I think the author is looking at gold stocks over the next couple of weeks and months rather than right now. The time to buy gold stocks was a week ago. Some of the miners are already a bit too pricey again. Gold stocks are 2X to 3x their November lows so one can't say they are totally out of favor. A week ago they were out of favor. This week they are in favor again. The daily bouncings between inflation and deflation trades is getting monotonous.
$942-$944 was the key resistance range last time around. It needs to get taken out along with $950 to make another high $900's run.
Are you a seller on gold stocks RR? I loaded up on gold stocks a few weeks ago (bad timing), but I'm at or near break even on almost everything right now. As I expect gold to continue to increase from here, I think I might as well hold on to what I've got. I don't follow the stocks as close as you do.
I did add to my gold futures position this morning at $935. It's a bigger position than I originally planned, but I did a tight stop at $932 for the new position just in case I'm wrong, but so far everything looks good. Also picked up a silver contract in another account.
The consolidation pattern looks strong. The consolidation has re-energized the short term pattern. I think the hourly and daily charts are showing that they are ready for more movement. I don't expect this to come Friday. Sunday night or Monday is more likely.
I'm with RR... $942-944 is key. It will be strong support once we break this level.
PC, I was shaken out of gold stocks on the last move down so I missed this last 10% move up. It looked like we were headed into the $800's. I'm not convinced this is not just another retry at the $944 level and then a fall back. We punched through it before only to get repelled back to $904. Looking for more weakness and shaking out to re-enter unless the dollar falls under 78.5 and $950 is blown away. Even then I don't think I'd want the risk of chasing the action. The COT gold commercial levels are still very high to the short side which is bearish.
There will be a good entry point by early to mid-August. And one that should be lower risk as well.
Bond auctions on 7/28-7/30 for 2/5/7 yr notes will mean next week is the last one this month to allow the stock market to move up any further. It's slam down time the week after next. Gold and commodities should follow the SM. 7 more bond auction weeks remain for 2009 ending in last October.
Edited for end of week COT report:
Fell below the 3.0 short to long ratio on commercial's gold futures (2.93) That's usually a good point to start building again for a future upmove. It's been above 3.0 since May. The April bottom occured around 2.5-2.6. That would be an ideal point to start building from assuming no summer washout over the next 4 weeks. The October-November '08 washout took it to 1.70-1.80 for several weeks. Also note that dollar futures perked up this week with the commercial long to short ratio jumping from 3.13 to 3.63. That was enough on 6/26 to stop the last rally in gold. The commercial longs have bumped the long/short ratio to >3.0 (from 1.36) over the past 3 weeks. It would seem they are expecting a move up soon. Maybe one last drop for the dollar into the 77-78 range and then a multi-week move up to shake things out.
<< <i>I mentioned silver on Monday as trying to bounce off the 200dma so I traded AGQ--the ultra long silver etf.
I've been more of a "manipulator", er, trader of oil through UCO the last few days. Sold 1/2 my position just now at 10.13, but plan on holding the rest for the $10.50 range. Other than a small position in UNG--which isnt doing anything--and a small put position on an individual stock, I am all cash. >>
So the answer is no? You're like my wife. She always gives me answers to every question except the one I asked... lol.
So I'm very happy with the gold move. I'm actually not expecting gold to pause too long at this level. I think we may see it pop over $944 on Thursday. I thought it looked really bullish how it hugged $940 really tightly all day. Tonight I expect support to hold up at $935. Resistance is $946.2
I'm debating whether to add to my position on a breakout over $946 or even on this dip to $936. I might buy a silver contract instead. >>
Absolutely. Like I mentioned to you via PM, there are much better trading vehicles than gold. For the same amount of energy, (doing research), why not go for bigger bang for the buck? Seems logical to me.
For disclosure, out of UCO at 10.47. 12.2% return. Not bad for a few days.
The charts are loaded with energy and gold is ready for a move Monday - Tuesday at the latest. It could go either direction of course, but I'm still expecting it to continue upwards. Most of the reason is the rally in equities which I expect to continue. Silver was also up nicely on Friday without gold matching the increase. I don't follow and play equities closely, but this is why I think the bear market rally will continue:
The weekly ECRI is turning up rapidly and the leading indicator is screaming. This is bullish for gold, IMO, and coincides nicely with predictions for $1500 gold by the end of the year.
Nothing really wrong with those trendlines. The steeper they are the more prone they are to be violated and the less important they really are.
Notice the line you drew from the Oct low. If you extend it out it comes pretty darn close to the 990 high. So the trend line was broken, then rallied to test the line again and then failure down to 905. We have now broken the less steep trendline that I drew and it most likely will pull back towards the 910-920 line that you drew. It may in fact be trying to build a wedge from March, and I hope you are aware of the extreme importance of the line at 910-920.
I'm not sure it will pull back to test the 910-920 line and that's because we've recently broken out over the 20day MA and we're almost over the 50 day MA. But it's always a possibility. One that happens, we usually stay above the moving averages for a while, meaning an up-move. Also in the next couple of weeks the 200day MA should really start to adjust upward significantly as the old sub-$800 data points come off, thus lifting support levels.
Another sign which simply says that gold is ready to move (either direction) is that the Bolinger bands are getting narrow.
I think the B-bands have a few more weeks to tighten. 50 and 200 dma are mostly sideways. Momos are still negative and price action is making a small series of lower highs and lower lows. Probably rangebound for awhile.
The silver wedge could also be widened on the bottom to include the last bottom point at $12.45. The points that mean the most on the wedge are those that fully traverse a move from one line to the next. The recent high at $16.23 was such a point as was the orig bottom back at $8.40. It took a clear 5 waves to reach $16.23. But everything that has followed since is corrective and the bottom is not yet known. The $11.75 point was part of the move up to $16.23 and I would not include it in constructing the wedge. The recent low at $12.45 is the 2nd point on the bottom line unless a lower point appears in the next month or so. And since silver has completed a fairly clear 5 waves down (A) with an initial bounce back (B) still in progress. Odds favor a 3rd deeper wave (C) down (or a retest) will form the 2nd point on the lower wedge line. From there, a good set up to break out of the wedge on the next move up.
I don't look at this exactly the same as a bottom or top trendline as one would find in a typical channel. End points at completion of wave patterns carry far more weight imo than those at intermediate points. Silver completing a very distinct 5 waves up means a lot. The other points on the way up mean a lot less to the overall formation of the triangle. The same is true on the way down. The completion point of the silver correction will have much more meaning in deciphering the end play of the symmetrical triangle. And this is not a trend line, it's a side of a triangle formed by major uptrend and downtrend end points.
The bottom of subwave 4 on the way up had meaning in drawing a bottom channel trendline and to ultimately note a break of the line in the past few weeks. To fully utilize the forming triangle pattern, I want to look at end points, not intermediates. Sometimes less can be more. Some might be inclined to dismiss that $12.45 point as being below the trend path and a sign of something else. I'd say that point is on the triangle glide path until a lower point possibly emerges soon. And in each case the triangle widens and extends.
The PM markets are on fire this morning. Gold broke through key resistance of $944. I think the next stop should be $990. I am planning to sell half of my position at $990 to play a pull back.
This week is first notice week for Aug contracts. Last week I was able to roll to the Oct contracts which are trading at ~$1.30 higher) at no cost. So my cost basis is still about $925, although my trading program has updated the cost to last week's transaction price of $938.
I'm going to add another position this morning at $952 (Sep contract). A pullback to $945 is possible, but I think that level is going to provide solid support. Might as well play this move to $990 will a max position.
I'm also pleased about my silver contract at $13.25. I'm just going to hang on to this one, and probably sell at gold $990.
One analysis of gold's correction since 2/20 that seems to make sense is a 5 wave series of which the first 3 waves (ABC) were just completed at a low of $905. D is close to completing its first leg up (a) of 3 (abc). Wave b will partially correct down followed by c up to the upper $990's. After that E takes gold down into mid-August to a previous resistance point.....possibly $918-$928. A strong move up for a 3rd time into the upper "$900's" will start to make a final drop into the $800's less likely.
Gold is looking strong, and the trend to $990 is only getting started. Gold will probably need to consolidate for a day or more before heading onward and upward.
I'm kicking myself for not having the patience to buy a few dollars cheaper for the last position, but a few dollars won't make much difference in view of the upcoming $40 move.
$955 and $965 are resistance levels for tomorrow, with support at $947 and $940.
<< <i>Gold is looking strong, and the trend to $990 is only getting started. Gold will probably need to consolidate for a day or more before heading onward and upward.
I'm kicking myself for not having the patience to buy a few dollars cheaper for the last position, but a few dollars won't make much difference in view of the upcoming $40 move.
$955 and $965 are resistance levels for tomorrow, with support at $947 and $940. >>
What your latest read?
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
Yesterday was a consolidation day. We're currently in a consolidation range between $944 and $949. The chart is re-loaded with energy and is ready for another move.
$990 still looks good for a target and may be attainable within the next week. I expect that the chart will need to have a significant consolidation at $990 though, so I will probably exit all of my positions there, as the consolidation will probably retest $945 again once it hits $990.
Nothing much happened today and the consolidation continues, although now in a higher range. The new range appears to be $949-954/956 but it looks like we might pop through that tonight. $961 is the next point of resistance after that. Silver's popped up to $13.82, so I think gold will have no problem going over $960 in the next 12 hours, in fact I think we might touch the next resistance level of $972. We're definitely on track for $990 by next Wednesday, especially with the accompanying rally in equities.
Cohodk, do you agree? Are you going to play this $40 move?
It provides a pretty good perspective on the issue of the world dumping their dollars. A contract to those who argue that, "Foreigners hold so many dollars that they can’t afford to stop buying them."
Here's a good quote:
Back in May, Masaharu Nakagawa, the chief finance spokesman for the opposition, told the bbc that he was worried about the future value of the dollar. He said that if his party were elected in the upcoming national elections, Japan would refuse to purchase any more U.S. treasuries unless they were denominated in Japanese yen instead of dollars. "
America grossly misdiagnosed the demand for dollars as a vote of confidence in the U.S. economic system. In fact, it was primarily a case of investors looking for a place they could quickly and easily get their money in—and out.
Now that the initial panic has subsided, the dollar’s international purchasing power has resumed its former downward trajectory. Since the post-crisis high in March, the dollar has fallen by a portfolio-shredding 10 percent.
America’s foreign creditors are again questioning the wisdom of holding so many U.S. dollars. And they’re looking for a way out.
<< <i>Nothing much happened today and the consolidation continues, although now in a higher range. The new range appears to be $949-954/956 but it looks like we might pop through that tonight. $961 is the next point of resistance after that. Silver's popped up to $13.82, so I think gold will have no problem going over $960 in the next 12 hours, in fact I think we might touch the next resistance level of $972. We're definitely on track for $990 by next Wednesday, especially with the accompanying rally in equities.
Cohodk, do you agree? Are you going to play this $40 move? >>
Im still looking at a more or less sideways trade. If it moves $40 over a 2 week period, it will be without me. I prefer a 3%+ move in a day or 2 rather than a week. Im a sniper and prefer to let my target poke its head out offering a clean shot, rather than spraying a bunch of bullets thereby revealing my postion.
> Im still looking at a more or less sideways trade.
I'm in agreement with you. It could all change in two minutes but as of today, I don't think recent moves warrant the excitement some others are feeling.
Corn and wheat prices are near the Oct crash lows. Only Soybeans are higher, but they have also dropped 25% in the last month.
They've been talking of bowl weevils and locusts and fungus and various threats to crops for centuries, yet none has ever proven to have any long lasting effect on ag prices.
storm, I'd be careful. I do think that equities are due for a consolidation, but the market is on fire and there is serious money flowing into the market right now, as evidenced by the long steady climb of the last week or so. The climb does have to end and it does need to slow down, but it's dangerous to counter a trend like this. Be careful.
As far as gold goes, it was disappointing that gold got shut down just below $960, although that does not mean the upward trend will not continue.... we just need to be more cautious. The danger sign would still be a breakdown below $945. The chart is still loaded with energy and ready to make another move, although I'm not expecting much for Friday.
Support for Friday is $944. Pivot is $951.5, R1 is 956.6, R2 is 964.3 and R3 is 977.
"...The climb does have to end and it does need to slow down, but it's dangerous to counter a trend like this. Be careful...."
/////////////////////
Yup.
I cannot pick tops/bottoms. If the stuff tanks, I will just average down and hold it in core.
But, many banks - and most commercial RE - are no more "sound" than they were in March.
My "friend" at GS says they are SHORT everything, but claims it is just to hedge massive LONG positions. I do not believe they have much of a LONG position in anything; if they do, they will dump soon.
Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
This was the "off" week from the T-bond sales so why not a move up in the SM? But money will be needed to buy 2,5,7 year notes next Tues-Thursday. Therefore expect weakness in stocks and PM's to "steer" bidders into bonds.
The dollar has double bounced around the 78.4 level. In the short term I'd expect at least a little rebound, but not much. That would coincide with gold falling back $10-$20 before a final leg up to end the July rally. Gold has peaked the last 2 days around lunchtime. If it fails to get above yesterday's $957 today there's a good chance we have a head and shoulders top completed. Gold options and futures expiration occurs next week during the bond auctions. Another good reason why gold will probably be hit around those days. Another factor is that gold has NEVER had an end of month close at $940 or higher. This will be another reason to keep gold under $940 through next Friday. $940 has sort of been a battle zone for some time and closing above it tends to indicate a subtle strength while below it is a general weakness. Therefore I think that the bankers will do all in their power to prevent any chance of a July close at $950 or above. It messes their books up as well (lol).
The dollar is headed for another strong up leg in the fall and it's only a matter of whether it begins right around now or deeper into August. The final hurrah for the dollar will be no later than November as it commences its final down leg to new all time lows in 2010. That will propel gold to new all time highs as well.
I thought of MoneyLA when reading the above article. Gives a nice overview of the sentiment behind each of gold's attempts at $1000. In particular, Adam Hamilton notes that for the first time ever $1000 gold lies inside the standard trading channel trend lines. This was not the case on all previous attempts.
Some significant changes in this week's report that indicate major trend changes.
The US dollar futures broke out of a 3 week funk of a 3.1-3.7 Long/Short ratio by the banks. This week the ratio is 4.35 L/S with a large increase in open interest of 5,600 contracts (+26%). To get a ratio this large means going all the way back to 2/28 when the dollar was just coming off a nice bullish run (peaked at 8.13 S/L on 2/13). It took about 3 weeks to go from 3.6 S/L to 8.13 S/L. The ratio has been moving back ever since and crossed over into a Long>Short bias since 5/20 (about the same time gold commenced it's very strong last leg up into the June 1-3 peak). Dollar is either being managed by the banks (at the request of higher authority) or it is getting primed for a run following an intermediate term bottom.
Gold did an about face from the pattern of last few weeks of the banks selling off shorts and adding longs. Now they're adding the shorts again big time. The short to long ratio jumped from 2.93 to 3.26....back into bull-killing territory. Open interest jumped up from 370K to 390K. The banks have not liked the increase in gold back to the $950's. Another week of short buying like that and they should succeed in stalling the current gold rally if history has been any indication. But the day will eventually come when naked paper doesn't sway physical bullion. The action in the dollar above seems to support the gold trend as would USBond sales and gold futures expiration arriving next week.
RR's comments have me very concerned, and I am doubting whether we'll hit $990. Nothing really happened Friday, which was disappointing but not to be unexpected for a summer Friday.
I'll remain more cautious and be looking for a breakdown below $945 as my cue to exit and lock in profits.
Some good quotes: (in reference to the 350 Euro mark (comparable to $1000 today) for gold in 2005) The most important benefit of the €350 breakout was its catalytic nature. The great majority of foreign investors had not yet been interested in gold, but once €350 was exceeded the coverage captured their attention. Foreign gold investment surged dramatically, pushing gold into its global Stage Two bull...
Remember that oil didn’t collapse once it broke above $100, but powered on to $145 within 5 months.
The metal will trade between $924 and $970 this week, said Chris Yu, head of the overseas market trading team with Samsung Futures Co. in Seoul. Fourteen of 24 traders, investors and analysts surveyed by Bloomberg News, or 58 percent, said bullion may rise. Six forecast lower prices and four were neutral.
Even though the commercials have been adding to their short gold positions, they have been lightening up on their silver shorts for weeks now. Silver continues to slowly meander its way up with GSR having come back from 73-74 down to 68. While there's no barrier barring gold from making another run to $970-$990 the odds are shrinking rapidly as the banks increase their short to long ratio. The current movements in silver and treasuries support another small gold rally while the dollar and gold futures would seem to be contrary. This morning's oversea's bump to $959 was encouraging but it could just as likely been a head fake.
Well, another uneventful day, but the last week has been very bullish (although frustrating for those of us looking for a faster move), IMO, as it was pretty much a slow grinding move/consolidation higher. Gold is energized and ready to move. It could go either way, but I think up will be the up direction and $990 will be the target.
Silver had a great day, closing at over $14. Silver could be looking at $15 soon.
RR's observations on shorts is quite interesting. I'm starting to think it may come in to play here soon. A ossible scenario might be... the market goes very bullish on gold, it surges to $990, the large shorts try to beat it down again, it drops to $945 or so, but the bull doesn't go down. Gold powers upward through $1000. The large shorts panic and scramble to cover positions, and gold is $1200 before you know it. When this thing goes, it will probably take off with a lot of large short positions on the books. The short covering is likely to make gold explode once it breaches $1000 significantly, and MoneyLA and others will be left behind. Maybe I'm dreaming.
rr, do you think that they are running out of silver to deliver, and that is the reason that they are finally lightening up on their short positions?
It really doesn't matter as they have papered the markets whenever they need "effective" silver to cover. The 3 major US banks that "play" already have 32,000 or so short contracts on the Comex out of a total short position of 63,000 contracts. Those banks average about 11,000 contracts each which is significantly above the unofficial and unenforced "table limit" of 6000 contracts. There's no reason they couldn't go to 15,000 or 20,000 contracts each if needed. And what they don't want to do in the light of day on the Comex, the banks can do with derivatives in the shadows. Last I checked the total derivatives position in silver equated to about 50X annual world production ($190 BILL in notional value). And most of this would be held by just a few large banks. Goldman Sachs shows up with ZERO gold and silver derivatives on the OCC's quarterly report yet it's a no brainer that they are a major player in this area. So it's pretty clear the upper limit on paper silver is only bounded by the bank's imagination. When $90 BILL (25 years production) wasn't enough for them in 2007 as silver started to get out of hand, they doubled it to 50 years to try and retake control. The next step might be 100 yrs world production in short paper bets. But at some point the game will be discovered and it will collapse as long holders start demanding physical delivery rather than settlement in dollars. Though it's possible that Comex silver might follow the path of gold where settlement is now allowed in equivalent ETF shares (such as GLD). That would mean a buyer requesting silver delivery of a 5000 oz Comex contract can be paid off in SLV shares. If we aren't to that stage yet, it's probably coming.
$990 gold this week on one analyst's view? That's really taking a leap. When predictions like that start popping up, even just one, they are invariably wrong. But it's true that gold will turn on a dime when no one expects it and catch most everyone napping. Even the Aden sisters got it right once in the past 2 years when they said to buy on July 13th. Well, as long as gold holds up here they were right.
Tomorrow starts this week's fun with a 2 year bond auction. But, In looking forward to August when there are 2 weekly periods of bond auctions with a total to be auctioned of $300 BILL! August will be an interesting month.
Anybody wanting to open a precious metals store between Fort Lauderdale and Pompano Beach, will find LOTS of vacant commercial properties.
Rent is cheap.
These shots were mostly taken while the guy was driving. They do not include the THOUSANDS of vacant lots that have been walked away from or stopped in various stages of development.
<< <i>Anybody wanting to open a precious metals store between Fort Lauderdale and Pompano Beach, will find LOTS of vacant commercial properties. >>
In Phoenix it's incredible. Street after street of BRAND NEW office buildings and retail space. Some several years old now, never occupied. And I'm not kidding - they are still building more. The market is FLOODED with space. Commercial is the next shoe to drop. There are a few media rumblings about this, but I think it will be a few more months before we have the magic "crisis day" where the market suddenly reacts to this reality.
I do real estate on the side in Phoenix. On the residential side, the market is on fire. Sales levels (# of sales) are near their peak from a few years ago. Anything under $200k flies off the market regardless of condition with multiple offers. It's ridiculous. The saving feature of it this time - the home prices allow almost anyone to easily cash flow the properties at prevailing rents - and it's not too hard to find renters. Median and mean prices have increased the last 2 or 3 months. The stats show that 2/3 of all transactions are for REO properties. Most of the properties need $10k worth of work, minimum.
On the radio today and in the news, I couldn't help but notice all of the talk is about the recovery. I think we all know here that it is a false recovery, and the only reason things may be turning around right now is because nothing goes straight up or down. The reality is, we can't have an economic recovery without jobs, and I don't see where those are going to come from.
Regardless, I think we're in for a few months of bullishness everywhere. Equities are going to continue to rally, and stimulus money will continue to flow into the market and combined, this will lift base medals, precious metals, and all commodities. It's going to be a heck of a bull run... for a little while.
The big move I mentioned came in today, and of course in the negative direction. I did close out most of my position on the move under $945 and preserved some profits.
The overall bull pattern is still intact, although it may be a week or so in the $925-950 range. I will probably load back up at $930 or even $925. The USD probably will rally back to 80.0 at a minimum. The equities rally needs to consolidate for several days as well, it will be hard for gold to advance in this environment.
The bond auction apparently disappointed today. Article
I think I read somewhere that they have another $300B to auction off in August.
If you count bills, notes and other treasury products, this week's expected tally will max out at $235 BILLION....and it's not one bit inflationary....and can be withdrawn at any time per Helo Ben.
<< <i>If you count bills, notes and other treasury products, this week's expected tally will max out at $235 BILLION....and it's not oen bit inflationary....and can be withdrawn at any time per Helo Ben.
roadrunner >>
I think $80B of this is just maturing securities. That is, debt issued to cover what just came due, so there really isnt any new debt issued.
Cohodk, I'm not sure if I understand what you're saying, but $80B out of $235B still sounds like a lot of *new* debt. $155B new debt? Sounds like a lot.
The five-year auction "now takes the cake as one of the worst-performing auctions for the year," said George Goncalves, chief rates strategist at bond dealer Cantor
So gold did touch $926 yesterday, which was an expected support level. Wish I was smart enough to buy then, but I didn't. I think the correction is over, but I won't be ready to hop on the bull train until we're above $945 again. Equities continue to rally. S & P is knocking on 1000 right now. The bad bond auction results is also going to help PM's, especially with all of the debt scheduled for sale in August. Looking for a re-entry point for a small position.
Resistance levels for Thursday are $939 and $946.7.
Yes, there is new debt created, but not as much as the headline numbers show. As with most of these auctions, there is new debt created to pay off old debt. Im not downplaying the amount of debt we are creating, I just want accuracy.
Regarding the trading. Mostly a sideways trade as I thought and I see continuing for the next few weeks, however the range may get wider. In other words, I dont see a breakout but do see better trading opportunity. On the extremes I see a range of 890 to 980. A break of this range will tell you the direction for the next 3-6 months.
Comments
$942-$944 was the key resistance range last time around. It needs to get taken out along with $950 to make another high $900's run.
roadrunner
I did add to my gold futures position this morning at $935. It's a bigger position than I originally planned, but I did a tight stop at $932 for the new position just in case I'm wrong, but so far everything looks good. Also picked up a silver contract in another account.
The consolidation pattern looks strong. The consolidation has re-energized the short term pattern. I think the hourly and daily charts are showing that they are ready for more movement. I don't expect this to come Friday. Sunday night or Monday is more likely.
I'm with RR... $942-944 is key. It will be strong support once we break this level.
There might be attractive entry points on SKF and SRS during the
next few sessions.
I will add more UNG, if it tests yesterday's lows. Not gonna chase
it though. January CALLS might be the way to play it.
There will be a good entry point by early to mid-August. And one that should be lower risk as well.
Bond auctions on 7/28-7/30 for 2/5/7 yr notes will mean next week is the last one this month to allow the stock market to move up any further. It's slam down time the week after next. Gold and commodities should follow the SM. 7 more bond auction weeks remain for 2009 ending in last October.
Edited for end of week COT report:
Fell below the 3.0 short to long ratio on commercial's gold futures (2.93) That's usually a good point to start building again for a future upmove. It's been above 3.0 since May. The April bottom occured around 2.5-2.6. That would be an ideal point to start building from assuming no summer washout over the next 4 weeks. The October-November '08 washout took it to 1.70-1.80 for several weeks. Also note that dollar futures perked up this week with the commercial long to short ratio jumping from 3.13 to 3.63. That was enough on 6/26 to stop the last rally in gold. The commercial longs have bumped the long/short ratio to >3.0 (from 1.36) over the past 3 weeks. It would seem they are expecting a move up soon. Maybe one last drop for the dollar into the 77-78 range and then a multi-week move up to shake things out.
roadrunner
<< <i>
<< <i>I mentioned silver on Monday as trying to bounce off the 200dma so I traded AGQ--the ultra long silver etf.
I've been more of a "manipulator", er, trader of oil through UCO the last few days. Sold 1/2 my position just now at 10.13, but plan on holding the rest for the $10.50 range. Other than a small position in UNG--which isnt doing anything--and a small put position on an individual stock, I am all cash. >>
So the answer is no? You're like my wife. She always gives me answers to every question except the one I asked... lol.
So I'm very happy with the gold move. I'm actually not expecting gold to pause too long at this level. I think we may see it pop over $944 on Thursday. I thought it looked really bullish how it hugged $940 really tightly all day. Tonight I expect support to hold up at $935. Resistance is $946.2
I'm debating whether to add to my position on a breakout over $946 or even on this dip to $936. I might buy a silver contract instead. >>
Absolutely. Like I mentioned to you via PM, there are much better trading vehicles than gold. For the same amount of energy, (doing research), why not go for bigger bang for the buck? Seems logical to me.
For disclosure, out of UCO at 10.47. 12.2% return. Not bad for a few days.
Knowledge is the enemy of fear
Steep trendline. Too steep. Broken. Retest trend. Failure.
Knowledge is the enemy of fear
<< <i>Steep trendline. Too steep. Broken. Retest trend. Failure. >>
That assumes your trend line correct. I see it a different way. Cohodk, is there anything that would invalidate my trend lines?
ECRI
The weekly ECRI is turning up rapidly and the leading indicator is screaming. This is bullish for gold, IMO, and coincides nicely with predictions for $1500 gold by the end of the year.
Notice the line you drew from the Oct low. If you extend it out it comes pretty darn close to the 990 high. So the trend line was broken, then rallied to test the line again and then failure down to 905. We have now broken the less steep trendline that I drew and it most likely will pull back towards the 910-920 line that you drew. It may in fact be trying to build a wedge from March, and I hope you are aware of the extreme importance of the line at 910-920.
Knowledge is the enemy of fear
Another sign which simply says that gold is ready to move (either direction) is that the Bolinger bands are getting narrow.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
-sm
The Maddy Rae Collection
CURRENT BST OFFERINGS
roadrunner
NEVER draw a trendline with only 2 points.
Knowledge is the enemy of fear
The bottom of subwave 4 on the way up had meaning in drawing a bottom channel trendline and to ultimately note a break of the line in the past few weeks. To fully utilize the forming triangle pattern, I want to look at end points, not intermediates. Sometimes less can be more. Some might be inclined to dismiss that $12.45 point as being below the trend path and a sign of something else. I'd say that point is on the triangle glide path until a lower point possibly emerges soon. And in each case the triangle widens and extends.
roadrunner
This week is first notice week for Aug contracts. Last week I was able to roll to the Oct contracts which are trading at ~$1.30 higher) at no cost. So my cost basis is still about $925, although my trading program has updated the cost to last week's transaction price of $938.
I'm going to add another position this morning at $952 (Sep contract). A pullback to $945 is possible, but I think that level is going to provide solid support. Might as well play this move to $990 will a max position.
I'm also pleased about my silver contract at $13.25. I'm just going to hang on to this one, and probably sell at gold $990.
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Edited $990's to $900's....oops
roadrunner
I'm kicking myself for not having the patience to buy a few dollars cheaper for the last position, but a few dollars won't make much difference in view of the upcoming $40 move.
$955 and $965 are resistance levels for tomorrow, with support at $947 and $940.
<< <i>Gold is looking strong, and the trend to $990 is only getting started. Gold will probably need to consolidate for a day or more before heading onward and upward.
I'm kicking myself for not having the patience to buy a few dollars cheaper for the last position, but a few dollars won't make much difference in view of the upcoming $40 move.
$955 and $965 are resistance levels for tomorrow, with support at $947 and $940. >>
What your latest read?
$990 still looks good for a target and may be attainable within the next week. I expect that the chart will need to have a significant consolidation at $990 though, so I will probably exit all of my positions there, as the consolidation will probably retest $945 again once it hits $990.
A breakdown below the $944 level would be bad.
Cohodk, do you agree? Are you going to play this $40 move?
World Prepares to Dump Dollar
It provides a pretty good perspective on the issue of the world dumping their dollars. A contract to those who argue that, "Foreigners hold so many dollars that they can’t afford to stop buying them."
Here's a good quote:
Back in May, Masaharu Nakagawa, the chief finance spokesman for the opposition, told the bbc that he was worried about the future value of the dollar. He said that if his party were elected in the upcoming national elections, Japan would refuse to purchase any more U.S. treasuries unless they were denominated in Japanese yen instead of dollars. "
America grossly misdiagnosed the demand for dollars as a vote of confidence in the U.S. economic system. In fact, it was primarily a case of investors looking for a place they could quickly and easily get their money in—and out.
Now that the initial panic has subsided, the dollar’s international purchasing power has resumed its former downward trajectory. Since the post-crisis high in March, the dollar has fallen by a portfolio-shredding 10 percent.
America’s foreign creditors are again questioning the wisdom of holding so many U.S. dollars. And they’re looking for a way out.
<< <i>Nothing much happened today and the consolidation continues, although now in a higher range. The new range appears to be $949-954/956 but it looks like we might pop through that tonight. $961 is the next point of resistance after that. Silver's popped up to $13.82, so I think gold will have no problem going over $960 in the next 12 hours, in fact I think we might touch the next resistance level of $972. We're definitely on track for $990 by next Wednesday, especially with the accompanying rally in equities.
Cohodk, do you agree? Are you going to play this $40 move? >>
Im still looking at a more or less sideways trade. If it moves $40 over a 2 week period, it will be without me. I prefer a 3%+ move in a day or 2 rather than a week. Im a sniper and prefer to let my target poke its head out offering a clean shot, rather than spraying a bunch of bullets thereby revealing my postion.
Knowledge is the enemy of fear
> Im still looking at a more or less sideways trade.
I'm in agreement with you. It could all change in two minutes but as of today, I don't think recent moves warrant the excitement some others are feeling.
Wheat shortages - DBA?
roadrunner
They've been talking of bowl weevils and locusts and fungus and various threats to crops for centuries, yet none has ever proven to have any long lasting effect on ag prices.
Knowledge is the enemy of fear
Dumped all X, MOO, F, AA, today.
Bought a big pile of SRS and SKF, at the close. I think/hope
this was THE entry point I have been looking for. Both broke
their 52-week low, today.
As far as gold goes, it was disappointing that gold got shut down just below $960, although that does not mean the upward trend will not continue.... we just need to be more cautious. The danger sign would still be a breakdown below $945. The chart is still loaded with energy and ready to make another move, although I'm not expecting much for Friday.
Support for Friday is $944. Pivot is $951.5, R1 is 956.6, R2 is 964.3 and R3 is 977.
/////////////////////
Yup.
I cannot pick tops/bottoms. If the stuff tanks, I will just average
down and hold it in core.
But, many banks - and most commercial RE - are no more "sound" than
they were in March.
My "friend" at GS says they are SHORT everything, but claims it is just
to hedge massive LONG positions. I do not believe they have much of
a LONG position in anything; if they do, they will dump soon.
The dollar has double bounced around the 78.4 level. In the short term I'd expect at least a little rebound, but not much. That would coincide with gold falling back $10-$20 before a final leg up to end the July rally. Gold has peaked the last 2 days around lunchtime. If it fails to get above yesterday's $957 today there's a good chance we have a head and shoulders top completed. Gold options and futures expiration occurs next week during the bond auctions. Another good reason why gold will probably be hit around those days. Another factor is that gold has NEVER had an end of month close at $940 or higher. This will be another reason to keep gold under $940 through next Friday. $940 has sort of been a battle zone for some time and closing above it tends to indicate a subtle strength while below it is a general weakness. Therefore I think that the bankers will do all in their power to prevent any chance of a July close at $950 or above. It messes their books up as well (lol).
The dollar is headed for another strong up leg in the fall and it's only a matter of whether it begins right around now or deeper into August. The final hurrah for the dollar will be no later than November as it commences its final down leg to new all time lows in 2010. That will propel gold to new all time highs as well.
Zeal on $1000 gold
I thought of MoneyLA when reading the above article. Gives a nice overview of the sentiment behind each of gold's attempts at $1000. In particular, Adam Hamilton notes that for the first time ever $1000 gold lies inside the standard trading channel trend lines. This was not the case on all previous attempts.
roadrunner
Some significant changes in this week's report that indicate major trend changes.
The US dollar futures broke out of a 3 week funk of a 3.1-3.7 Long/Short ratio by the banks. This week the ratio is 4.35 L/S with a large increase in open interest of 5,600 contracts (+26%). To get a ratio this large means going all the way back to 2/28 when the dollar was just coming off a nice bullish run (peaked at 8.13 S/L on 2/13). It took about 3 weeks to go from 3.6 S/L to 8.13 S/L. The ratio has been moving back ever since and crossed over into a Long>Short bias since 5/20 (about the same time gold commenced it's very strong last leg up into the June 1-3 peak). Dollar is either being managed by the banks (at the request of higher authority) or it is getting primed for a run following an intermediate term bottom.
Gold did an about face from the pattern of last few weeks of the banks selling off shorts and adding longs. Now they're adding the shorts again big time. The short to long ratio jumped from 2.93 to 3.26....back into bull-killing territory. Open interest jumped up from 370K to 390K. The banks have not liked the increase in gold back to the $950's. Another week of short buying like that and they should succeed in stalling the current gold rally if history has been any indication. But the day will eventually come when naked paper doesn't sway physical bullion. The action in the dollar above seems to support the gold trend as would USBond sales and gold futures expiration arriving next week.
roadrunner
I'll remain more cautious and be looking for a breakdown below $945 as my cue to exit and lock in profits.
Here's a good summary of the markets from last week: Is The Rally...
And another on the quest for $1000 gold:
$1000 Gold
Some good quotes:
(in reference to the 350 Euro mark (comparable to $1000 today) for gold in 2005)
The most important benefit of the €350 breakout was its catalytic nature. The great majority of foreign investors had not yet been interested in gold, but once €350 was exceeded the coverage captured their attention. Foreign gold investment surged dramatically, pushing gold into its global Stage Two bull...
Remember that oil didn’t collapse once it broke above $100, but powered on to $145 within 5 months.
The metal will trade between $924 and $970 this week, said Chris Yu, head of the overseas market trading team with Samsung Futures Co. in Seoul. Fourteen of 24 traders, investors and analysts surveyed by Bloomberg News, or 58 percent, said bullion may rise. Six forecast lower prices and four were neutral.
Here's a Bloomberg article speculating on gold for this week:
roadrunner
I knew it would happen.
Silver had a great day, closing at over $14. Silver could be looking at $15 soon.
RR's observations on shorts is quite interesting. I'm starting to think it may come in to play here soon. A ossible scenario might be... the market goes very bullish on gold, it surges to $990, the large shorts try to beat it down again, it drops to $945 or so, but the bull doesn't go down. Gold powers upward through $1000. The large shorts panic and scramble to cover positions, and gold is $1200 before you know it. When this thing goes, it will probably take off with a lot of large short positions on the books. The short covering is likely to make gold explode once it breaches $1000 significantly, and MoneyLA and others will be left behind. Maybe I'm dreaming.
Here's an article predicting $990 this week:
Article
It really doesn't matter as they have papered the markets whenever they need "effective" silver to cover. The 3 major US banks that "play" already have 32,000 or so short contracts on the Comex out of a total short position of 63,000 contracts. Those banks average about 11,000 contracts each which is significantly above the unofficial and unenforced "table limit" of 6000 contracts. There's no reason they couldn't go to 15,000 or 20,000 contracts each if needed. And what they don't want to do in the light of day on the Comex, the banks can do with derivatives in the shadows. Last I checked the total derivatives position in silver equated to about 50X annual world production ($190 BILL in notional value). And most of this would be held by just a few large banks. Goldman Sachs shows up with ZERO gold and silver derivatives on the OCC's quarterly report yet it's a no brainer that they are a major player in this area. So it's pretty clear the upper limit on paper silver is only bounded by the bank's imagination. When $90 BILL (25 years production) wasn't enough for them in 2007 as silver started to get out of hand, they doubled it to 50 years to try and retake control. The next step might be 100 yrs world production in short paper bets. But at some point the game will be discovered and it will collapse as long holders start demanding physical delivery rather than settlement in dollars. Though it's possible that Comex silver might follow the path of gold where settlement is now allowed in equivalent ETF shares (such as GLD). That would mean a buyer requesting silver delivery of a 5000 oz Comex contract can be paid off in SLV shares. If we aren't to that stage yet, it's probably coming.
$990 gold this week on one analyst's view? That's really taking a leap. When predictions like that start popping up, even just one, they are invariably wrong. But it's true that gold will turn on a dime when no one expects it and catch most everyone napping. Even the
Aden sisters got it right once in the past 2 years when they said to buy on July 13th. Well, as long as gold holds up here they were right.
Tomorrow starts this week's fun with a 2 year bond auction. But, In looking forward to August when there are 2 weekly periods of bond auctions with a total to be auctioned of $300 BILL! August will be an interesting month.
roadrunner
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between Fort Lauderdale and Pompano Beach, will
find LOTS of vacant commercial properties.
Rent is cheap.
These shots were mostly taken while the guy was
driving. They do not include the THOUSANDS of vacant
lots that have been walked away from or stopped in various
stages of development.
Room For Precious Metals Stores In America's Gold Coast/Yachting Capital
There are a couple hundred pics in the above link.
They were shot on an 8-mile stretch of the main drag.
Tomorrow, the guy is going to shoot the interior commercial
streets, where the damage is even worse.
<< <i>Anybody wanting to open a precious metals store
between Fort Lauderdale and Pompano Beach, will
find LOTS of vacant commercial properties. >>
In Phoenix it's incredible. Street after street of BRAND NEW office buildings and retail space. Some several years old now, never occupied. And I'm not kidding - they are still building more. The market is FLOODED with space. Commercial is the next shoe to drop. There are a few media rumblings about this, but I think it will be a few more months before we have the magic "crisis day" where the market suddenly reacts to this reality.
I do real estate on the side in Phoenix. On the residential side, the market is on fire. Sales levels (# of sales) are near their peak from a few years ago. Anything under $200k flies off the market regardless of condition with multiple offers. It's ridiculous. The saving feature of it this time - the home prices allow almost anyone to easily cash flow the properties at prevailing rents - and it's not too hard to find renters. Median and mean prices have increased the last 2 or 3 months. The stats show that 2/3 of all transactions are for REO properties. Most of the properties need $10k worth of work, minimum.
On the radio today and in the news, I couldn't help but notice all of the talk is about the recovery. I think we all know here that it is a false recovery, and the only reason things may be turning around right now is because nothing goes straight up or down. The reality is, we can't have an economic recovery without jobs, and I don't see where those are going to come from.
Regardless, I think we're in for a few months of bullishness everywhere. Equities are going to continue to rally, and stimulus money will continue to flow into the market and combined, this will lift base medals, precious metals, and all commodities. It's going to be a heck of a bull run... for a little while.
///////////////////
Yup.
Yesterday's numbers showed that nationwide folks
bought 3,000 more new houses than they bought
last month; an 11% jump.
BUT, each day this month and last month 10,000+
folks PER DAY got their first foreclosure notice.
I guess if enough folks die from influenza in the
next year, a "jobless recovery" might work.
The overall bull pattern is still intact, although it may be a week or so in the $925-950 range. I will probably load back up at $930 or even $925. The USD probably will rally back to 80.0 at a minimum. The equities rally needs to consolidate for several days as well, it will be hard for gold to advance in this environment.
The bond auction apparently disappointed today. Article
I think I read somewhere that they have another $300B to auction off in August.
roadrunner
<< <i>If you count bills, notes and other treasury products, this week's expected tally will max out at $235 BILLION....and it's not oen bit inflationary....and can be withdrawn at any time per Helo Ben.
roadrunner >>
I think $80B of this is just maturing securities. That is, debt issued to cover what just came due, so there really isnt any new debt issued.
Knowledge is the enemy of fear
Yesterday's auction was a disaster: Buyers balk at Treasury note sales, forcing yields up
The five-year auction "now takes the cake as one of the worst-performing auctions for the year," said George Goncalves, chief rates strategist at bond dealer Cantor
So gold did touch $926 yesterday, which was an expected support level. Wish I was smart enough to buy then, but I didn't. I think the correction is over, but I won't be ready to hop on the bull train until we're above $945 again. Equities continue to rally. S & P is knocking on 1000 right now. The bad bond auction results is also going to help PM's, especially with all of the debt scheduled for sale in August. Looking for a re-entry point for a small position.
Resistance levels for Thursday are $939 and $946.7.
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Yes, there is new debt created, but not as much as the headline numbers show. As with most of these auctions, there is new debt created to pay off old debt. Im not downplaying the amount of debt we are creating, I just want accuracy.
Regarding the trading. Mostly a sideways trade as I thought and I see continuing for the next few weeks, however the range may get wider. In other words, I dont see a breakout but do see better trading opportunity. On the extremes I see a range of 890 to 980. A break of this range will tell you the direction for the next 3-6 months.
Knowledge is the enemy of fear
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