September gold and silver trading thread ***
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New Month, New Thread. Dedicated to the shorter term movements of previous metals.
I think we may have visited 945 for the last time yesterday. We visited $948 this morning, but that was just a brief undershoot of $950 which I expect to hold from here on out. The charts are loaded and poised for a new move.
The S&P tested 1013 again last night, but it too is poised for a big move, probably before - or in conjunction with - gold. I think it's pretty clear that S&P will hit 1060 very soon. But I think the reaction there will be swift downside movement. Many are calling for a "top" this week or next. It's very possible that gold will come along and top out at $990.
I think we may have visited 945 for the last time yesterday. We visited $948 this morning, but that was just a brief undershoot of $950 which I expect to hold from here on out. The charts are loaded and poised for a new move.
The S&P tested 1013 again last night, but it too is poised for a big move, probably before - or in conjunction with - gold. I think it's pretty clear that S&P will hit 1060 very soon. But I think the reaction there will be swift downside movement. Many are calling for a "top" this week or next. It's very possible that gold will come along and top out at $990.
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the US mint numbers showing less sales for silver and gold, with the
stock market continuing to show an upwards trend, with the recession
appearing to be over and no depression coming up, with home sales
stabalizing, with only the weakest of banks going under, with oil failing
to break past 80, with jewelry sales in a slump, with the dollar doing
so-so but not terrible... etc.. etc... just what in the world is positive
for gold except the unnatural fear people have right now with inflation
or the possibility the markets will tank in a significant way???
the move will most likely be down in my opinion. for gold and silver that is.
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<< <i>with India and Turkey importing staggering less amounts of gold, with
the US mint numbers showing less sales for silver and gold, >>
Notable, but not a major factor. The US mint has also NOT released several and cancelled several product lines due (supposedly) to keeping up with bullion sales. I'm still waiting to buy a 2009 proof ASE. Not sure if they'll even sell them this year.
<< <i>with the stock market continuing to show an upwards trend, with the recession
appearing to be over and no depression coming up, with home sales
stabalizing, with only the weakest of banks going under, >>
I disagree with the media's assesement (which you seem to agree with) that the recession is over. There's been no recovery or slow down in unemployment. Real estate may be stabilizing, but we have yet to know if this is the bottom or just a pause on the way down. Foreclosures are still at an all time high and not scheudled to stop anytime soon. The commercial bubble is supposedly going to hit here later this yet. Fibonacci theory calls for a minimum 38.2% retracement of any fall. You don't want to mistake the retracement/bounce as real recovery. If you look at the great depression, there were steep stock market declines followed immediately by steep recoveries... but that didn't mean the depression was over. zimbabwe's stock market has been soaring.
Banks still are not lending and are not making money on the services that they traditionally made money with. Mark-to-myth accounting is keeping many banks looking much better than they really are.
And by the wya, the FDIC is now broke.
<< <i>with oil failing to break past 80, with jewelry sales in a slump, with the dollar doing so-so but not terrible... etc.. etc... just what in the world is positive for gold except the unnatural fear people have right now with inflation
or the possibility the markets will tank in a significant way???
the move will most likely be down in my opinion. for gold and silver that is. >>
Unnatural fear? The fed is monetizing debt, and worse, being sneaky about it. In the last auction, 47% of the debt sales were re-purchased by the fed within 10 days. How is this NOT good for gold? Our deficits are incredibly high (found out last week we were underestimated by $2T) and congress is doing nothing that will cut spending or increase revenues. And Obama still wants to spend trillions more on health care and drive all business overseas with cap and Trade.
California is broke and still hasn't done anything meaningful to address their situation. Many other states are right behind.
Recently, for the first time, it became cheaper to borrow the USD than YEN. The fed is not likely to raise interest rates this year.
central banks have started BUYING gold, and worldwide production continues to fall.
I don't know what you're seeing that's causing you to think the recovery here.
the move will most likely be down in my opinion. for gold and silver that is.
Pretty much disagree across the board on the above. As far as gold goes, investment gold demand has MORE than made up for any drop in jewelry demand overseas while eating up the huge supplies of scrap gold showing up this year. In fact the Asians are getting more accustomed to $900+ gold and have ramped up buying over the past several weeks as they enter their peak season...so expect further increases. They will buy gold during their holiday season regardless of the $900+ price tag. Does anyone think they just won't buy for all those being wed this fall?
Gold positive factors....lemme see if I can think of one or two:
-Continued debasement of the dollar. The govt can't support a strong dollar while creating >$1 TRILL in new deficits each year. They certainly can't keep the US bond and dollar strong while creating $1.5-$2 TRILL deficits every year.
-The possible/probable end of a 20 yr bull market in bonds.
-The end of a 25 year bull market in stocks (1982-2007)
-The commencement of a typical 15-20 yr commodity bull market starting in 2001.
-The eventual need to unwind $593 TRILLION in otc derivatives (and $300 BILL in combined gold and silver derivatives)..and they are still creating new CDS and MBS otc derivatives. Nothing has changed.
-Every major bank is insolvent as is the nation's balance sheet. $13 TRILL in paid out ransom money has not changed anything...other than to ensure the winners of the AIG derivative bets were paid off.
-Doubling M0 over the past year (+$800B) eventually it will get used
-Adding $1-2 TRILL dollars to the FED's balance sheet (most of it toxic and unsaleable - ie the FED cannot withdraw that liquidity but it is total illiquid. You think they can afford to show everyone that those assets are worthless?)
-Giving away $13 TRILLION to the banksters and getting nothing back. Basically the banks and the FED have ways to still issue credit and liquidity by bypassing the Monetary system. The govt is now the lender of last resort....if the banks won't lend, the govt will.
-$1 TRILLION in bond sales this year alone to shore up the balance sheet. In 3 more years we will have added $4 TRILL in new bonds and increased the money supply accordingly.
-Scrap sales plummeting....from 500 tons 1st qtr to 380 second qtr. This was one of the main things helping to turn pog down 1st qtr.
-Gold miner production falling for 8 years straight with no changes on the horizon. In fact the larger miner's survival is to continue to take over smaller companies to keep their production rates from falling off. Even with cheaper fuel and material costs this past year the miners have surprisingly been struggling with their net profits...with gold at $900+. One would have thought they'd be raking the $$ in by now. But with losses on derivatives, bad deals, debt, losses on wildly fluctuating currency exchanges, political and environmental roadblocks and other paper plays, it's not looking great for keeping new deposits coming in. Better keep hoping that celebrity gold toilet seats keep coming into CASH4$GOLD because the miners aren't helping any.
-Potential/possibility for CFTC trading limits in silver and gold futures
-Central banks not selling any more gold (IMF 403 tons starts to sell off in 2010!)...in fact Central Banks are now NET buyers of gold for the first time in many, many years.
-Comex published gold inventory has been slowly dropping off for years as well as the spread (contango) betw present and future price. Eventually the Comex won't be able to supply bullion but only paper replaceements. In 2005 the Comex was given permission to use GLD and other ETF substitutes to count as "payment in gold." Eventually, there will be no payment in gold allowed because they won't have it.
-As of 9/21/09 a new settlement method for gold by CME group goes into effect at the London gold forward market. This is basically another way to push more risk into the paper gold side and not settle up until delivery rather than at trade time.
-The Germans and others have asked to have their sovereign gold returned to them rather than being kept in US banks.
-The Greenlight Fund, one of the largest former shareholders in GLD pulled out their several Billion dollars recently and put it into physical bullion. Another example of someone no longer willing to accept paper bets or promises.
-New gold trading markets in Dubai, China, etc. have appeared over the past year. More gold ETF's have sprung up around the world. The amount of "gold" in the ETF's continue to grow (I hope it's not all paper). Seems like gold is getting more interest around the world.
-US mint and some world mints not keeping up with gold coinage demand while gold is in a weakened state. What happens when it gets hot again? Gold coins still bringing a rather sizeable premium..look at AGE's and US $20's? Why the premium on these if there is plenty of small gold to go around?
-If things are so gold negative in the economy now how the heck did gold recover so quickly from it's fall to $690 last year? Do you think the bankers brought it back to profit on the rebound? And why did gold knock on the $1000 door 2 additional times? Strange behavior for bearish behavior. Did you know that it took years and a 6th time through $1000 for the DOW to finally clear the 1000 barrier for good in the early 1980's. Once this last ROUND number is gone there is really nothing left as a barrier. Why is gold still hanging around at $900-$950 basically this entire year? Why are the December and January gold comex contracts so heavily loaded at >$1000/oz?
I could go on, but that's at least 20. Maybe someone else can add on. Gold can fall or rise in the short term. But it's almost certainly headed for an all time high by spring of 2010. The weak state of the dollar and the deficits that drive it will ensure it. Debauching the dollar even while a poor economy exists leads to rising gold prices.
roadrunner
As the LEAP guys explain it, don't judge a gold book by its cover.
roadrunner
As far as gold, gold held up REALLY well considering the fall in stocks. Nice to see that we didn't need to go to $945 today. Still not sure when the ride to $990 will take off, it may still take a week or so but it could happen any day now. The range is really tightening, and is now pretty strictly $950-960.
Silver held up even better and just keeps grinding higher, while gold is stuck in its range.
To further my arguments to FC, I'd like to refer to this article. The parabolic chart makes the most compelling argument to be bullish on gold. I don't think we're going to breach the parabola.
Spread consists of long Oct 95 call, short Oct 105 call. Reason for the spread is that pennants sometimes break to the downside, so risk is defined. Selling the 105 call helps with cost and time decay, in exchange for giving up any move above 105 by October expiration.
Nice article. I agree more or less with most that he writes. If you condense my posts over the past year you will see the same commentary.
GLD and SLV are nearing the downtrends lines. It is time for PM's to "fish or cut bait".
Knowledge is the enemy of fear
Knowledge is the enemy of fear
We've hit the third resistance point at $976, so the move for today should be done. Support is at $965.
$972 easily breaks above the upper trend line of the descending triangle that has been forming for months. There have been a couple of bounces close to it the past week or so. A retest back to the line would be in order. It seems money is moving to safety this week with gold, silver, dollar, yen, and bonds all up. Most everything else including commodities, oil, etc are down. It's very odd that gold, dollar, bonds, and yen are flying in unison. Seems to be a serious lack of confidence in the equity/financial markets. Welcome to September.
roadrunner
but i still do not see all these amazing factors that will push gold past 1000 and
keep it there for any amount of time. I know i could refute some of the statements
mentioned in this thread that are bullish for gold but that would take work on my
part. Since no citations are given in this thread i will not bother myself.
As for that article it is all guessing the future. Even the author hedges his bets in
the conclusion. I also do not care for how the author is drawing their trend lines
on those graphs. Using anomaly points to draw trend lines does not often lead
to useful statistics but it makes for an exciting line does it not?
a small blip up.. we have been here before and the results have always been the same.
a slide back down from 1000 to the current trading range stuck at recent levels.
I have stated I will not be surprised to see gold over 1000 one more time as there is
enough exuberance in the mental state of the market speculators/investors to go for
it one more time. I just think that time is not on the side of gold. This blip up will result
in a hammering down shortly as people sell into the strength for short term profits.
Rinse and repeat until they find the next investment to work over.
my two cents. basically we will have an answer in 6 months to a year to mull over who
had a good guess and who did not.
good luck all.
part. Since no citations are given in this thread i will not bother myself.
Most of what I stated Are just publically known facts that have been requoted over and over again. Whether stocks, bonds, dollar, or PM's are in a bull/bear markets can be debated and are just opinions.
September is one of the best months of the year for gold based on historical data. So looking for gold to fizzle this month will be a tough sell. It should do fine until the end of the month. October and early November should be corrective if patterns hold. From November to May should be the new all time high assuming it isn't taken it out this month. Again, the fact that gold has kept knocking at the $980-$1030 door so many times over the past 18 months is a very bullish situation. What other currency, commodity, bond or stock index is within 10% of it's all time high? Do you think the bankers manipulated gold from $690 last November back to the upper $900's three times to corral all the bulls for one last smackdown before pummeling them into the dirt? Sounds a bit far-fetched. Gold continues to sense something out of whack concerning downstream economic/financial conditions. Until those lingering issues are resolved to the market's content, gold isn't going away. And it's not necessarily a deflation/inflation issue, but more so a confidence in the govt/currency issue. When confidence in the money recedes the jig is up, wherever the economy might be at that time.
Gold has broken out of the smaller triangle forming over the last 4-1/2 months. The next triangle is the large one that has been forming for 17 months. Somewhere in the $985-$990 range would be a breakout of that triangle.
roadrunner
RR, do you see this testing/touching $960-ish? I do. I'm not sure about the time frame for all of this. Sept 10 is still being called out as a gold top. I don't see gold taking 8 days to reach $990.
Silver following right long with an impressive up-day as well.
The GDX breakout happened today as well. That could be a good play.
RR, what do you see happening for the near term?
Stumpled upon this article from Monday which talked about the breakout move that happened today. They were looking for a close over $980.85, and we were pretty dang close or exceeded it, depending on what you consider the close to be and what gold figure you're talking about. They are looking for an initial target of at least $1100 with an eventual target of target of $1325. Projections abound, but I'm thinking a bit higher, like $1400-1500. I also think if gold breaks 1030 we'll see 1130 dang quick as short covering explodes and investors like FC and MoneyLA pile in and scramble to catch the train. Not unlike when we first saw Dow 10k, it quickly hit 11k.
Gold $991.00 $992.00 13.50
Silver $15.87 $15.92 0.55
Platinum $1,234.00 $1,244.00 12.90
Palladium $292.20 $297.20 7.30
Updated:9/3/2009 10:37:51 AM CST
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I wrote this in my blog:
>>
This move looks like the real McCoy. Seasonality, sentiment, technical, fundamental indicators are all lined up to the bullish side. Of course that doesn't guarantee a winning trade, but a trader sometimes might wait for months or years for everything to line up like this. When that time comes, take a shot.
>>
Cheers.
This is usually the point where I buy back in right before it corrects down and does the move that I am expecting but wasn't patient enough to wait for.
<< <i>I did sell at $990 because I anticipate a pull back... but I'm struggling with the decision of when and where to buy back in. The patter is highly likely to retest the $960's right?
This is usually the point where I buy back in right before it corrects down and does the move that I am expecting but wasn't patient enough to wait for. >>
PF,
It is so hard to know when to pull the trigger going in or out. Thanks to the last two days, I am enjoying a solid 5 figure profit.
As redtiger noted in his above post, things seem to be lining up. Do I take my profit now or is this the big run-up and another $50 to $100 move in gold gives me an even nicer 6 figure profit in my mining shares?
I still think we are heading for a dollar crash and $1000 POG will seem like a cheap bargain.
Greed wins out for me this time. Best to you in whatever you decide to do.
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I knew it would happen.
One area still ripe for movement is slabbed generic gold in the 63-65 range. If one looks back at previous highs in the upper $990's gold coins many are far short. The only coins that have made new highs are $20 Libs in MS64. There seem to be some decent deals that really haven't changed much since gold was at $865-$900. Once people are reminded that slabbed gold coins are at older levels they tend to catch up fast. I think they have remained where they are because the dealers are tired of the see-sawing and just aren't reacting as much to gold movements. Once they believe they see the real thing, the bids will be chased higher.
roadrunner
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<< <i>PC, I would line up with the "this is it" crowd if we can get one more post from MoneyLA or fc that we're still just in the "trading range." >>
i aim to please! never let it be said i do not come through in the clutch.
i expect gold to pull back to 950 in short order after the funds take
their profits.
Several writers have been calling for a bottom on Sep 9-11, which makes sense here. Gold is out of energy and needs at least a day to consolidate. That takes us into Tuesday the 8th. It's quite conceivable and I believe the plan will be for gold to take a final dip down to $960 to re-test that last breakout point before the BIG MOVE. I had to remind myself that it would be VERY EXCEPTIONAL for gold to keep going at this point, although I have a bad habit of convincing myself that "it's different this time."
It also helps that I now understand the fuel for this latest move: China bought $50B worth of IMF bonds. I think this is a clear indication that China is DONE with the US. They may still purchase US bonds, but they are definitely going to be converting their holdings from US bonds to IMF. At what rate remains to be seen, but this is VERY BAD for the USD.
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China is also very much encouraging its 1.2B population to buy physical gold and silver. Even if just 20% of them buy just a little bit of gold and silver, it will be substantial. Others have pointed out that China only recently allowed its population to own gold and silver, so this change of heart is definitely something to pay attention to.
So I'm still going to rely on a pull-back to $960 to reload. I will probably buy at just under $970, since gold lately hasn't quite been going as low or as high as expected. This will be an all-in, back up the truck and load up event. I suppose it could go down to $945/$950, but I'm not going to count on that. I suppose the big banks will try one last time to beat prices down.
Of course, a decisive breakout over $1000 would throw all of this out the window.
The only thing that makes me nervous is being all-out over a 3-day weekend after this big news.
Besides the drawing down of comex gold inventory over recent months you have multiple examples of gold shifting to new homes. The Chinese, Russians, and others are buying now... Central Banks are net buyers for the first time since 1987. China wants their people to buy gold as well. Hong Kong is trying to set up a gold warehouse and is pulling inventories from London. The Bundesbank has asked that all its gold in US hands be shipped out. Dubai is starting up a gold trading exchange. ETF inventories continue to expand. The Mints are cranking out coins the best they can but several popular coin lines have been shutdown. The Greenlight hedge fund took away it's $4 BILL dollars from the ETF GLD and went out and bought its own physical gold. Paulson's hedge fund went out and bought huge shares in gold miners. The list goes on. A tidal shift has been occuring for quite some time. It only makes sense that regardless of big bank's papering up the markets, things are eventually going to hit the fan.
Besides the Chinese buying IMF bonds, they have also suggested to the big US banks that they can probably shove their otc derivatives as well. No ransom money to be paid. A lot of not so good news for the status quo fiat community.
roadrunner
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Gold is still in the same trading range. Ho hum.
That will seal the deal for a new all time gold high this month. I think MoneyLA would be tickled to death to know that his words broke the back of the trading range.
roadrunner
Time is running short to get your physical. Don't know if there will be a pull back in price or not once again, but one of these times there will not be a pullback.
Things seem to be moving forwards much quicker on the world scene now.
And I agree tincup. We will reach a point where there are no pull-backs, for a while anyway. I'm just hoping that we're not quite there just yet, but I think that may be coming very soon.
If there is a sell off in gold on the news, I would tend to see that as a chance to load more. Like I said, there are a lot of positive factors to be long gold at the moment, so I believe one employment number is not enough to derail this train.
Good luck to everyone.
<< <i>It is always a crap-shoot trading ahead of major news like Friday's employment number. Some days it comes up "snake eyes," some days it is lucky "seven." We'll see the number and the market reaction, soon enough.
If there is a sell off in gold on the news, I would tend to see that as a chance to load more. Like I said, there are a lot of positive factors to be long gold at the moment, so I believe one employment number is not enough to derail this train.
Good luck to everyone. >>
Looks like the unemployment number is about at expectations, basically a non-event. Gold giving back a little bit. Not much to do unless the pullback becomes more pronounced. It will be interesting to see which way the tilt is at the close with the long weekend coming up.
This is diagnostic. What do lower interest rates usually imply? If there is sufficient liquidity, lower rates are the same thing as easy money, stimulating business activity.
It also implies more dollar creation.
Let's take that a step further. If interest rates go negative and there is sufficient liquidity, it seems to me that lower rates (negative rates) are the same thing as ULTRA-easy money, akin to shoveling it out the window as fast as possible, thereby stimulating business activity.
It also implies dollar creation to the extent that nobody really wants dollars. In fact, it means that you and I won't want them either, because they aren't worth keeping ahold of.
Here's the kicker. They won't be worth keeping ahold of, unless the government forces people to keep ahold of them, as in forcing a fiat currency down our throats.
Oh, excuse me - that's where we've been all along.
So really, what's different about a negative interest rate? Nothing, other than it is a more aggressive form of inflating the currency, which is basically another hidden tax.
The problem with having a permanent negative interest rate is that it quickly becomes untenable as people see that holding the currency is hurtful to their savings, thus they will dump them. It might work for the government on a transient basis, just long enough to put a bandaid on some acute fiscal problem, but it won't work on a permanent basis. To even flirt with negative interest rates is a full-blown admission of failure already. So, Sweden is already admitting a failed economic system and thus a failed system of governance.
What's the difference between Sweden's doing it, and the USA doing it (negative rates)? The Swedes can do it inside Sweden without affecting international finance. In fact, that's the same exact thing that Bernake said last fall about the impact on US citizens if the government inflated the dollar. If the USA does things like Sweden, there is no difference in the outcome - a full-blown admission of failure - other than the fact that the USA has alot more clout than Sweden, and therefore can pull it off a bit longer than Sweden can get away with it.
A failed currency is a failed currency - and that's all a negative interest rate really indicates. It's only a question of time before a universal loss of confidence in the failed currency becomes fact amongst US citizens, but also in the arena of international finance. AND THAT'S THE DIFFERENCE!
When the USA dominated the world economy, creating dollars as a world reserve currency was viable. The rest of the world economies have grown up, or are in the process of growing up. If the USA's world fiat currency dips below zero in it's interest rate, all bets are off. What's the incentive to you, or I, or China, or anyone else in holding a currency that is not worth holding onto? If the dollar has been the world's fiat trading currency, what happens when it's not?
I could extrapolate that out a bit, but there is nothing to be gained by doing that. It's all happening whether or not we like it or not.
I knew it would happen.
Reminds me of Wimpy in the old Popeye cartoons - "if you lend me a dollar, I'll gladly repay you on Tuesday............"
I knew it would happen.
OK, back to the basic premise...There seems to be little doubt that the USD is in peril and something has to give because you just can't have debt/debt service that siphons a large part of the GDP before it can even get into the bank. In order to have GDP, you have to have folk that are producing something in the first place and if we're looking at 10%+ unemployment rate (and rising) and a 14 trill GDP ('08) then we could assume at least 1.4 trill is not even produced in the first place in '09-'10. I know that's a bit of an extrapolation since the unemployment rate is around 5 or 6 percent anyway but for the sake of argument, lets admit that we could have 0 unemployment for able bodied folks. So, losing 1.4 trillion from loss in production (via unemployment) and looking at debt and debt servicing obligations ranging past the 2+ trillion mark, we're looking at 3-4 trillion in lost GDP v.s. an '08 GDP of 14 Trillion or at least a 25% lower GDP for '09. Of course, an ever expanding government government being run on an ever decreasing income is not possible beyond a certain point so we are back at the same question again: Do you destroy the currency to save the government or let the government fail because of a lack of confidence in the currency?
It seems unlikely that they will let the govt fail so that leaves us with a destroyed currency. Do we revert to the early colonial days and use Thalers, Reals and Pesos (Euros, Yen, Yuans) and the like or do we just barter or is there some other solution? Seems to me that the USD could become the NAD (North American Dollar) or one of those fad spin offs like the Amero and we could just recall the currency and create a new currency. Or...we could adopt an international currency (yet to be invented) and that seems to be the most likely end position. Having all these geographic/political fiat currencies is no longer acceptable because it destablizes the governments too much and puts the citizenry in a financially vulnerable situation. What's happening isn't working very well.
For entertainment purposes only, do not try this at home.
The tilt on GLD after the futures closed was positive today (negative yesterday). The ETF traders didn't want to be short gold over the long weekend. Gold will trade overseas on Monday, and the first chance for U. S. ETF traders to do something will be on Tuesday.
<< <i>you can't spend what you don't have
Reminds me of Wimpy in the old Popeye cartoons - "if you lend me a dollar, I'll gladly repay you on Tuesday............"
or was it, "I'll glady repay you on Tuesday for a hamburger today."
Either way, I agree with you.
I especially agree with Larry Edelson's article about what Bernanke and others are thinking...
Bernanke and debt
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Right now the FED probably likes the idea of having $700+ BILL on paper in excess bank reserves and paying 0.15% interest on it. The next question is, how do we know they haven't invested or used those "reserves" to buy US T-bonds or something similar? It makes sense that the US has leased or sold some of its gold stocks to other CB's, so why not some of the cash reserves as well? There are certainly many good reasons why the FED doesn't want its balance sheet audited, none of them being for proprietary trading tactics.
I have too much ammo on the sidelines and did get faked out between the actions of Friday to Tuesday am. So waiting for some sort of pullback to try and re-enter the paper gold side. I've been adding physical all along though and have added a good amount these past few weeks. Pulling the trigger on physical or generic gold is the easy part for me. For some reason the trigger on paper gold is much harder to pull.
Some very interesting COT results as of Tuesday. Gold and silver as expected with the commericals adding a lot of shorts. The Long to short gold commerical ratio increased for the 3rd week to 3.64. As of today it's probably 3.8 to 3.9. The banks were not cashing in their longs, but were adding 5,000+ shorts. The dollar side is where it looks telling. Last week was apparently a head fake as the commercials briefly stopped the retreat from the long side of the dollar. But it was only half-hearted. The Long to Short commercial ratio dropped from 2.1 to 1.1 (5 weeks to drop from 4.73 to 1.1). Another week like this and they will shift to the short side. They sold very few long contracts but added a whopping 6,947 shorts...almost doubling the entire comm. short interest in one week! Total open interest is now at a multi-month high of 30,000+. Not a whole lot of good news here for the USDollar.
roadrunner
<< <i>The US Dollar is Charmin and soon it won't be that good.. There is just so long the Government can keep the manipulation up--- eventually the mighty dollar is gonna crash.. you can't spend what you don't have >>
Actually the government has done nothing to prop the $$. In fact, just the opposite. To set inflation in motion, the gov must devalue the $$. You're correct to note that the $ will eventually crash. But everyone on the planet is on that trade, which actually keeps it from crashing now. The market will make most people wrong.
<< <i>So did anyone get back in, or get out today? Nothing for me. The impulse to cash in my profit was strong. I am thinking to use a "time stop" (vs. a price stop) and let my trades run at least until at least Friday 9/18 and see how it looks. I am not a daytrader, I do not watch the screen all day. >>
I didn't do anything Friday. My plan for Monday/Mon night is to watch and see what happens. I'll buy on strength or wait if there is weakness. RR's report on the increas in short contracts makes me think that a final pullback is in the cards. I just have a feeling that I'm going to get faked out on this one... I'll wait for the pullback, decide it's not coming, then buy, and then the pullback will come. Which will be OK as it will be temporary, but I'd like to play this more optimally. I gotta believe that a short term bottom Sept 9, 10, or 11, so I'm going to be very cautious about buying on Tuesday.
<< <i>
<< <i>The US Dollar is Charmin and soon it won't be that good.. There is just so long the Government can keep the manipulation up--- eventually the mighty dollar is gonna crash.. you can't spend what you don't have >>
Actually the government has done nothing to prop the $$. In fact, just the opposite. To set inflation in motion, the gov must devalue the $$. You're correct to note that the $ will eventually crash. But everyone on the planet is on that trade, which actually keeps it from crashing now. The market will make most people wrong. >>
Absolutely!!! Ole Ben is doing everything possible to keep deflation from taking root. If you want to know Ben's next move, read the books he reads.
Knowledge is the enemy of fear
And the dollar ran smartly from Jul 08 to Mar 09. The dollar will do as the FED wants it to. Not what the Europeans, or Chinese, or Wiley's want.
Knowledge is the enemy of fear
The real movements of the dollar, interest rates, money flows, etc. (at least up to now) are under the issuers of the hundreds of $$ TRILLIONs of derivatives that exist. That's where most of the money/credit was, not in the M1 and M2 numbers. The FED has just increased its own balance sheet to over $2 TRILL. Their lending rates are at 0%. Any move to increase interest rates will tank the economy again. So what do they have left in their arsenal to strengthen the dollar over the next few years? Nothing really. It doesn't seem they even have the mojo they once did to tank PM's which directly prop the dollar. It seems their only course is a continued general trend towards dollar weakness in order to prevent a massive waterfall drop which would be far worse.
I wouldn't say Bernanke and Geithner are in control of the dollar but just happen to be in office while it is spiraling downward. And I wouldn't credit them with the massive "strength" that the dollar showed during the deleveraging in 2008....unless it was through their orders to other banks to dump commodities and stocks. The dollar was the sole beneficiary from the 100 year unwinding of massive carry trades and derivatives baselined in dollars (beginning with BSC and ending with Lehman). It was certainly nothing planned by the FED though it certainly worked to their liking.
roadrunner
<< <i>Actually, the fed *did* support a strong dollar. This mantra ended about 8-12 months ago if I recall correctly. That's when things changed with stimulus packages, monetization of debt, and other actions. Nowadays, you no longer hear this mantra. >>
No it didn't. It hasn't supported the dollar for many years. They talked about a strong dollar but did nothing to support it. Edited to add that a carry trade was unwound...the short dollar was covered during the economic collapse and liquidation phase of the the financial crumple.
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I wouldn't say Bernanke and Geithner are in control of the dollar but just happen to be in office while it is spiraling downward. And I wouldn't credit them with the massive "strength" that the dollar showed during the deleveraging in 2008..... The dollar was the sole beneficiary from the 100 year unwinding of massive carry trades and derivatives baselined in dollars (beginning with BSC and ending with Lehman). It was certainly nothing planned by the FED though it certainly worked to their liking.
roadrunner >>
I agree with you on these points.
China and the buzz of a pending bank default
Hong Kong recalls gold reserves, touts high-security vault
Chinese sovereign wealth fund dumping dollars for strategic investments like gold
Luckily (at least so far) I was able to resist buying, although it was hard.
I'm still expecting the near term "low" for gold to occur Wed-Fri, and I'm hoping it's going to touch $960 again, but I plan to load up at $970. I will be watching any declines very closely to buy on any dips. It'll be a tough judgement call, but I wouldn't have a problem buying at 980 either and riding a decline to $960 or so.
Silver appears to be topping out, but I hate to discount it because I think if gold runs, silver will too. Not sure what to think there, but silver has had a great run and I think it needs to consolidate.