Trader Dan's Market Views: <b>Gold Price</b> vs. Hedge Fund Activity - Act II |
- Trader Dan's Market Views: <b>Gold Price</b> vs. Hedge Fund Activity - Act II
- <b>Gold Price</b> Rebound Driven by Big Futures Buying - The Market Oracle
- <b>Gold price</b> only gainer amid carnage on stock, metal markets <b>...</b>
- The Hows and Whys of <b>Gold Price</b> Manipulation - Paul Craig Roberts
- The <b>Gold Price</b> is in the Middle of a Rally, Up $40.90 this Week
| Trader Dan's Market Views: <b>Gold Price</b> vs. Hedge Fund Activity - Act II Posted: 15 Mar 2014 03:00 PM PDT This is to provide a bit more lengthier view of the gold market action vis-a-vis the hedge fund activity going back to the beginning of 2011. It includes the rally to the record high price ( these are weekly closing prices only and thus do not reflect any intra-week spikes but only where price closed that week).  There is one thing I would really like to point out on this chart and that is the section where the words "Gold sinks to $1523 but recovers" begins. Look at the SHARP INCREASE in the number of fund long positions as opposed to the amount of short covering. Can you see it? Massive NEW BUYING in opposition to modest short covering. The number of new longs ramps up by 75,000 positions compared to a reduction of about 11,000 existing short positions. The ratio is nearly 7:1.  Then move to the right on the chart when the words, "Price hits $1525 again and then rallies to near $1800 as funds pile back on the long side and cover shorts". There we have an increase of 101,000 new longs compared to about 36,000 short positions covered. The ratio is less than 3:1 but still strongly favors new buying compared to short covering. Traders were getting excited about the possibility of gold coming back up and taking out $1800 once again and going on to make new highs but the number of skeptics was increasing. The failure there turned the psychology around completely. Bulls bailed out in earnest and bears became aggressive. The number of longs that bailed out was about 86,000 while the number of new shorts went on to max out near 78,000. Clearly it was a huge change in sentiment that caused this. What I would like to emphasize is the fact that during times when the bullish psychology was still at work in gold, rallies back off of support levels that were tested and held were led by a huge number of new long positions in comparison to the number of short positions being covered. That was reflective of the bullish sentiment that was still intact even after the big drops in price. Traders were convinced that the bull market was going to resume and did not want to miss it, after it had been ongoing for a decade. When the price failed on the third test of $1800 the sentiment began to shift and even the most resolute of bulls began to waver. The final blow came when $1530-$1525 gave way and down she went. This time around we are watching gold rally but the move higher is being led by a greater number of shorts compared to the number of fresh new long positions. That is what has me concerned. A careful analysis shows that there is no longer the same resolute bullish sentiment that once existed prior to the breakdown at $1800 but especially after the failure at $1530-$1525. That is why, even though we have had a nice move off the lows, we are still not seeing bulls getting aggressive. I am convinced that we will need to see at least a breach of $1425 and a change in the handle to stay at "14" before we will get some skeptics on the sidelines to come in. Gold needs to see a change in sentiment for a brand new bullish trend higher can be maintained. Please bear in mind that I am talking about a strong new uptrend and the resumption of a bull market. Until $1530 gets recaptured, this is just a rally in a bear market. It is a nice rally, and is certainly a tradeable rally, but it is nonetheless a bear market rally. There needs to be further developments, whether geopolitically but more importantly concerning the US Dollar to occur before we will once again see the strong NEW BUYING that has in the past been a hallmark of bullish moves higher than have some sticking power. Again, that certain website and its plagiarizers over there - I am watching you.... You may use this chart and the accompanying notes but I expect full credit to be prominently noted.  |
| <b>Gold Price</b> Rebound Driven by Big Futures Buying - The Market Oracle Posted: 14 Mar 2014 01:50 PM PDT By: Zeal_LLC
From a pure fundamental supply-and-demand standpoint, gold's crushing losses last year were solely attributable to record gold-ETF selling by stock traders. The World Gold Council's comprehensive 2013 data showed that global gold-ETF outflows from epic share selling was actually a third greater than the total worldwide drop in gold demand! Without those extreme gold-ETF liquidations, gold wouldn't have plunged. Thankfully stock traders are just starting to buy gold-ETF shares again, resulting in capital inflows from the stock markets to gold for the first time in over a year. This critical mean reversion of investor interest in gold has barely even begun. So far, the flagship American GLD gold ETF has only recovered 1/25th of its bullion hemorrhaged in 13 months ending in January! Investors are driving this new gold-ETF holdings recovery. But a major secondary factor in gold suffering its worst loss in a third of a century last year was record futures selling. In the first half of 2013, American futures speculators dumped gold at blistering sustained rates. Provocatively as soon as their outsized selling peaked mid-year, gold prices stabilized even though the heavy gold-ETF liquidations continued. Futures trading dominates global gold-price action! There are multiple reasons for this. While gold trades universally in physical form, the actual prices vary slightly. The American gold-futures market provides one centralized price quotation that the rest of the markets can cue off. Actual gold bullion is costly and cumbersome to trade, but futures allow instant leveraged gold-price exposure to large hedgers and speculators. And gold futures have been around for decades. American gold futures started trading in late 1974, when gold ownership finally became legal again for Americans after being banned for four decades by a Democratic president. Meanwhile GLD wasn't born until late 2004, three decades after US gold futures started trading. So from a real-time-price and trader-sentiment perspective, American gold futures remain the only game in town. They truly are the gold price. So just as extreme gold-futures selling slaughtered the gold price in the first half of 2013, heavy gold-futures buying is lifting it this year. The implications of this critical shift are very bullish. Based on multi-year averages, this gold-futures buying is likely only half done at best. As futures buying continues to push gold higher, more and more investors will be enticed back to strengthen and amplify gold's new upleg. It's important to remember that futures are a zero-sum game. Every futures contract has one trader on the long side and another on the short side. The former is betting the underlying price will rise, and the latter that it will fall. Every dollar won by the winner is a direct dollar loss for the loser. Because of this core structure, the total number of longs and shorts outstanding in gold futures are always perfectly equal. But there are two distinct groups of futures traders, hedgers and speculators. Hedgers actually produce or consume the underlying commodity, so they simply use futures to lock in their future selling or buying prices to minimize market risks on their businesses. But speculators trade futures solely in the hunt for profits, they have no commercial dealings in gold. Their highly-variable buying and selling drives the gold price. Every week the main US futures regulator releases a great report called the Commitments of Traders that breaks down the futures positions held by both hedgers and speculators. The charts in this essay are built from that CoT data, revealing how American futures speculators are betting on gold. And they have been buying it aggressively, which is why the gold price has surged so nicely in the past few months. This chart may look complex, but it's quite simple. The green line shows the number of gold contracts that American futures speculators hold the long side of on a weekly basis. These are leveraged bets the gold price is going to rise, so the higher this metric the more bullish traders collectively are on gold. And the red line shows their bets on the short side, where higher numbers mean they are more bearish as a herd. In order to grasp the implications of the big gold-futures buying this year, understanding the context of the big gold-futures selling last year is essential. Gold plunged 26.4% in the first half of last year, in three distinct selloffs that all had major futures-selling components. Last February, it all started when gold fell on a futures bear raid while most Asian traders were away for week-long Lunar New Year celebrations. American speculators triggered this 6.7% 2-week decline by aggressively selling short gold futures. They effectively borrowed gold from other traders, sold it, and then hoped to buy it back cheaper later to repay their debt after its price had fallen. Speculators' total short-side bets on gold surged about 50k contracts in that time! This is truly a vast amount, as each futures contract controls 100 troy ounces of gold. The equivalent of 5m ounces of gold hitting the markets in a couple weeks, or 155.5 metric tons, was brutal. By that point in 2013, the total gold-bullion outflows from differential GLD-share selling was just 51.6t over 7 weeks. This pushed gold down near critical multi-year support at $1550, setting it up for April's shocking panic-like plunge. Once that technical line in the sand crumbled, all hell broke loose. As $1550 failed in mid-April, gold plummeted 13.8% in just 2 trading days! Gold hadn't seen anything remotely close to that for three decades, it was crazy. That critical-support break triggered stop losses on speculators' long gold-futures contracts, so they were forced to liquidate. This sparked margin calls on other traders, spawning a vicious circle of selling. Unfortunately the weekly CoT data masks this anomaly. The CoT reports are current to each Tuesday's close. Gold's panic-like plummet in mid-April happened on a Friday and Monday, right in the middle of a CoT week. While many traders were getting stopped out of long contracts, many other traders were buying them aggressively since gold's selloff was so extreme. So despite the minor weekly CoT changes, there was massive volume and churn within that week. That event was so scary that it galvanized futures speculators into a hyper-bearish outlook. Just like at all extremes, they assumed that anomaly was the start of a new trend that would persist for some time. This led them to continue dumping gold futures relentlessly, making their bet a self-fulfilling prophecy. Between late April just after that plummet and early July, speculators fled gold futures at an unprecedented rate. You can see this on the chart, the falling green line showing long positions being sold while the rising red one shows short bets growing. In futures trading, the price impact of selling an existing long position and selling to create a new short position is identical. The shorting accelerated as gold plunged again in June after Ben Bernanke laid out the Fed's best-case timeline for slowing its QE3 debt monetizations. 2013 was as far from a normal year in gold as you can get. Not only was it gold's worst year in nearly a third of a century, the second quarter was gold's worst quarter in an astounding 93 years! Epic gold selloffs like we witnessed last April and June simply don't happen, they are exceedingly rare. So there was no doubt that both futures speculators' extremely-bearish psychology and resulting bets weren't normal. As I was trying to figure out just how wildly outlying all this was in the middle of last year, I needed some baseline for normal gold markets. I decided to simply look at their post-stock-panic years before 2013, the 2009-to-2012 era, for that comparison. As the next chart shows in a little bit, both speculators' total long and short contracts held in gold futures had radically different averages over that secular span. The total deviation of both speculators' gold-futures longs and shorts from their 2009-to-2012 averages is represented by the yellow line above. By early July this critical metric had ballooned over 204k contracts. This meant American futures traders had sold the equivalent of 20.4m ounces of gold that they would normally hold, or 634.8 metric tons! This dwarfed GLD's year-to-date liquidation of 411.1t. The sheer magnitude of this first-half-of-2013 gold-futures selling defies belief. The World Gold Council reports all the world's mines supplied 2969t of gold in all of 2013. Since gold is produced at a constant rate, halving that yields 1484t in the first half. So American speculators' futures selling alone was so great in that span that it was like a 43% boost in mined supply! No wonder gold wilted under such an onslaught. But the great thing about futures and markets in general is extremes never last. Eventually after anything is sold too long, bearishness peaks and the anomalous selling burns itself out. So there was no doubt that American speculators would have to start buying gold futures again soon to reverse these hyper-bearish bets. On the short side in particular, it was mandatory. Those record shorts had to be covered! Despite their sophistication, gold-futures traders are human just like the rest of us. They too suffer from groupthink and herd mentality, getting too greedy and bullish when prices are already too high and too scared and bearish when prices are already too low. Historically, the aggregate speculators' gold-futures positions are actually strong contrarian indicators. Their low longs and high shorts predicted an imminent reversal. Indeed in July and August the speculators started aggressively covering their shorts, buying about 75k contracts or 233.3t of gold. This drove a sharp 18.2% 2-month gold rally, but unfortunately it fizzled out. Major new uplegs are always born with widespread short covering, as speculators buying to close their shorts at profits are often the only buyers around near extreme lows at peak despair. But their buying is finite. An upleg can't continue unless the upside price action initially sparked by short covering leads to enough bullish psychology to bring in other buyers. First futures speculators need to start adding new long-side bets, and then investors must gradually return to take over the capital-inflows lead. While there were encouraging signs of both gold-futures buying and gold-ETF buying, it soon ran out of steam. So futures speculators resumed shorting gold with a vengeance in November, as they continued to whittle down their long-side bets. By early December, the total deviation of spec long and short contracts from their 2009-to-2012 averages was back up near 201k! But just as this extreme anomaly proved unsustainable in early July, it was no more so in early December. Futures selling was simply exhausted. Provocatively for most of 2013, futures speculators feared nothing more than the Fed slowing its QE3 money printing to buy bonds. But when the rumor became fact and the QE3 taper arrived by surprise in December, gold only slumped to modest new lows. The American futures speculators didn't add to their high short positions, and they actually started buying longs again! Thus gold started to reverse higher. In January and February the speculators' short covering accelerated, they have bought back over 62k contracts (the equivalent of 194.5t of gold) since early December. Once again this major short covering has birthed what is likely to grow into a major upleg. But even more encouraging, they have also started to buy on the long side in a major way for the first time since last year's carnage. This is a super-bullish omen! Futures contracts have expiration dates, so speculators legally have to buy to cover their shorts to effectively repay their borrowed gold in a matter of months after selling it short. But they have no similar obligation to buy on the long side. So new long-side buying reflects a genuine shift in their collective sentiment away from the extreme bearishness that crushed gold in early 2013. And it feeds on itself. The more futures contracts speculators buy, the higher the gold price rallies. This brings in even more buyers, both in the futures realm initially and later in the far-more-important investment realm. It also puts tremendous pressure on the remaining speculators with short positions to buy back their bleeding bets to stem their mounting losses. And incredibly, this highly-likely futures buying is only half over! Once again that yellow data series shows the total deviation in speculators' gold-futures long and short contracts from their respective 2009-to-2012 averages in normal markets. This deviation peaked at 204.1k contracts in early July, and again at 200.8k in early December. All this gold that was sold had to be repurchased, driving gold higher, to return to market normalcy. As of the latest CoT report, it is still at 102.0k! Gold has run 15.0% higher in the past several months or so almost solely on American futures buying. While stock-market capital has just started returning to gold via GLD, that is just 23.1t so far compared to 317.6t of futures buying. And these futures speculators still need to buy another 102.0k contracts, or 317.2t more gold, merely to mean revert to their secular-average levels of bets in normal market conditions! This final chart extends this same CoT data back to 2008, to show those critical long-term averages. And the word average is key. It's certainly not like speculators' long-side gold-futures bets have to hit new record highs, or their short-side ones have to fall to zero. Between 2009 and 2012, before 2013's craziness, speculators averaged 288.5k long gold contracts and 65.4k short ones on a weekly basis per the CoTs. As of the latest CoT report, speculators' longs were only back up to 208.6k contracts. This is still 79.9k, or the equivalent of 248.6t of gold, below their long-term post-panic average. By mid-December 2013, these bullish bets on gold had fallen to their lowest level in 5 years, since the also extreme and short-lived anomaly of 2008's stock panic. Just take a look at what speculator longs did after that crazy event! They rocketed dramatically higher over the subsequent year or so, catapulting the gold price 54% higher and paving the way psychologically for investors to return en masse. This is all but certain to happen again after today's extreme, as that's just the way mean reversions out of extremes work universally in the financial markets. Once buying after extreme selling starts, it takes a long time for it to run its course. There is less gold-buying fuel left on the short side, with speculators total shorts now at 87.4k contracts. This is only 22.1k or 68.6t above their pre-2013 post-panic average. Still, that certainly isn't a trivial amount of gold. Most short covering happens early on, before long-side buying. Back in early July, speculators' total shorts hit 178.9k contracts! That was their highest level in at least 14.5 years, if not ever. Another 102k contracts of gold-futures buying, as much as has already happened, is bullish enough for gold. But one of the greatest things about mean reversions is they seldom merely return to averages after hitting extremes. They nearly always overshoot to the opposite side! Like a pendulum pulled too far to one side, the momentum built in the reversion is so strong that the pendulum can't just stop mid-arc. So there is nearly a certainty that we are going to see way more than another 102k contracts or 317t of gold-futures buying by speculators. The odds are overwhelming that their total longs will not stop mid-arc at their 288.5k 2009-to-2012 average, but soar well beyond that up towards 375k or so like after the stock panic. And their shorts are likely to fall far below their 65.4k average, likely challenging 40k again. Run these numbers, and we're looking at potentially 214k contracts of gold-futures buying or 665 metric tons in the next year or so! That much futures buying along with the investment buying the resulting gold upleg will create should easily push gold back up over $1800 again, it not much higher. Mean reversions out of extremes are the most powerful trends in all the markets, incredible profit opportunities. At Zeal we've been riding this one since its birth. As battle-forged contrarians, we've been brave when others were afraid. We've been aggressively buying dirt-cheap gold and silver stocks with outstanding fundamentals, and advising our subscribers to do the same. We're all already sitting on big unrealized gains (up to +120% since November) that will grow far larger as gold's recovery upleg continues to run. You ought to enjoy the profitable fruits of our hard work! We publish acclaimed weekly and monthly newsletters for contrarians who like to buy low and sell high. They draw on our decades of hard-won experience, knowledge, wisdom, and ongoing research to explain what's going on in the markets, why, and how to profit from it with specific trades. Since 2001, all 664 stock trades recommended in our newsletters have averaged stellar annualized realized gains of +25.7%! Join us today for just $10 an issue, a steal. The bottom line is big gold-futures buying has fueled this year's strong gold rally. And it wasn't just short covering like last summer, but the first major new long-side buying since last year's carnage as well. This greatly increases the odds that we are witnessing the birth of a major new mean-reversion upleg in gold. And incredibly, even to mean revert to average levels this futures buying is only half done so far. But mean reversions out of market extremes never simply stop at averages, they overshoot in an often dramatic fashion. So there is likely a lot more futures gold buying coming than merely a return to normalcy would suggest. As this continues to relentlessly push gold higher, more and more investors with their far-larger pools of capital will return to take the baton. And a massive upleg will be the ultimate result. Adam Hamilton, CPA So how can you profit from this information? We publish an acclaimed monthly newsletter, Zeal Intelligence , that details exactly what we are doing in terms of actual stock and options trading based on all the lessons we have learned in our market research. Please consider joining us each month for tactical trading details and more in our premium Zeal Intelligence service at … www.zealllc.com/subscribe.htm Questions for Adam? I would be more than happy to address them through my private consulting business. Please visit www.zealllc.com/adam.htm for more information. Thoughts, comments, or flames? Fire away at zelotes@zealllc.com . Due to my staggering and perpetually increasing e-mail load, I regret that I am not able to respond to comments personally. I will read all messages though and really appreciate your feedback! Copyright 2000 - 2014 Zeal Research ( www.ZealLLC.com ) © 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication. |
| <b>Gold price</b> only gainer amid carnage on stock, metal markets <b>...</b> Posted: 13 Mar 2014 03:50 PM PDT The gold price held onto recent gains on Thursday on the back of safe haven buying as reports surfaced of Russian troops amassing on Ukraine's borders and stocks took a tumble over worries about China's economy. On the Comex division of the New York Mercantile Exchange, gold futures for April delivery – the most active contract – last traded at $1,370.90 an ounce, up slightly from yesterday's close. In brisk trading the metal hit a high of $1.376 earlier in the day, the best level since September and up 14.8% since the start of the year. President Vladimir Putin's adventurism in Ukraine received another round of condemnation from Western leaders and Nato announced the deployment of fighter jets to countries on Ukraine's western borders, but there appears to be no resolution to the crisis in the offing. Voters in the Crimea, where 60% of the population are Russian speakers, go to polls over the weekend to decide whether to become again a part of a greater Russia. The semi-autonomous republic was gifted to Ukraine in the 1950s when the region was under Soviet rule. Dismal economic news out of China crimped global growth expectations gave investors another excuse to sell off stocks. US and European stocks were hammered with the Dow Jones falling 231 points and the broader S&P 500 losing 1.2% and erasing the year's gain in the process. In Europe, which is China's largest trading partner and will be hard hit if sanctions are imposed on Russia, Germany's Xetra Dax index fell almost 2%. Silver did not join gold's rally falling 16 cents to close almost 1% lower at $21.20. Platinum at $1,478 and palladium at $776 also pulled back slightly and copper suffered another sharp correction. The red metal ended the day at just over $2.92 a pound, the lowest level since June 2010. |
| The Hows and Whys of <b>Gold Price</b> Manipulation - Paul Craig Roberts Posted: 17 Jan 2014 03:31 PM PST Copyright .© Paul Craig Roberts 2014.- Please contact us for information on syndication rights. This site offers factual information and viewpoints that might be useful in arriving at an understanding of the events of our time. We believe that the information comes from reliable sources, but cannot guarantee the information to be free of mistakes and incorrect interpretations. IPE has no official position on any issue and does not necessarily endorse the statements of any contributor. |
| The <b>Gold Price</b> is in the Middle of a Rally, Up $40.90 this Week Posted: 14 Mar 2014 06:17 PM PDT Gold Price Close Today : 1,379.00 Gold Price Close 7-Mar-14 : 1,338.10 Change : 40.90 or 3.1% Silver Price Close Today : 21.384 Gold Silver Ratio Today : 64.487 Silver Gold Ratio : 0.01551 Dow in Gold Dollars : $ 240.83 Dow in Gold Ounces : 11.650 Dow in Silver Ounces : 751.29 Dow Industrial : 16,065.67 S&P 500 : 1,841.13 US Dollar Index : 79.440 Platinum Price Close Today : 1,469.00 Palladium Price Close Today : 773.00 Exactly one month after the silver and GOLD PRICE surge on 14 February, they are repeating their act. Stocks, on the other hand, have lost 287.37 or 2.4% in a five day losing streak. US dollar index looks puking sick, and platinum and palladium are breathing hard to keep up. The GOLD PRICE scooped up another $6.80 (0.5%) today to pierce $1,375 and close at $1,379.00. Silver joined in, grabbing 21.5 (1%) cents to rise to 2138.4. The SILVER PRICE was pushed to a 2114c low but gapped up about 5:30 a.m. EST. It stopped a leap from 2120 at 2180, but backed off that and traded between 2130c and 2150c most of the day. Silver has formed what is probably a bullish flag (down-pointing flag) and today broke above the top of that range, but at the close was only about 8 cents above it. At day's end silver stopped at 2146c. Climbed today above the 20 DMA. The gold silver ratio at 64.487 STRONGLY witnesses that silver is verging on playing catch up with gold, and running past it. First, however, silver must close above 2160 and then above 2218c, the February high. Gold is a little overbought, but bull markets can stay overbought a long time. Since today it punched through its top Bollinger Band (a measure of range), we might see gold take a rest for the first couple of days next week. Of course, anything can happen over a weekend. Last week gold closed above the downtrend line from its August 2011 high and above its 50 week moving average. This week's trading all took place above that downtrend line. On the monthly chart gold remains below its 20 and 50 month moving averages, but has broken out through the downtrend line there, too, and posted three rising months. On a weekly chart silver has spent five weeks above the post-April 2011 downtrend line and this week closed barely below its 50 week MA (2150). It has spent four weeks trying to fight through that moving average. Silver's monthly chart reveals a breakout similar to gold's above the downtrend line, but only two months. We're in the middle of a rally. Buy -- more silver than gold. If you have gold to swap for silver, do it fast. Whoops! The Fed has sprung a money leak!. It holds US government securities in custody for foreign central banks, and for the week ending 12 March those fell $104 billion to $2.86 trillion. Speculation is that the Russians pulled theirs out ahead of the US government possibly locking them up. Now that little smidgen of treasuries withdrawn doesn't amount to anything, but its about three times the last biggest drop ever. And if more central banks took a notion to take delivery, or, worse yet, simply to sell, why there would be big trouble in Fed-ville. Stocks had a consistent week: consistently lower. Dow yesterday dropped a thumping 231.19, today another 43.22 (0.27%) to end the week at 16,065.67. S&P500 lost 5.21 (0.28%) and ended the day at 1,841.13. Y'all know that moving averages are momentum milestones. A market above its moving averages has upward inertia, a market below downward. When a market falls below its short term moving average (say, 20 day), it's warning of a downturn. When it falls below the 50 DMA, it picks up steam, etc. In the last two days the Dow dropped through both its 20 (16,241) and 50 (16,148) DMAs. S&P500 fell through its 20 (1,854) but not yet the 50 DMA (1,821). More interesting still, the S&P500 has fallen through a long term uptrend line it had "thrown over" or broken out above. Now its punching back below. Same holds for an old upper boundary of the Dow's range. It threw over that line in November, traded up until end-December, cascaded down through that support in January all the way to its 200 DMA, then rallied back over the line. Today it sits just above it. Add a downward or sell cross in the MACD indicator, and, well, stocks look a mite peaked. It appears that the Dow's refusal to confirm new highs in the S&P500 and other indices in this last rally was telegraphing underlying weakness. However, it's like a dead rattlesnake. Don't count it out until somebody cuts off its head. Stocks will likely still back to a new high before May. I'm strapping on a muzzle so I don't crow too much over the Dow in Gold and Dow in Silver. They fell from end-December until end-February, then managed a little counter-trend rally -- really a sort of counter-trend burp. Now they have earnestly resumed their fall as metals outperform stocks, and they point toward much more outperformance the further they fall. They gave a couple of sell signals this week. DiG closed today at 11.65 oz (G$240.83 gold dollars), well below the 200 DMA at 12.02 oz (G$248.48) Yo! What of the DiS? Silver has lagged gold so the DiS hasn't performed quite as spectacularly, but respectably still. Tumbled today 1.38% (10.47 oz) to 750.28 (S$970.11), a gnat's eyebrow from the 200 DMA (748.51 oz). Bearings check: Dow in Gold topped (stocks peaked in August 1999) at 44.767 oz (G$925.42) and Silver in June 2001 at 2,573 oz. In 2013 both broke above their long term downtrend lines in a correction, and now they are headed to break below those lines. From peak to the first trough in this bear market for stocks against metal, stocks lost about 85% of their value. They'll lose another 85% before the bear market for stocks ends. Rough guess, mind you. US dollar index fell again today, 17 basis points (0.2%) to 79.44. The November low, lowest price in a year, was 79.06. If there dollar breaches that support, no safety net appears before, oh, 78. However, the dollar has spent most of 2014 tracing out a falling wedge, which usually but not always ends by reversing upward. However, if it lurches yesterday's low, about 79.28, it might just keep on lurching downward. Since Europe has a lot more to lose by a war in Ukraine than the US, the euro ought to be dropping like a careless tourist off a cruise ship, but it's not. Yesterday it dropped 0.27% after hitting a new high for the move, then closed lower. Today it rose 0.27% and closed higher, gainsaying any key reversal downward. Seemingly intends to rise, but why remains a mystery. Again today the yen picked up the safe haven bid and rose 0.49% to 98.73 cents/Y100. 'Twas at this same level as March began but slid, so if it can close higher then it is rallying and not merely trifling with us. On 14 March 1900 congress passed the Gold Standard Act, allegedly to put the United States on a gold standard, really to try to make the banks' demonetization of silver permanent and demoralize bimetallists. The bill made the gold dollar of the standard of 1834 the "standard unit of value" to which the secretary of the treasury was supposed to maintain all other forms of money at parity The act is another irrefutable argument against government issuing any money at all, since the whole history of government issued money is a parade of corruption, stupidity, confiscation, and market suppression. A government monopoly on money issue, along with legal tender laws, is the tyrant's indispensable tools to rob the people. Y'all enjoy your weekend. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger © 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. |
Gold's strong rebound upleg this year has been driven by big gold-futures buying. After abandoning gold last year, American futures speculators are returning to the yellow metal in droves. These capital inflows are a very bullish harbinger, as major futures buying is the primary fuel for young gold uplegs before investors return to take the baton. And this big gold-futures buying is likely less than half done!
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