***APRIL 2010 Gold and Silver Stocks/Options/Futures trading thread***
ProofCollection
Posts: 6,121 ✭✭✭✭✭
New month, new thread.
I expect Thursday to be mildly bullish or nicely bullish extending gold up over $1120, and ideally over $1130. Of course, the day before the holiday I can't expect too much. I'm all ready for the "big move" to start in earnest on Apr 5 if it doesn't start tomorrow.
Here's a chart for gold volatility. The BB's are about as tight as they get... which usually when they get this tight we're in for a big release of energy... which I expect to come to the up side. The volatility level is also near a long term low.
I expect Thursday to be mildly bullish or nicely bullish extending gold up over $1120, and ideally over $1130. Of course, the day before the holiday I can't expect too much. I'm all ready for the "big move" to start in earnest on Apr 5 if it doesn't start tomorrow.
Here's a chart for gold volatility. The BB's are about as tight as they get... which usually when they get this tight we're in for a big release of energy... which I expect to come to the up side. The volatility level is also near a long term low.
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Thanks for the answers to the other thread...I have to confess, with the research I'm doing I'm finding an almost balanced + side and - side for silver. My gut tells me though, we're headed back to $20+ soon...maybe the new coupling device will be oil as it rises to meet summer demand...dunno, but can't seem to find any other reliable mechanism...
Sort of surprised that a number of miners not really reacting at all to the jump in gold and silver as well as SM >10,900.
roadrunner
<< <i>It's looking like a strong day. ... >>
Congrats ProofCollection. If you are still "all-in" on the futures side, as you posted in the March thread, it looks like steak dinner tonight
My recent gold buy (selling May puts) was well timed, but because of the lack of conviction, and low risk, low reward nature of the trade, it is more like "happy meal" money for me. Still, better to be on the right side of the market than the other side.
Gold: a net 35,000 long contracts added dropping their net short position from 242K to 207K. A huge shift for just 2 weeks. And the lowest net short position since the summer. Same for the short to long ratio which dropped from 3.2 to 2.5. Open interest dropped from 496K to 467K. This change is larger and deeper than following the Feb 5th smackdown into the $1044 low. You have to go back to early October or even early summer to find positions or ratios as low as they are now.
Dollar: the commercials reversed course the past 2 weeks by piling on the shorts once again....+8,000, bringing their short to long ratio back to 7.0. They must think the dollar rally is going to take a rest for at least a little while.
The BLS jobs report (+120K non govt jobs added in March) seemed basically positive imo which should keep the liquidity flowing as it has been the past 4-6 weeks. The FXE/FXY pair as well as GSR still shows liquidity headed into the markets. But I don't want to get too jaded by the jobs number considering the BDM could have injected 100% of those "+120K" jobs.
roadrunner
Just curious...
Oops...Edited to change to VS
<< <i>Do you guys have any reasoning behind the CAD's strength? It seems to be holding all of the gains since "The Collapse" and lately getting even stronger...despite some minor recovery VS the EURO and BP.
Just curious...
Oops...Edited to change to VS >>
<<Friday March 05, 2010 8:32 AM
Canadian dollar looking to breakout against the dollar. New twelve month high. MJ
FXC>>
1) The dollar has really only managed meaningful gains against other equally sick currencies. AKA the euro and sterling. The mainstream media only reports strong or weak dollar according to the UDX. Since the UDX is weighted over 50% against the euro all other currencies take a back seat.
2) The Canadian banking system is ultra conservative and it's perhaps the safest in the world. They did not invest in mortgage back securites for example.
3) The CAD is a commodity currency and can be moved by oil ( more so then pm's)
4) Increased exports to China
5) Canada has actually been adding jobs
Full disclosure- as stated previously the Canadian dollar represents my largest holdings. MJ
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......
Some observations:
Today crude is heading over $85, and gold is up near $1130, all while the USD is holding up over 81. Why is the USD so strong? I think lately it hasn't been that the USD is strong, it's that the Euro has been very weak. So the dollar really isn't strong, it's just better than the index it's measured against. Perhaps oil is a better gauge. Despite oil inventories rising and no real "reason" for oil to go up, it keeps going up. This is probably an indication (together with gold) that the USD is continuing to lose value even though its index doesn't reflect this. This may also explain (to some extent) the strength of the stock markets which tend to do well with a weak dollar.
In the big picture, SP500 looks like 1250 is a lock over the next few months.
It could be a couple of things. Oil is the bottom line, it's where energy begins for the civilized world, the more growth, the more energy is required and it's not really an option. If you are going to be, you are going to have oil and money knows this, sure, but oil is this. So either the USD is weak on the international markets or at least for those that are selling oil, and hence the more $ per barrel, or maybe someone is saying that oil is going to be more valuable in the future. Not to discount that there is seismic level international tension focused on the mid-east, it's like it is the last frontier. Unfortunately enough, that's where a lot of folks get their oil. And it may be as simple as that.
It's pretty fascinating to watch the mainstream currencies continue to fall...and with oil's prime upward moves coming (summer), it almost causes anxiety over everyday items' prices (IOW: I start to worry about food/energy/transportation-basics- costs) not just in the long term, but now in the short term. Is it just me, or does it feel like a coiling of energy prices is building, ready to launch into the stratosphere? Of course, this should help PMs, but I don't get paid in G/S/P/Pd (darn it).
I expected today to be a bit bigger but I can't complain. The last few days have been good for gold, and I expect that to continue through the week.
I mentioned in the other thread (GOLD, Economic new, etc) that the USD index may not be reliable right now as a gauge for the USD... I think it's more of a reflection of a weak Euro than it is a strong dollar... and even a strong yuan. Gold, and almost all commodities are doing well inspite of this. If we do see some weakness in the USD soon gold could zoom up to previous highs easily. I think gold may be stuck under 82 and we could see some weakness in the coming weeks.
The breakout can be seen in this chart below. The only thing that concerns me is the lack of volume, but I don't think this is a problem at this point.
I think 1128 will provide good support for tonight. Resitance points are 1136.6 and 1140.9 and 1151.7.
One other note is that the 200DMA is now well over 1050, and should keep increasing at a steady pace as old data points under $950 keep coming off over the next 2 months, which should solidfy support even further at around 1100.
In the chart we've got a triangle breakout as well as an ascending channel...
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......
"Notes drew a yield of nearly 1.78%, which is roughly 11 basis points higher than many analysts had expected."
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Gold took out a number of resistance points on its way to $1150. Would be surprised if it continues to run much further without a pause. Next higher resistance point is $1162 from the January pullback. Once that's gone then those gaps up around $1195-$1205 will look inviting. Can't get to excited yet knowing that this pull back since FEB could just be the B leg of a much larger ABC. Until $1200-1226+ gets taken out, there's no sure way to tell. GSR and liquidity currency pairs showing some retreat in money flows for the past few days. Was surprised that gold still moved further up despite that resistance.
10 yr bond auction today was a rousing success based on the reduced yield needed and bid to cover in the upper 3's. Only question is who is buying this debt as the FED and GSE's are selling off their treasuries?
roadrunner
Gold has made a lot of progress in a short amount of time. I think 1145 will hold as solid support, and 1161 will be the next resistance level. We may spend a few days bouncing around this level, but I wouldn't be suprised to end the week within a few dollars of 1160. A weekly close over 1145 will also be a good confirmation.
Edited to add:
Gold really is showing some solid strength. These moves are not coming due to dollar index weakness. Even crude and copper were down today but gold was up nicely. What will happen when the USD index finally bounces down off of 82? Not saying that it's going to, but I think it will help propel gold to new highs. Although I think it's perfectly feasible for gold and the USD index to both move up together.
I did add to my TBT ( short 20's) position last week and added a little more today as well. MJ
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......
<< <i>There was a huge spike in open interest on June gold late last week. >>
That probably doesn't mean anything. Last week was the last week for trading April gold contracts, so everyone was rolling to June. Not sure you can read a lot into the transition weeks.
Today was a nice consolidation day and $1145 held up well. I'm expecting more upward movement on Friday as we should be ready for another move then.
From everything I'm seeing and reading, I think we're looking at more tempered upward movement throughout next week, topping out around Apr 19-Apr 21. Friday's also looking like a potentially really good day for SP500, so that could boost gold a bit too.
And still, all of this without any help from the USD index.
<< <i>
<< <i>There was a huge spike in open interest on June gold late last week. >>
That probably doesn't mean anything. Last week was the last week for trading April gold contracts, so everyone was rolling to June. Not sure you can read a lot into the transition weeks >>
With all due respect I think it does bear weight. You have to compare numbers in a comparible time frame to come up with a true picture JMHO.
Last Thursday June gold rose $11.60 with volume of 126,000 lots and an astonishing 15,000 lot INCREASE in open interest.
This is the largest jump in open interest since the 16,800 contract leap on Dec 31 which saw gold rise by over $20 in near by gold and the start of January's rally leg.
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......
<< <i>I went all-in in the 20's and I added a few contracts as it went using the profits. I sold half of my position here at 1160.x ...
No sooner did I post that then I could see the move had legs. I re-established at 1162.0 and will sell again at 1168. >>
If you were "all-in" it made sense to take some off the table. The trading profits for futures on a 4% move on gold in a week are huge. Moves like that (4% up in a week or so) might only come two or three times during most years. Good call and good trading to be on that train and to cash in big time with an all-in position.
For the most part, I missed the train, and am reluctant to chase the train, because there is financial danger in doing so. Some of my energy has been on the bond market where my TLT short puts came under pressure, but now looks like they will come in safe (95% probability at 86) at expiration on Friday 4/16. I also closed out a short stock market position (long May SPY puts), where I got shellacked. I took an 85% loss on the puts as SPY went from 112 to 117 where I closed, now 119. So far the April cycle (I track from one option expiration on the 3rd Friday to the next) has been by far my worst of the year, with a near certainty that I close the month in the red.
Cheers.
The massive shift to the long side the previous 2 weeks was essentially erased by the most current week. Amazing whipsawing. This past week the gold commercial short to long ratio went from 2.52 to 2.93 by adding 28,000 shorts and selling 9,000 longs. O/I went up 31,000. Net comm. shorts zoomed from 207K to 245K. Managed money (large investment funds) took the opposite bet by adding 26,000 longs. Are the banks lining back up for another smack down from $1162 or are they about to be overwhelmed by the longs as they were last Sept-Oct?
The dollar similarly gave up most of the short move made the previous 2 weeks. This past week the short to long comm ratio went from 7.0 to 5.8. Commercials sold off 5700 shorts and added 370 longs. OI gained 10,000. Net short position dropped from 39K to 33K.
I still find it odd that the Bank Participation Report no longer lists the number of reporting US banks. They do it for gold, but for some reason not for silver. Is it because less U.S. banks hold silver positions than gold (4 banks) and that their silver short is 50% larger (more manipulative) than the gold short? But to be fair in the reporting there are numerous other items where they are no longer listing the # of banks participating (ie all the ag products, natural, gas, and all the other metals for starters). Why only gold gets a listing seems odd.
roadrunner
For silver, combined futures & options lg spec long ratio is 7.6, small is 1.4.
On the USD, I found it interesting that open interest has dropped about 17%.
I don't know what to make of the commercial gold positions. I've been following it a while and I just don't see any reliable correlations. They are always short. And when gold goes up they get more short. That could just be producers taking advantage of higher prices.
For tonight & Monday, resistance at 1168.7 and 1175, support at 1159.5 and 1153.2.
Support at 1144.6, 1150.7, and resistance at 1161.1, 1167.2, and 1177.6.
I was getting concerned that I had miscounted the legs up and bailed on 70% of my miners too early last week. It does seem that the move up since late March has encompassed 3 legs up in gold (1088-1115, 1103-1134, 1123-1168). This recent 2-3 wks in the miners produced 15-20% gains in 9-12 days and was looking overly ripe. BVN coming to a screeching hault last Wednesday at around 35.4 (and then failing to exceed 35.2) was the first sign that the run was nearing an end (5 legs up). Not coincidentally, GSR has been moving sideways to slightly upwards over the past 7-8 trading days....hinting that a change was in the making. Negative divergences in macd, rsi, stoch had started showing up last week.
This latest hit to gold and the miners looks like the 3rd leg down. Hence I suspect we'll get a pullback but then one more whack....bringing a number of the miners to their 50 dma, if not lower. Since GSR peaked out around 72 it seems possible it has made 5 waves down. The 50 or 200 dma (64.5) lines should hold this pullback. Note that Cohodk's multi-year up-trend line held at 62 on the recent multi-month down move. Now looking for attractive re-entry points on the miners. I'm hoping I don't get too greedy and then miss the next move up. But I'm expecting gold to retest the breakout of the Inverted H&S neckline in the lower to mid $1130's between Thurs-Monday. That will also give a nice 38-42% Fib retrace of the $80 up-move.
roadrunner
Had some thoughts about the gold mining stocks. Even though most companies have de-hedged, I imagine they still sell their production a few months out. So 3Q 2009 production was probably mostly still sold at sub $1000 levels, and perhaps some Jan and Feb production. Revenue from production here at 1100+ levels is probably only recently starting to hit the books. So 1Q 2010 might have some good earnings to report, 2Q even better. Not sure if it's priced in or not, but it doesn't appear to be.
My thought was if gold is going to hit sub-1000, then only the next 1 or 2 quarters' earnings would be a potential reason to buy...otherwise I should look elsewhere?
I was only throwing out some theories - I don't know if my thoughts are accurate or not. As I expect gold to pretty much double between now and next April, I think any gold stock is a buy right now and hold until next April. Of course, some stocks will do better than others, and my approach is to spread it around between large and junior companies with a few penny stocks thrown in for added measure.
FWIW, Ackerman is calling for $1245 as a short term target using his hidden pivot method.
Bix Weir - The Golden Road
In the charts, gold has charted out a broadening top pattern over the past 2 days (is this applicable to a daily chart?). Today's pattern also fits a slowly rounding over top or a double H&S if you will. The same rounding top/double H&S is visible on GLD and many of the miners over the past 2 weeks. Still SLV has bounced back all the way to 18.50 and showing a perfect V-notch. GSR has been falling but only on the strength of SLV. I'm still expecting another wave down based on negative momentum divergences in miners, GLD, and SLV. But I must say I'm surprised at gold's resilience in the $1150's. It doesn't seem to want to go back into the $1140's. Over the past day it seems that GLD and the miners have driven themselves into a triangular pattern waiting for a resolution. And the more I look at the miner charts since March 24th the more I'm convinced that the current pullback is just leg #4 with a final spurt to come.....before a larger correction after hitting $1180-$1205. The fact that a number of stronger juniors (ie AZK) continue to power upwards suggests they are in their 5th legs.
roadrunner
<< <i>Is the gold market REALLY as "fundamentally flawed" as Nadler says it is? (as in: pumped way too high from the investment demand) The way he writes, a major collapse is going to happen... >>
He is a broken record. One day he may be right and he can say I told you so. I find him to be a tool. MJ
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......
From what I see, the physical gold market seems to be alive and well, sans any tungsten bars that might be out there. There is some forward selling of production by miners and stuff like that but it's pretty much real time, cash value transactions. Now there is lending of physical reserves and balance sheet transactions that are done internationally and well above our heads but I can't see that it affects the day to day pricing. I have good confidence in the physical gold market. From some of our reports on this thread, physical long contracts are increasing and it will be interesting to see if they start taking delivery instead of opting for a cash settlement.
Now, what has the market screwed up are the paper etf's and stock funds that are built on air and no or minimal physical (100:1) to back it up but unfortunately they affect the daily and futures price of physical gold. The paper contracts are used to manipulate the daily price but this has been in the news and is not suprising information to most folk. Now the paper market is a total con/ponzi/scam/racket and in my thinking, they would easily fit the designation of "fundamentally flawed". There are going to be a bunch of people that will be suprised when their etf and stock accounts start going into a decaying orbit because of physical calls on the paper but, this is not new information.
JMHO
Got Cash?
On top of the above, the CCI and W%R had dipped below their fully bullish lines. Trix (5,9) was already showing a cross as well. In looking back at the GDX chart back to November, nearly every case of the above indicated a decent drop to follow and at best only a minor drop over a couple of days. Also, the GDX volume since February has been declining. In summary, there wasn't much in the charts that was bullish for a resumption other than the cheers of the internet analysts urging us to buy gold/silver mining shares. Right now, don't know if this is the first step of a continuing GDX falling knife or almost the end of a share's shakeout as gold retests the $1130 neckline and takes back off. My original thought was the GDX should fall back to it's multi-month trendline of 44-45.
After selling off my BVN and AUY shares last week, I dabbled in some shares this morning on the drop to $1130. These guys have already suffered far more of a beatdown than their IAG and EGO counterparts and imo don't have as far to fall. Most of their price drop occured on the previous beatdown to $1088. If we stay above $1088-$1100 the bullish scenario stays intact. For now, the $1132 area offered some stiff resistance in the past....as has $1142.
Next question is were those 3 legs down a complete ABC or just the first 3 legs of a bigger wave set?
roadrunner
What I miss?
Reentered copper short this morn. Got my 5% back already. Debating on whether or not to take it. Probably will hold. IMO, copper is stupidly overpriced.
I see silver had a good run--getting hammered today. Price is still same as in Sept. Stuck in range--albeit a wide one. Still in downtrend from 2008 highs. See no reason to expect breakout until range consolidates. Rangebound for awhile im afraid.
Gold also stuck in 5 month range, should continue.
Knowledge is the enemy of fear
Copper may be stupidly priced, but I still wouldn't be surprised to see them push it higher once the dust clears from this Goldman fraud issue. Fraud just happened to be the catalyst needed by the Boyz to tank the market and get people back into bonds. We can't have 10 yr rates flirting with 4% and 2 yr rates over 1%. Time to flip things back. The next bond auction is not until the last week in April so this timing is a tad early. With gold futures expiring that last week as well, a gold hit would be the expected outcome. So now there is a full week to "kill" between now and then. Maybe a week back up from here to flirt with the $1140-$1152 level, then a week down at the end of the month to $1100-$1112 to complete the 5 waves.
GSR gapped up above the downtrend line today and sliced through the 200 dma before closing under it. Next target would be the 50 dma sitting higher. What is concerning is that following sideways action, when the GSR finally breaks, it moves straight up for a while. a lot. Just look back to the sideways and peaking/whipsawing action from Sept to December. GSR had been slowly cycling up and down the past 2 weeks. This is the first real noteworthy jump. Another 2 weeks of downside could be in the cards. GSR had tracked down for 8-9 weeks from Feb to early April. So a first fib time retracement of that should be at least 3-3.5 weeks. We have 2 weeks in the kitty so far. The banksters just may use this opportunity to get them all the way through the April 29th bond auction. Liquidty ratios from Gold/Silver, $NZD/$XJY, FXE/FXY, and HYG/LQD show liquidity now humping over and leaving the market quickly. I don't think this is gonna be over first thing next week.
_______________
COT report:
While I thought last week's action was a warning shot to the gold price and not sustainable in volume, I was wrong on the "sustainable" portion. Not being content to add 28,000 shorts for just one week, commercials did it exactly again this past week. Well done guys! Just in the past 2 reports they've taken their net short position from 207K to 264K, clearly enough to tip the gold price and to get within earshot of the 285K net short level they had at the end of December. Over the past few weeks O/I increased from 466K to a hefty 529K, nearly in the same range as the Nov/Dec peak. Short to long ratio stayed constant at 2.94....since they added about 10% to both their long and short positions. The banksters are still playing/leading this market.
On the dollar side the commercials continued to pare down on their net shorts by 10%. So basically for the past 3 wks the commercials have been getting less short on the dollar and more short on gold/silver. At this point they are probably going to start selling gold shorts (if they didn't do so today) and adding longs again.
roadrunner
Support is at 1081.1, 1112.1, 1124.9, and resistance is at 1143.1 and 1155.9.
Didnt find any gold, but did see A LOT of very interesting quartz formations. Saw lots of finned and furry critters also.
Sold 1/2 position in copper short. Made 8.1%. Chart formation is "potentially" extremely bearish, but might need another week or two to develop.
Just a tidbit of technical info. RSI on Nasdaq 100 was 82.25 on Thursday. This level was exceeded for only one day in the last 10 years--Jan 3, 2000. Nasdaq did not make a top until about 10 weeks later and 20% higher.
Knowledge is the enemy of fear
In reassinging IH&S necklines and trendlines from the last couple of lows I'd say gold's ok even to $1112 and $1100. Those represent the worst case of the current trendlines. The IH&S if plotted the most conservatively could still be allowed down to $1123....and that's exactly the low that we saw today before it bounced. Gold completed 5 legs down from $1168 with the move to $1123. With all those shorts the banksters added in the previous 2 reporting weeks, and whatever they piled on between last Wed-Thursday, should provide headwinds for a while longer. The macd and slow stochastic curves still are quite steep. I think it makes sense that this weakness will run all the way through next week's bond auctions and end of month options expiration. In this way the bankers have the opportunity to sweep the stops even lower and really demoralize the longs. Gold likes to put together 5 legs and I think it's the more likely option that we're going to see 2 more: one to the $1142-$1145 resistance area and then another down to $1123 or lower.
This from Sinclair today. On Friday he was talking a recovery in "days." I agree more with this current statement. It would also rhyme with the fact that gold has opened each of the last 9 months on a rise. This would align well with a recovery beginning around 4/29-4/30.
This entire thing is coming within weeks of an unwind that no amount of bailout money is going to reverse. April showers in the Gold market make for May flowers....JS
Eric DeGroot (Sinclair's CIGA Eric) often puts up some interesting charts though some of them go over my head. This one of commercial gold traders net long futures & options stochastics (weighted average) as a % of open interest shows that for every down leg "D" in gold since 2004 ("C" to "D" on his gold graph) the stochastics reach the 90-100% lines. They have yet to do that in this correction that began back in December....currently they have dropped down to 40% after an interim peak of 75%. So there is more downside to come if this trend continues though Eric seems to be hinting that early May is when the average time of the D leg is reached.
Eric's chart
roadrunner
If last night's 1124.3 is the bottom point for this move, we could be looking at an upside target of 1211.3 based on the A-B leg from 1084-1171. The charts probably need a few more days of consolidation, but they can definitely (and probably will) move up $10-20 while doing so. I still feel the market is looking/waiting for a spark... and there are a lot of potential sources from Iran's nukes to the euro and Greece to trade or currency announcements from China, or something new...
Support is at 1127.5 and 1132.8 and resistance is at 1141.4 and 1146.7.
The SP500 is recovering pretty rapidly from Friday's decline which makes the move look temporary like I suspected, I just expected gold to recover along with the SP500 a bit more.
On a side note, I tried to find a source online but there was a story on the radio about a guy who runs some huge canadian hedge funds who reportedly tried to contact the IMF to buy the gold that was announced a few weeks ago that was going to be sold on the open market. The result was that he was given a run-around and he was not able to purchase the gold... they would not sell it to him. No big surprise there.
On the economy in general, another sign of recovery that I noted was a friend who had taken a job at a furniture store as a delivery driver has reported that they have been pretty busy lately. Could be people spending tax refunds. I'm under no illusion that the economy is genuinely recovering, but it's definitely stabilizing or improving from last year.
The IMF got a lot of mileage on that proposed sale of those 191 tons. I suspect they'll keep it on the back burner until the next run up in gold and then trot it out once again. As long as the market keeps falling for that gambit they should keep on employing it.
roadrunner