Well, the day we have all been waiting for, again - another Friday payrolls day. The number came in much better than the market expected and the result was instantaneous - gold promptly fell some $14 breaking through $1280 again but then, within less than a minute, the losses were cut in half. Within the span of an hour, it had recaptured all of its losses and then some.
NOTE - the website is not allowing me to post the one minute chart for some reason. As soon as it does, I will get the chart inserted so that you can see the extent of the huge price swing. It is quite graphic and further underscores the havoc that these infernal computers have unleashed on our markets.
What gives? who in their right mind would swallow up the entire string of offers regardless of price or the size of their buying. Did they not know that by so doing they would obtain the worst possible buy price? Obviously this is horrible and it proves that gold is being manipulated on the buy side by a sinister force out to punish the shorts for daring to sell gold with such impunity. These reverse flash crashes must stop!
Those of you who read this site regularly know that I am prone to use hyperbole/sarcasm to prove my point. Actually there was nothing sinister, nor evil about the price action. What happened was that the computers shifted from selling to buying within seconds because while the payrolls number put a firm bid under the US Dollar, events in Ukraine escalated with that attack by its military on the town of Slovyansk, which is being held by pro-Russian militants. These same militants apparently shot down at least one helicopter.
That this area flared up on a Friday, made the bears nervous about getting too aggressive, even the face of a surprisingly decent jobs number, because no one knows what might transpire over a weekend. They did not want to get caught too short just in case.
However, this underscores my contention made this week - gold would be much lower were it not for this Ukraine mess.
Friday, May 2, 2014
Thursday, May 1, 2014
The Gold Cult
Cult -
1.) a religious group which promotes worship of a human leader and devotion of one's life to a specific purpose.
2.) A misplaced or excessive admiration for a particular person or thing
Cult of Personality -
1.) Intense devotion to a particular person.
Writing this short treatise brings me no particular pleasure but rather sadness. Sadness that some whom I count as friends have become trapped in this prison and cannot see it.
I have chosen in the past, and do so now again, to describe a certain portion ( I want to be clear that I am not lumping all under the same heading ) of the pro-gold or honest money camp as being cultish in nature. The similarities between their comments, writings and blind adherence to an inanimate object and those trapped in a religious cult are striking.
Having had some personal experience in dealing with people trapped in religious cults, it is not hard for me to see the same symptoms in those who have been swallowed up by the cult of gold. The most obvious of such symptoms is the inability to see reality as it is. Statements of fact, logic, sound reason, empirical evidence - all are easily dismissed by those snared in the cult if such things happen to contradict the centrally held tenets. Those who speak against the cult are viewed as unenlightened or uninformed at best, and inimical to truth and therefore enemies at worst.
Generally speaking, a cult also has either a charismatic leader/(s) whose authority is beyond questioning. Those who would challenge the statements of such leader are immediately ostracized if such a challenge arises from within the cult, or ridiculed and held in contempt, if the challenger is outside of the cult.
These leaders more often than not, claim to possess an esoteric knowledge, a sort of key to the mysteries of the universe, which lesser gifted humans are not capable of receiving. They tend to reinforce this as often as possible so as to lend further credibility to themselves among their followers. This special insight into things either divine, or in the case of gold, economic in nature, is claimed so as to strike a sort of awe bordering on the realm of reverence.
Free thinking is discouraged if not outright forbidden as the members are expected to fall into line behind the prescribed belief system.
As you note these characteristics, ask yourself if this is not what we are seeing in some segments of the hard asset community?
Let's be brutally honest here - both gold and silver have been in bear markets for some time now. Silver, three years ago this month, had an epic collapse in price from just below the $50 mark to near $33 in a single week. It never recovered that level, moving up to near $44 before imploding. Gold peaked at over $1900 in August 2011 and while it managed to recover to near $1800 three months later, it has not been able to clear that level again, even after making two tries at it, the first in February 2012, and the last in September 2012.
Both metals have been trending lower since that time having managed to bounce slightly but still remaining well off their peak levels set over two years ago.
An open-minded, serious and conscientious investor/trader looking to maximize his or her return on monies, would have taken notice of this some time ago and acted accordingly. Common sense/prudence dictates that investors put money to work in those areas where they can capture the maximum amount of returns, risk factors considered.
In spite of this, for more than two years, we have been regaled with one outlandish claim after another for both gold and silver. In gold, we have had theory after theory, breathlessly advanced as to why the price of the metal is going to soar "any day now". Among these were backwardation claims, negative GOFO, JP Morgan cornering gold on the long side, Comex defaults, China buying that raided the gold ETF, etc, etc.,etc. In EVERY SINGLE CASE, those who proposed these theories and those who subscribed to them, were left holding the bag looking like dupes at best and like charlatans/hucksters at worst.
Yet for some bizarre reason, many of those people who follow the "advice", prognostications and predictions of these "experts" continue to dote on their every word, every interview and every speech in spite of the fact that many are losing their life's savings by so doing. How else to understand this phenomenon except to deal with it as a cult.
One would think that the severity of the financial losses that they have endured would have awakened them to the reality of what is taking place. In some cases, fortunately, it has. But tragically, in far too many instances, those who are trapped in the gold cult just dig in further, awaiting the inevitable rocketshot to the moon during which they all hope to become rich.
It reminds me of many evangelical prophecy hucksters each claiming to have a special revelation that Jesus was coming any day now. Some, like the famous book " "88 Reasons that Jesus is coming in '88" ( that was 1988) could not have been more wrong. Yet that did nothing to dissuade them from coming out with the next prediction. All they had to do was admit that they have miscalculated somewhat but this next prediction would be spot on.
I personally know of two families, who sold their homes, cancelled their life insurance policies, etc,. while they waited for the heavenly rapture to take place. Needless to say, their lives were wrecked as a result. That however did nothing to impact those "prophets" who issued their predictions - life went on as usual for them, if not better as they reaped the profits from their books which they of course promoted to these poor, but sincere victims. Some of them are still out there plying their deception even now.
I find it remarkable that men, whom God has given a sound mind to and the ability to think, reflect, ponder, analyze, interpret, etc. can be so gullible and continue to allow themselves to be taken advantage of and serve as willing dupes to those who do not have their best interests at heart. The willingness of human beings to allow self-inflicted pain to continue coming their way is an astonishing thing to behold.
Let me just close this by saying, if you are an advocate of honest money, good for you. I like to think that I am. But do not allow your convictions on these matters to cloud your judgment as an investor/trader. Recognize that until the vast majority of investors see things in the same manner as you do, yours is going to be a lonely, lonely habitation. Cast aside subjectivity and let your own senses and sound judgment be a guide to you. Be objective, especially in regards to market action but even more specifically, in regards to a shiny yellow piece of metal.
Gold is an element. Yes, it is rare but it is an element. It is not a god, nor are those who preach it divine or privy to any sort of esoteric knowledge. Judge their predictions and if found to be false, reject them. Gold is an asset class; nothing more, nothing less. Remember that.
Here is hoping that some who read this come to their senses and escape the snares of so many charlatans and wrong-headed prophets. Think for yourself!
1.) a religious group which promotes worship of a human leader and devotion of one's life to a specific purpose.
2.) A misplaced or excessive admiration for a particular person or thing
Cult of Personality -
1.) Intense devotion to a particular person.
Writing this short treatise brings me no particular pleasure but rather sadness. Sadness that some whom I count as friends have become trapped in this prison and cannot see it.
I have chosen in the past, and do so now again, to describe a certain portion ( I want to be clear that I am not lumping all under the same heading ) of the pro-gold or honest money camp as being cultish in nature. The similarities between their comments, writings and blind adherence to an inanimate object and those trapped in a religious cult are striking.
Having had some personal experience in dealing with people trapped in religious cults, it is not hard for me to see the same symptoms in those who have been swallowed up by the cult of gold. The most obvious of such symptoms is the inability to see reality as it is. Statements of fact, logic, sound reason, empirical evidence - all are easily dismissed by those snared in the cult if such things happen to contradict the centrally held tenets. Those who speak against the cult are viewed as unenlightened or uninformed at best, and inimical to truth and therefore enemies at worst.
Generally speaking, a cult also has either a charismatic leader/(s) whose authority is beyond questioning. Those who would challenge the statements of such leader are immediately ostracized if such a challenge arises from within the cult, or ridiculed and held in contempt, if the challenger is outside of the cult.
These leaders more often than not, claim to possess an esoteric knowledge, a sort of key to the mysteries of the universe, which lesser gifted humans are not capable of receiving. They tend to reinforce this as often as possible so as to lend further credibility to themselves among their followers. This special insight into things either divine, or in the case of gold, economic in nature, is claimed so as to strike a sort of awe bordering on the realm of reverence.
Free thinking is discouraged if not outright forbidden as the members are expected to fall into line behind the prescribed belief system.
As you note these characteristics, ask yourself if this is not what we are seeing in some segments of the hard asset community?
Let's be brutally honest here - both gold and silver have been in bear markets for some time now. Silver, three years ago this month, had an epic collapse in price from just below the $50 mark to near $33 in a single week. It never recovered that level, moving up to near $44 before imploding. Gold peaked at over $1900 in August 2011 and while it managed to recover to near $1800 three months later, it has not been able to clear that level again, even after making two tries at it, the first in February 2012, and the last in September 2012.
Both metals have been trending lower since that time having managed to bounce slightly but still remaining well off their peak levels set over two years ago.
An open-minded, serious and conscientious investor/trader looking to maximize his or her return on monies, would have taken notice of this some time ago and acted accordingly. Common sense/prudence dictates that investors put money to work in those areas where they can capture the maximum amount of returns, risk factors considered.
In spite of this, for more than two years, we have been regaled with one outlandish claim after another for both gold and silver. In gold, we have had theory after theory, breathlessly advanced as to why the price of the metal is going to soar "any day now". Among these were backwardation claims, negative GOFO, JP Morgan cornering gold on the long side, Comex defaults, China buying that raided the gold ETF, etc, etc.,etc. In EVERY SINGLE CASE, those who proposed these theories and those who subscribed to them, were left holding the bag looking like dupes at best and like charlatans/hucksters at worst.
Yet for some bizarre reason, many of those people who follow the "advice", prognostications and predictions of these "experts" continue to dote on their every word, every interview and every speech in spite of the fact that many are losing their life's savings by so doing. How else to understand this phenomenon except to deal with it as a cult.
One would think that the severity of the financial losses that they have endured would have awakened them to the reality of what is taking place. In some cases, fortunately, it has. But tragically, in far too many instances, those who are trapped in the gold cult just dig in further, awaiting the inevitable rocketshot to the moon during which they all hope to become rich.
It reminds me of many evangelical prophecy hucksters each claiming to have a special revelation that Jesus was coming any day now. Some, like the famous book " "88 Reasons that Jesus is coming in '88" ( that was 1988) could not have been more wrong. Yet that did nothing to dissuade them from coming out with the next prediction. All they had to do was admit that they have miscalculated somewhat but this next prediction would be spot on.
I personally know of two families, who sold their homes, cancelled their life insurance policies, etc,. while they waited for the heavenly rapture to take place. Needless to say, their lives were wrecked as a result. That however did nothing to impact those "prophets" who issued their predictions - life went on as usual for them, if not better as they reaped the profits from their books which they of course promoted to these poor, but sincere victims. Some of them are still out there plying their deception even now.
I find it remarkable that men, whom God has given a sound mind to and the ability to think, reflect, ponder, analyze, interpret, etc. can be so gullible and continue to allow themselves to be taken advantage of and serve as willing dupes to those who do not have their best interests at heart. The willingness of human beings to allow self-inflicted pain to continue coming their way is an astonishing thing to behold.
Let me just close this by saying, if you are an advocate of honest money, good for you. I like to think that I am. But do not allow your convictions on these matters to cloud your judgment as an investor/trader. Recognize that until the vast majority of investors see things in the same manner as you do, yours is going to be a lonely, lonely habitation. Cast aside subjectivity and let your own senses and sound judgment be a guide to you. Be objective, especially in regards to market action but even more specifically, in regards to a shiny yellow piece of metal.
Gold is an element. Yes, it is rare but it is an element. It is not a god, nor are those who preach it divine or privy to any sort of esoteric knowledge. Judge their predictions and if found to be false, reject them. Gold is an asset class; nothing more, nothing less. Remember that.
Here is hoping that some who read this come to their senses and escape the snares of so many charlatans and wrong-headed prophets. Think for yourself!
Gold Flirting with Dangerous Chart Support
Gold has once again fallen into a support region on the charts which continues to gain in importance as it is being tested yet again. The more it is tested, the greater the chance of it breaking for each test begins with the top side of the range moving lower, first from near $1400, then from just above $1320 and most recently from slightly above the $1300 level. Resistance is moving lower and lower but thus far the $1280 level has held.
Bulls have their backs up against the proverbial wall therefore as we head into tomorrow's big payrolls number report. Any strong number is going to break their backs. If the number comes in weak, they will have dodged a bullet yet once more.
Were it not for this report due out tomorrow, I do not believe $1280 would have held today. Bears are reluctant to press it further due to the volatile nature of these recent jobs reports. They do not want to take the chance of getting blindsided by another miserable number. Bulls however are in serious trouble if the number is strong as that will remove yet another leg of support under their already wobbly stool.
Out of all the economic data releases that regularly hit the market, these payroll reports are the most important and most illuminating. Ultimately the health of the economy depends more on the number of people working that anything else in my view. Given the Fed's rather optimistic reading of the economy in the FOMC statement yesterday ( remember, they blamed the weather for the poor showing ), anything that confirms an improvement on the labor front will be viewed as confirmation that the QE program is on track to be phased out entirely before this year is out.
In looking at the chart, note that gold has not yet had a CLOSE below $1280 since February. It has closed right at that level or just barely above it, but has always managed to bounce higher. A good part of this has been due to geopolitical concerns involving the Ukranian situation. While that factor remains in play, it seems to be fading from traders' minds as the turmoil looks to remain localized in that region ( for now ). That makes tomorrow's report all the more critical to gold's fortunes moving ahead.
Let's see what we will get.
Grains are weaker again today as those weather forecasts look much more conducive to planting prospects this weekend and into next week. Also, soybean export sales were terrible as the high prices appear to be doing their work at rationing demand. Funds are big longs in both the corn and beans so this will bear watching. Thus far they have been buying dips and keeping prices supported but if their computers shift into sell mode, watch out. Again, this has not yet happened however as the pattern of late has been for them to come charging back in just ahead of the closing bell. We'll see if that is the case today or not.
New crop December corn seems to have run into a temporary wall just shy of the $5.20 level. New crop November beans have done the same near $12.50.
Currencies are rather subdued today - again, I suspect this is due to the upcoming payrolls report tomorrow. No one wants to get too aggressive ahead of it.
Some good news, at least for consumers and some businesses, gasoline prices have fallen back below the $3.00 level wholesale. They have lost almost $0.20 over the last week. We should see a bit of relief showing up the pump shortly as a result.
Bulls have their backs up against the proverbial wall therefore as we head into tomorrow's big payrolls number report. Any strong number is going to break their backs. If the number comes in weak, they will have dodged a bullet yet once more.
Were it not for this report due out tomorrow, I do not believe $1280 would have held today. Bears are reluctant to press it further due to the volatile nature of these recent jobs reports. They do not want to take the chance of getting blindsided by another miserable number. Bulls however are in serious trouble if the number is strong as that will remove yet another leg of support under their already wobbly stool.
Out of all the economic data releases that regularly hit the market, these payroll reports are the most important and most illuminating. Ultimately the health of the economy depends more on the number of people working that anything else in my view. Given the Fed's rather optimistic reading of the economy in the FOMC statement yesterday ( remember, they blamed the weather for the poor showing ), anything that confirms an improvement on the labor front will be viewed as confirmation that the QE program is on track to be phased out entirely before this year is out.
In looking at the chart, note that gold has not yet had a CLOSE below $1280 since February. It has closed right at that level or just barely above it, but has always managed to bounce higher. A good part of this has been due to geopolitical concerns involving the Ukranian situation. While that factor remains in play, it seems to be fading from traders' minds as the turmoil looks to remain localized in that region ( for now ). That makes tomorrow's report all the more critical to gold's fortunes moving ahead.
Let's see what we will get.
Grains are weaker again today as those weather forecasts look much more conducive to planting prospects this weekend and into next week. Also, soybean export sales were terrible as the high prices appear to be doing their work at rationing demand. Funds are big longs in both the corn and beans so this will bear watching. Thus far they have been buying dips and keeping prices supported but if their computers shift into sell mode, watch out. Again, this has not yet happened however as the pattern of late has been for them to come charging back in just ahead of the closing bell. We'll see if that is the case today or not.
New crop December corn seems to have run into a temporary wall just shy of the $5.20 level. New crop November beans have done the same near $12.50.
Currencies are rather subdued today - again, I suspect this is due to the upcoming payrolls report tomorrow. No one wants to get too aggressive ahead of it.
Some good news, at least for consumers and some businesses, gasoline prices have fallen back below the $3.00 level wholesale. They have lost almost $0.20 over the last week. We should see a bit of relief showing up the pump shortly as a result.
Wednesday, April 30, 2014
FOMC Day
One word can sum up the press release by the FOMC today: " BORING".
It pretty much said the same thing as last month's statement with the exception that the Fed cut another $10 billion off the bond buying. That however seemed to be generally expected. In effect, the Fed has just repeated that it is on track to end the QE program this year but will continue to monitor the data like the rest of us. They seemed to put the blame on the slow growth in Q1 squarely on the back of the severely cold weather. We shall see what subsequent data yields. Along that line, this Friday's payrolls number will therefore be much more significant than today's statement.
One thing is sure - the DOW seemed to like what the Fed said today. Another new high! The S&P however is much more restrained however.
Early in the session Gold once again fell down towards the key $1280 level but as has been its pattern of late, it attracted enough buying to kick it off of the worst levels of the session. Traders remain conflicted between a rotten GDP number and a fairly strong ADP jobs number. As time came for the release of the FOMC statement, the price began moving higher and actually made it into positive territory. It would seem that some shorts got a bit nervous and thought that the Fed might back away from the tapering somewhat. They decided to cover and that took the price higher. Their concerns were unfounded however as once the statement hit the wires, the price moved lower again.
The situation in Ukraine is keeping some buying rolling into the market. I am of the firm belief that were it not for that geopolitical situation, gold would be trading closer to $1260 if not lower at this point.
Aiding gold somewhat is the fact that the US Dollar is weak. It is flirting with support near 79.30 ( USDX ). Below that is more important chart support near the 79 level. This morning's GDP number seemed to send Dollar bulls scurrying for the moment with the thinking being that the Fed will certainly be hesitant to announce any interest rate hikes. Higher interest rates will support the Dollar.
One of the problems that gold has at the moment is the continued moved lower in the Chinese Yuan or Renminbi. A weaker currency there, means gold becomes more expensive to buy. While it remains unclear to what extent this could impact the amount of gold purchased by China, it certainly does not help demand and right now, gold needs all the demand news it can fetch.
Why do I say that? Because that barometer of Western Investor gold demand, the big gold ETF, GLD, has reported holdings showing that the amount of gold held there has now fallen below the closing level of last year. In other words, the trend of Western investors moving away from gold has resumed after a brief interruption.
Here is the chart:
Note how holdings are barely above a 5 year low. Western money managers and large institutions are not interested in holding an asset that pays no dividend or throws off any sort of yield in the current environment. This is the reason that gold needs the sort of support from geopolitical events, such as what is occurring in Ukraine, to keep it propped up.
Along that line, it was reported today that home prices in China are not rising at the same pace as they have been previously. Average prices rose 9.1% in April but that was down from a 10.% rise in March and a 10.8% increase in February. First quarter home sales were down 7.7%.
Traders are watching any sort of news out of China that might suggest a weakening or perhaps more properly, a slowing of the rate of growth as that will have a big impact on many commodity prices.
From what I can see at this point, any rallies in gold are likely to be viewed as opportunities to sell. With the Fed effectively tightening down on the liquidity spigot, gold is losing one of its key supportive factors. The Fed is not tightening in a direct sense but they are certainly slowing down the flow of money creation. I would think that at some point this is going to benefit the Dollar. Today it certainly did not. Interest rates actually moved a tad lower with the yield on the Ten Year down to 2.653 as I type these comments. I am not sure what to make of that to be honest.
One thing that I am continuing to monitor with increasing interest is the move higher in the Euro. The last thing the Europeans want right now is a stronger Euro. Their monetary authorities are concerned about the lack of inflation and that is precisely what a strong currency is going to bring, not to mention crimping their export markets. The ECB has been making noises about bringing in its own version of QE if deflation pops its head up. That will be worth watching, especially if the Euro manages to clear 1.39 and treks higher.
Silver continues to attract selling at the $20 level and buying near the $19 level meaning its boring, range bound trading pattern continues. Copper continues its retreat from near the $3.10 level. Much of the recent gains can be attributed to hedge fund short covering in the red metal. It will be interesting to see if it maintain its footing above the $3.00 level. From what I can see of its price chart, the metal is not showing any significant pick up in global economic growth at this time. Just more of the same - slow, mediocre growth but nothing especially torrid. I would need to see copper prices at the very least above $3.20 to see a shift in trader sentiment in this regard.
Hogs are continuing their yo-yo like trading - rallying to limit up one day, then dropping sharply the next, then back up, then back down. Discombobulated is the best word that I can think of to describe trading in this pit right now. That being said, any hog producers out there would do well to begin instituting some hedge coverage on expected 4th quarter hog marketings. Profits are enormous for that time frame - do not let them slip completely out of your fingers.
If you want to hold out some portion of your production betting on even higher prices, so be it; just do not bet the farm. Be prudent and secure some of the best 4th quarter profits that I have ever seen in the hogs on a portion of your marketings.
Don't let the usual bullish hype around the disease lull you into a state of complacency. Some are suggesting that producers are not going to be expanding due to virus issues. That sort of thing has been proven wrong already by the last USDA quarterly hogs and pigs report. Don't expect for one moment that those advocating this will be correct - they are not. Listening to them will cost you - big time. Secure some coverage and sleep well before gambling with your earnings/livelihood. There are some decent combination futures/option strategies that you can employ. Check with your broker to get some help along that line.
The corn and bean markets took a bit of a break today from moving higher as the forecasts called for some warmer weather which will allow farmers to get into the fields and make some planting progress. One never knows about weather forecasts but bulls pulled some winnings off the table, just in case. The bullish chart pattern however remains intact. Traders are going to want to see evidence of strong planting progress before becoming too bearish.
Incidentally, news today from the CME Group that it is considering limits for its gold and silver futures contracts. That has elicited the expected response from the GIAMATT crowd crowing, "we told you so", when it comes to the wild price swings in gold. Sadly for them it proves nothing at all about "nefarious evil doers" manipulating the price of gold for the government. What it does prove, if anything, is that computerized algorithms continue to wreak havoc in our financial markets and the wild volatility, so often unpredictable in nature, is scaring business and would-be customers away from the exchanges. They are grappling with how to deal with all of this. Limits might help but I doubt it. Position size reductions would be more instrumental in my view but that will probably never happen. Watching hogs go from limit down to limit up in the same day is a perfect example of what the computers have done to the price discovery process. If that is not enough for you, try trading old crop soybeans if you are bored and you will get a first hand lesson into the nature of modern computer algorithms.
Not much has changed on the gold chart which I am presenting here:
As you can see, it remains mired in its trading range. The range is constricting further however as first the top side moved down to near $1320 and now has moved down to just above $1300. The bottom is intact near $1280. Two things worth noting however - the stochastics indicator ( used for range trading ) just gave a new sell signal while the ADX line is beginning a very slow rise. Normally that indicates the presence of a trending move. With the -DMI ( Red Line ) above the +DMI ( Blue Line) that translates to a trending move lower. The chart pattern however does not as of yet show a clearly defined trend. That will require a strong close BELOW $1280 to achieve. Stay tuned - this Friday might be a game changer.
The mining shares are a tad weaker based off the HUI today.
One last thing - the VIX or volatility index, dropped lower and is sitting near 13.38. There is not the least bit of fear/uncertainty or whatever in these markets, which is rather remarkable given the high degree of margin debt.
It pretty much said the same thing as last month's statement with the exception that the Fed cut another $10 billion off the bond buying. That however seemed to be generally expected. In effect, the Fed has just repeated that it is on track to end the QE program this year but will continue to monitor the data like the rest of us. They seemed to put the blame on the slow growth in Q1 squarely on the back of the severely cold weather. We shall see what subsequent data yields. Along that line, this Friday's payrolls number will therefore be much more significant than today's statement.
One thing is sure - the DOW seemed to like what the Fed said today. Another new high! The S&P however is much more restrained however.
Early in the session Gold once again fell down towards the key $1280 level but as has been its pattern of late, it attracted enough buying to kick it off of the worst levels of the session. Traders remain conflicted between a rotten GDP number and a fairly strong ADP jobs number. As time came for the release of the FOMC statement, the price began moving higher and actually made it into positive territory. It would seem that some shorts got a bit nervous and thought that the Fed might back away from the tapering somewhat. They decided to cover and that took the price higher. Their concerns were unfounded however as once the statement hit the wires, the price moved lower again.
The situation in Ukraine is keeping some buying rolling into the market. I am of the firm belief that were it not for that geopolitical situation, gold would be trading closer to $1260 if not lower at this point.
Aiding gold somewhat is the fact that the US Dollar is weak. It is flirting with support near 79.30 ( USDX ). Below that is more important chart support near the 79 level. This morning's GDP number seemed to send Dollar bulls scurrying for the moment with the thinking being that the Fed will certainly be hesitant to announce any interest rate hikes. Higher interest rates will support the Dollar.
One of the problems that gold has at the moment is the continued moved lower in the Chinese Yuan or Renminbi. A weaker currency there, means gold becomes more expensive to buy. While it remains unclear to what extent this could impact the amount of gold purchased by China, it certainly does not help demand and right now, gold needs all the demand news it can fetch.
Why do I say that? Because that barometer of Western Investor gold demand, the big gold ETF, GLD, has reported holdings showing that the amount of gold held there has now fallen below the closing level of last year. In other words, the trend of Western investors moving away from gold has resumed after a brief interruption.
Here is the chart:
Note how holdings are barely above a 5 year low. Western money managers and large institutions are not interested in holding an asset that pays no dividend or throws off any sort of yield in the current environment. This is the reason that gold needs the sort of support from geopolitical events, such as what is occurring in Ukraine, to keep it propped up.
Along that line, it was reported today that home prices in China are not rising at the same pace as they have been previously. Average prices rose 9.1% in April but that was down from a 10.% rise in March and a 10.8% increase in February. First quarter home sales were down 7.7%.
Traders are watching any sort of news out of China that might suggest a weakening or perhaps more properly, a slowing of the rate of growth as that will have a big impact on many commodity prices.
From what I can see at this point, any rallies in gold are likely to be viewed as opportunities to sell. With the Fed effectively tightening down on the liquidity spigot, gold is losing one of its key supportive factors. The Fed is not tightening in a direct sense but they are certainly slowing down the flow of money creation. I would think that at some point this is going to benefit the Dollar. Today it certainly did not. Interest rates actually moved a tad lower with the yield on the Ten Year down to 2.653 as I type these comments. I am not sure what to make of that to be honest.
One thing that I am continuing to monitor with increasing interest is the move higher in the Euro. The last thing the Europeans want right now is a stronger Euro. Their monetary authorities are concerned about the lack of inflation and that is precisely what a strong currency is going to bring, not to mention crimping their export markets. The ECB has been making noises about bringing in its own version of QE if deflation pops its head up. That will be worth watching, especially if the Euro manages to clear 1.39 and treks higher.
Silver continues to attract selling at the $20 level and buying near the $19 level meaning its boring, range bound trading pattern continues. Copper continues its retreat from near the $3.10 level. Much of the recent gains can be attributed to hedge fund short covering in the red metal. It will be interesting to see if it maintain its footing above the $3.00 level. From what I can see of its price chart, the metal is not showing any significant pick up in global economic growth at this time. Just more of the same - slow, mediocre growth but nothing especially torrid. I would need to see copper prices at the very least above $3.20 to see a shift in trader sentiment in this regard.
Hogs are continuing their yo-yo like trading - rallying to limit up one day, then dropping sharply the next, then back up, then back down. Discombobulated is the best word that I can think of to describe trading in this pit right now. That being said, any hog producers out there would do well to begin instituting some hedge coverage on expected 4th quarter hog marketings. Profits are enormous for that time frame - do not let them slip completely out of your fingers.
If you want to hold out some portion of your production betting on even higher prices, so be it; just do not bet the farm. Be prudent and secure some of the best 4th quarter profits that I have ever seen in the hogs on a portion of your marketings.
Don't let the usual bullish hype around the disease lull you into a state of complacency. Some are suggesting that producers are not going to be expanding due to virus issues. That sort of thing has been proven wrong already by the last USDA quarterly hogs and pigs report. Don't expect for one moment that those advocating this will be correct - they are not. Listening to them will cost you - big time. Secure some coverage and sleep well before gambling with your earnings/livelihood. There are some decent combination futures/option strategies that you can employ. Check with your broker to get some help along that line.
The corn and bean markets took a bit of a break today from moving higher as the forecasts called for some warmer weather which will allow farmers to get into the fields and make some planting progress. One never knows about weather forecasts but bulls pulled some winnings off the table, just in case. The bullish chart pattern however remains intact. Traders are going to want to see evidence of strong planting progress before becoming too bearish.
Incidentally, news today from the CME Group that it is considering limits for its gold and silver futures contracts. That has elicited the expected response from the GIAMATT crowd crowing, "we told you so", when it comes to the wild price swings in gold. Sadly for them it proves nothing at all about "nefarious evil doers" manipulating the price of gold for the government. What it does prove, if anything, is that computerized algorithms continue to wreak havoc in our financial markets and the wild volatility, so often unpredictable in nature, is scaring business and would-be customers away from the exchanges. They are grappling with how to deal with all of this. Limits might help but I doubt it. Position size reductions would be more instrumental in my view but that will probably never happen. Watching hogs go from limit down to limit up in the same day is a perfect example of what the computers have done to the price discovery process. If that is not enough for you, try trading old crop soybeans if you are bored and you will get a first hand lesson into the nature of modern computer algorithms.
Not much has changed on the gold chart which I am presenting here:
As you can see, it remains mired in its trading range. The range is constricting further however as first the top side moved down to near $1320 and now has moved down to just above $1300. The bottom is intact near $1280. Two things worth noting however - the stochastics indicator ( used for range trading ) just gave a new sell signal while the ADX line is beginning a very slow rise. Normally that indicates the presence of a trending move. With the -DMI ( Red Line ) above the +DMI ( Blue Line) that translates to a trending move lower. The chart pattern however does not as of yet show a clearly defined trend. That will require a strong close BELOW $1280 to achieve. Stay tuned - this Friday might be a game changer.
The mining shares are a tad weaker based off the HUI today.
One last thing - the VIX or volatility index, dropped lower and is sitting near 13.38. There is not the least bit of fear/uncertainty or whatever in these markets, which is rather remarkable given the high degree of margin debt.
Monday, April 28, 2014
Speak Loudly and Carry a Wet Noodle
That pretty much sums up the market's reaction to the announcement of a new set of "sanctions" unveiled by the current administration against Russian President Vladimir Putin and Russia over events in Ukraine.
Sellers in gold wasted no time in declaring their view of the "strong message" ( note sarcasm here ) being sent to Russia proceeding to knock it back down below the $1300 level.
Further aiding the move lower was the heavy selling in Newmont and more weakness in Barrick over the announcement that any merger between the two was off the table for now.
The Yen also moved lower signaling the absence of any safe haven play as bonds also moved lower. Equities are moving in and out of positive territory as I type these comments. Safe havens are on hold, at least for today. There remains a great deal of volatility with short term technical factors dominating trading today.
I mentioned last Friday that I do not believe gold has much upside here because at this time I do not see events in Ukraine spreading outside of that region. If the market felt like those events could be a harbinger of more to come, gold would be much stronger. That it is not, is evidence enough that while the situation remains tense, most do not see it spreading beyond that region. Rallies in gold are therefore attracting selling even as dips lower are attracting buying from some due to the ongoing geopolitical developments. As stated so many, many times here now, buying gold due to geopolitical events is extremely risky. You have no idea what might or might not happen and thus it is entirely a crapshoot. That is not trading; it is not investing either for that matter; it is gambling. If you want to gamble, head to Las Vegas or Reno - at least they have some great looking showgirls while you are losing your money.
Corn continues to attract buying as traders are concerned over the slow start to planting this year. Also, the cool, wet conditions have raised concerns about poor germination of those crops which have been seeded. Soil temps are not warm enough and the market wants to see more sunshine.
This past Friday's Cattle on Feed report was considered friendly to the market as it caught some by surprise who were expecting to see larger numbers moving ahead. Feeder cattle continue to make all time highs as most small specs are caught on the short side and are getting squeezed out in a brutal fashion. How some of these guys paying the kinds of prices that they are for feeders are going to be able to make any money on them is a big mystery to me but that does not seem to be impacting things at the moment. Hogs are bleeding out of some the premium in there as traders take a "show me" attitude towards the slaughter numbers and the impact from the PED virus.
Crude oil continues weak in today's session further retreating from the double top near the $105 level.
Silver has once again attracted selling as it neared $20. It remains stuck in a narrow range between that level and $19 on the bottom.
Sellers in gold wasted no time in declaring their view of the "strong message" ( note sarcasm here ) being sent to Russia proceeding to knock it back down below the $1300 level.
Further aiding the move lower was the heavy selling in Newmont and more weakness in Barrick over the announcement that any merger between the two was off the table for now.
The Yen also moved lower signaling the absence of any safe haven play as bonds also moved lower. Equities are moving in and out of positive territory as I type these comments. Safe havens are on hold, at least for today. There remains a great deal of volatility with short term technical factors dominating trading today.
I mentioned last Friday that I do not believe gold has much upside here because at this time I do not see events in Ukraine spreading outside of that region. If the market felt like those events could be a harbinger of more to come, gold would be much stronger. That it is not, is evidence enough that while the situation remains tense, most do not see it spreading beyond that region. Rallies in gold are therefore attracting selling even as dips lower are attracting buying from some due to the ongoing geopolitical developments. As stated so many, many times here now, buying gold due to geopolitical events is extremely risky. You have no idea what might or might not happen and thus it is entirely a crapshoot. That is not trading; it is not investing either for that matter; it is gambling. If you want to gamble, head to Las Vegas or Reno - at least they have some great looking showgirls while you are losing your money.
Corn continues to attract buying as traders are concerned over the slow start to planting this year. Also, the cool, wet conditions have raised concerns about poor germination of those crops which have been seeded. Soil temps are not warm enough and the market wants to see more sunshine.
This past Friday's Cattle on Feed report was considered friendly to the market as it caught some by surprise who were expecting to see larger numbers moving ahead. Feeder cattle continue to make all time highs as most small specs are caught on the short side and are getting squeezed out in a brutal fashion. How some of these guys paying the kinds of prices that they are for feeders are going to be able to make any money on them is a big mystery to me but that does not seem to be impacting things at the moment. Hogs are bleeding out of some the premium in there as traders take a "show me" attitude towards the slaughter numbers and the impact from the PED virus.
Crude oil continues weak in today's session further retreating from the double top near the $105 level.
Silver has once again attracted selling as it neared $20. It remains stuck in a narrow range between that level and $19 on the bottom.
Friday, April 25, 2014
Safe Havens Boost Gold
Once again, it is back to tracking events in Ukraine when it comes to gold. Traders are running away from risk and into the usual safe havens ( gold, bonds and the Yen).
This is going to be the scenario until something changes over there so get used to it. As I mentioned yesterday, it is basically a crap shoot. Those who expect the events to get worse are buying gold; those who expect them to be more contained are selling the rally. Both sides are utterly dependent on what happens next but more importantly, what is PERCEIVED to be the course of events.
Personally I do not see a lot of upside for gold here because the situation, as tense as it is, has not thus far spread to anywhere outside of Ukraine. In that sense, while it is not insignificant, it is not likely to have much impact ( other than the short term market gyrations associated with geopolitical events ) on regions outside of that immediate area. It certainly is not going to move the Fed one way or the other when it comes to Tapering plans or interest rate policy. As mentioned many times here, that will be completely dependent on subsequent US economic data releases.
This is the reason that gold is struggling to maintain the "13" handle in spite of the escalation in tensions. If the bombs start going off in earnest or we get larger scale shooting or conflict, gold will be bid higher but many traders do not see this thing moving beyond Ukraine at this point.
What we have seen is a bout of sharp, short-covering from speculative interests who had been pressing the metal from the short side. They are standing aside and allowing events to unfold further before coming back in to sell in size. That is allowing an air pocket above the market and price is moving in the path of least resistance which for now is higher.
I would caution those who are looking to buy the metal here. Just be careful - geopolitical events are very tricky - you might hit it big and then again, you might not. Whatever you decide to go, no matter which way, long or short, do not be slow on the draw if need be. You can never anticipate when events on the ground will change and flip the market in the other direction.
As a trader you do not always need to be in the market. Sometimes the sidelines is the proper place. Let others chop each other up while you wait for the trend to re-establish itself after the excitement lifts. I have made it a habit never to chase gold over geopolitical events because one never knows how those will turn out. If you own some physical gold, you can be content with that but do not chase it higher if you are a trader. Even if you miss out on a move, the structure of the market becomes too unstable and that sort of thing is asking for disaster in these highly leveraged futures now that computers are doing the brunt of the trading.
I am noticing that crude is getting hit hard today. We have large supplies of the stuff but some are unsure how to trade it due to the geopolitical concerns. For now the bears are flexing their muscles. Gasoline is a bit weaker today but the stuff has moved up some $0.50/gallon since mid-January this year much to the chagrin and frustration of consumers who were relishing the lower prices back then.
Moo-Moos and Piggies parted ways today with hogs going down and cattle going up. Packers have been able to move the higher priced beef for now while pork demand has hit a temporary lull it would seem. Consumers are going to learn quickly, if they have not done so already, that beef prices are at record highs. Again, I look for relief later this year but the summer grilling season is going to suck.
Corn continues to draw buying from those playing up the cold, wet planting season weather. There is no doubt that planting is running behind normal. Most expected it to do so given the intensity of the cold winter and the fact that some of the Great Lakes were frozen over. The big question is whether or not we will have a good growing season regardless. Some chatter that El Nino will help out the crop is around but it is a bit early to bank on that. For now, the bulls are in charge of the corn market. They were certainly back to playing " the US is going to run entirely out of old crop soybeans" theme in the bean market once again today as May hit the magical $15.00 level. We'll see if China begins any cancellations in earnest and whether or not imports from S. American begin to really take off.
I will get a chart up later for both gold, the COT stuff and the mining shares. I do not know whether or not the COT data will show the hedge fund short covering that has been occurring this week. My guess is that it will not, at least not in size because the big move from down below $1280 did not come until events flared up over in Ukraine on Thursday, two days after the cutoff point from the CFTC. Same goes for silver - hedge funds have been playing it increasingly from the short side and the combination of a stronger durable goods number, plus the psychological support from a higher gold price no doubt sent a fair number of shorts scurrying to cover but that occurred after Tuesday of this week. In other words, do not read too much into today's COT data. With what happened on Thursday, it is interesting but far too dated to give a clear read on how things stand here at the end of the week.
Considering the move higher in gold and its ability to recapture a "13" handle, the miners look rather lackluster at the moment. Maybe that will change by the closing bell. The HUI continues to trade down below both its 50 day moving average and its 200 day moving average, not exactly a glaring example of a big market endorsement of the sector. There is value-based buying at work in the sector but the momentum crowd is MIA.
The US stock markets are getting hit with some selling ahead of the weekend as traders are nervous holding long positions over the weekend in which anything can or might happen. Caution/prudence dictates standing aside, especially if you have some decent profits. I suspect that a fair number of money managers/institutions are welcoming this move lower in the broader equities. Valuations have not been cheap keeping many from buying. Their problem has been that they do not want to miss the move up but are hesitant to buy when many issues are trading up so close to chart highs. The setback will allow some strategic positioning to begin taking place.
So far, 1880 - 1890 on the S&P has proven to be a bridge too far for the bulls. Its session low at 1853 is right about even with the 50 day moving average. The 100 day comes in near 1830 which also corresponds closely to the mid-March swing low at 1823. If the 50 day does not hold it, I would look for prices to drift down towards that level to see if the market can uncover some buying there.
More later...
This is going to be the scenario until something changes over there so get used to it. As I mentioned yesterday, it is basically a crap shoot. Those who expect the events to get worse are buying gold; those who expect them to be more contained are selling the rally. Both sides are utterly dependent on what happens next but more importantly, what is PERCEIVED to be the course of events.
Personally I do not see a lot of upside for gold here because the situation, as tense as it is, has not thus far spread to anywhere outside of Ukraine. In that sense, while it is not insignificant, it is not likely to have much impact ( other than the short term market gyrations associated with geopolitical events ) on regions outside of that immediate area. It certainly is not going to move the Fed one way or the other when it comes to Tapering plans or interest rate policy. As mentioned many times here, that will be completely dependent on subsequent US economic data releases.
This is the reason that gold is struggling to maintain the "13" handle in spite of the escalation in tensions. If the bombs start going off in earnest or we get larger scale shooting or conflict, gold will be bid higher but many traders do not see this thing moving beyond Ukraine at this point.
What we have seen is a bout of sharp, short-covering from speculative interests who had been pressing the metal from the short side. They are standing aside and allowing events to unfold further before coming back in to sell in size. That is allowing an air pocket above the market and price is moving in the path of least resistance which for now is higher.
I would caution those who are looking to buy the metal here. Just be careful - geopolitical events are very tricky - you might hit it big and then again, you might not. Whatever you decide to go, no matter which way, long or short, do not be slow on the draw if need be. You can never anticipate when events on the ground will change and flip the market in the other direction.
As a trader you do not always need to be in the market. Sometimes the sidelines is the proper place. Let others chop each other up while you wait for the trend to re-establish itself after the excitement lifts. I have made it a habit never to chase gold over geopolitical events because one never knows how those will turn out. If you own some physical gold, you can be content with that but do not chase it higher if you are a trader. Even if you miss out on a move, the structure of the market becomes too unstable and that sort of thing is asking for disaster in these highly leveraged futures now that computers are doing the brunt of the trading.
I am noticing that crude is getting hit hard today. We have large supplies of the stuff but some are unsure how to trade it due to the geopolitical concerns. For now the bears are flexing their muscles. Gasoline is a bit weaker today but the stuff has moved up some $0.50/gallon since mid-January this year much to the chagrin and frustration of consumers who were relishing the lower prices back then.
Moo-Moos and Piggies parted ways today with hogs going down and cattle going up. Packers have been able to move the higher priced beef for now while pork demand has hit a temporary lull it would seem. Consumers are going to learn quickly, if they have not done so already, that beef prices are at record highs. Again, I look for relief later this year but the summer grilling season is going to suck.
Corn continues to draw buying from those playing up the cold, wet planting season weather. There is no doubt that planting is running behind normal. Most expected it to do so given the intensity of the cold winter and the fact that some of the Great Lakes were frozen over. The big question is whether or not we will have a good growing season regardless. Some chatter that El Nino will help out the crop is around but it is a bit early to bank on that. For now, the bulls are in charge of the corn market. They were certainly back to playing " the US is going to run entirely out of old crop soybeans" theme in the bean market once again today as May hit the magical $15.00 level. We'll see if China begins any cancellations in earnest and whether or not imports from S. American begin to really take off.
I will get a chart up later for both gold, the COT stuff and the mining shares. I do not know whether or not the COT data will show the hedge fund short covering that has been occurring this week. My guess is that it will not, at least not in size because the big move from down below $1280 did not come until events flared up over in Ukraine on Thursday, two days after the cutoff point from the CFTC. Same goes for silver - hedge funds have been playing it increasingly from the short side and the combination of a stronger durable goods number, plus the psychological support from a higher gold price no doubt sent a fair number of shorts scurrying to cover but that occurred after Tuesday of this week. In other words, do not read too much into today's COT data. With what happened on Thursday, it is interesting but far too dated to give a clear read on how things stand here at the end of the week.
Considering the move higher in gold and its ability to recapture a "13" handle, the miners look rather lackluster at the moment. Maybe that will change by the closing bell. The HUI continues to trade down below both its 50 day moving average and its 200 day moving average, not exactly a glaring example of a big market endorsement of the sector. There is value-based buying at work in the sector but the momentum crowd is MIA.
The US stock markets are getting hit with some selling ahead of the weekend as traders are nervous holding long positions over the weekend in which anything can or might happen. Caution/prudence dictates standing aside, especially if you have some decent profits. I suspect that a fair number of money managers/institutions are welcoming this move lower in the broader equities. Valuations have not been cheap keeping many from buying. Their problem has been that they do not want to miss the move up but are hesitant to buy when many issues are trading up so close to chart highs. The setback will allow some strategic positioning to begin taking place.
So far, 1880 - 1890 on the S&P has proven to be a bridge too far for the bulls. Its session low at 1853 is right about even with the 50 day moving average. The 100 day comes in near 1830 which also corresponds closely to the mid-March swing low at 1823. If the 50 day does not hold it, I would look for prices to drift down towards that level to see if the market can uncover some buying there.
More later...
Thursday, April 24, 2014
HUI Chart
A quick chart update...
The 200 day moving average is serving to cap the move higher, for now. Nothing definitive either way, bull or bear. It's a crap shoot and traders do not shoot craps.
The 200 day moving average is serving to cap the move higher, for now. Nothing definitive either way, bull or bear. It's a crap shoot and traders do not shoot craps.
Stop Hunting - the Financial Version of the Hunger Games
Just a quick post for now to detail some goings on this morning.... more later including some charts...
The Durable Goods number that came out this morning and caused some ripples. By the way, those are "big ticket" items. The orders jumped 2.6% from February last month beating the market expectations of a 2% rise. It was also the largest increase since November.
The result of this was to set off a round of short covering in the copper market as those who have been shorting copper based off of problems in China and expected slower growth there, were caught off guard by the strength of the number here. China is the world's largest user of copper but the US is still important to that market.
I noticed that as copper strengthened on this bout of short covering, so too did silver. It seemed those leaning on the industrial metals from the short side decided to head to the sidelines and await some further data before pressing their case. Copper has been quietly sneaking higher over the last month tacking on some $0.25/pound and while the chart is not especially friendly, it seems to have found a bottom below $3.00 for now. As many of you who read this blog regularly know, I track that market quite closely as I believe it is a much better barometer of what is going on as far as growth or lack thereof than most anything else.
The way I am reading that chart right now is that growth is not solid but neither is it all that sluggish. In other words, things are improving, but not by all that much. If copper can clear $3.20 then I will feel more comfortable about future economic growth prospects.
Hey, how about that REVERSE FLASH CRASH where the "good, benign, saintly" manipulators came in an shoved gold higher in some sort of perverse spike upwards? First it was run lower and a huge number of downside sell stops were picked off enriching quite a few floor traders in the process, only to careen higher forcing a huge number of buy stops to be run.
I am reminded of the old song:
" A hunting we will go, a hunting we will go; Hi, Ho, the derry O, a hunting we will go".
Just insert the word 'stop' in front of the word 'hunting' and you about have it.
By the way, do not expect to hear any round of criticism from the GIAMATT crowd about the ricochet higher in price. After all, that is reserved only for downward moves in price. Spikes higher are perfectly acceptable because we all know that everyone who wants to buy gold in large quantities wants to make sure that they buy it in such an obvious fashion that they drive the price higher so that they can pay a much higher price for it than if they had otherwise quietly been accumulating it.
I am using a bit of sarcasm here to just prove the point I continually make here at this site - today's wild swings in price are evidence of the broken nature of our markets due to the proliferation of computerized trading which rips price higher and lower as the new norm. Remember this the next time gold drops lower and up start the usual: "FLASH CRASH - evidence of evil manipulators at work" nonsense flares up.
Here is what actually happened and it had NOTHING, ZERO, NADA to do with manipulators or some secret esoteric anonymous large trader lurking in London or anything else - News hit the floor that Russia has decided to hold military exercises near the Ukranian borders and that included air operations.
Pro-Russian forces in eastern Ukraine are continuing to clash with Ukranian forces and that announcement sent stocks temporarily lower while gold shot higher as safe haven plays popped up. You can usually see that sort of thing when the Yen reverses and scoots higher.
It looks to me like the initial spike higher has attracted some sellers now that things seemed to have calmed down a bit. We will have to wait and see how the dust settles today. As long as there are any fears of further escalations over there in Ukraine, the market will be supported. If those fears fade, watch for more selling pressure to re-emerge once again.
The Durable Goods number that came out this morning and caused some ripples. By the way, those are "big ticket" items. The orders jumped 2.6% from February last month beating the market expectations of a 2% rise. It was also the largest increase since November.
The result of this was to set off a round of short covering in the copper market as those who have been shorting copper based off of problems in China and expected slower growth there, were caught off guard by the strength of the number here. China is the world's largest user of copper but the US is still important to that market.
I noticed that as copper strengthened on this bout of short covering, so too did silver. It seemed those leaning on the industrial metals from the short side decided to head to the sidelines and await some further data before pressing their case. Copper has been quietly sneaking higher over the last month tacking on some $0.25/pound and while the chart is not especially friendly, it seems to have found a bottom below $3.00 for now. As many of you who read this blog regularly know, I track that market quite closely as I believe it is a much better barometer of what is going on as far as growth or lack thereof than most anything else.
The way I am reading that chart right now is that growth is not solid but neither is it all that sluggish. In other words, things are improving, but not by all that much. If copper can clear $3.20 then I will feel more comfortable about future economic growth prospects.
Hey, how about that REVERSE FLASH CRASH where the "good, benign, saintly" manipulators came in an shoved gold higher in some sort of perverse spike upwards? First it was run lower and a huge number of downside sell stops were picked off enriching quite a few floor traders in the process, only to careen higher forcing a huge number of buy stops to be run.
I am reminded of the old song:
" A hunting we will go, a hunting we will go; Hi, Ho, the derry O, a hunting we will go".
Just insert the word 'stop' in front of the word 'hunting' and you about have it.
By the way, do not expect to hear any round of criticism from the GIAMATT crowd about the ricochet higher in price. After all, that is reserved only for downward moves in price. Spikes higher are perfectly acceptable because we all know that everyone who wants to buy gold in large quantities wants to make sure that they buy it in such an obvious fashion that they drive the price higher so that they can pay a much higher price for it than if they had otherwise quietly been accumulating it.
I am using a bit of sarcasm here to just prove the point I continually make here at this site - today's wild swings in price are evidence of the broken nature of our markets due to the proliferation of computerized trading which rips price higher and lower as the new norm. Remember this the next time gold drops lower and up start the usual: "FLASH CRASH - evidence of evil manipulators at work" nonsense flares up.
Here is what actually happened and it had NOTHING, ZERO, NADA to do with manipulators or some secret esoteric anonymous large trader lurking in London or anything else - News hit the floor that Russia has decided to hold military exercises near the Ukranian borders and that included air operations.
Pro-Russian forces in eastern Ukraine are continuing to clash with Ukranian forces and that announcement sent stocks temporarily lower while gold shot higher as safe haven plays popped up. You can usually see that sort of thing when the Yen reverses and scoots higher.
It looks to me like the initial spike higher has attracted some sellers now that things seemed to have calmed down a bit. We will have to wait and see how the dust settles today. As long as there are any fears of further escalations over there in Ukraine, the market will be supported. If those fears fade, watch for more selling pressure to re-emerge once again.
Subscribe to:
Posts (Atom)