August gold and silver trading thread ***

ProofCollection

Time for the new thread.

Holy silver! Up about $.50 at the moment. I've still got my silver contract from $13.25, so that's sitting in good shape, I'm just going to hold it until I think silver has topped out. I think the bullishness in silver is a good sign for gold as well.

As far as gold, it seems to be struggling to get and stay over $964 but it almost looks like it's ready to do so momentarily. If it toes, the next resistance level is $968. This move will probably lead to a run up to $990, and probably be accompanied by a run on the S&P 500 over 1000 (currently struggling just under $998).

dragon

The S&P has already hit 1001.78 this morning, would be nice to see a close over 1000

roadrunner

The $1000 gold bull articles are starting to flourish again. A close today above $960 or tomorrow will certainly give some creedance to that stance. Similar to the the 6th attempt needed to break the DOW 1000 mark for good back in the 1980's, it will take a 6th time for gold to finally break the $1000 mark (one more pullback and then a rally). It's only a matter of when in the period of August-May it finally comes.

A close above $960 probably gets gold to $980-$990. Everyone has the dollar falling even lower so you have to wonder if that's the smart bet. Copper never really weakened over the past week as gold was getting hammered and is now much higher now that bond week is a memory. The Chinese bought no bonds openly on the last 2 days.

roadrunner

gecko109

Am I the only guy in this forum who isnt obsessed with the day to day up and down ticks of PMs? Are there any other true "stackers" here besides myself?

cohodk

The PPT is doing their best to create inflation.

KentuckyJ

> Am I the only guy in this forum who isnt obsessed with the day to day up and down ticks of PMs?


No, you're not alone. I watch it and then I don't watch it and then I eventually watch it again. I've got maybe 1/2 of one eye on it now.

ProofCollection

Today's action was promising but gold gave most of it back by the end of the day. Silver has given up most of its gains as of this moment as well.

The dollar continues to decline, and $74.0 looks like it is in store very soon. I believe this will be accompanied by $990 gold. A USD bounce at $74 is likely, which will probably cause gold to come back down and test $945 again. I will definitely be selling at $990 in this scenario.

In the mean time, I wouldn't be surprised to see gold touch the $940's overnight, which will be a good buying opportunity.

Edited to add:
Gold is struggling with the $966.40 resistance point. I think we'll make it over this point if S&P futures can get over the $1002 mark.

To comment on RR's observations about the articles calling for $1000 gold... I think we're at a point where this is no longer a good indicator. At some point, the move just becomes inevitable, and I think we're nearing that point.

OPA

<< <i> In the mean time, I wouldn't be surprised to see gold touch the $940's overnight, which will be a good buying opportunity. >>



I hope you didn't stay up all night waiting for it to happen

ProofCollection

No, I had my limit order set but the closest it came was about $952. I just saw a buy signal happen on the 5 minute chart so I loaded up at $962. If this fizzles out I'm ready to close my new positions, but so far, so good. Silver recovered nicely over night as well.

roadrunner

PC, eventually the agglomeration of analysts calling $1000 imminent will finally be right. And according to Bob Hoye who has one of the best track records out there (including the massive drop in commodities last year).....he appears to be on board with $1000 being targeted within the next 2 weeks. He's one of just a few analysts who one needs to give consideration to.

Hoye is on board.....quick...call MoneyLA

And no signs of the Aden Sisters since July 13th!

Note also that short term gold lease rates continue to stay negative every since gold took off on July 13. The gold banks want to get that gold into the market to help turn the price.

roadrunner

pmac

<< <i>Am I the only guy in this forum who isnt obsessed with the day to day up and down ticks of PMs? Are there any other true "stackers" here besides myself? >>


What else would we talk about?

ProofCollection

My buy signal this morning turned out to be legit, as gold shot up over $970. I think the path to $990 is now clear and due to occur within the next week. It looks like it will probably coincide with S&P500 at 1060 and the USD falling to $76.0 If all of these events line up, it's a pretty safe bet to close all positions, which I plan to do. I will probably even short the S&P500 at 1060. Gold would be too risky to short at that point.

Silver's making nice gains and holding on at $14.60. I'm guessing silver will top out at $15.50 or so on this move.

Support tonight is at $964.8 and $957. Resistance is at $977.4 and $985.2

MoneyLA

I got three phone calls tonight from boiler rooms telling me that gold was headed to $3,000 by the end of the year. THREE CALLS. How did they get my number? Never did business with them?

MoneyLA

gecko... Im with you. I just don't understand the excitement of these moves. Gold has been in this trading range for months. When it breaks out, wake me up.

roadrunner

I got three phone calls tonight from boiler rooms telling me that gold was headed to $3,000 by the end of the year. THREE CALLS. How did they get my number? Never did business with them?

Sorry, I left my phone on automatic redial. You were only supposed to get one call.........

Looks like $971 may have been the peak on these last set of waves up. Expecting a little more downside from today's $958 low.

Why watching this action in gold so closely is different from the months of March-June is that gold has more history under its belt in the +$900 range. It has continued to make higher lows from the $863 double bottom in April. The latest move to $971 exceeded the last intermediate high made. This is not the action of a commodity looking to crater like it did in 2006 and 2008. The action is eerily similar to 2007 when pog picked up strength from mid-August through November taking out the May 2006 high in the process.
A bounce back from $935-$950 up to $990 would be all but saying $1000 is ripe for a takeout right now.

Just trying to keep MoneyLA up to date because when the real move through $1000 is coming, we don't want to leave him on the curb with Nadler's Raiders who are still waiting for $600-$650 to re-enter. This will Nadler's 3rd year waiting for <$650. Maybe JN should consider combining office space with the Maytag repair man so they can share/reduce expenses why they wait.

roadrunner

ProofCollection

RR, so you don't see us getting through $970 for a while?

Gold's decline this morning was a follow-on to the stock market decline back to $995, where there is strong support.

I don't expect any moves in gold (over $970) until later today or tonight.

roadrunner

PC, I miscounted the waves when shifting between a 10 day and 30 day charts. So maybe there is another up wave left in the mix. Ignore my previous comments about <$958. If we are following the converging triangle path then this move should be close to over.

roadrunner

Bear

I would tell you all that I bought 100 tons of gold at $321/oz,

but I do not want to aggravate anyone on the Forum.

ProofCollection

Today was a mild consolidation day for PM's and equities. Looking at the action tonight, gold is ready to move again (up). Next resistance levels are $971.3 and $976.8 and then $987.

Silver is up to $14.81.

The correction down from $990 might not be as steep and may only come back down to $960 before the surge over $1000 is ready.

Also, I heard on the radio that China now wants US bonds priced in Yuan and Yuan only, which is VERY bad for the dollar.
The US treasury also announced they place to sell $75B in long term debt next week, with $14.1B of it being new cash. Also read that the fed monitized another $7 or $8B (?) in debt. The treasury said it expects to run up against the debt ceiling, currently at $12.1T in the 4th quarter of this year. Bloomberg

roadrunner

With another bond auction next week expect a similar smackdown as we saw last week. JPM and GS will now profit take off the SM to help move the bond sheep into the shearing-pen next week. But as you say, maybe just a mini-smackdown. Next week's important 3/10/30 yr auction can't afford any miscues. The buyers should be lined up ahead of time. The dollar is already teetering deciding which to way to go.

Expect a worse than predicted jobs report tomorrow. The "improving" reports of the last 3 months had a built in cushion of +200,000 birth-death model jobs to help float them. You know, all those construction, professional business, and hospitality jobs that were being created from April-June. That's not the case this month with only +25K jobs in the bin via BDM. The last 6 months of the year will only average +50K jobs per month. Then comes the massive January -300K hit. So don't expect any "good" news in job reports any sooner than February. I could see Friday's report either supporting gold or crashing it depending on how the SM takes the news.

Guaranty Bank and the others currently ready to bust will take the FDIC bankroll down to zero. Congress will need to step in to refund them. Another gold positive event when it gets announced.

Update: The negative divergences over the past 2 days in the gold chart indicators seemed to have finally taken over. $973 this morning was very likely a final quick bounce. Hourly chart doesn't look good. $USDollar made a strong reversal back to 78......and within a few minutes of seeing the "obvious"......gold goes on a vertical tear right back up within 10 minutes. Nice head fake to pick up some stops cheap....and later to spit out some new longs who just bought in on the up move.

roadrunner

MoneyLA

Roadrunner... please keep me posted. But nothing will "move me" until the break out comes.

jmski52

Roadrunner... please keep me posted. But nothing will "move me" until the break out comes.

MoneyLA, let's assume a breakout. What is the move you intend to make? And what level are you talking about, in terms of a breakout?

Will you be building a position at that time, or will you be ready to trade back out, and at what point would that happen?

The reason that I'm asking these questions is because I see a secular bull market trend coming in precious metals, and my focus is primarily on the government's scorched-earth monetary policy.

I know that you don't see it that way. Are you going to look strictly at the momentum seen in a chart, or are there other variables that you consider important, once a breakout occurs?

ProofCollection

Another consolidation day. The chart is now loaded with energy and poised for another move. Again it could be in either direction, but IMO, up is the most likely direction. I'm not expecting much for a summer Friday, gold may put its move off until Monday. The dollar has held steady, but IMO, still needs to decline another $2.

Equities have been consolidating as well. It's remarkable that they (S&P500 futures) have held the $990 mark very solidly.

Support for gold tonight/tomorrow is $957.6 (although it appears to actually be $962.5) and $966. Resistance is at $973.6, $982, and $998.

In the news...
--Local coin shop says that $20 gold has been on the move this week. I haven't seen it reflected anywhere though.
--The second week of August is usually strong for gold
--An interesting article on why a default on US Treasuries is Likely
--Why the USD will not collapse this fall


RR, you haven't mentioned the gold/silver ratio lately. What's going on with that? I see it's at about 66 at the moment...

MoneyLA

Give me a solid close ABOVE $1,000 and I will start buying gold again. I own NO gold now. Sold it all a while back at about $945.

I am likely to buy gold in small incremental steps, price averaging UP. I never price average DOWN.

I will only buy the actual metal (it could be AGEs or Maple Leafs) and I would avoid numismatic pieces because of their premiums.

I will not buy "paper."

My gold investment will probably never exceed 5% of my investment capital.

roadrunner

Local coin shop says that $20 gold has been on the move this week. I haven't seen it reflected anywhere though.

Heritage has raised their sell prices on circ $20's as well as MS 64 $20 Libs and MS63-65 Saints.

RR, you haven't mentioned the gold/silver ratio lately. What's going on with that? I see it's at about 66 at the moment...

Once the GSR peaked at around 73-74 and started falling back it seemed superfluous to mention it while gold and silver were running up. It's retraced about 60% of the total move from 61 to 73. Hard to say if it's going to head lower and take out 61 or head higher and take out 73-74. I've seen good arguments for both cases. Most of it is based on what the dollar and bonds do from here.

Jobs report was a big positive from earlier reports at only -245K. And earlier months were revised down a bit as well. Unemployment down -.1% to 9.4%. I was very surprised at the jobs number based on the lack of BDM input this month. I don't know where they found the extra 200,000 jobs this month. Must have been in hospitality and construction again. What was ironic is that several big trading firms/banks claimed their estimates were within 2% of that number. Guess they are on the day earlier distribution list from the BLS.

roadrunner

jmski52

My gold investment will probably never exceed 5% of my investment capital.

MoneyLA, that explains alot. At 5%, there is not much of a diversification impact. Why invest in gold at all? If you do a sensitivity analysis with your portfolio, you will see that this is true.

To be buying anything only on the way up indicates to me that you have low risk tolerance, which is fine. However to only take a position on the momentum side will never allow you to gather much of a return, unless we hit upon a rather unfortunate "black swan" event. At that point, I'm not too sure how happy any of us might be.

Given the maximum 5% allocation you mention, I would think that the transaction costs would negate the potential profit, except for a large move to the upside since you will be buying in smaller increments at higher markups.

I do agree with you that only physical possession of the metal makes sense in general, unless you follow the numismatic market premiums like roadrunner apparently does. I speculate in new Modern issues on the basis of projected mintages when I think that the Mint's premiums aren't too onerous. Other times such as now, I buy the much lower premium bullion coins - so I have a mixture of bullion and "collectible bullion" obtained at various markups. Of course, I follow the stuff I buy rather closely, but have no current intentions to sell any of it.

Now, I do understand that different factors influence how an investor would want to allocate his investments, so I am not questioning your choices or your strategy.

We do see things about 180 degrees, because my allocation is well over 50% of my net worth. I would also note that in this economic environment, anything goes. There is no telling what the government might do next that would dramatically change the investing landscape.

The best that any of us can do is to take our best shot. Any of us could be really wrong one day, and really smart the very next day. That's how bad I think the investing landscape is today, and that's how flakey the government's policies are today.

roadrunner

The dollar took off like a bat out of he$$ today closing at .79 and apparently based on a jobs report that probably will be revised upward from the -247k jobs reported. The only reason the headline number dropped from -9.5% to -9.4% with an additional -247,000 jobs lost is that more that hundreds of thousands of workers either just exited the unemployment payroll or they became part of the 17% or so that are no longer actively job searching. Hey, as long as the stats look good to J6P. The auto industry was credited with creating +28,000 jobs last month which must have all been in the repo business (lol).

The dollar has been strengthening for a week or so and just started going parabolic. May just be hot air but regardless, the trend is up and just in time for bond week. The COT report as of last Tuesday showed the commercials still adding dollar longs in preference to shorts. The ratio moved up only 2% the past week to 4.84 L/S. The trend continues in the same direction since early March.

The gold commercials tacked on a whopping 16K of shorts this week and dumped 9K of longs. The short/long ratio increased from the 3.21 warning track to a very bearish 3.77. That's about the same ratio achieved at the Feb and May peaks. So it would be very hard to turn back up to $980 from here. And with 3 extra trading days for this week one could assume the ratio is already near 4.0. Total open interest only increased 6,400 contracts to 392,000 which is still far less than the 500,000+ seen in March 2008. Silver followed the same game plan as gold with many more shorts being added. Interesting is that with the metals faultering, the GSR has continued to drop (gold dropping faster than silver). Normally this means stronger PM prices to come. But in this context it would seem to be a stretch. Most likely scenario is a continuing decline through bond week with a slight upmove for a few days following that. Then another downmove during the next bond week ultimately bottoming out by 1st week in September. Then it's time to light the fuses on the roman candles. Sept. should have an excellent chance to rock.

More bond sales next week. Will the FED once again buy 50% of the auctions through primary bond dealers who only sell them back the following week? Since they got caught this week they will probably hide their tracks a bit better next time around.

roadrunner

57loaded

my gut tells me gold is on a foundation +/- 5% for a few more months.

don't ask me what that means i had bisquits and gravy for breakfast.

OPA

<< <i> Most likely scenario is a continuing decline through bond week with a slight upmove for a few days following that. Then another downmove during the next bond week ultimately bottoming out by 1st week in September. Then it's time to light the fuses on the roman candles. Sept. should have an excellent chance to rock. >>



Good read so far, RR.

MoneyLA

jmski52, you summed it up nicely with this: "you have low risk tolerance."

youre exactly right. And that has been my strategy not only personally but also when I'm on TV.

when I want to gamble, I play video poker and craps.

but when it comes to managing money... I'm very tight.

I wasnt always that way.

Back in the 1980s I traded options. And I lost a lot. And every year for the next ten years or so as I carried over those option losses on my tax returns the lesson sunk in.

investment money has to be kept secure.

but like I said, I gamble in casinos, when I want to gamble. There is an advantage to gambling in casinos vs stocks, or metals, or commedities. When I gamble in casinos I get free rooms, free gourmet meals, free shows, free drinks, etc.

My brokers never sent me show tickets, or hotel comps, or a baskets of fruit at check in.

ProofCollection

The move down to $945 was not unexpected, it's a good thing to re-test this powerful engergy level. IMO, this is a great low-risk place to load up positions, with a stop under $940. If ~$945 doesn't hold up, then gold has some more work to do before $990. Gold needs to recover soon though, probably on Tuesday. I think it's unlikely we'll have a 5th down day in a row and a 6th up day for the USD.

I can see that the USD is kind of in a channel but it's not clear exactly how it should be drawn. Regardless of how you draw it, there is room on the upside, although there's no need for the USD to hit the upper side.

RR's points for USD strength/weak gold are valid and concerning. I see the strength in silver as a positive; however, there are probably two big factors at work there that don't apply to gold: a) the new silver ETF (SIVR) and b) the SM rally portending to a strong economy and thus stronger base metal demand.

The fed meeting this week may surprise people. I wouldn't be surprised to see a 1/4% rate hike, due to the ECRI and other indicators showing that the economy is picking up steam. But I won't be surprised if they leave rates alone either. An increase would probably see a nice $20 move (up) in gold. Likewise, there may be gold-bullish news about the soon-to-expire program to buy US Treasury bonds.

Resistance is $949.5 and $957.3, support is $940.1 for Tues.

57loaded

Sinclair has a countdown now before the USD falls off a cliff

it's b4 the end of 09.

that should probably increase the POG (ya think?), but i am outside of August.

it may be time to load up again, more arm twisting needed with my spouse.

i am not a paper trader just a hand-holder of PM

ProofCollection

The $945 level held up for gold today, which is encouraging, although gold didn't move either. Gold is done consolidating so it's ready to move again - either up or down. I'm expecting a move to $954-$960 tonight or Wed, with a possibility for $960-970.

Gold matched the decline in the S&P today, and the $990's are holding up there as well.

Gold's making a move tonight already up to $949.50...

Support at $947.9, $943.9, and resistance at $956 (although $954 and $960 are probably more significant).

roadrunner

While $945 held for the close, it did concern me that $941 was hit on the morning sweepdown following a head fake to $950. That was similar to how the low $950's were swept down last week from $970. It seems to hint that $930's will eventually come and possibly $920's. But for now I would agree that gold looks like it wants to run back a bit after falling $32 over 4 days.....so $955-$960 seems like a reasonable stopping off point. Hitting the $930's would still keep gold above the trend line starting back in early April.

The 3 yr note auction today was good enough and it helped drive yields down across the curve. Usually gold falls when yields fall. And there are still 2 more auctions to go. The FED is meeting today and Wed. as well. Keeping gold off-kilter through Thursday would be in line with what has happened during the last couple of bond weeks. The dollar performed a typical pullback following its run on Friday. But it looks like there is still more upside to come over the next week or so as the USD makes a run at 80.

roadrunner

ProofCollection

Found a great article with a balanced analysis of where gold's at and where it's headed. What I took away reflects what I've been saying... a drop below $940 here will mean more weakness. $970 is major resistance. Short term, $970 again is possible. August is a pivot month to foretell the next 6-9 months. Also a discussion of the large commercial short positions.

A rise above the US$ 990-1000 level confirms the seasonal pattern. Then we should see the next leg of this gold bull market and prices around US$1500 in spring 2010.

A pull back below US$940 indicates another wave of correction down to at least US$900-920 or even US$880-845. This could last even until early October before gold might be ready to challenge the 1000 level again. By then (with a better COT picture) I expect Gold to be finally successful.

ProofCollection

So gold hung in between $945 and $951 all day. Again a bit frustrating but again remarkable that 945 held up as well as $990 for S&P 500. I think the re-test of the $945 level was a good move to solidify the coming move to $990 and beyond. With so much consolidation time at that level, I think gold is charged up and ready to move... sooner rather than later. This week is pivotal for gold, and as long as 945 hold up we're in for higher prices.

In the late night here, gold is running at $955 which is good. I'll feel really comfortable that the move to $990 is back on once we get solidly over $960 again. It looks like gold is anxious to move. $970 is going to be some serious resistance, and if we can exceed that level gold is off to the races. August is typically an up-month for gold, meaning gold should end the month above $957.

Resistance is at $954.7-956-7 and $960.9-$961.7, with support at $948.4-949.40.

I am concerned about a growing number of articles and commentary about a pending rally in the USD. I don't see it yet. I think the USD needs to hit ~$76.25 to match the low from last September which should provide support. $78.40 is the near-term key area to watch, and we're pretty clost at $78.7. At some point though, gold is going to move irrespective of the USD. I don't think we're near that point though. The fed should have raised rates today, but as epected they didn't.

Here's an interesting article: Gold & USD Relationship
and a good quote:
A significant breakdown in the US Dollar will come AFTER a major breakout in Gold. Gold has been consolidating for months, even as the dollar has trended down. The recent bottom in the greenback confirms that Gold is still in a consolidation phase. In March we asserted that Gold wouldn’t break 1000 because money would pour into stocks and commodities, thereby diverting Gold’s strength.

Gold’s relative strength has been poor due to the ensuing recoveries in stocks, commodities and foreign currencies. In recent weeks we noted this to subscribers as well as the fact that dollar sentiment was too bearish. Hence, we didn’t see a major breakout in gold or a sustained breakdown in the dollar.

Another good article in Moneyweek:
There are three things that make me very cautious in the short term. The first is that a continued rally in the US dollar will knock gold. The second is the widespread bullishness amongst commentators. We need some kind of a sucker punch. And the third is the positioning of professional traders on the Comex futures exchange. Large traders have a sizeable 'long' position while commercial traders have a similarly sized 'short' stance, i.e. they have sold gold they don't own. Together, this isn't usually indicative of a gold price low, as I explained last week in Money Morning:

He's got a point. He also brings up RR's arguments about the commerical positions. But I was also thinking that if there is a large commercial short position, that could be a great time to buy. After all, the short position eventually has to lessen, which means buying and gold price increases. In other words, you'd probably want to buy gold when the short position was at its most extreme, rather than when long positions were at an extreme high.

jmski52

MoneyLA, we really are different:

when I want to gamble, I play video poker and craps.

When I want to gamble and have a good time, I go to Vegas.

but when it comes to managing money... I'm very tight.

but when it comes to managing money, I am very thoughtful. Tight has nothing to do with it for me. I don't mind paying a higher premium than normal if it gets me where I want to go. I don't mind paying for good information if that's the only way to get more ideas. I make up my own mind, after agonizing over my decisions. I usually don't jump on something unless I've already been looking at it. There's really no good way to compete with the highspeed trading algorithms used by Goldman Sachs, and I'm confused by the guys who are enthralled with day trading. It seems like such a low-percentage shot!

Some guys are better at it (trading) and can make it work, but that's not me.

I wasnt always that way.

me neither.

Back in the 1980s I traded options. And I lost a lot. And every year for the next ten years or so as I carried over those option losses on my tax returns the lesson sunk in.

I did futures contracts and margin accounts. I *never* lost in the late '70s or 80's, except for my very last venture into silver sometime after the crash in silver.

investment money has to be kept secure.

I totally agree. That's why I'm mostly out of paper. Mostly. That's why I no longer trust banks or brokers with anything substantial.

You can always subscribe to the idea that diversification of assets will buffer your principal. However, I believe that doing that right now is pure folly. Regards, jmski

roadrunner

Nice selection of articles PC summarizing most of the good and some of the bad of gold's current status. It definitely does appear to add more weight to the plus side. Until the dollar drops past 77.5 again it could still be in a rally mode. The upward bounce we just saw may have only been leg 2 or part of leg 2 of a 5 wave set down. In that case your estimates of 76 or lower should come into play and that will take us very close to $990 gold again, maybe touch $1000 or so.

The GSR is giving some interesting feedback as it has rocketed down to >64 over the last few trading days. While it appears it has a little more room to run before hitting the lower BB's, it's overall trend appears to be running out of room. That would imply no more than $970-$980 on this current run. It has made essentially 5 legs down which is a caution sign. Typically after 2 gapped down/up days in a row as we just had, it corrects back. The move since April showed 5 major legs down followed by a bounce and return. Which way for the general trend from here? Based on the 3yr chart one would think it would continue down to revert to normal averages of previous years. The distortion in the silver markets when the banks loaded up on silver derivatives and shorted futures in July 2008 to multiples of previous levels has made a mess of the GSR. It's difficult to find any LT trend. Note that the GSR slow stochastic has been basically buried <20 for days now....a bullish signal for PM's.

... After all, the short position eventually has to lessen, which means buying and gold price increases. In other words, you'd probably want to buy gold when the short position was at its most extreme, rather than when long positions were at an extreme high.

The banker's mode of operation during any gold rallys have been to buy short and keep buying short at ever-increasing levels. In all of the previous moves the past 7 years they piled on shorts as gold went higher and higher until they squashed it. So if gold breaks $1000 and keeps going, expect them to lay on the shorts even heavier until they finally get to a % where they turn the price. The only time when I expect them to just get out of their shorts is when the Comex defaults or some other catastrophe occurs and the paper game ends. I don't know if that will ever happen. I'm sure they are being "paid" a pretty penny by the FED/Treasury to manage the rise in gold so that it is not all at once. One author recently stated that they are also there to ensure high volatility to keep the sheeple from entering gold and to never think it is a stable enough commodity to ever be considered as a money substitute. Ironically, if you compare the pog to the stock market over the past 7 years, it has far less volatility than stocks. Go figure! In fact it's one of the more stable markets out there but the sheeple see it otherwise.

Jmski52 I agree with you on day trading for the most part. What I try to do is take positions for ideally a week to a month or more as long as I get on the trend at the right time. If it only lasts a few days and I get shaken off, that's the way it goes. But the one thing day trading in the gold market has going for it is that gold is money and it's supply is severely limited vs. credit/fiat. I don't have any problem playing in a market that has both fundamental and technical reasons to keep rising over time. When those conditions no longer exist, it will be time for beanie babies or something else.

roadrunner

ProofCollection

Nice move to $960 today, now we have some breathing room from the critical $945 level. This level (960) is significant resistance, so I will feel much better once we are through it. $970 is another huge level. The pattern is charged up and ready for a move though, although it may not happen on a summer Friday. Until then, we are probably stuck between $954 and $960.

Silver is continuing to move up nicely. Wish I had just loaded up on silver and forgotten the gold. Still have my contract from $13.25, so doing well there. Resistance levels are $15.28 and $15.51 for Friday.

I think the move upward for gold to $990 is definitely in the cards, as I think it will follow the S&P to 1060. I read one report which pointed out that there are no resistance levels between about here and 1060 for S&P, so the move up could be sudden.

roadrunner

Smackdown on Friday to a 3rd time in the past week or two down to the $939-$941 region though only very briefly. According to Sinclair this was a gold capping excercise at $960 along with keeping the dollar propped above 78.4. Regardless of what it was, it worked.

Major changes in the COT numbers as of Tuesday 8/11 indicates swings to come.

The dollar just did a big course reversal from a long to short ratio of 4.84 to 2.76. This is the first major shift like this since February when the ratio peaked short to long at 8.13 and has been falling back ever since and then reversing to the long side in mid-May. Does this mean the bankers are unloading their props on the dollar and now betting on lower prices to come? Open interest fell slightly while 2,539 short contracts were added. Unless this is a massive head fake it sure looks like that the banks are bailing on the dollar and have completed their good deed by keeping the dollar propped up for 3 months.

Gold futures reached a commercial short to long ratio of 3.79 which was slightly higher than last week's 3.77. It probably peaked near 4.0 prior to Tuesday. Open interest dropped about 7K to 385K. The bankers sold off 2440 longs and 7700 shorts. No doubt they took advantage of gold's brief drops to close out some of those recently added shorts and the brief spikes to profit on some longs. The ratio is still quite high which acts as a stiff wall of resistance, though not impregnable considering the open interest is still far from that of the March 2008 high.

Our favorites, the Aden Sisters, came out with a bullish article on Thursday and promptly helped the pog tank on Friday. But I'll admit their article makes sense down the road.

Pog 40 day ema pattern indicates stronger gold prices to come in the next few weeks to months. The pattern is not unlike what occured during the last 2 major legs up from 2005-2006 and 2007-2008. Doody's article on goldseek states that physical gold has never really had a true correction during the summer months since this bull market started. Rather, the bigger corrections have come earlier or later in the year. That view seems to be holding as Nadler's drop to $850 or his wish for $650 is starting to seem more and more unlikely for the month of August.

Gold analyst Ron Rosen switches to the bear camp

In a major switch Rosen is moving towards the bear side for the current C leg. I would assume he thinks the most likely resolution for the current triangle formation is downward. Food for thought.

roadrunner

ProofCollection

I believe that the pullback on Friday was a final test down to the support level of $945, although I wouldn't be surprised to touch $945 one last time on Sunday night.

The consolidation has taken longer than I had expected. The upside of this is that gold may not need to stop - or may not stop long - at $990. I'm going to keep this as my target and I plan to sell part of my position there and I'll get back in on any pullback from there, but We might just zoon through $1000 when the time comes.

The S&P and gold still seem to be tightly coupled. S&P keeps bouncing off of $995, while gold keeps bouncing at $945. It's because of this relationship and because of the ECRI that I think both the SM and PM are about to bolt higher. Here is the latest ECRI Indicator. The leading indicator is rebounding from -11 and is at about -7, while the leading indicator has zoomed over 10. This is why the fed *should* raise interest rates, but they probably won't any time soon.

Support levels are $942.2, and resistance is $951.8 and $959.6.

Things have been quite for quite a long time. Part of me expects an upcoming event of some sort to ignite the markets. Not sure what it will be, economic, terrorist, or otherwise, but things have been too quiet for too long.

roadrunner

I've been following Quad G's market thread on Kitco forums and he's showing gold in the E wave of a corrective ABCDE "triangle" pattern that began following the Feb 20, 2009 peak. The E wave can touch the bottom trend line formed since April at $920-$925 and the pattern is still intact. I'm leaning toward a higher low than the $904 already locked in rather than the $850-$890 scenario. It just fits everything better, esp. the average seasonal behavior of gold. A bounce off $930 takes us back up a bit and then a final third wave bounce down to the $920's to complete the 5 wave pattern. It should take the rest of this week to complete.

GSR has sprung all the way back from 74 to 63.5 and is now moving back up again. Currently around 66.7. As of Sunday this was in a pretty sharp downtrend with positive momentum but appears to have shifted direction and broken out of a severely oversold stochastic. Gold stocks have had a couple of days down and momentum seems to be building against them. Yamana for one looks to be nearly bottomed already with Goldcorp and Newmont not far behind. Increasing drops in momentum and RSI along with stock not turning up yet indicates more drops to come for the miners. Some of the big miners already have 14 day RSI's <40 which indicates not much further to drop. Only Kinross has shown decreasing volume among the majors during this multi-day drop.

roadrunner

ProofCollection

Yes, gold broke down below $940. I'm looking for a possible touch of $942-943 tonight where I will bail on my long positions and I will look to get in lower. I think the $920's will be a good re-entry point. The overall bull movement will still be intact if it goes no lower.

ProofCollection

Here's an article about China Diversifying out of treasuries.

I bring this up because it's been discussed here before. Some important quotes:

New data on international capital flows into U.S. financial assets were released Monday indicating that in June China was a net seller of $25.1 billion of U.S. Treasuries.

In total, China accumulated $177 billion of reserves from April through June, yet its net purchases of Treasuries were just $9 billion. In 2008, China’s reserves increased $418 billion and its net Treasury purchases were $250 billion, about 60% of the reserve accumulation. The recent pattern suggests China hastened its effort to diversify its international reserves, which totaled $2.132 trillion at the end of June.

This explains very well the need for the fed to continue to monetize the debt.

roadrunner

China and others are supposedly ramping up their moves to get out of the longer term treasuries and into 1,2,3 year treasuries as a less exposed alternative. Of course they will continue to buy pieces of hard asset companies around the world whenever they can.

GSR continued to blow upwards now sitting at 67.5. One would think this will finally stall no later than the 70 range. The momentum shift has been outside the norm and almost smacks of being manipulated back up. What is also odd is that the volume ratio (gld:slv) has not been rising with this current multi-day upleg. In fact the general trend in volume is still trending down over the past 5-6 weeks. I can't find any periods in the last 2 yrs where this happened during an extended up move. The GSR has already pulled back 50% of the last leg down and is now nearly touching the 50/100d sma as well as the 40d ema. The 50 day ma is now turned up and getting ready to cross that 100 dma. A positive macd cross has occured (12,26,9). Regardless of those positive features the negative volume doesn't quite fit the previous history...yet. I think this GSR will stall this week. Just a gut feel.

roadrunner

ttown

FDIC is Bankrupt


And a little alamist to watch from the tin foil crowd:

Bank Holiday Possible from August 26th Through October 2009 Will Be No Picnic But an Illuminati Feast of Flesh and Marrow

57loaded

ttown only if the tin foil crowd doesn't understand the difference between writing an essay vs a report.

ProofCollection

Since the breakdown under $945 gold has been suck in the $935-945 range. There are a lot of calls for a bottom this Friday, which appears to be likely.

There's a pennant formation on the weekly chart starting at the end of 2008. We are approaching the apex in 2-3 more weeks. I believe this week will establish the final bottom of the penant, and I'm seeing that coming in around $928, although it may dip lower during the day.

I'm looking to get back in at $925-930

ProofCollection

I'm still looking for a short term bottom in gold on Friday. Looked like we were going to break below $940 earlier but it's not quite happened yet.

I had targetted $928 for an entry point, but I just realized the patter for the past few months has been the gold has consistently not gone as high - or as low - as generally expected on its moves. I may consider getting in at $935 instead. I always play these things wrong; however, I don' think gold will spend much time in the $928-935 price range, so buying anywhere in there should be OK for the big picture.

Equities are once again back above 990 (S&P), and so that correction is probably over and equities are ready to head higher - probably taking gold with.

Support is at $938.70 and $934.20 (hence my $935 buy target), and $925.3. Resistance at $943.10 and $947.6.

ProofCollection

We got our answer. Gold is done with this correction. I am no just looking for an entry point, hopefully on a pullback. This is where I usually get impatient and buy a little too soon.

With resistance at $960.9, I think this move is over for the day and will have topped out at $960. With support at $951.8, I'm looking to buy back in at $952 or so.

roadrunner

Gold or at least gold stocks are starting to feel like they have a 2-3 week run in them.

COT report as of Tuesday 8/18 was in the same direction as the report from the previous week. The gold and silver commercials are adding longs and dumping a boat load of shorts. The short to long gold futures ratio dropped from a nosebleed 3.79 down to 3.51. Better yet, Open Interest dropped 11K to 374,000 contracts. 1,643 longs were added while a hefty 16,717 shorts were sold off. The typically overloaded short Bankers have been heading for the hills the past 2 weeks reducing their net short position as best they can. At least for the past few years the gold market has almost always in the direct the commercials were moving. With them selling shorts and buying longs they are lining up for higher pog.

In the dollar the same trend continued with longs selling off and shorts being added on. The Long to Short commercial future's ratio fell from 2.76 to 1.79. 2 weeks ago it topped out at a much stronger 4.84. Open interest fell about 10% with 1,786 longs sold and 2,414 shorts added. The banks are continuing to bet on dollar weakness. In 2 more weeks they can shift the ratio in favor of shorts over longs. Of all the indicators out there this seems as important as any of them and it clearly shows the tide turning against the dollar.

roadrunner