October gold and silver trading thread ***

ProofCollection

New month, new thread.

Support for gold is at 1004.1 and 997.5, with resistance at 1015.4 and 1021.9.

For Thursday I see a continuation of the up move, probably to the 1021 resistance level, perhaps with a bounce or test off of support at 1004.

RedTiger

The seasonal tendency is for a flat October for spot gold, and a down month for gold stocks. The selling squall in late September may have been traders jumping the trade. As always, seasonal tendencies are one of the least reliable indicators.

roadrunner

I think I made it clear a few weeks ago... gold broke out of the trading range. It was in a trading range for a long time. I stand by that:

1. it was in a trading range for a long time
2. it broke out

that's clear, precise, and exactly what happened.

I didn't take it that you had felt the trading range was left behind. In fact you made it quite clear for the past year that the trading range would not be broken until the all-time high was taken out decisively followed by higher levels. So this is a major change in philosophy. It's now on the record....MoneyLA is in the bullish camp again, gold is headed to new ATH's. If gold heads back under $980, $930, $900 would that change your prognosis? Are you now rebuilding a position?

roadrunner

cohodk

<< <i>I think I made it clear a few weeks ago... gold broke out of the trading range. It was in a trading range for a long time. I stand by that:

1. it was in a trading range for a long time
2. it broke out

that's clear, precise, and exactly what happened.

I didn't take it that you had felt the trading range was left behind. In fact you made it quite clear for the past year that the trading range would not be broken until the all-time high was taken out decisively followed by higher levels. So this is a major change in philosophy. It's now on the record....MoneyLA is in the bullish camp again, gold is headed to new ATH's. If gold heads back under $980, $930, $900 would that change your prognosis? Are you now rebuilding a position?

roadrunner >>




Ut oh!!! Time for me to get bearish. Actually I am still in the sideways camp.

ProofCollection

I agree RR, MoneyLA's position was unclear, I didn't know if he was still holding to his trading range theory or not either.

I am concerned about gold in the short term due to the fact that equities are getting hammered this morning. The S&P under 1045 isn't a good sign and may drag down gold, although gold is holding up farily well so far. If the S&P can't recover to 1045 by the end of the day, I'll have to be really cautious on gold - although the relationship could de-couple at any time. The USD is up quite a bit, but gold doesn't seem to have fallen a corresponding amount.

roadrunner

Still waiting for a better entry point for gold stocks. The dollar looks to be ready to move back and test the 77-78 range yet again. But treasuries have continued to be solid the past 2 months except for the first 2 weeks in Sept and are helping put a damper on gold's movements. 30 yr. yields just fell <4%. The safe haven play is back in vogue but gold is only a mild participant. As long as it stays above your $995 support it looks to have life. Silver's key point is $16.50 which is right around where it's been a good part of the day. Gold stocks gave up today what they got over the past 2 days.

Trends in UUP (dollar), TBT (20 yr bear TBonds), and GLD:SLV still appear to indicate more bearish news for gold. One bright point is that the 20 day BB's are starting to change shape on GLD and GDX. Up until today they were in a steep dive....now starting to flatten. Aroon10/15 continues to say that we have more downside to play out before a flip. I've watched that indicator for most of this year and it's rarely given a bad picture for gold in general. The SLV chart shows a well defined 4 waves down so far. Gold and Silver love to do 5 waves down, so I'm waiting for the 5th. GSR only correcting back to 62 or so doesn't yet seem enough. I was figuring on 63-64. It's at 60.6.

Ira Epstein on gold

I read Ira's view tonight and like what he has to say.

roadrunner

ProofCollection

I wasn't happy to see gold retreat on Thursday back down to $1000, but I also don't see it as significant. I do see the the trend from Wednesday launching a possible continuation Friday to 1013-1018, if it doesn't decide to turn the other way.

Today it seems that gold de-coupled from the S&P, which got hammered while gold only gave up a few dollars. It seems that gold may be coupled with oil a bit now, as Wedneday's rise in oil matched the rise in gold quite well. There's talk of oil re-testing $75, so I could see that coinciding with a re-test of $1025-1030 gold. Gold and oil still seemed to advance OK along-side a slightly gaining dollar as well.

$1000 seems to be holding up quite well for gold tongiht. Support is at $995.4, with resistance at $1003.3 and $1007.9

ProofCollection

Wow, what a morning. Gold took a dive, but $990 held up yet again, and then gold zoomed back up above the pivot point at $1003.2. $987-1007 in under an hour. Crude has also recovered to $70.0.

Not sure if it's too much to ask for gold to hit the high $1010's today, but I guess I don't see why it's not possible given that gold is essentially where it was 2 hours ago, plus a few dollars.

For those that have been wondering, I've held on through it all, still holding a full position.

Edited to add: The next resistance level above $1008 is $1016.

roadrunner

Gold initially took a nose dive from over $1000 to $986 on some worse than expected Sept. jobs data (-263,000) at 8:30 am. But the rebound was very impressive getting all the way back to normal before the SM opened at 9:30. The move down took a lot of stops out.

One would have to say that gold seems to have springs from $985-$995. I cannot recall it ever acting like this after reaching a frothy top with such massive COT commerical short interest. Those guys must be getting worried that something else besides their paper shorts finally have a say in this market.

roadrunner

Wolf359

Gold has a hard bottom it seems. The shorts might be in trouble. I would guess China is stepping in.

Economic data continues to be awful. The FHA and FDIC are going to need huge bailouts. Job losses for September were horrific and there's a possible annual revision of 800,000 plus in job losses. The DOW has been sliding. Just 4 weeks ago, they were announcing a recovery.

roadrunner

Job losses for September were horrific and there's a possible annual revision of 800,000 plus in job losses. The DOW has been sliding. Just 4 weeks ago, they were announcing a recovery.

I wouldn't be surprised that once the DOW finishes this current correction in Oct/Nov that it continues on its way to 10,000+. The dollar may start to tank in November providing fuel to stocks and commodities. Considering that the BLS's Birth Death Model adds about 1 MILL new business jobs per year regardless of economic conditions, giving a big chunk of that back would make sense to me. Wait until we get back to January-March time frame again when BDM jobs are removed. January is typically the worst month, often peeling away 300,000 BDM jobs even when times are good. The BDM starts adding about 200,000 jobs per month in the spring.

The payroll number of -263,000 was worse than expected but the household survey at -710,000 jobs was anemic, though a 300,000 job improvement over last months -1,000,000.

I've reassessed the gold/silver picture. And while a 5th leg down might still occur, most of the chart parameters I look at are now pretty close to the bottom (CCI, Aroon, W%R, stoch, BB's, volumes, etc.). It's now just a matter of how long they stay. Trading bands tightening suggest a move coming shortly. The moves up in treasuries and GSR look to be getting stale but the momentum is still in their favor. The dollar bounced off the mid 77's and was repelled easily. It could be in for some downside right about now back to the bottom of its current trending channel. The fact that gold keeps springing back up after stop sweeps shows remarkable resilience. I began adding to my paper gold positions once again.

_____________

COT numbers:
_____________

Gold futures open interest dropped from 467K to 454K. What was odd was that a lot of longs (+4600) were added while 7800 shorts were cashed in on the various sweep downs. Short to long ratio dropped from 4.58 to 4.24. This still seems to be rarified air for banks to be adding significant longs so soon....unless they are positioning for a move up.

Dollar futures shifted back towards the short side a bit from 2.72 long/short to 2.35. After 3 weeks of an ascending ratio, it's headed back down. Open interest dropped 12% with 3000 longs being sold.

roadrunner

mhammerman

Excellent summation, RR.

roadrunner

This if from a Kitco thread on whether the gold mania has hit yet. I thought the comment concerning the value of GLD or SLV was rather interesting.

Originally Posted by ag47au

Not yet. One of the key indicators is when there are 3 or more up limit days on the Comex. Then, the powers that be increase margin requirements, up to 100% (full cash), trying to stem the buying tide. All these moves only serve to fuel the mania. Wait until you see what happens when buyers stand for delivery and are handed ETF shares for bullion allegedly in storage in England, 400 ozt. minimum! And, they have to arrange for shipment to the USA! Then the British ban the export of whatever ETF bullion exists. Try to sell your ETF gold shares. They will be worth little, if anything. Certainly far less than actual gold bullion.

Mish on potential jobs revision of -824,000

Here's a link discussing the potential jobs revision coming out in early 2010 that Wolf359 mentioned above. While the economy is shedding jobs and closing small businesses at the greatest rate since the great depression, the Birth Death Model is doctoring new job and business creation into the job stats to the tune of 1,000,000 per year as if the economy had just turned the corner on a recession. That's the stated reason why the BLS created this model back in 2002-2003. But the more honest answer would have been to make the job picture look better than it actually is. It's better to puff it up now and revise down later. More fuel for the SM as well.

roadrunner

RedTiger

For those that follow the COT (commitment of traders), Troy Swenson at Kitco commentaries has an interesting article.

from
http://www.kitco.com/ind/schwensen/oct012009.html
link

>>
There are many analysts right now looking at the COT information and claiming the commercial net short position is high and a correction in the gold price is imminent. Let’s now briefly take a look at what the net commercial short positions were as a % of the commercial open interest (COI) as each of the new highs were being made post consolidation:

* 2003: 26 Aug 03 – 59% net short (% of COI)
* 2004: 26 Oct 04 – 58% net short (% of COI)
* 2005: 20 Sep 05 – 62% net short (% of COI)
* 2007: 25 Sep 07 – 54% net short (% of COI)
* 2009: 15 Sep 09 – 63% net short (% of COI)

Each new run in the gold price has always started with a commercial net short (% of COI) position of close to 55% or above. ...
>>

I don't follow gold or the COT that closely. Swenson who does, sees a potentially bullish set up.

As for GLD being worthless, how many times does the boy cry wolf before it becomes ignored. How many times have posts like that have been made on some Internet forum during the entire time GLD has been in existence? I'd guess thousands of times. How many real problems have surfaced that affected the trading price in the many years of trading? Maybe a handful of days, when every other market was also under stress from heavy volume and wide price swings. Yes, at some point there will almost certainly be some problems with the ETFs--I am not so naive as to believe otherwise. However, to say that they will be worth zero overnight because of something so simple as three limit up days and an increase in margin requirements? That is something else.

Again, GLD and SLV are fine for a little trading money, to trade the short term swings at low commissions, low spreads. They aren't for permanent long term core holdings, because there will almost certainly be dislocations or problems with the ETFs.

yellowkid

You guys will never convert me to being a PM only guy, but I just checked my PM mutual fund, up 60% since the first of the year, I think that makes it the leader in my portfolio closely followed by Emerging markets. I wouldn't think gold stocks would be a good buy after that run up.

roadrunner

Again, GLD and SLV are fine for a little trading money, to trade the short term swings at low commissions, low spreads. They aren't for permanent long term core holdings, because there will almost certainly be dislocations or problems with the ETFs.

This is the basic point I've been making. That at some point, GLD holders will be wishing they were holding the real thing. That's the day they will wish they were not trading in it or holding it. At one time BSC and Lehman were trading vehicles also.

I don't think anyone here is a PM only guy. Many or most of us were not into PM's at all from 1980-2002. When PM's are no longer a viable play, most of us will have left. Note that gold funds compared to gold price are now in a 5th wave down from the peak of mid-September (ie compare GDX to GLD). They may have already corrected most of what was needed before moving up again.

RT, I like that information on the % net commercial short. Since I follow the ratio of commercial short to longs, I will go back to those periods and see what they were. Then post the results along side yours. I'm very curious.

First cftc chart shows historical comm. short vs. long position

* 2003: 26 Aug 03 – 59% net short (% of COI) 4+ comm short/long
* 2004: 26 Oct 04 – 58% net short (% of COI) low 3's
* 2005: 20 Sep 05 – 62% net short (% of COI) 4.22
* 2007: 25 Sep 07 – 54% net short (% of COI) 3.35
* 2009: 15 Sep 09 – 63% net short (% of COI) 4.50

2 of those previous 4 rallies do have a comm short to long ratio of 4+. And if you count only major legs then 2 of 3 have that >4+ ratio. Certainly a high net % short is not necessarily a barrier to gold moving up.

2003 rally went into spring 2004 with gold moving from $350-$425 and the ratio eventually peak above 5. Leg 1.
2004 fall rally was only 3 months with gold moving from 425-450.
2005 rally was the first parabolic move from $430 to $730. Leg 2.
2007 rally was another parabolic move from $730 to $1033. Leg 3. Curiously, this major rally started from a much lower ratio than the 2005 move. What is also interesting from the chart is that the big runs into $730 and $1033 resulting in the ratio peaking a few months early and then slowly declining into the gold peak.

With most every chartist and seasonal follower calling for a gold pull back in October, that tends to support just the opposite happening as it did in Oct. 2007. One obvious difference is that back then the SM was running towards its all time numerical high and the banking system wasn't yet fully broken.

roadrunner

57loaded

good stuff to digest whilst tomorrow at work

cohodk

This is a list of the most popular stocks at Stockcharts.com. All of the stocks with .to as part of the symbol are junior mining companies listed on the Toronto exchange. Seems to be an awful lot of enthusiasm for this group.

Currently Popular @ StockCharts:
aapl agi.to aig apa c ctq.to dbc dia dml.to eld.to gdx gld gold goog hmy hnd.to hnu.to hod.to hxd.to iwm lihr oil qid qld rim.to sds smh srs sso tbt tna tza ung uso uup uyg vt.to vxx xlf yri.to
Popular symbols as of Mon, 05 Oct @ 09:21:15

roadrunner

We're not in Kansas any more Toto This is Rick Ackerman's view of the article

The Aden Sisters finally have an antidote in the name of David Kansas. He wrote a great chop job on gold in Sunday's WSJ consumer section that probably appeared in many our your local papers ("gold is still a lousy investment"). There are so many classic cliche's that it's a must read. The fact that gold plunged after a 12 yr. bull market in the 60's and 1970's is a failure to Mr. Kansas. I guess he expected that environment to go on forever despite the raising of interest rates into strong double digit territory. He notes a terrific run since 2005 where gold has doubled. But he left out the fact that gold quadrupled since 2001 and was one of the few decent 10 yr performers out there....oops. Nowhere in the article is there mentioned anything about derivatives, the basic reason the financial system is where it is. And his suggestion for a better place than gold to protect your money right now.....TIPS.

With this kind of "TIP" there is even less chance of J6P entering PM's anytime soon if they read this article. The contrarians should take Kansas' article as a very bullish sign.

WSJ on line - full article

roadrunner

ProofCollection

Rick Ackerman commented on the Kansas article and put it in perspective well:

Ackerman

The one thing here that concerns me is that Geithner is once again saying something we haven't heard for a long time:
Geithner: We'll Do Everything To Save The Dollar
Geithner Says ‘Very Important’ to Have Strong Dollar

I'm not sure what practical means remain for "keeping a strong dollar" but that usually means that gold gets screwed. I'm just not convinced that the fed has many effective tools left for supporting a strong dollar. There's lots of talk of new taxes like a VAT, which I can't imagine would help the dollar: We're broke ... time for a new tax

Support for Monday is at $1000, resistance at $1012.7and 1021 (although 1008 seems to be a tough sticking point), and support at $991.

Gold's looking kind of bullish to me for some reason today. The 5:30 smackdown was very muted, going from ~1008 to ~1004 and hitting only 1002.5 a bit later. Gold just looks like it wants to jump. A breakout over 1008 will lead us to 1013-1020 gold, I believe.

Almost forgot, good Ron Paul video clip where he theorizes that a strike against Iran will Cause the dollar to collapse

And another video regaring the ECRI index and discussion relative to an October crash: Video

ProofCollection

Gold was up nicely today, and even a few more dollars in tonight's trading. I don't expect much movement on Tuesday, but 1030 is not out of the question.

Support is at 1007, 1013 and resistance is at 1024 and 1030. I'm not sure we'll see anything below 1013 tonight, if that. gold is just looking extra bullish. I'm actually not sure it will go below 1018 again tonight.

Word is out that Obama is not going to Leave Afgan. He's got to make an announcement soon, and I've got my money on a troop surge. I don't think that will help gold.

As far as the stock market, I think the last little correction is over and the market is ready to head higher, but probably not significantly higher on Tuesday. The leading ECRI index was up YET AGAIN last week.

Justacommeman

I'm in Asia watching gold rip through $1025. Let's see if NT can take her down in a couple of hours. Aussie dollar spiked against the USD on a surprise rate $AUD

MJ

ProofCollection

Gold is on fire! The next pivot point is 1046.8, although I've read that if 1040 is broken, it's a good point to add more.

RedTiger

<< <i>Gold is on fire! The next pivot point is 1046.8, although I've read that if 1040 is broken, it's a good point to add more. >>



Congrats on holding your long position through some turbulent down drafts and some sleepless nights. Others such as myself got shaken out. An article over at Market Watch (forum filter won't let me link) says gold timer newsletters are only 18% in, which is absurdly low given the strength in gold. So the scenario that many have written about, gold taking off with as few people aboard as possible is unfolding. Unfortunately, I am one of those watching from the sidelines in terms of trading positions. I may take a tiny trading position today, as difficult as that is to do after two big up days.

/edit to add: I pulled the trigger, selling some GLD Nov 91 puts, GLD was at 101.30. With gold timer sentiment so low, a big decline seems unlikely, which is a good setup for selling way out of the money puts. Strike price of 91 is below GLD chart support level of 92.

ProofCollection

Thank you Tiger. I was going to say, if you don't have a long position, it's not too late to get in. This bull has alot longer ways to go.

R3 is at 1046.8. I'm not sure it's going to be able to breach R3, but the bull is loose and out of control. The melt up is about to begin. This is the first of several consecutive up days that we are in for. The breakout over 1040 is a buy/add point.

roadrunner

Since Friday gold is up around $55, a good amount for a single leg up. And there are 3 basic up moves to it ($985 to $1005, to $1020, to $1040) Fwiw the YuYangers timing chart was calling for a high today or tomorrow and then a slow meandering down for the rest of the month. That was one of the reasons I didn't sell anything yesterday as things strengthened quite a bit on a run back to $1018. I don't see the cartel not tossing everything they have to keep things under wraps on this current up leg. A new all time high shouldn't be that easy. But commericals were buying long last week on the futures so it wasn't like they didn't expect futher strength. Maybe there they cash out more longs. But they are getting fried on their shorts. Per Sinclair next major milestone is $1089.

I spent an hour last night purusing the 1 year gold chart to see if I could fit the latest move into a 3rd major wave since last November. When gold hiit $1020 around 10 pm late last night it started to smell like a breakout was coming. The chart can sort of be done but the waves in the descending triangle over the past few months don't easily fit. But what we're in now could certainly be the 2nd major leg of what began last November. The higher it pushes the less likely this is just an irregular B corrective leg top from the March 2008 high.

It was interesting to watch the CNBC'ers trying to fathom why gold is moving up. They were saying that to even think of gold as a currency was like going back to the dark ages. What do they think gold has been doing for much of the past 8 years while it reacts inversely to gold? And finally, David Kansas' Sunday WSJ gold-bashing article was in fact the final contrarian call. Wonder how long he'll be ridden for that one? The Aden Sisters weren't so far off after all....lol. Proof Collection has held his gold torch strong through all this whip sawing. Well done!

The YYer's were calling for an interim top on the 6th or 7th so the current action could support that. They also call for weakness the rest of the month would could just be higher lows...if gold >$1000 can be construed as weakness.

roadrunner

mhammerman

"It was interesting to watch the CNBC'ers trying to fathom why gold is moving up. They were saying that to even think of gold as a currency was like going back to the dark ages."

Unfortunately for them, they live in some BS world where they all believe what each other tells them to believe and then they report that to the masses as though they were spreading the light. If they hadn't wasted that education where they were taught to be self motivated and independent thinkers, they might actually be of some use in the media world but those times are well past. Now we just get regurgitated drivel that is completely useless for financial management and other than the entertainment value of watching those guys/gals jump through each other's pants with the analytical passoffs, that medium is just a lot of wasted effort but, hey, the advertisers are paying and paying for spots on that circus so let the games play on.

So, as opposed to taking a chance and offering something that they believe might be happening or coming up with some sensible rationale for movements, they are quite content to stick with the pat hand and dish some amalgam of the various sources of information resulting in some senseless crap advice that I wouldn't spend a nickel on. There is no way those bozos have even a modest clue about what's going on or, if they do, they sure as hell aren't telling anyone.

Edited to add: It almost seems as though they have only one prime directive...Don't spook the herd.

ProofCollection

Today's move was delicious... the move I've been waiting for. I would agree that a slight amount of caution is in order, but basically we're at the blackjack table with 11, and the dealer's showing a 6.

The short term trend needs to re-energize (consolidate), but it could be ready to go again by mid-day tomorrow. Maybe even sooner. The S&P500 was in a similar position a few weeks ago and it just kept going even though a consolidation was in order. Overall, it appears that we're definitely at the start of a bigger, longer term move. I expect the current move to last at least through next Monday, so there is much more upside to come. So $10-20/day for the next 3-4 days takes us to $1070-1100.

Support for Wed is around 1035, but I'll feel better if we can stay up over 1040 or at least 1037. I'll post better support and resistance numbers later tonight when I'm on my other computer. I think those hoping for a pullback will be disappointed, I'd be surprised to see a dip below 1035.

Consider also the dollar taking a big hit today, I think the down-move will continue, which will of course help gold. The stock market also had a great day - definitely benefiting from a weak dollar.

The news from Australia was also huge... it will be interesting to watch as other countries begin to follow suit.

roadrunner

Another bullish gold/dollar stat is that their correlation just changed from 2 stand. deviations to 3 sd. Stefano on Kitco forums does a mathematical model of the dollar and gold correlation over the last 125 trading days (1 yr). The dollar and gold as a pair have been rangebound most of the year. Before today, even if the dollar index had fallen to 70, gold would have only correlated to 1100. But with this move to $1040 at 76 gold can theoretically now move exponentionally rather than the linear range it had been stuck in. One could say that the linkage between them has some serious cracks. This is the first 3 sd move in the pair in >1 yr.

roadrunner

secondrepublic

<< <i>"It was interesting to watch the CNBC'ers trying to fathom why gold is moving up. They were saying that to even think of gold as a currency was like going back to the dark ages."

Unfortunately for them, they live in some BS world where they all believe what each other tells them to believe and then they report that to the masses as though they were spreading the light. If they hadn't wasted that education where they were taught to be self motivated and independent thinkers, they might actually be of some use in the media world but those times are well past. Now we just get regurgitated drivel that is completely useless for financial management and other than the entertainment value of watching those guys/gals jump through each other's pants with the analytical passoffs, that medium is just a lot of wasted effort but, hey, the advertisers are paying and paying for spots on that circus so let the games play on.

So, as opposed to taking a chance and offering something that they believe might be happening or coming up with some sensible rationale for movements, they are quite content to stick with the pat hand and dish some amalgam of the various sources of information resulting in some senseless crap advice that I wouldn't spend a nickel on. There is no way those bozos have even a modest clue about what's going on or, if they do, they sure as hell aren't telling anyone.

Edited to add: It almost seems as though they have only one prime directive...Don't spook the herd. >>



Very well said. I've often thought the same thing. Like, "are you guys kidding me?!"

ProofCollection

Gold is consolidating kind of like it did the previous couple of levels (1005, 1018, 1021). There's kind of a penant forming around a centerline of 1040.5. Volume was up nicely today to confirm the move.

Support is at 1025, 1035, and resistance is at 1053, 1063, and 1091.

Based only on the resistance levels and my expectation for more upside tomorrow, I'm realistically looking at 1053-1063 on Wed. I'll throw out a 20% chance of a monster day to 1080 or so. And probably another 20% chance of a mild consolidation day. 1080 is based on my theory that the market will take off quickly as short scramble on the breakout to new highs. I have to admit that on one hand, I'm a bit surprised gold didn't zoom past 1040, but on the other hand, I'm not surprised because it never happens how you think it will.

Regardless, a new daily up-trend did start today, and as such there's little chance (IMO) of it reversing until it's run its course.

roadrunner

Volume today was very light compared to yesterday's numbers, especially in most of the gold miners. But it was adequate to not disturb the trend. Gold completed a quick 5 legs down this morning and is now consolidating in a fairly tight whipsaw.

For a better clue to confirm the current overall trend look at the Gold:Silver ratio. I mentioned this a short time back as GSR was finishing out a wave 4. But now that it's clearly in a wave 5 down, it completes the picture better. Looking back to early July there is a very nice 1-2-3-4 wave action up to this past week. The 2 and 4 waves alternate nicely in fib days. GSR has broken far enough in the down direction again to indicate that wave 4 is complete. The previous lengths of waves 1 and 3 down were quite long, 18-23 trading days each. We're now 4 days into the current reversal. So figure at least 2 weeks total if not longer. This would coincide with a 10/13 turn date that I've seen listed elsewhere.

When GSR peaks at 80 on the stochastic it almost always heads for the basement to touch 20. And it's only about half way there. The other indicators such as Macd, Rsi, Trix all continue to show negative divergence since July (ie downtrend should continue to around 53-55).

The downside with the GSR analysis is that the end of this leg will complete a very lengthy ABC zig-zag correction that started last October at around 90. It only makes sense that a multi-week move back up into the 60's or 70's could occur and crush some of the newly ordained bulls. That will give the dollar another opportunity.

4 month gold to silver ratio chart

2 year GSR chart

roadrunner

Wolf359

Obama under fire for falling dollar

Most economists attribute the recent surge in the gold price to the actions of a few speculative investors hedging against inflation fears in the US. And they point out that the far deeper US bond markets show no sign of concern over inflation.

ProofCollection

Good analysis RR, I see this overall run lasting at least through Monday, but it could easily run until Tuesday. Our views are lining up. That doesn't mean it's time to sell on Mon or Tues, just that we'll reach a top and then there will probably be a lengthy consolidation.

Today's movement and those of the past couple of weeks have really been nothing but bullish. The price moves up to a new level, goes sideways, the moves up again, repeat. No real weakness at all that I can see, looking back at the charts.

Gold just touched 1055 in overnight trading, but I think gold is still energized and ready to keep rolling for Thursday. There's a resistance level at 1055.7 and 1067.2 which is R3, so I don't see gold going significanly above there on Thursday, although 1070 is doable. Support is at 1050.50 and 1044.

So I think I'm seeing two more big pushes... this current one finishing up on Thursday, and then one more on Monday or Tuesday... although Monday is a holiday.

I find it kind of strange that some are calling for a big drop and reversal at any moment. I guess they can't get over what happened at the 1033 high a few years ago. The reality is that this move is different. There is super solid support at 990-1000 and 1040 is also going to be a good support level.

ProofCollection

Nice pullback this morning and quick recovery. A good chance to add to positions.

There's significantly different resistance levels for gold based on which instrument is used, I think mainly because of the hours the Comex trades vs. the Liffe and Globex (GC and YG). Using GC, I have resistance levels at 1060 which is where gold is stuck at the moment. Above that, there is resistance at 1065.6 and then 1081.7.

For today, I think gold has enough energy left to punch through 1060, hitting a new all time high between 1065 and 1070.

I've since found out that the markets are basically open like normal on Monday, so that shouldn't affect anything.

RedTiger

I double up on my GLD position, with GLD @103.77, selling a Nov 92 put, to go along with my short Nov 91 put. Basically it means I am big buyer if there is a sharp pullback, or collect a little cash if GLD doesn't crack.

This thread seems unnaturally quiet given the moves in gold. There are some warning signs, such as the Drudge report leading with gold, and other spotty appearances in the mass media, and most of the rally being rumor driven and dollar driven. Still, I suspect that most gold newsletter timers have missed this entire move--only 18% of gold timers were in on Monday of this week, 82% in cash according to a Mark Hulbert article, so the chance of an immediate major correction in gold seem slim.

With 20/20 hindsight goggles, obviously I and others would have traded the move differently and all of us would be rich today. Some of the small trades I had on earlier and bailed out from, have turned into monster winners, but I bailed because I couldn't take the pain. Such is the life of the "singles hitter" trader that cuts losses (vs. the home run trader that is okay with striking out). To further the baseball analogy, sometimes I run myself out of the big inning, sometimes I settle for a bunt single or a walk when a pitcher is on the ropes and might be ripe for giving up a home run.

cohodk

double up on my GLD position, with GLD @103.77, selling a Nov 92 put,

Those are trading at only 25c. 10 contracts would net you only $250, yet make you liable for a 92K investment. Chances are it wont be put to you, but thats not much return on the investment.

roadrunner

I tried an entry point yesterday when AUY was around 11.20-11.30 and by the time I got around to punching it, it was already at 11.50. So decided to pass. Today it's up around 12.25. PC mentioned the brief pullback this morning from $1058 to $1042 gold and by the time I blinked, it was already gone and back at 1050. It spiked up just as fast as it had spiked down. Volatility will rule from here to keep as many people out as possible.

Continue to watch the GSR for signs of this leg ending. Right now we're in the 3rd leg down dropping like a stone. 4th leg pullback not visible yet. The GSR in hindsight shows every twist and turn in gold and silver. And the GSR chart has been well behaved since October 2008 and dead on since July offering really no TA kinks. The gold chart has been full of TA questions and multiple pathways.

GSR chart

roadrunner

cohodk

Lets see what gold and the dollar do when interest rates pop higher over the next few weeks.

mhammerman

Yeah, not so sure j6p is gonna participate in this little run because he's tapped out and running scared and scared money is always wrong...he knows this.

Fountainhead

The GSR seems to be supporting today's rally. Did you sell today, roadrunner?

ProofCollection

<< <i>Lets see what gold and the dollar do when interest rates pop higher over the next few weeks. >>



Can you elaborate? You're not talking about fed rates are you?

RedTiger

<< <i> double up on my GLD position, with GLD @103.77, selling a Nov 92 put,

Those are trading at only 25c. 10 contracts would net you only $250, yet make you liable for a 92K investment. Chances are it wont be put to you, but thats not much return on the investment. >>



All true. It is a low risk, low reward trade only if a person stays away from leverage. With leverage it can be extremely risky. I would never suggest this kind of trade for option novices. I have been trading stocks and options off and on since 1987, so hopefully, I know my way around the block.

Let me add, that my broker ThinkorSwim, requires about 10% margin to initiate the trade (about $950 per put sold). Some brokers require much higher margin to open the position. In my case, the return on capital in terms of margin required is about 2% for six weeks. Annualize that, and it is about 16% per year, on a high probability trade (92% chance of success based on implied volatility). One key to long term survival doing these, is managing the risk, in terms of cutting losses, or rolling the position, if the bottom drops out of the underlying--and at some point, the bottom will surely drop out, no matter how sure folks are the bottom will hold.

roadrunner

The GSR seems to be supporting today's rally. Did you sell today, roadrunner?

GSR will be supporting higher prices for a bit longer. I still don't see a 4th leg shaping up yet. And following that will be the bullish (for gold) 5th leg.

Sold some shares of Kinross but too early in the day, as is usual for me. I was tempted to cash in one of my junior golds but it's still lagging this move, will wait for Friday or Monday to see what happens. These guys jump early or late, but they usually do participate in a big move. I wonder if Norseman ever re-established his Yamana trade after it fell back to around $10.00 twice in the last few weeks? Another 15-25% move in very short order.

Was hoping to pick up more shares of a few items on my shopping list but none materialized. Purchased a few unc. $10 Indians today if that counts. Generics are still lagging from the Long Beach and Philly shows because the big players are stuffed with them. They aren't even at the levels of 4 weeks ago when gold was sitting around $1005. And they are far short of the last highs made in February when gold hit $1007. I think they might be a worthwhile play for a few months once we get by these current over-supply issues. But the issue of generics bears rethinking if our major players can't handle the relatively small percentage that comes on to the market during each short term/intermediate cycle.

TBT chart - 20 yr bond bear

As far as what to expect when interest rates/bonds shift in the near future I would think it should ignite gold further. TBT much of the time has mirrored the moves in gold. But since mid-year TBT has been in a downtrend (rates lowering, bond prices rising). Gold has been fighting this headwind since June. And it's jerky movements seem to reflect it. You can see the brief rallys in early Sept, etc that were helped by rising rates. That's in progress right now as well. The TBT down trend is long in the tooth. The big bond auctions end in 2 weeks. GSR and TBT look to be in similar places on their 3-4 month charts (ie near the very end of an ABC correction). One more small down wave to follow and then an up move for TBT should commence (rates rising). Typically that helps gold in the longer run. From 1977-1980 rates were raised and had little effect on gold's upward parabolic movement. The brakes (ie strong double digit rates) were applied all the way into the summer of 1981 to erase any remaining bullishness leftover from the Jan. 1980 peak.

But the TBT analysis seems to conflict what I said would happen as GSR shifts direction at about the same time (it's in its 3rd leg of C of an ABC as well). If one looks at interest rates over the past 35 years, it's clear that generally rising rates drives gold up. I'll have to think about this more....but TBT (ie longer dated bonds) should trump GSR. Both conditions can be satisfied if silver severely lags the gold rise. A move in gold to $1300 could achieve a much higher GSR (ie a correction) while keeping silver under $21/oz. And that would fit with silver's tendency to be late to the party. After all, there is a lot more paper silver to wade through than there is paper gold.

Plug in TLT (20 yr bull bond) if you want to see the inverse of TBT.

roadrunner

cohodk

I mentioned in the other thread to see what happens to gold and the dollar when interest rates rise. I mentioned that at that time because TBT and 10 yr yields made a classic bullish engulfing candle today.

SUMORADA

I was sitting here trying to figure out what RR said. I liked it BTW .....I'm just not smart enough to know why.....Then cohodk comes in with classic bullish engulfing candle

What the hell is that ?..

cohodk

The power of the Bullish Engulfing Pattern comes from the incredible change of sentiment from a bearish gap down in the morning, to a large bullish real body candle that closes at the highs of the day. Bears have overstayed their welcome and bulls have taken control of the market.

SUMORADA

Thank you, cohodk......

ProofCollection

I was a little disappointed to see gold sink back below 1050 tonight, but it is not bearish. The charts are still loaded and ready to punch higher. I think it's yet another good opportunity to add to positions right now at 1050. There have been 2 attempts at 1060 now. I expect the next attempt to be successful. I think we're still good through Monday and possibly Tuesday - at the least.

Support is 1046, resistance is at 1054.4, 1065, 1073, and 1092. 1065-1073 is probably a realistic target zone for Friday.

Stocks had a good day Thursday and look poised to continue to move higher Friday as well, along with crude. The USD is knocking up against a resistance level at 76.50. I'm expecting that USD will not make it through this level and gold will rise as the USD falls back to (and possibly lower) than support levels at 76.08 (and the next stop at 75.65).

RedTiger

Barrons has a follow up to the gold timer sentiment article from Market Watch that I have been referring to, and unlike MW, Barrons can be linked on this forum.

As of this writing, it certainly looks like my most recent trade on GLD (selling Nov 92 puts) was ill timed with Kitco reporting gold down $7 to $1047 in Asia on dollar strength. That might be the weak link in my thinking, sentiment on gold is leaning one way, while sentiment on the USD is leaning the other way. The dollar seems to be the lead dog at the moment. So if the dollar rebound continues, gold might be in for some rough trading, along with my position.

PerryHall

<< <i>I was a little disappointed to see gold sink back below 1050 tonight, but it is not bearish. >>



When PM's go up as far and fast as in the last few days, you've got to expect some profit taking. I'm not worried since I'm in it for the long haul.