24 hours straight at least no charts no work!


    TGIF!

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    1. 77;

      that is very true about the 3 day countertrend move... we will want to see how things shape up on Monday evening/Tuesday morning.

      Meal volatility is off the chart...

      Moo - moos trying to hang tough but one wonders how long the beef is going to be able to stay up here. Pork is indeed cheap

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  4. Dan, it looks like the shoe clerks thought that the 1180 break would play out like the 1550 break and are now kind of trapped a little bit. Maybe not, maybe just a weekend pop but I do not know.

    As for those who want to look at a pretty good spread trade, buy rbf/sell hof @-37 cents and risk to- 50 cents. Could be 37 cents in this. Remember my plat/gold trade @+210 plat?

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  5. corn and soybeans held that trendline off the oct. 1st lows earlier in the week, today that line comes in above 362 dec corn.

    looks like the reality of a big usda number is hitting corn, and in wheat it's the reality of being uncompetitive.

    Clear harvest weather is forecast for the weekend. The Midwest will turn cold next week with snow likely in the northern areas.

    in stock mkt, If SPY closes under $203, 100% of the gain this week will have come from net overnight gaps (+$1.3). regular trading hours added nothing.

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  6. Hey Dan, I didn't see an email contact form and just wanted to thank you for providing all of this information online, for free. I just wish I'd discovered this site 3 years ago! I'll be the first to admit I got taken by the hucksters at the KWN crowd. Discovering you and Kid Dynamite's work has been a real breath of fresh air for me.

    Cheers,
    Jonathan
    (Recovering Goldbug)

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    Replies
    1. Jonathan X;

      Welcome to GBA - Goldbugs Anonymous - where recovering gold bugs can find solace and sympathy!

      Seriously, glad to have you.

      We do not hate gold over here contrary to what you might have been told. We are simply realists and try to track the sentiment in the market and be on the correct side of a move.

      Being able to hedge one's physical gold so that you suffer no paper losses on its value and actually have the potential to make some profits on the way down, is a very comforting thing. It just takes time and dedication to studying the charts.

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    2. the Bulgarian Bullshitter is at it again with another worthless interview with Easy Al, the most confused fraud out there, although Richard Russell and Henry Kissinger are racing with him to the bottom of the sewer. Starting in Aug of "87, Greenspan showed his colors and stayed true all the way to his pathetic end of disservice to America. A true sociopath, psychopath and panderer to Wall Street and D.C. as has never before been seen. Having said that, gold could still rally from here in its 4 year secular bear mkt. How far? Who knows? Only the shadow knows.

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  7. oh well, gotta cue up brittany spears:
    "Oops, I did it again!"

    that's a full moon low in gold and ramp outa there...same for all the USD crosses that are making new highs o day or new lows (usd/jpy)

    bonds have a ton of supply next week in auctions and bond pit is closed tuesday(bank holiday vetarans day)

    dec CL had those lows 10/14 10/15 10/24 between 79.10-79.40 stopped it again thus far.

    ethanol is higher than RBOB in Los Angeles, must be the same elsewhere, and wonder what that will do.

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  8. Oops, back from work...what a rallye!
    On my side, sold 1/3 of my gold this morning (my morning) luckily at 1134 before the take off. Back home and another 1/3 is out stopped buy at 1170 :( mooh, maybe the worst level, but at least I'll have made a litle profit down there and now my short position is back to what it was before we broke under 1180, so I'm fine with that. We bounced essentially on the support of the weekly time unit downwards channel I traced yesterday, so, as the top of this is channel is still above us, I prefer to wait and see.
    Also the SP500 is stalling just under the 2040 level where I was waiting for him with a small short order.
    Eur Usd is up, sold half of my short at the lows and waiting.
    Should I have gotten rid of all my short position?
    Easy to say after the reaction occured.
    I don't know.
    Usually, I trade like that, stay in the downwards movement, but sell around 50% on a support in order to hope to be able to sell once more 50% after an upwards reaction of a few days.
    Have a nice evening,

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    1. Nice, I got out at 1140-1150. My fiend in USA squares all short before NFP.

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    2. Hubert, So you were wrong then?

      Who wants to buy gold when it looks like this?

      http://oi57.tinypic.com/vxlvlw.jpg

      The buy while the miners were falling were right on this occasion. NUGT up over 35% in 2 days!!!!!!!!!!

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    4. Paper puppet: Do you think the tanks signal the gold/silver bottom? lol

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    5. Hi David,
      I don't know what you call being wrong.
      There are several time units.
      I think that on the one you show, the longer term, gold is in a bearish trend. That's why, since 1320 and as long as we remain in this downwards channel, I am on the short side. Until now, it makes me earn some money, so I'm not wrong in that.

      Now in every trend, there are pullbacks, and I think I identified correctly yesterday the spot where gold was supposed to reverse (I wrote 1130 this week or 1125 next week).
      This, because you can also trace the red line I put in my last chart, crossing 1130, and meeting the inf bollinger band monthly time unit going up at that 1130 price. In that, I was right.

      But I got out of only 1/3 of my position. In that, may be I was wrong. If I had the possibility to monitor real time, I'd probably get out of 2/3 of the position for example, and quickly short back if I saw that we keep going through 1125 with some volume. In any case, I could also see the faster time unit confirming the bounce and 1130 acting as a support (but well, when it happened, it was the middle of the night here...gotta sleep :)).
      So I think I was correct about anticipating a bounce at 1130.
      What I did probably wrong was to take insufficient profit at that time, and it would have been more clever probably to take at least 2/3 of my profits. I wish I knew how to improve my skills here.
      Now I think that gold may go through 1180, but won't make it above the upwards resistance of the red channel. So, as usual, I sell when we hit its resistance, and I buy when we hit the support. I should probably do it with more conviction.

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    6. David B;

      Let me try to explain something to you. When you ask a question like "Were you wrong HUbert?" it betrays a lack of understanding of the very nature of trading.

      It is not a matter of being 100% correct in one's assessment of the market on every trade one puts on. NO ONE has a track record like that. If they claim they do, they are liars.

      What matters is very simple - you attempt to establish the direction of the primary trend in a market, assuming there is one and you trade accordingly. Sometimes the trend comes to an end; sometimes it does not and it continues.

      Trading is an art that requires one to try to discern when and where a trend is ending and a new trend is beginning or perhaps better put, a halt in the primary trend.

      Hubert has an excellent approach to the market and you might want to show him some respect before posting something like you did.

      For the record, more money has been made on the short side of gold over the last two years or so than from being long and wrong. Trades taken from the long side have been very fleeting and have required one to snatch what profits they might have made rather quickly. Just remember that...

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  9. I think USD is the best bet. When risk on people chasing USD, when risk off peope chasing USD and gold as well.

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  10. Soybean futures were higher for the third day, but still finished slightly lower for the week. Preliminary data show daily volume in the January contract was the lightest of the week a sign that traders likely moved to the sidelines awaiting Monday's USDA numbers.

    Higher cash bids at river markets indicate still strong export demand for soybeans and soymeal despite the advancing harvest. At one Iowa river terminal the basis bid improved 18 cents in a week. Recent price gains appear to have farmers content to hold onto soybeans, providing they have the storage.

    before GC ES et al open sunday there are china trade balance and import/export data for oct. ... after futs reopen sunday will be china PPI & CPI

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  11. That large weekly bullish hammer on gold (with positive divergence on my weekly stochastics) looks very constructive for the bulls. Price action will tell soon enough

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    1. ezodi: Yeah I see the hammer. But to be honest the major floor being taken out last week and the current "more of the same" safe haven buying activity which did nothing to stop the broader downtrend all across this year is not encouraging.

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    2. I agree with you on both accounts. I'm not sure if you follow Elliott Wave patterns, but the (mildly) constricting nature of previous 1180 floor (lower highs and ever so slightly higher lowers) appears to triangulate and in EW that signifies a final move lower which we've now had. A break back above 1180 will be very telling, though I agree with you that at the moment all we have is a hammer underneath resistance. For the bulls I'd also point to a diagonal trendline from around 2004 through 2008 lows which we're just about hitting now for support.

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    3. Yes I'm familiar with some EW, and like to check up on it from time to time. My main problem with it is that (to me) it feels like driving a car straight ahead while looking at the rear view mirror the entire time lol. I do see the very slightly upward angled nature of the 1180 floor you mention. A break back above 1180 that appears sustained, like hovering over 1200 for weeks, will make me question the downtrend, but pokes above it like say, 1186, that keeps losing its footing will still have me suspicious. I sort of imagine plenty of those entities that are underwater longs, which Dan has mentioned, are waiting for others to make the first move in hopes that it will go back up so that they can dump and minimize their losses. But anything can happen at this point - Many may have been expecting a waterfall event like the previous two times (1550 and 1350) and it just seemed muted this time, but it could happen and take many by surprise within the next several weeks?

      Anyways I read Avi Gilburt's (EW man) recent analysis and thus far he appears, yet again, to be correct in warning about a rally that will take place after falling to the 109/111 region in GLD, that could extend as high as the 114 region (in process now), to be followed by a washout to the 95-105 region with the potential of it overreacting and declining even deeper than that. I mean so far it seems to be unfolding as he says, with zig-zags in between to be expected. Never linearly.

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  12. Gold clearly in a downtrend. After Putin withdrawal and USD find its strength again, gold will plummet. If you good in swing, you can long

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  13. Linh, Putin, like most leaders out there is very over-rated; do not pay attention to blogs that think they know something

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    1. He is the reason to short Crude and Rubble

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  14. Bought DUST just before the close. The miners' numbers just suck horribly, and I'm betting the bloodbath will resume next week

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  15. hello
    I would like to invest money and I have heard that it should be very profitable to invest in gold. You are professional. So I am asking you, wether I should invest in gold?
    And I also think that more transparancy can be achieved by electronic gold fixing.
    Regards

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    Replies
    1. "Danger Will Robinson danger"

      Please go back and read Dan's last dozen analysis of Gold and the gold bugs. Then think about it real carefully.

      Gold may bounce here for a trade and some of the readers here are trading it with small positions and tight stops. Longer term (weeks or months) gold is in a down trend. Buying here is very dangerous. Don't be in a hurry. Dan will announce when he sees and up trend in gold. Could be years from now and at a much lower level.

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    2. @ Mike Ehlert
      You're right, I have to read a lot to learn more about the market. In this topic I am a beginner but eager to learn. Your answer helped me a lot. But it amazes me that a friend of mine buys gold, every now and then, when he has enough money for it and says that he can only makes a profit. But when the market is on a down trend at this moment, then gold loose value, am I right? So he is probably not familiar with the current market, is he?
      Regards

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  16. I want to see GLD stop bleeding tonnage. Until I do very cautious despite this reversal. GLD had a bad week and now down to 733 tons as of 11/6. However I am dipping my toes in USLV at 20.1 with stop at 18.25 (15 silver)

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