"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


Friday, May 30, 2014

Some thoughts on the Gold Commitment of Traders

For gold bulls, this past week was rather traumatic to say the least. The near two month long support region centered at the $1280 level gave way resulting in a drop of an additional $40. The combination of reduced tensions in the Ukraine, some improvement in key economic data ( although the situation remains mixed ) and tame inflation, along with a soaring stock market, has resulted in Western investors selling gold and moving the funds into equities in order to gain the best possible return on investment capital.

Gold now enters a seasonally weak period during the month of June so additional losses are certainly possible as we move forward into that month. It looks as if there was some late-in-the-session short covering by bears in the miners this afternoon as they rang the register on a very profitable month.

To give you an idea of how successful they were - the HUI started the month of May at the 225 level and moved all the way down to 201 today before the slight bounce to end the month closing at 206.

The GDXJ, fared a bit better ( because it has suffered even more severe losses over the last couple of years than the larger caps) as is started the month at 36.50 and fell to 32.43 ( almost entirely erasing this year's gains) before it closed at 34.

Next Monday brings the start of a new trading month so it will be interesting to see how players position themselves the first entire trading week since the Memorial Day holiday shortened week.

For gold the technical damage done this week was severe. However, based on this afternoon's Commitment of Traders report ( which unfortunately did not include the $20 drop over the last three days of this week) the entire group of speculators, every category, still, in spite of the deteriorating chart pattern, remain net long.  That concerned me last week and it concerns me still this week.

They are still not getting out meaning that their losses are continuing to grow. At least in silver they have finally figured out which side of the market to be on ( short ) and might perhaps be making some money for a change, but when it comes to gold, it seems old habits die hard.

What I wanted to do was to graph out in visual form something showing the reader what the problem is for the longs in this market at the moment.

Take a look at the following chart which has as its beginning point, the middle of December last year. As you can tell, the gold price, which is on the right axis of the chart, was near $1200 then ( closing price). It climbed all the way to near $1381 on Ukraine fears before plummeting back to earth where it currently sits as of the close today slightly below $1250.

The blue line on the chart is the SUM TOTAL of all three categories of SPECULATORS LONG positions only. I am not noting any short positions or the NET position but rather just the Long positions.

If you note the second and third vertical lines in mid-April, you can see that there was a large influx of speculative buying. A great portion of this was related to safe haven flows tied to Ukraine fears. That buying was met with heavy selling by both the Commercial interests ( possibly some hedging by some miners) as well as Swap Dealers. There was also some selling in the large speculative categories as well by that was outnumbered by their buying. Some of the old pros and those with past experience knew that selling gold into geopolitical fears was the proper way to approach the metal as those rallies tend to be fleeting as a general rule.

Nearly all of those brand new longs, put on over a three week period or so, were put on when gold was trading between $1300 and $1290. As the crisis in Ukraine seemed to cool down, disenchanted bulls began giving up as can be seen by the fall off in their numbers early this month. About half of them threw in the towel (look at the horizontal line). That translates to another 9,000 or so that were left and whom did not get out which had paid north of $1290 for their gold. We do not have all of the movement among traders for the last three days of this week unfortunately but suffice it to say, a fall below $1280 was not good from a technical standpoint but from an account management standpoint, a further fall to $1260 and then to $1240 means some very severe losses for that crowd that purchased their gold above $1290 and on towards $1300. One has to wonder how deeply capitalized some of these guys are because included in this number of total speculative long positions is the little spec, the most undercapitalized trader of them all.

It is interesting also to note, ( go back to the first vertical line in early February, that almost all of the longs that bought into gold when it was first near $1260 and then carried towards $1380 are now gone from the market. However some of them still remain ( about 6000 or so). Those 6,000 put on long positions when gold was near the $1260 level so they too are now underwater completely. Their paper losses are not that severe  - yet. The question is at what level will their losses be sufficient to force them to exit?

What I am getting at is the fact that we currently have a still sizeable contingent of speculators on the long side of the market who are underwater on those long positions - if they did not yet exit Wednesday, Thursday and Friday of this week. We have no way of knowing that for sure until next Friday. My guess is however, that some of them did liquidate, either by choice or were forced out by margin calls.

Go back to the beginning of the chart  - As you further see from the chart, there still is a large number of these specs who moved onto the long side back when gold was near $1200 and who then added on more as gold climbed above $1250 in January. So far, those positions are safe, which is the reason for this continued bullishness among the specs when it comes to gold, unlike silver which is losing favor among them.

In going over this chart, I believe gold will need to fall BELOW $1240 to kick some of this crowd out with more coming out if gold falls through $1215.

If this does happen I would expect to certainly see the speculative side of this market also begin to ramp up NEW SHORT positions at the same time. That would bring us selling from two directions - long liquidation and fresh shorting.

 Perhaps we might see a true, lasting, bottom if that were to finally occur. In spite of what many seem to be saying, sentiment towards gold, while it has taken a big hit, remains, based on the still sizeable number of these speculators who are long at the Comex gold market, bullish. That is quite astonishing but at least we know some of the reason why. Many of them are into gold at much lower levels and still have their positions in the black. They do not need to exit as of yet. Just look at that blue line however and see where it stands today compared to where it stood at the middle of December last year. There remains enough specs on the long side to pressure this market lower if those key technical support levels do not hold and they are forced to abandon ship.

Gold bulls certainly do have their work cut out for them. As always, we will watch the price action and let it be our guide.


  1. Looks like were at a crossroads as far as the long spec positions intersecting the gold price on the way down.

    Last time that happened (within the time parameters on your chart) the longs capitulated a bit and followed the gold price trend and they reduced more of their longs in mid-March as gold continued to slide.

    Looks like more of the same could happen in June. Sunday nights action when the markets open back up should be quite revealing in what to expect going forward.
    You have to laugh at the assertion by anyone who believes this has something to do with empty vaults, cartel desperation and some type of day of reckoning for them.

    Thanks for the update and objective perspective.

    Everyone have a great sunny ¤ weekend!

  2. Excellent post, thanks a lot!
    If you smell blood here on the long side, do you think a few large shark hedge funds on the short side may hit the 1240 $ level and push their advantage?
    As Eph also mentioned before, gold is more vulnerable than last time it was around 1250, as sentiment is more bullish now.
    If we break through 1220, the long term upwards support of gold I'm following on the monthly time unit would also be broken, fueling the move down.
    I definitely don't want to be long gold for now...

    1. Hubert;

      Hard to say my friend. That is always possible but they would need some sort of backdrop to allow them to get that aggressive. Something like a piece of economic data that would come in stronger than expected.

      The lower the price moves the more it should stimulate Asian demand ( speaking mainly of India and China) which tends to slow the fall in price. That is why I can see more of this grinding type of move lower rather than some sort of sharp plunge. Sort of a situation where there is a gradual resignation on the part of some longs that gold is not working for them and they begin to finally give up on it, reluctantly I might ad.

      Of course, I could be completely wrong which is why any sort of expectation I might have is probably as worthless as the rest of them floating around. At least for now the price action is confirming mine - notice I said "for now". We both know in this business that one is only as good as their last trade! :o)

      Enjoy the weekend bon ami!

    2. Thanks Dan,

      So I'll stay happy with my short on copper and wait for the best entry point to short if gold prices allow it :)
      Have a great sunday too,

  3. Thanks for the post! Do you know why there seems to be a strong long term support on the number of Hedge Fund Net longs at roughly 105K? For some reason this number seems to always hold. I wonder if this will act like a “price support" and when broken, will break very quickly. It almost seems like this number is the "line in the sand" for gold. Thanks

    1. eric webber;

      Can you tell me if you are using the futures only data or the futures and options combined data Eric?

      The reason I am asking is because the futures and options combined data shows that the net long position of the hedge funds has been well below that 105K level many times already this year alone.

      At the beginning of this year, the hedge fund net long position was 34,104. It spiked as high as 138,429 in March when gold made its peak this year but has since declined to this week's 68,393.

      The number of OUTRIGHT LONGs is a different matter however. At the beginning of this year that number was 106,675. It climbed as high as 151,939 in March and has fallen to this week's 122,275.

      In looking over the data, the number of outright longs has reached a low range of between approximately 105K - 108K for all of 2013.

      In 2012 the low in that number was 103, 695 back during the week of 7/24/2012.

      in 2011, the low reading was 126,992 the week of 12/27/2011.

      in 2010, the low reading was 168,540 the week of 7/27/2010.

      in 2009 the low reading was 107,083 the week of 1/13/2009

      in 2008, the low reading was 69,580 the week of 11/18/2008.

      I am too lazy to go back any further my friend!

      Let me know what you are referring to exactly and perhaps we can glean something from that.


    2. Thanks for the response! I generally get the COT info from you :) So, I guess I was referring to your March 8th 2014 post where you spoke of the “Hedge Funds outright positions in gold”. You had a plot running from Jan 2012 to March 2014. Looking at the OUTRIGHT LONGs, it just looked interesting, in that it seems to not easily drop below ~105K during that time period (even as Gold dropped below $1200). I have no idea if this means anything. However, it may make us wonder that if the outright longs drop below ~110K again, will the selling stop from this group. If the selling continues and the outright longs plunges below 105K, will it accelerate dramatically? I wonder if this 105K of outright longs is predominately made up of old positions that were taken when the price of gold was much lower. And if this group gives up, could it cause an avalanche of selling?

  4. Darkpurplehaze is anticipating Sunday night's action. I took a look at the last two months' trading in afterhours silver. On all but a few nights in April and May, the overnight market opened with a line straight down. Regardless of the sentiment at the end of the NY session, and the price action to follow. I'm sure this isn't Yellen placing these trades, but it does seem to indicate that some are trying to push the market around, pretty constantly and predictably.
    Does the other side of the trade not behave this way? If not, why not? Is a quick push up or down irrelevant, and if so, why does anyone do it over and over? Is there any reason to think that these trades are not intended to start a leg down? I'm not saying this is manipulation, it's trading, but is it normal?

    And for you absolutists: Since the fed is legally allowed to push metal prices around, why is it impossible that whoever is doing it is working as an agent for the fed? I know the argument is that they don't need to push it down because it's already headed that way. But why not give it some extra tweaks along the way? All perfectly legal. .How long would a pattern like this of immediate sharp drops have to continue before there would be some reason to believe that it is not just regular market action?

    1. Gregory;

      Soybeans do the same thing my friend when they open on Sunday evenings. Livestock markets do the same thing when they open on Monday mornings. Currency markets often do the same thing when they open for trading Sunday evening here ( Monday morning in Asia). Same can often go for stock index futures.

      Yes, it is normal and no it does not mean there is a sinister force working in league with the government to do so.

      I honestly think it will help your objectivity and approach to markets if you can just let go of that notion and try to see the markets without that particular set of glasses on. It colors everything that you see.

      Not trying to criticize you - just trying to help you understand how markets trade.

      Try trading soybeans and hogs for a week or so and then you will see what I am seeing. For that matter try coffee if you are really brave ( that is a joke - I do not even trade that market!). The wild swings in price will dispel any notion that you have about gold or silver being in a special class.

      Have a good weekend

    2. I agree with you that it is essentially an academic question, since the answer does nothing to inform a trader. But it's still a legitimate and interesting question, since metal is the only historically useful alternative to fiat. Does fiat benefit the average human, or harm them? If the answer is the latter, then it is sinister to prop it up at the expense of money that holds its value, money that doesn't require every person of average intelligence to either play the markets to stay ahead of inflation, or become a ward of the state. I don't think you can have both a welfare and warfare state with a metallic currency, so it may be a question that affects the entire world.
      I frankly don't care too much, personally, what they do. I buy raw silver every day, and can hedge it. But it's an important question. If they are doing it, they should stop.
      That's my diatribe, and I hope you can see it has naught to do with trading. It's about elites maintaining their power at the expense of people in general. I don't care how their manipulation affects traders, or the day to day price, I care that it can happen, by your admission it has happened, nutjobs(?) like James Rickards say there is conclusive evidence that it's conclusively proven, and it is propping up a system that is impoverishing people and has been doing so for generations.
      Your answer that it happened but it isn't happening now is based upon a falling price, and the fact that other markets see even wilder price action. (If you think about it, the gold market should be no more wild than the market for the dollar). But you have no idea, looking at spikes, if zero or twenty were initiated by actors working on behalf of the Fed. It's legal, they've done it repeatedly in the past, and power does not lay fallow.
      Do you still insist that it's not happening, or is that really __just your best guess__?

      Thanks Dan. Great site.


    3. I think the worst mistake that could be made would be a return to a hard money gold standard system. I think modern economies need fiat (created out of thin air) in order to function properly. The problem is this fiat creation has no constraints. The artificial demand for the $USD is waning and I believe a new monetary system will emerge at some point. New debt will no longer be accepted as settlement for old debt. Global imbalances are unsustainable. I think gold will play a role in the new system and I think that is why we have seen CB's accumulating gold.

  5. Hubert and Steve,
    I respect your opinions and agree that Armstrong isn't the chosen one. Maybe he suffers from acute dyslexia when it comes to spelling, and maybe he does fancy himself an expert on political and monetary history. He has mentioned that he doesn't need money, but he does need to pay his employees somehow via "reports" etc. and he doesn't charge for his blog or even advertise on his site so at least give him some credit for that. Trader Dan and Martin were the only ones I could find on the internet that were warning of a correction when all the hucksters were screaming to buy with both hands, and to the moon Alice. I respect both of them very much and think that both Dan and Martin have much to offer us in trying to figure out what is headed our way in these markets. I look to Dan for what's happening in the short term, and to Martin for what could be coming in the medium to long term. So far so good as I have been able to salvage a sinking ship by getting away from the huge loses I would have taken by staying in the markets. Being in cash and watching has taught me much over the last three years, and the reason I take up for Martin and Dan when people give them crap stems from saving my wallet from huckster torture.

    1. point well taken, John, and have a good weekend!

    2. Hi John,
      Agreed with you that it is worth reading his blog especially on the long-term point of view, but I don't want to see the "guru" mentality that I found on other websites, and his selected answers to questions starting by "you are so great" are feeding this. One must remember that even though the guy is bright, he doesn't always hold "The Truth". "Only Human" would say agent smith in Matrix. I won't be the blind follower of one guy on the web. For example, his attack on Picketty can be criticized. He is making a big deformation of the guy to settle in his own point of view, but I don't find it very objective. So, let's just say that his blog is useful, just as jsmineset or anyone's blog whose owner seems to have real brains between his ears, but it shouldn't replace your own analysis.
      Regarding his forecasts, I have no negative track records about him yet as I haven't followed his forecasts, but I'm quite decided to follow them when he makes one, so let's see and check if they are really worth something or not. IT's only afterwards that I will know :)
      Have a nice weekend,

    3. > "Trader Dan and Martin were the only ones I could find on the internet that were warning of a correction"

      In fact, Elliott Wave technical analysis correctly called both the CRASH of gold and silver on a timely basis. Several KWN "analysts" acknowledged this by saying, "The Elliot Wavers will be crushed." LOL

      Gold is currently in a corrective Primary Wave 4, comprising a double combination structure (currently in minor wave B down, targeting 1178-1202, of intermediate wave Y, targeting about 1360 or 1434, depending on the depth of B and whether the structure shows as a flat or triangle).
      The purpose of Primary Wave 4, which will be a year old this summer, is to take up time while moving price sideways, overall.

      When Primary 4 completes (with the end of intermediate Y described above), then Primary Wave 5 will begin and take the gold price down in 5-waves to a new multi-year low price (target TBD based on end of P4 and fib ratios of course). Only after that, which is still many months away, will the gold bear finally phase end.

    4. "currently in minor wave B down, targeting 1178-1202,"
      I'm not quite familiar with Eliott except many say it's difficult to know in which wave you are because many variants can be explored.
      But at the moment I don't have an immediate target of 1200.
      Too many things make me doubt we'll go there directly.
      On the daily time unit, both CDurs (daily, weekly) are in the low areas, meaning impulsion down has been consumed. Bollinger band weekly is in vicinity. Plus the 77% fibo I mentioned at 1240. I have a "feeling" (might be wrong) that gold could just as well bounce back towards 1277, so I'll pass the urge to short right now.
      Let's see what happens :)

    5. The whole move since Jun 2013 low looks like a wedge that is typical in wave 4. The question is should we get another bounce once it hits 1200 or a crash through that 2013 low to kick off wave 5? Only time will tell.

    6. I went from classical TA to EW for gold & currency because EW seems uncannily accurate when done properly, though it’s more difficult.

      EW waves are fractal, meaning each wave can be broken down into another series of waves. I attended MA’s technical seminars and observed similarity between EW and what MA has “discovered”. When done properly, EW is uncannily accurate for gold & FX, tho imperfect; thus the need for an alternative EW count or MA’s “cycle inversion” contingency.

      Commonly poor EW wave counts tarnish its reputation, just like amateurish TA work cause skeptics to view classical TA as voodoo and reject it in favour of pure “fundamentals”. I’m cool with that because their losses are often our gain!

      Corrective B-waves (of an A-B-C correction), like the current minor wave for gold, are difficult to analyze because they present the most possibilities. Within minor B, on the hourly chart Gold either:

      1) Ended minuette wave 1 @ 1243 and ended minuette wave 2 with a shallow correction @1252 on Friday. Minuette 3 down just began with slight increase in downwards momentum. This count would be invalidated if gold moves above 1260.5, otherwise subminuette 3 should target 1204 = 1.618 X length of subminuette 1 this week, or possibly 1182 = 1.618 X length of minuette wave 1.

      2) Alternatively, gold ended minuette wave 1 @ 1243. Minuette wave 2 is still ongoing targeting 1267-1280. Fits well with MACD but this count makes the subminuette waves within it have an odd look.

      Either way, gold will ultimately head to new lows in Primary wave degree #5, after Primary 4 ends higher than here. As I explained last post, it remains to be seen whether P4 ends as a double combination zigzag (my main view) or as a contracting triangle (my alternative view)… the depth of this minor wave B will ascertain which. B must eventually break 1202 to validate my main view, otherwise B is a triangle. Primary 4 would be invalidated if gold reached above 1533.

      Wish me luck :)

    7. Good luck J :)
      The only thing I use related to Eliott are Fibonacci levels, but I find them very useful.

  6. Dan,
    Thanks for the reply in yesterdays post and I agree with you 100%. I also wanted to apologize for sending you that clip on Warren Pollock last week. I should already know you are way too busy for offering your opinion on somebody else's opinion. His ideas are quite unique and he paints the future with a rather dystopian brush, and I was only asking your opinion because I respect you so much.

    Thanks for all that you do Dan.

    Best Regards,

  7. I still say that there is a 60% chance that the drop in gold was a shakeout and gold blasts up from here. Exact same thing happened during one of the Nasdaq market drops in 2001, where every single support zone was broken, and the market reversed, came back into the trading range, and rose for 6 weeks slaughtering the bears before the market rolled over again.

    Sure feels like the same setup to me.

    Bear market rallies are vicious and fast money can be made, and GLD and GDX are now due to clean out some shortsellers.

  8. Venezuela demanded their gold, price dropped 200.

    Germany demanded their gold, price dropped 500.

    Now Austria is demanding an audit of their gold and – surprise, surprise – the price drops all week.


  9. Paul:

    No doubt some people want their gold and are demanding it.

    However, an even higher number of hedge funds and disgruntled and disallusioned CIGA's and GATA boys were dumping even faster, lol.....

    I think the $1.72 low print in TRX probably marked the last of the selling by the suckers who bought into the "This Is It!" hysteria from 2 years ago.

    There is only so much pain one can take from being bamboozled and suckered by these carnival barkers.

    I think for the most part, many have been washed away, seeing their retirement dreams vanish.

    1. This comment has been removed by the author.

    2. Mark - Regarding TRX, 1.72 might be the low print for the time being. But the company only has something like $4-$5 Million (max) cash left ($5.7 left in Feb per 20K report). Even without ramping up for production, their burn rate is something like $1mil a quarter. They are running out of cash. They either have to go into production with cash on hand and generate positive cash flow by, say, beginning of next year (back of envelope), or they need to go to capital markets for more funding. So there will be a moment of truth coming up in the next few quarters.

      What is the value of Buckreef? Since the company's other projects are essentially dead in the water, you have to assume that the NPV of Buckreef is the value of the company (currently about $180 million) and you get the other properties for free.

      But I'm guessing that the company will need to go to the capital markets. The question is, if they are even interested, how much ownership will new investors require for the amount given. The problem, of course, is that the company (TRX) has not posted any economic feasibility for Buckreef on its website or Edgar filings. Nor has it posted any capital requirements. These are the sine qua non of investment decision making, whether you call it IRR, payback, NPV, whatever.

      On top of that, the company has transformed itself into a production company in the past two years, from a royalty/exploration/deal making company. Simply put, it's a different skill set and I don't see a lot of boots on the ground with a lot of production experience.

      I think that's a lot to take on faith in this market and so it's not likely that 1.72 will be the bottom print. But hey, that's just me.

    3. @Mark-The current NI-43-101 for Buckreef states that "Given that no current mine design or process flow has been concluded for the TRX low cost business plan, no economic analysis could be undertaken." No plan.

  10. Of course the "gold" the hedge funds are dumping is just paper proxies designed to track price action. The gold Paul is talking about is real. I wonder if and when the market will recognize the difference. I don't know anyone that understands why they own physical gold that is selling physical now. Most like me have been adding to their stack at these sale prices.

    1. Gene, last time I checked, my coin dealer buys and sells physical coin at prices which track GLD or COMEX prices "tick for tick".

      Very little variation.

      So all this talk about "phyzz" vs. "paper" is just a con job.

      I'm continuing to buy physical platinum, as it has build an absolutely monsterous base, and I'm making a big bet that it breaks to the upside.

    2. Mark if you read what i said you would realize that I understand the market does not recognize the difference. I believe at some point it will. A coin dealer buys and sells phyzz to make dollar profits. I buy and hold phyzz because I have no faith in the $USD as a savings vehicle. Totally different.

  11. i agree with Mark and Gene (both!) above. i just don't think that there is going to be one last dramatic wash-out. those selling now, are selling their remaining stack and miners to live on. no one is selling to rebalance down here. no one will be panicked out this late in the game. most of the miners aren't even worth selling at these prices. who needs any more tax loss!

    even those who have rode the S & P to new highs understand that there are no fundamentals behind it. so maybe the metals continue bleeding, but at some point, there will be no blood left to let. i know i'm just about bled out, and yes, my retirement dreams have pretty much vanished.

    one tiny little bit of consolation is that i never bought Shillclaire's TRX. unfortunately, i did fall for his hype and stupidly did buy a load of junk silver at about that time, and also EXK. that was the last dip i ever bought, and it finished off my retirement savings. thanks Santa.

  12. just adding a caveat to my comment above...

    not intending to disagree with you in any way Dan - i never considered myself a trader. so my opinion is not of a professional trader, speculator, or other money manager. i'm just one of the little guys that well meaning pundits are always trying so desperately to help.

    i was invested in miners and metal because they were presented as a prudent investment. i just have been out of work too long, sold my winners first (broader market, bonds), and now am taking serious life changing losses selling the rest of my miners early this year, and now my actual physical metal. i have lost more in the last 3 years, than i made in 15 years of relative success managing my own IRA.

    good luck everyone and listen to Dan. his approach as far as i can tell has never put a single person out on the street yet.

    1. Peckerwood, nothing forces you to sell all your metal. Why not consider simply cutting your losses by selling 2/3 of it but keep the remaining part? If you sell it all, I don't think you'll ever have the courage to get back in the train when prices finally reverse up, am I correct? Just keep a small part of physical gold and forget about it, don't follow prices every minute. Instead consider you own a certain quantity of physical gold for its own qualities and diversification, that's all. Good luck,

  13. Do not for a second trust "we are a producing company now" jim sinclier (during the 2012 agm)

  14. Peckerwood,
    I feel your loss deeply. One thing to consider though is that there's possibility, typical for the small and inexperienced investors, that you bought high (which is more like certainty than possibility) and that you are now selling low. Many, many investors have made the same mistake over and over again. I do not say that we have seen the absolute low in the metals, but there is a possibility that they might turn-around shortly after you are out of your positions, so you'd be losing on the price going up (not really losing but not recovering your losses).
    Many people here claim that the place to be now is in the stocks, because they are in the upward move, but they are nimble enough to reverse their course quickly enough. Nobody will tell you to get out of the rails until it's too late, like they are saying now that investing in the metals 2011 to 2013 was a mistake, like we don't know that. All I'm saying is that there's more than one way to skin the cat, and if you are the cat you'll have to be quick and smart enough in order to avoid the skinning. No one, and I mean NO ONE, is looking for your and mine best interest.

    1. I still own too much silver. The thing that sucks about accumulating metals is what does one do with it? Sales are supposed to be reported to the IRS, In a way I would rather report a gain to the IRS, because large losses that offset other income could be onerous to prove, as most pay with cash. I just hedge with futures. I know those eminis are illiquid compared to the full contracts, but to smaller holders they offer the cheapest downside protection. a silver emini is for 1,000 ozs. gold is for 33 oz (about that). Just roll it over.

      Silver could bleed for the next couple years, but it is a vital industrial metal used specifically for things like military buildup. It can be used in place of lithium, copper, etc, for wiring, solder, microcircuits, and batteries, as it is much more stable and effective. Nobody talks about the traditional uses of silver anymore, like photography. It is a vital metal. At this point the downside is perhaps a few bucks.

      Sure the tape is bearish. I look at these charts basically 24 hours a day, and it just bleeds all the time. But it was only a few bucks higher after April 2013s bloodbath. I hear people talking about 10 silver, but the US admittedly used the 2 bil oz silver defense stockpile to suppress the silver price. President Johnson and VP Cheney both talked about this. A huge catalyst for the sharp price rise in 2005 was Cheney's admission that all that silver was gone. I don't know why he said that, but he did. We have seen what silver has done since then,

      Silver is just too important to the world right now - and especially as war spending increases as the globalist controlled govts plan for the upcoming global war that will be used to bring in the NWO.

      Seriously, at this point, unless you need the money to live, the damage is already done.

    2. I added back the extra short here at 1250 Friday PM, the one I covered at 1245.... I like that 1250 number.

      Dan is right, a bleed is in the cards. That only means less futures contracts turnover. But this bleed could try the patience of many people as it could last for another year. Juns is not a good month for gold.

    3. Eph 6:7, I mostly agree with your posts. $10 silver is like $200 gold predicted by Nadler in 2009. We all know what gold did since, and even now $200 gold looks like S&P @ 300. People just come out with this crazy numbers like $50000 or $200 and they are taken seriously. I know it's an anathema on this site, but I plan to accumulate from this point on. The things always go up, but then when you least expect them to they go down, and then when you least expect them to they go up again ...

  15. thanks Abraxas. but i have little choice but to sell what i have left to live. it has been a cruel joke that i lost most of my life savings because i was scared out of the general markets and into precious metals at the worst possible time. i take plenty of blame for that, but it angers me to see the very same pundits that i followed unapologetically pumping the same story. guess what - the economy stinks, but the broader markets are up, and gold is hated. i do not have any more more money to buy another dip, or to wait until the moonshot next week. in fact, i am in the process of moving to another city where there is a better economy (hopefully to find work) and i'm having to sell what's left of my "stack" to do it.

    i was an easy sell i admit. the inflation story really made sense, and i have relatives (now dead of course) that lived through the Weimar inflation. all one can say is that Bernanke pulled it off. next time i decide to fight the FED i'm going to have to bring bigger guns.

    i know there are many out there reading this in the same situation. try not to blame yourself. do what you have to do. it's a process, but at some point one has to accept the loss and move on.

    sorry all for the tantrums, and all the crying. :-)

    1. You should have read the book "Gold Bubble" By Yoni Jacobs. Without a doubt the best book I have read regarding investing or trading. He wrote it in 2011 when gold was high flying, and he was ridiculed BIG Time. They are not making fun of hm now.

    2. Peckerwood: you are honest and that is honorable. No apology required. I fell for the same story to a lesser extent.

    3. Peckerwood,
      I wish you all the luck. Sometimes the goddess of Luck, like the one of misfortune, comes unexpected and unannounced. It is good that you shared your experience for the rest of us to hopefully learn something (although I bet the most of us are going to repeat all of the mistakes over and over again).
      As for the Turds and Santas of this world, I share your sentiments completely.

    4. Peckerwood
      I feel your pain. All the best.

    5. Good luck Peckerwood. See my answer to your previous comment above.

      "thanks Abraxas. but i have little choice but to sell what i have left to live. it has been a cruel joke that i lost most of my life savings because i was scared out of the general markets and into precious metals at the worst possible time. i take plenty of blame for that, but it angers me to see the very same pundits that i followed unapologetically pumping the same story. "

      I think your quote is a great example of the vulnerability of the gold community.
      Don't fell guilty please, you've a made a pretty standard mistake, one that most traders do when they begin their career as well and simply move on and learn from it.
      The sad thing is that you want to sell it all now.
      Simply consider this :
      1) From its top at 1900, gold already lost now 650 dollars. Selling now makes you lose 650 $ from the top, which becomes a real loss. How much more your losses can aggravate? I mean even if gold plunged another 300 $, the additional loss and pain would be only less than half that you already lost.
      2) You don't know when gold will finally reverse up. Might be now. Might be at 900. But I hope we agree that it's very unlikely it will reverse at 500 even in case of a massive capitulation.
      3) So why don't you consider keeping some of it? OK, sell half now, or even 2/3, but I think you should keep some 30% of our gold position long, and forget about it a for a few years. Gold's very long term trend is up. Can't be otherwise with fiat printing. Worst feeling for you would be to have sold all your gold and see it suddenly burst to the moon. Keep a bit of gold and move on.

    6. thanks guys. you people seem very real, so the above sentiment really counts for something.

      good night all.

    7. Hi Hubert. sorry but we crossed in the mail. i hope for a miracle so i can keep some of my stack. i stayed too long in a dead city waiting for the economy to turn. i think it's more likely Jesus will return first. of course i'd prefer a moonshot in gold over the 2nd coming, because if Jesus does come back right now, he's gonna be pissed. :-)

      probably had too many beers one a hot day. off to bed i go.

      thank you all.

  16. http://www.mrci.com/pdf/pl.pdf Mark, I am curious as to where you see a

    massive base in platinum? The dailies and weeklies do not excite me either. Of course I am talking my book, as I have sold plat vs. gold, so we shall see; sparks

  17. Steve go to Kitco 5-yr. chart and you will see what I mean.

    Palladium is even more impressive.

  18. Mark, tough call; you may be right.

  19. Steve-
    How do you like using mrci? What is your evaluation of this service?

    1. Trinity trader; I only use them to remind myself of how irrational prices can get, so as never to allow myself to get caught up in a parabolic blow-off and going broke. Monthly charts are notoriously hard for me to trade off of but I like to look at them so as to maintain respect. Example, the cotton in '11. They say you gotta go bust at least twice before you learn anything. Well, I have done the former and the latter is a work in progress. Good luck!!

  20. Copper bounced down on weekly time scale, within descending triangle.
    Support near 310 daily time scale and channel upwards.


    1. So, the daily trend is up while we are in this channel above 310, while weekly (stronger as longer term) is down as long as we are under 320.
      People usually look for consensus until one side loses.
      As long as there is "enough room" to trade long on smaller time units, prices may meet buying near 310 upwards and sell under 320 downwards, building a triangle for copper prices, until whether daily time unit up or weekly time unit wins and provokes the new imbalance.
      Therefore I'll carefully get out of another 20% of my short position on copper if prices hit 310 area.

  21. Dear Dan,

    Money Velocity again fell. That means Borrowing Lending Consuming is just falling.

    Also Q1 GDP figures show a recession.

    Yellen has said that taper is fully data dependent. So maybe by July she may pause taper and maybe later increase QE in 2015. By then it will be clear that FED money printing has passed the point of NO RETURN. Such a conclusion will create hyper-inflationary demand for hard assets.

    1. Interesting Video : Confessions of Ben Bernanke

    2. Enjoyed the video.Thanks. (I thought the world loved US paper??)

  22. Richa, why don't you pound salt?

  23. These $5 scalps are nice. I perhaps see a spike to the 1255-1260 area sometime this week. I intend to put in a standing sell order somewhere in that area. Any spike needs to be hammered down. Of course I will keep an eye on GDX to gauge what gold may do. gold's dumb sister, Ag, will follow. silver is overbought vs. gold at this level. A definite 18.53 test is possible.

  24. Let's face it, Dan, your WRONG on this one, Just plain WRONG WRONG WRONG

    we know this because the formidable tag-team of Zerohedge and Goldcore tell us this - http://www.zerohedge.com/contributed/2014-06-01/gold-vulnerable-manipulative-sell-june-bargain-hunters-ready-and-waiting

    Gold, you see, is vulnerable to Manipulative Sell Off In June Not vulnerable to anything else, of course - you know, weak demand, seasonal trends, lack of resurgent inflation, ambiguous economic data. Far from it!

    Mercifully, we also learn that "Bargain Hunters Ready And Waiting", so All's Well that Ends Well! and all shall have Jam for Tea!

    Glad we got that sorted out - it creates an odd atmosphere when someone tries to introduce rational analysis into a discussion about Gold. It's as if someone had farted in a lift..... (or elevator, as you Yanks are won't to call it)

    ON WHICH TOPIC, by the way, I would like to take this opportunity to point out to everyone of the Septic persuasion that "The World" was not on holiday last Monday - only you lot were. The rest of us who have to work for a living rather than depend upon Food Stamps and having what currently passes as the global Reserve Currency were NOT remembering your heroic dead - we were working and erroneously buying your IOU's so that you guys can Lord it over us plebs for a few weeks longer

    AND FAR MORE IMPORTANTLY, every goddamn mothertrucker of you should be forced to watch this video until your eyes bleed and you cringe in shame at your absurd contortion of the English Mother Tongue: http://www.youtube.com/watch?v=om7O0MFkmpw

    1. you are one sorry sonofabitch, partner!

    2. PostcolonialBrit.

      That is a funny video. Then again, we Texans would have to take issue with you Brits about that!

      Can you do me a favor however... please refrain from using that sort of foul language that you used in that last paragraph of your post. I do not mind at all when folks feel very strongly in their convictions but I do not want to see this blog filled with that sort of profanity. We are trying to keep things lively and interesting here without a plethora of vulgarity.

      Thanks for listening!

      By the way, that is a good point you raise about the perma gold bull sites - gold must always rise in their wrong-headed and simplistic view of things - if it falls, it MUST be the result of nefarious actions because it alone, of all market, MUST RISE, RISE, RISE or something evil is afoot! This is the reason that none of these people could ever be successful IN THE MARKET. They have t make their livings OFF the market.

  25. not a good sign that GC could not get above 1250 on the huge 10am volume spike. This tells me that there is a wall of selling (count me) that is selling there keeping a lid on prices. This tells me that short scalp opps present themselves as those buying into the surge have to sell into close to square trades.

    Same goes with GDX.

    In other words the wall of selling at 1250 seems strong. This does not go unnoticed by traders.

    1. this action reminds me of the trading the last time we saw 1650, OK no more trading recommends. :) Another $5 scalp....

  26. Piss OFF, you grubby, stinking, limey freak. Stop wasting time and space here. Some of us want to focus on TRADING. If YOU could trade successfully you wouldn't have to sweep chimneys for a living.

    1. I do this for a living. Closing in on 20 years. 13 years without a job. Sounds like you are losing money.

    2. I was replying to PostcolonialBrit for slamming the US in the prior post. I forgot to hit reply and hit comment instead. Sorry for the confusion Eph 6:7. I'm doing fine, up about 25% on my capital so far this year. Good luck to you.

  27. We live in a 0% interest rate world. Does have a certain ring to it. No cost to borrow money. Does seem a bit risky to the lender. But that is of no consequence.

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  29. GLD down 5 days in a row as speculators are only interested in chasing stocks and levering up bond portfolios.

    DBC also falling again for 4th straight day.

    Absolutely zero inflation on the horizon according to 95% of money managers.

    None whatsoever.

    Because central bankers can easily overwhelm physical markets with "words" or the mere threat of "fight inflation statements" which can sen commodity speculators reeling instantaneously and within weeks cause the CRB index to resume its bear market decline.

    I mean really, has central banking ever been this easy?

    1. This comment has been removed by the author.

    2. Mark, they dont even have to say it anymore. They only have to think it to have the desired effect.

  30. PostcolonialBrit is still upset about the colonists terrorizing the redcoats and using round stones in their muskets when they ran out of proper ammo. Brits always forget or ignore the fact Lloyd's of London (ostensively a GSE) legitimized slave trade by underwriting those ship transports.

    1. believe me, there is precious little in British colonial history to feel proud about http://www.telegraph.co.uk/history/9653497/British-have-invaded-nine-out-of-ten-countries-so-look-out-Luxembourg.html


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