I have no idea if the markets will top out in 10 weeks or 10 months, or if they already have. I just found it interesting that this indicator took 10 years to reach a peak, especially given the overbought markets we've had since then. I do see many sectors that are very top heavy and have included a chart of one. Sometimes Christmas comes early. Good luck. Chart via Esignal.
That is quite an ominous chart, cohodk. I don't think the markets are ready to topple just yet, as SP500 at 1250 looked to me to be an important level that I feel it's destined to be reached. We're actually not that far... I'll be surprised if the markets to fall before reaching 1250, but it is of course possible. My only question is if it will take gold with it or send gold shooting up the other direction.
<< <i>That is quite an ominous chart, cohodk. I don't think the markets are ready to topple just yet, as SP500 at 1250 looked to me to be an important level that I feel it's destined to be reached. We're actually not that far... I'll be surprised if the markets to fall before reaching 1250, but it is of course possible. My only question is if it will take gold with it or send gold shooting up the other direction. >>
It is very possible that the markets will undergo a cycle of rotation. Weak sectors rise while strong fall. Net result is a sideways market. Or, the bottom could just fall out.
Seems I hear the 1250 number mentioned quite frequently. Well, we did hit 1214, or only 3% away. Money managers may begin to ask themselves, "Is it worth it to wait for another 3%?"
The Naz 100 came with 10% of the 2007 highs as did the S&P mid cap 400.
One uplifting thing about that chart is that the 45,25,25 long term stochastic looks ready to "lock in" much the same way it did during the second summer 2009 leg. It's high enough and flat enough right now to weather a trip down and still stay >80. An each of the last 3 waves has demonstrated higher highs and lows. Not a bad thing to have.
My only question is if it will take gold with it or send gold shooting up the other direction.
Take a look at the CRB index on a weekly basis with candlesticks. Focus on Jan this year. A bearish engulfing top, followed by 3 black crows? Hopefully that formation has been resolved with a 3 month consolidation pattern. Bollinger bands are tightening and almost all my momo indicators are neutral, so I would expect a substantial move--either up or down--in the next 3 months.
<< <i>One uplifting thing about that chart is that the 45,25,25 long term stochastic looks ready to "lock in" much the same way it did during the second summer 2009 leg. It's high enough and flat enough right now to weather a trip down and still stay >80. An each of the last 3 waves has demonstrated higher highs and lows. Not a bad thing to have.
roadrunner >>
Surely this does(did) indicate strength. Overbought is good, but overbought for an extended time is not. The RSI on $RLX--retail index hit 85. Highest I could find in the last 15 years was 83. RTH is also within just 4% of its 2007 high. Do you think retail should be this high in this economy? This does not indicate a correction is near, but I can say with strong confidence that there aint no way in hell retail goes higher over the next month or two. I see at least 8% downside.
There are other charts with similar patterns. Happy trading.
Funny how different folks interpret the same chart differently. On the RTH chart, another 10% rocket shot to the upside wouldn't surprise me at all. That would get more fast moving stupid money into the sector, and also take out the stops of many bearish position traders. During the bear market, oversold became oversold-er, and bankrupted many traders that tried to time a bottom at support or by reading stochastics or RSI. I also have the feeling that if the same identical chart was labeled GOLD instead of RTH, 80%+ of the small timers on this forum would read the chart as bullish because it fits the narrative playing in their head.
This 13 month long up move in the stock market, I have described as a "ridiculous rally," where overbought often becomes more overbought. To me, the relatively tight price action on the most recent move up often means big money is doing the buying. Big money sometimes has no choice. They sometimes are compelled to buy because they have money coming in and must put it into certain stocks because of the guidelines of their specific fund.
/edit to add: where is that new money coming from? Some might be from Federal income tax refunds. The average Federal refund is 50% higher than last year. Refunds will continue to trickle out for more than a month past the April 15th filing deadline. Some of that refund money gets plowed directly into the stock and bond markets.
<< <i>Take a look at the CRB index on a weekly basis with candlesticks. Focus on Jan this year. A bearish engulfing top, followed by 3 black crows? Hopefully that formation has been resolved with a 3 month consolidation pattern. Bollinger bands are tightening and almost all my momo indicators are neutral, so I would expect a substantial move--either up or down--in the next 3 months. >>
Gold volatility index same thing...
With SP500, there is the 1250 target but it's actually a range... 1250-1320. So I'll be looking to reduce positions once we cross 1250, but I think the move will have potential to penetrate higher, if only briefly.
Edited to add: Yes, the ridiculous rally... I agree, I think everyone agrees. But what's causing this rally? It's the fact that there's so much money sloshing around. So as long as that prevails - and there's no real reason to think that's going to change, overbought will probably become overboughter... the only problem is that with such a false sense of foundation for this rally, the market is pretty skittish.
Cohodk, the CRB chart has the general look of an ascending triangle over the past 4 months. Not perfect, but presentable. Other commodity indexes (GSCI and CCI) look a bit different but same general shapes.
Which of these do you find to be a more accurate representation of what is happening in overall commodities? I see different traders using different indexes. CCI seems to show up more often among the PM analysts.
Really good article about bond crash driving gold prices. This is the scenario that I believe will happen... The timing is the only thing I can't figure out... somewhere between 6 months and 10 years...
<< <i>Cohodk, the CRB chart has the general look of an ascending triangle over the past 4 months. Not perfect, but presentable. Other commodity indexes (GSCI and CCI) look a bit different but same general shapes.
Which of these do you find to be a more accurate representation of what is happening in overall commodities? I see different traders using different indexes. CCI seems to show up more often among the PM analysts.
roadrunner >>
I prefer the CCI. Both are roughly similar and neither looks particularly bearish. I do see a potential bottom in many of the grains indices. The PM index looks neutral, so maybe soft commods push inflation fears?
Went back at looked for a reason why everyone is looking for 1250. I really couldnt find one. What I did find....the 200 week moving average at 1224. A 62% retracement at 1230. A market that is at the top of a line connecting the tops from Sept. A daily momo that is rolling over and an RSI reading at a 6 yr high. The path of least resistance is no longer up.
Regarding a ridiculous rally. I think you need to put in context. Many, many stocks were down 90% or at decade lows. If you look at the chart, the initial selloff took the SP-500 to about the 900 level. It traded around there from Oct to Jan. Then we had a quick washout to 666 as a result of ZERO buying interest followed by an equally quick rally back to the 900 level where we consolidated for the next 2 months. Then the rally continued. So while the market did selloff hard in Feb/Mar 09, it was corrected within 2 months, so in judging the magnitude the this rally, it would be best to use 900 as a starting point, rather than 666. Keep in mind also, that at 1200, the SP-500 is still nearly 30% below the 2007 high. The broad markets are only back to pre-Lehman levels. Ridiculous may better suit the selloff from Jan to Mar 09.
Quite clearly, it's the point of the Sept 08 market meltdown, and markets have a tendency to return to these levels. The red lines are both 1250 and 1320.
Canadian dollar making a huge move against the dollar today.................MJ
Walker Proof Digital Album 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......
It was good to see gold get decisively back over 1145 today. The charts in all time frames are looking really good right here - the consolidation is almost done and the charts are pretty much recovered from Friday's event. I think gold is ready for its next move. But not necessarily tomorrow, but soon. The move could go either way but my expectation is up. I am now at about ~130% position with a stop for the extra 30% at 1142.
What if the "market" hits 12,500 and 1,250 by November, would that keep some voters from exercising their right? If some see their 401k portfolio rebound, maybe they won't feel so disgruntled to cast a changing vote. Granted that's not what the TP's are about but some may have that "good feeling" seeing their numbers up and may not want to rock the boat. Those levels may get Joe-retail back in being always late to the party for a big blowoff near new highs.
This movement seems so contrived....when the stimulus money is done and there is no private money to catch the baton then 2011 could be ugly. My question is how long can "they" stretch the rest of the stimulus money?
Well so much for 1145. It was worth a shot overloading my account in the case I was right, but I alas I was not. Still, gold was drawn back up close to the 1145 level, so the dip today pretty much only served to finish the consolidation and prepare gold for the next move.
Saw this article which was interesting and discusses the gold to silver ratio. Evidently this guy has a newsletter and he's giving a money-back guarantee if gold doesn't hit $1300 and silver doesn't hit $21.50 by the end of July, 3 months from now.
Interesting move today in PM's with the typical 9 am smackdown followed by a direct shot slingshot back upwards ($1133 to $1153). The miners did extremely well after the initial smackdown.....a strong 2-3 days in a row now. The overall move to $1158 gives the impression gold is getting ready to test the $1165-$1171 range. But I somehow can't fathom how the Banks (& Treasury/FED) could risk a weak bond week when they can so easily crush the futures on Mon-Wednesday and profit handsomely in the process. And no doubt the banks layed down a lot of shorts yesterday and today that they'll want to profit from next week.
As strong as the move looked today for the entire PM complex (and stock/bond markets), I just can't see the PTB letting a good opportunity go to waste next week. A lot of nice upturns in the PM chart indicators and oscillators. The charts are looking much better. And then the dollar hit 82.0 early today only to get smartly beat back down in a nice ABC. Almost seems too good to be true....and too pat heading into gold options/futures expiration week. Full moon on Wednesday to boot. However it turns out, I suspect that Tuesday and Wednesday will be interesting days for PM's. Things won't be standing still.
Really nice move today, everything's looking good. We finally got the kind of energy I've been looking for. The move that started today still has more room to run, so I think RR's range is realistic (~1170).
It is concerning that there is a bond auction next week, but it doesn't ALWAYS affect gold negatively. In fact - maybe we'll see more weak bond auction results.
We're also approaching the first week of May, for which the first few days of each month has been very bullish fore many months now.
The SP500 also took off pretty good today as well, although its move may need to consolidate on Mon and Tues. The ECRI weekly leading index is also continuing to make highs.
COT numbers didn't look like major changes in open interest, but it seems to be a reversal of previous trends where speculators are getting less long on gold and long the dollar and commercials are increasing long positions and shorting the dollar.
Yes, there are lots of bond auction weeks, but not that many that coincide with the double whammy, end of month gold futures/options expirations. I went back and checked previous bond weeks that coincided with options expiration during the last week or so of the month.
In all 7 cases that applied going back to July 28-30, 2009, all but one resulted in significant downward price movement. July, October, December, January and February, and March all resulted in good hits. Sept and Nov did not have applicable bond weeks at the end of the month. In nearly each of the 7 cases gold rebounded sometime on Thursday as the last auction ended. Friday was strong as well. During the January week gold went down all week and rebounded strong that Monday, Feb. 1st. Only the week of August 25-27 did the gold price hang in fairly steady, but did not advance. In this case it didn't go any lower, but whipsawed up and down for a couple of days. It still broke back up on Thursday. The March bond week occured the week before options expiration but apparently was close enough to have the same effect (gold down sharply then rebounded that same Thursday).
So of the last 7 occurences we have 6 smackdowns and one sideways motion. In every case gold recovers and then plows through the very start of the next month on a sharp upswing. So as far as next week, I'm not going to go against this trend. But I have no doubts that coming out of bond week and at the start of a new month, things should look very good for next Thursday through the start of May. I will not that last year's late August sideways action was really the final setup for gold to break out for good ($930 to $990). So gold was building a lot of strength that the bond week could at best keep managed. It's possible that we are at a similar juncture next week as well. This bond week is for $129 BILL including a 4th auction with TIPS.
May 1st should provide us with the 10th month in a row with gold rising in price. It's a trend until it's broken. Some think that the physical delivery of gold/settlement at the end of one month/start of a new month has caused this effect (ie a shortage of physical gold to settle with at the start of a month).
A lot of bullish headlines on Kitco tonight, running 90% or greater. If it seems too good to be true........
Gold Most Likely to Double: Puru Saxena - Kitco News , Apr 23 2010 4:46PM Gold Run Not Over: Marc Faber - Kitco News, Apr 22 2010 2:28PM Kitco Daily Gold Brief - - Gold Prices Wait For Breakout - Kitco News, Apr 23 2010 12:43PM ROBUST MARKET FUNDAMENTALS ENSURE GOLD PRICE REMAINS RESILIENT IN FIRST QUARTER 2010 - Gulf Press, Apr 25 2010 11:45PM Lihir Gold Ltd rejects Newcrest proposal - Papua New Guinea National, Apr 25 2010 11:45PM Gold Fields chief calls for consolidation - Business Report, Apr 25 2010 11:35PM Hugo Chavez threatens to nationalize gold mining concessions in Venezuela - Canadian Business Magazine, Apr 25 2010 11:35PM DRDGold production soars - Business Report, Apr 25 2010 11:35PM ?R to present artifact in honour of silver mining at Expo - Prague Monitor, Apr 25 2010 11:35PM Venezuela mulls gold mining nationalization - Financial 24, Apr 25 2010 11:05PM Gold edges higher as greenback rally stalls - Brisbane Times, Apr 25 2010 11:05PM Traders urge banks to sell gold at fair price - Kathmandu Post, Apr 25 2010 10:55PM
Just found out that this week also has a pair of FOMC meetings. And the G-20 finance ministers met this past weekend. Makes for a potential quadruple-whammy week.
I have a sense that this week is going to be different somehow, and I base that on the fact that Friday's move isn't over... I just don't see it getting cut short. But that doesn't mean we can't have a good Monday and then get taken out on Tuesday. Also, the SP500 move has more upside left as well, and gold and stocks have been moving together.
While the news is extra-positive on gold, that doesn't make it a bearish sign. In fact, wasn't the news fairly bullish before last fall's run-up? I seem to recall that it was, but I don't remember for sure. GLD ETF holdings are at or near an all time high, which is to be expected as gold rises to just under it's all time high. Physical prices are still low, and I think there's plenty of money waiting to get back into gold, especially when the bullish "signs" become more clear.
Edited to add: And perhaps the FOMC meeting might be the spark gold needs to really start moving. Of ourse, it could have the opposite effect, but my bet would be on no effect (more of the same).
Zeal did an article last week that talks to current ETF holdings. GLD has been basically steady since peaking back around March 2008. SLV continued to make new inventory highs up until around March 2010. Since then it has tailed off 6% while the price of silver has advanced 7.7%. That's the biggest SLV inventory drop ever....bigger than during the 2008 fall smackdown.
I seem to recall that last fall's news leading into the September rally was on the bearish side. A lot of people missed that breakout from $930 to $990 after the summer lulled them to sleep.
FOMC meetings this week certainly shouldn't help gold until they're over on Wednesday. Also missed the fact that the G20 finance ministers met this past weekend. Wonder if they concocted anything?
While gold meandered down about $10 today it was the miner action that flagged my attention. The weakness in the weaker miners (BVN, GRS, AUY) seemed to continue. BVN was the leader today at minus 3% with "essentially" a large bearish engulfing candle (technically off by a couple of cents). BVN has been the poster child of miner downward movements as of late....at least for the weaker links. The stalwarts like IAG, EGO, NEM, AEM, etc. have prospered in spite of gold downward movements. So right now I see a bifurcation in both the seniors and juniors. Not sure which side will win out over the next few days. But usually where BVN goes, the others eventually follow. Newmont reported earnings today and Goldcorp and Barrick report Wednesday. 2 are expected to have solid reports.
Per the author Goldman had their hands all over this one. Once bankrupted, Ashanti was bought by AngloGold for peanuts. A little gold history for this week.
The Shanghai market is really coiled. Right now is breaking last weeks low and approaching the Feb low--only 3pts away. Certainly is not the prettiest of charts. Commods are ONLY betting on China. In 1997 we had the Asian contagion. Im wary of a European contagion.
Reloaded on copper short today. Also went to heaviest short position on US equities since July 08. Sensing LOTS of giddiness among US investors while most charts are up against broken uptrends, pre-LEH peaks, parabolic, or have rolling momos. Possible shooting star today on $INDU chart.
EURO trying to make a stand. A close under 132 most likely trades to 125. This thi
Have a tight stop though as Rule #1 is Never Underestimate the Power of a Mania.
<< <i>Really good article about bond crash driving gold prices. This is the scenario that I believe will happen... The timing is the only thing I can't figure out... somewhere between 6 months and 10 years...
I still think gold is coiled and ready to spring any day now, despite all of the threats from this week. Although it's possible gold may put this move off for a week and languish until then.
I saw a different chart than Zeal's. It doesn't include as wide of a range:
<< <i>... Also went to heaviest short position on US equities since July 08. Sensing LOTS of giddiness among US investors while most charts are up against broken uptrends, pre-LEH peaks, parabolic, or have rolling momos. Possible shooting star today on $INDU chart.
... >>
Wow, I'm impressed, SPY down about 2% as of this writing, that vacation to Alaska looks like it did wonders. It is a good feeling when trades go profitable immediately (something I haven't experienced much lately). Congrats.
Interesting how this played out this morning with some fine whipsawing to pick off bottom stops and then try to force new positions on the opposite move. Got 'em on both ends within a few hours.
First gold was taken down about $10 for the 2nd day in a row to $1145. This brought down the gold stocks for an initial hit with BVN and AEM leading the way. Then out of nowhere gold went springing back up to $1161 which dragged the gold stocks right back up, with some reaching new yearly highs. Newmont and Barrick came out with some excellent earning reports so that didn't hurt any. But around that same time the news of Greece being downgraded apparently brought the European markets falling down with the Dow/S&P in tow.
Gold has hung up there in the $1158-$1161 range while the Dow has sold off >150 pts. Would have expected gold to fall as well. Oil and copper taking hits, silver to some extent as well....but gold hangs probably as a currency alternative. Treasury yields falling like a stone as the trade is shifting to safety and liquidity/volatility indexes are jumping. Today's 2 yr bond auction will probably be strong. The FXE/FXY liquidity ratio had been in a descending triangle for the past few weeks. Today's action broke sharply below that base.
<< <i>Gold has hung up there in the $1158-$1161 range while the Dow has sold off >150 pts. Would have expected gold to fall as well. Oil and copper taking hits, silver to some extent as well....but gold hangs probably as a currency alternative. Treasury yields falling like a stone as the trade is shifting to safety and liquidity/volatility indexes are jumping. Today's 2 yr bond auction will probably be strong. The FXE/FXY liquidity ratio had been in a descending triangle for the past few weeks. Today's action broke sharply below that base. >>
You didn't mention the USD, up around .55 at the moment. When was the last time you saw gold hang in there like this with such a huge INCREASE in the USD index?
If this were a year ago then gold would have succumbed. But the Euro is getting hammered and it's people go to gold in times of emergencies and doubt. The whole Greek/sovereign European debt thing is relatively new. So gold holding up may be a new thing but it's no longer a surprise. If the commercials are throwing thousands of short contracts at gold right now and this is the best they can do, then they are losing the battle. For now, they are succeeding on a little whipsawing to win at each end of the spectrum.
If the commercials are throwing thousands of short contracts at gold right now and this is the best they can do, then they are losing the battle.
If that is the case (and I wouldn't be too surprised if it were), then won't gold be ready to make a major up move like a slingshot when the shorts have to unwind, even if only to a degree?
Q: Are You Printing Money? Bernanke: Not Literally
So, I'm watching Carl Levin cross examine a Goldman Sachs guy about the large net short position they had in "synthetic shorts" in mortgage backed securities..............Congress seems somewhat conversant in these heretofore little-publicized financial vehicles. I wonder how much Congress knows about the synthetic short positions in gold & silver that JP Morgan & Goldman Sachs have that are constantly ignored by CFTC? Whoops............just thinking out loud here. Or was it JP Morgan & Morgan Stanley............darn, we need a program, you can't tell all the players without a program.........
Q: Are You Printing Money? Bernanke: Not Literally
I'm still pretty new to all of this and trying to learn, but I'm curious what you guys think the future is for the EU and what the effects on gold would be? It seems to me that pressures on the EU are likely to continue to increase. I read one article today that said a German Finance official has raised the subject of Germany leaving the EU. Maybe unlikely, but I have been looking at the situation from the standpoint that Greece and possibly other smaller nations could leave the EU over time, not from the view that the major economic power would leave. Any nation leaving would certainly impact the euro and the US dollar, and continuing problems and credit downgrades with Greece and others will do so as well. So is it likely the effects of a lower euro/higher dollar will be outweighed by a shift to safety in gold like we seem to have seen today? Or am I wrong altogether and the EU and euro will be stronger going forward? It seems I can find commentary and articles arguing opposite results from nearly every scenario. Personally I would think that most are positive for gold long term, but again I'm just learning and interested in what others here think. I do realize no one can see the future with certainty and maybe there are too many unknowns to really be sure what will happen, and sorry if I am asking too many questions.
The quick drop in the SPY today almost seemed like a quick run to pick up some sell stops. I see that GS didn't drop today even though they were on "trial" and the financials were getting hammered. Gold's whipsawing today was impressive. Most surprising was the final move from $1160 up to $1169. And even more surprising to see it move to $1172 to take out the previous January high.....the last strong hurdle before working on $1195-$1205. This reinvigorated the miners and dragged most of them up to where they started the day or in some cases to new yearly highs.
The majors and intermediates displayed the most strength overall. After BVN got the tar kicked out of it on a quick 9:30-10 am 3% down move, it came back that 3% plus another 3% for good measure. What was quite different this time is that the miners followed a little bit of strength in gold rather than a lot of weakness in the general stock market. It's been quite a while since I've seen that. Usually the SM's influence had been trumping bullion. Is this a decoupling of gold and gold miners away from the dollar/stock & bond markets? I would never have expected this action today as gold options were expiring....esp. considering that all other PM's sold off today.
I only got 50% of my BVN and AUY goal on this downdraft as I was expecting it to last through tomorrow and possibly even go lower. That rapid downdraft may have been the final consolidation for the miners before they take off again. It sure doesn't feel like a headfake with volume increasing, prices rising, and gold taking out the $1171 resistance point during the toughest possible week of the month (bond week & options expiration). But I did note a couple of days ago that last August displayed that some type of underlying strength before it took off into early September ($930 to $990). That was the only combination bond/expiration week during the past 8 months that wasn't down. In fact it was a whipsawing several days much like we've seen the past few days. After that August breakout gold never looked back. This similar strength could be what takes gold back to $1200 similar to the $990 "weigh" point from last August.
Commodities may continue to move down (copper, Pall, Plat, etc.) but they've been running ahead of gold for quite some time. Both Plat and Pall could use a rest. Could be about time for gold to take the lead spot for a while especially with the Euro falling through key 1.33 support, and then even through 1.32. Today the safe havens were dollar, treasuries and gold....and maybe even gold miners.
I also track Jeff Kerns "SKI" index. And as of yesterday that went bullish on his 92-96 day USERX back index. Could be a very bullish indicator for the mining shares if this holds. And as long as the HUI/XAU don't fall more than 3-5% from here, the USERX PM fund should hold too. The USERX 92-96 back day index tracks down over the next 4 weeks (ie gold was weak during December). At least for now it is "hinting" at 4 weeks of strength potentially available before that 92-96 back Index starts to rise sharply again. Kern has noted that his 92-96 day SKI index has not forecasted a true bullish gold equities move since 2006. It also signalled the first bullish movement in miners from 2002-2003. It should be noted these initial 92-96 Index buy signals do fail fairly rountinely.
So is it likely the effects of a lower euro/higher dollar will be outweighed by a shift to safety in gold like we seem to have seen today? Or am I wrong altogether and the EU and euro will be stronger going forward?
I don't think there's much disagreement around the PMs Forum that paper currencies are headed into the toilet while gold is slowly and surely headed up. Weak currencies drive gold prices up....not the other way around. All the emergency measures being taken today to "help" the world economies are only going to bring further hurt. The only disagreement is in the timing as to when gold breaks out to new highs. Some think gold will make new highs this year while others point to 2011 or even 2012.
Stuart Thomson has an interesting view on gold in this week's article. A good read on real assets vs. toilet paper.
If you think that gold had a good day today, just take a look at the dollar chart on Sinclair's website. The dollar was strong and stronger all day long - nevertheless, gold kept climbing in spite of it.
It looks like the paradigm is shifting, to what is anyone's guess.
Q: Are You Printing Money? Bernanke: Not Literally
The dollar is basically a 57% mirror image of the Euro....at least on paper. As long as the Euro is being flushed, the dollar will appear relatively strong, regardless how many hundreds of BILLIONS or even TRILLIONs of dollars are created in the short term. Gold is no doubt sensing the flushing action and depreciation of both currrencies. It's not any different than 2 traders holding different sides of a Credit Default Swap that has no true underlying asset (only promises from each party). As one guy's position heads towards zero the other guy's paper gain looks pretty good...until the first guy defaults and there is no one to collect from. Having a bet between imaginery "assets" doesn't mean there is a true asset to collect on.
The dollar completed 5 quick waves up over the past 1-2 days. It should rest for at least overnight. It's back to the highs it reached in late March. It will probably take some work to get through this resistance level.
Yes, an impressive run for gold in light of the USD increase. If it weren't for the USD, gold would have been up another $20 at least. Gold stocks managed a gain for the day for the most part.
I think stocks were weak because the USD was so strong. If the USD takes a break here, which I expect it to do, then stocks should recover nicely over the next couple of days.
Stocks went lower for the reasons I gave last night. And in light of comments (sentiment) I've heard today, they aint finished going lower. Everyone looking for 1250 SPX means we aint getting there.
Thanks RedTiger. Like you I've been spinning my wheels for the better part of a year. Nickel and dime trades. I was getting tired of trying to run out bunt singles. Almost forgot what a 3-run homer feels like.
I dont see much difference in many equity charts today, than in gold from early Dec. Investor sentiment also seems eerily similar.
I did cover about 40% of my short position at close today as I have very, very little on the long side. Always take some profits. Still holding copper short which was up a whopping 9.6% today. The metal itself could drop another 15%.
Gold did benefit from the Euro decline. This is a very good sign. When currencies do stabilize, gold will stagnate. That wont be a bad thing either. Hopefully it will build a nice long base, for the bigger the base, the bigger the rally.
In Roadrunners link, the author wrote " If gold goes to $5000 in a short period of time, and I think it will (and that is the great danger, not how high gold goes, but the rate of change in price in time), what do you think the price of food will be, and what do you think will have happened to the standard of living?"
I would answer that a rally in gold from 250 in 2001 to 5000 in 20?? is the same increase as 35 in 1972 to 800 in 1980. Neither the price of food nor the standard of living changed much. I would also add that folks need to look at a chart of gold and silver just 6 weeks after those peaks.
I guess what irks me the most is that some gold bugs must resort to fear mongering to push an idea, especially when such scare tactics may not be needed.
Prices for many items--auto, grains, energy, homes--are at many years lows. There is no rampant inflation pushing gold higher, yet gold is higher. There is no need to scare people into thinking toilet paper will cost an ounce of silver, so why do it? Maybe they dont believe their own surmon?
I would answer that a rally in gold from 250 in 2001 to 5000 in 20?? is the same increase as 35 in 1972 to 800 in 1980. Neither the price of food nor the standard of living changed much. I would also add that folks need to look at a chart of gold and silver just 6 weeks after those peaks.
Those 6 weeks after the peak in early 1980 came on the heels of a multi-year rising of interest rates to mid double digit levels....not following a 28 year decline in rates to low single digits. At least back then the economy could withstand rising rates....not so today. The other major differences back then was that our economy, banks, govt, states, and individuals were on much better financial footing. Of course there is also the small matter of $1 QUAD in otc derivatives still left to unwind. We're not at $5000 gold yet but only $1100. Let's not get too excited about the potential downside in commodities just after completing the first turn in the race followed by stumbling (ie 2008) in the middle of the backstretch. There's a lot of ground still to cover. The 2 charts in the linked article below don't have all that much in common yet.
Prices for many items--auto, grains, energy, homes--are at many years lows. There is no rampant inflation pushing gold higher, yet gold is higher.
Those same commodities are also up 50-400% if one starts the charts back at 2002-2005 when the runs first began. The CCI is up 46% since November 2009. The parabolic move up and down in 2008 can be effectively tossed out due to trading "fever" and massive fund speculation on Wall Street. With that aberration negated commodities have been moving up for 5-8 years. Is that going to stop because of the Euro crisis? Homes, autos, computers, appliances, etc. are not commodities. Money has been gravitating towards harder/speculative assets for quite some time now. Isn't that representative of what inflation is all about as people look to find places to protect/earn with their money? Even lowly natural gas is up 2X since it's bottom back around 2002. Oil is up 4X. Most metals are up at least 2X. Grains are up 50-100% or more since 2005-2006.
The Gold to Silver ratio has finally broken out of this sideways funk of the past several weeks and has gone parabolic. It's definitely going to make a move to overbought status on the slow stochastic. That could take days or weeks. What's interesting is that the action now looks very similar to what it did during the Sept-Dec 2009 period. It also meandered sideways for a while in early September and then shot up towards the end of the month only to fall back as October began. That same pattern sort of followed in November. In case anyone forgot, gold was running strong from Sept-Oct as GSR was rising. It's not what was expected but it happened. We seem to be on a similar course right now. Rather than a crashing of both gold and silver we may be in store for gold rising much more than silver.
Still refreshing today to see gold/silver stocks follow gold rather than the stock market or GSR. Maybe someone finally figured out that those guys are actually mining real gold and not just paper chits with the letters "IOUAU" stamped on them. Today's strong earning's reports from Barrick, Goldcorp, and Hecla didn't hurt any. Interesting to see the major silver miners pushing noticeably higher in the face of weaker silver bullion. Even they are following gold.
<< <i>Prices for many items--auto, grains, energy, homes--are at many years lows. There is no rampant inflation pushing gold higher, yet gold is higher. >>
Those same commodities are also up 50-400% if one starts the charts back at 2002-2005 when the runs first began. The CCI is up 46% since November 2009. >>
I disagree that autos are at any kind of a low, as my fairly recent efforts to replace 2003-2004 vehicles with similar replacements showed that prices have increased at least 10%. The housing market has been in an aberration since 2004 or before, so you can't really use housing as indicator; however, if you consider housing prices before the aberration (2002-2003), then housing prices had increased significantly over the previous couple of decades. Certainly, the cost to build has not decreased, especially if you factor out land.
I don't see how energy is at any kind of a low. My electric company has had rate increases every couple of years pretty steadily, and RR already mentioned oil & gas prices but you could easily add coal & uranium. Solar might be about the only form of energy that is cheaper.
And I still don't think you get an honest picture when you look at some of those asset classes, particularly over the past 20-30 years. Many industries have had large one-time cost reductions due to advances in technology and off-shoring. Further advances in technology are unlikely to push prices down further (it's hard to fathom the production of many items getting more efficient when it is already highly mechanized), and it will be hard to find cheaper sources of manufacturing labor than those already being used that weren't in use (to this extent) 10-20 years ago. Mining and farming technology has continued to improve efficiency, yet those costs, as RR has demonstrated, have continued to increase. I'm sure they'd be much higher without those efficiency improvements.
Everything over 10-20 years is higher. Thats the plan. Im simply stating that most commodites are barely higher than their 2006 peaks. In case you guys dont understand, im saying that gold has performed well in light of benign inflation, so to my gold bugs friends "please stop the inflation fear mongering". Im not singling out anyone on these boards, but the newsletter guys who push an agenda. Find the "real" reason why metals are going higher and educate your readers. Fear benefits no one.
Rant over.
Covered some shorts yest morn. Still about 30% short. Not doing that bad today in light of a 120 pt rally in the DOW as shorts are concentrated in small-cap--underperforming market today, and basic materials---copper, nickel, coal-- which are largely lower. SP-500 has retraced about 62% of the downmove and thats probably all she wrote. I cant see new money coming into the market Friday, ahead of what may be a contentious weekend in Europe.
Unlike yesterday when the market tanked and gold jumped, today the market rallies and gold is flat. At the same time, silver and platinum rally with the market, as good industrial metals should. It does look like silver and platinum are tracking the expectations for the economy. What happens then with a double dip in the economy? Argh.
Gold seems to be reacting simultaneously to Europe's struggle and to the dollar's revitalized status as a safe haven (!!!!????) as well. Argh.
Gone, it seems - are the good old days when we could count on the stability of central bank price manipulation of gold.
Why, oh why, can't the government and the bankers just tell us the truth about what's going on? Just kiddin.
Q: Are You Printing Money? Bernanke: Not Literally
The SM's recovery over 1193 today signals to me that there is no big drop coming and the rally is still fully underway. I picked up a few SPY calls just because it was too tempting. I expect the rally to continue at least into mid-May, unless today is just a head-fake.
I think it's safe to say that gold has de-coupled from the USD, at least for a little while, and that is VERY bullish IMO. I took advantage of the dip in gold this morning to pick up another futures contract around 1163. I still maintain that the big move has begun (and gold is up over $50 since the beginning of the month), just not as quickly as I had anticipated but that just means that the rest of the move will be that much more intense.
Comments
I have no idea if the markets will top out in 10 weeks or 10 months, or if they already have. I just found it interesting that this indicator took 10 years to reach a peak, especially given the overbought markets we've had since then. I do see many sectors that are very top heavy and have included a chart of one. Sometimes Christmas comes early. Good luck. Chart via Esignal.
Knowledge is the enemy of fear
<< <i>That is quite an ominous chart, cohodk. I don't think the markets are ready to topple just yet, as SP500 at 1250 looked to me to be an important level that I feel it's destined to be reached. We're actually not that far... I'll be surprised if the markets to fall before reaching 1250, but it is of course possible. My only question is if it will take gold with it or send gold shooting up the other direction. >>
It is very possible that the markets will undergo a cycle of rotation. Weak sectors rise while strong fall. Net result is a sideways market. Or, the bottom could just fall out.
Seems I hear the 1250 number mentioned quite frequently. Well, we did hit 1214, or only 3% away. Money managers may begin to ask themselves, "Is it worth it to wait for another 3%?"
The Naz 100 came with 10% of the 2007 highs as did the S&P mid cap 400.
Knowledge is the enemy of fear
roadrunner
Take a look at the CRB index on a weekly basis with candlesticks. Focus on Jan this year. A bearish engulfing top, followed by 3 black crows? Hopefully that formation has been resolved with a 3 month consolidation pattern. Bollinger bands are tightening and almost all my momo indicators are neutral, so I would expect a substantial move--either up or down--in the next 3 months.
Knowledge is the enemy of fear
<< <i>One uplifting thing about that chart is that the 45,25,25 long term stochastic looks ready to "lock in" much the same way it did during the second summer 2009 leg. It's high enough and flat enough right now to weather a trip down and still stay >80. An each of the last 3 waves has demonstrated higher highs and lows. Not a bad thing to have.
roadrunner >>
Surely this does(did) indicate strength. Overbought is good, but overbought for an extended time is not. The RSI on $RLX--retail index hit 85. Highest I could find in the last 15 years was 83. RTH is also within just 4% of its 2007 high. Do you think retail should be this high in this economy? This does not indicate a correction is near, but I can say with strong confidence that there aint no way in hell retail goes higher over the next month or two. I see at least 8% downside.
There are other charts with similar patterns. Happy trading.
Knowledge is the enemy of fear
This 13 month long up move in the stock market, I have described as a "ridiculous rally," where overbought often becomes more overbought. To me, the relatively tight price action on the most recent move up often means big money is doing the buying. Big money sometimes has no choice. They sometimes are compelled to buy because they have money coming in and must put it into certain stocks because of the guidelines of their specific fund.
/edit to add: where is that new money coming from? Some might be from Federal income tax refunds. The average Federal refund is 50% higher than last year. Refunds will continue to trickle out for more than a month past the April 15th filing deadline. Some of that refund money gets plowed directly into the stock and bond markets.
<< <i>Take a look at the CRB index on a weekly basis with candlesticks. Focus on Jan this year. A bearish engulfing top, followed by 3 black crows? Hopefully that formation has been resolved with a 3 month consolidation pattern. Bollinger bands are tightening and almost all my momo indicators are neutral, so I would expect a substantial move--either up or down--in the next 3 months. >>
Gold volatility index same thing...
With SP500, there is the 1250 target but it's actually a range... 1250-1320. So I'll be looking to reduce positions once we cross 1250, but I think the move will have potential to penetrate higher, if only briefly.
Edited to add: Yes, the ridiculous rally... I agree, I think everyone agrees. But what's causing this rally? It's the fact that there's so much money sloshing around. So as long as that prevails - and there's no real reason to think that's going to change, overbought will probably become overboughter... the only problem is that with such a false sense of foundation for this rally, the market is pretty skittish.
Which of these do you find to be a more accurate representation of what is happening in overall commodities? I see different traders using different indexes. CCI seems to show up more often among the PM analysts.
roadrunner
Bond Crash to Drive Gold
<< <i>Cohodk, the CRB chart has the general look of an ascending triangle over the past 4 months. Not perfect, but presentable. Other commodity indexes (GSCI and CCI) look a bit different but same general shapes.
Which of these do you find to be a more accurate representation of what is happening in overall commodities? I see different traders using different indexes. CCI seems to show up more often among the PM analysts.
roadrunner >>
I prefer the CCI. Both are roughly similar and neither looks particularly bearish. I do see a potential bottom in many of the grains indices. The PM index looks neutral, so maybe soft commods push inflation fears?
Went back at looked for a reason why everyone is looking for 1250. I really couldnt find one. What I did find....the 200 week moving average at 1224. A 62% retracement at 1230. A market that is at the top of a line connecting the tops from Sept. A daily momo that is rolling over and an RSI reading at a 6 yr high. The path of least resistance is no longer up.
Regarding a ridiculous rally. I think you need to put in context. Many, many stocks were down 90% or at decade lows. If you look at the chart, the initial selloff took the SP-500 to about the 900 level. It traded around there from Oct to Jan. Then we had a quick washout to 666 as a result of ZERO buying interest followed by an equally quick rally back to the 900 level where we consolidated for the next 2 months. Then the rally continued. So while the market did selloff hard in Feb/Mar 09, it was corrected within 2 months, so in judging the magnitude the this rally, it would be best to use 900 as a starting point, rather than 666. Keep in mind also, that at 1200, the SP-500 is still nearly 30% below the 2007 high. The broad markets are only back to pre-Lehman levels. Ridiculous may better suit the selloff from Jan to Mar 09.
Knowledge is the enemy of fear
Quite clearly, it's the point of the Sept 08 market meltdown, and markets have a tendency to return to these levels.
The red lines are both 1250 and 1320.
I see it and , for all intents purpose, we're there. Sideways +/- 5% market for the rest of the yr. Time to go on vacation.
Knowledge is the enemy of fear
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>Canadian dollar making a huge move against the dollar today.................MJ >>
O Canada
They may raise rates sooner than expected. Thats great news. Gold loves rising rates.
Knowledge is the enemy of fear
Platinum and Palladium are on fire.
This movement seems so contrived....when the stimulus money is done and there is no private money to catch the baton then 2011 could be ugly. My question is how long can "they" stretch the rest of the stimulus money?
R95
Saw this article which was interesting and discusses the gold to silver ratio. Evidently this guy has a newsletter and he's giving a money-back guarantee if gold doesn't hit $1300 and silver doesn't hit $21.50 by the end of July, 3 months from now.
Silver The Most Bullish Currency
Sensing a lot of apathy in all markets. Not comfortable. Like cash.
Knowledge is the enemy of fear
As strong as the move looked today for the entire PM complex (and stock/bond markets), I just can't see the PTB letting a good opportunity go to waste next week. A lot of nice upturns in the PM chart indicators and oscillators. The charts are looking much better. And then the dollar hit 82.0 early today only to get smartly beat back down in a nice ABC. Almost seems too good to be true....and too pat heading into gold options/futures expiration week. Full moon on Wednesday to boot. However it turns out, I suspect that Tuesday and Wednesday will be interesting days for PM's. Things won't be standing still.
roadrunner
It is concerning that there is a bond auction next week, but it doesn't ALWAYS affect gold negatively. In fact - maybe we'll see more weak bond auction results.
We're also approaching the first week of May, for which the first few days of each month has been very bullish fore many months now.
The SP500 also took off pretty good today as well, although its move may need to consolidate on Mon and Tues. The ECRI weekly leading index is also continuing to make highs.
COT numbers didn't look like major changes in open interest, but it seems to be a reversal of previous trends where speculators are getting less long on gold and long the dollar and commercials are increasing long positions and shorting the dollar.
Overall, things are looking good for the upside.
In all 7 cases that applied going back to July 28-30, 2009, all but one resulted in significant downward price movement. July, October, December, January and February, and March all resulted in good hits. Sept and Nov did not have applicable bond weeks at the end of the month. In nearly each of the 7 cases gold rebounded sometime on Thursday as the last auction ended. Friday was strong as well. During the January week gold went down all week and rebounded strong that Monday, Feb. 1st. Only the week of August 25-27 did the gold price hang in fairly steady, but did not advance. In this case it didn't go any lower, but whipsawed up and down for a couple of days. It still broke back up on Thursday. The March bond week occured the week before options expiration but apparently was close enough to have the same effect (gold down sharply then rebounded that same Thursday).
So of the last 7 occurences we have 6 smackdowns and one sideways motion. In every case gold recovers and then plows through the very start of the next month on a sharp upswing. So as far as next week, I'm not going to go against this trend. But I have no doubts that coming out of bond week and at the start of a new month, things should look very good for next Thursday through the start of May. I will not that last year's late August sideways action was really the final setup for gold to break out for good ($930 to $990). So gold was building a lot of strength that the bond week could at best keep managed. It's possible that we are at a similar juncture next week as well. This bond week is for $129 BILL including a 4th auction with TIPS.
May 1st should provide us with the 10th month in a row with gold rising in price. It's a trend until it's broken. Some think that the physical delivery of gold/settlement at the end of one month/start of a new month has caused this effect (ie a shortage of physical gold to settle with at the start of a month).
roadrunner
Gold Most Likely to Double: Puru Saxena - Kitco News , Apr 23 2010 4:46PM
Gold Run Not Over: Marc Faber - Kitco News, Apr 22 2010 2:28PM
Kitco Daily Gold Brief - - Gold Prices Wait For Breakout - Kitco News, Apr 23 2010 12:43PM
ROBUST MARKET FUNDAMENTALS ENSURE GOLD PRICE REMAINS RESILIENT IN FIRST QUARTER 2010 - Gulf Press, Apr 25 2010 11:45PM
Lihir Gold Ltd rejects Newcrest proposal - Papua New Guinea National, Apr 25 2010 11:45PM
Gold Fields chief calls for consolidation - Business Report, Apr 25 2010 11:35PM
Hugo Chavez threatens to nationalize gold mining concessions in Venezuela - Canadian Business Magazine, Apr 25 2010 11:35PM
DRDGold production soars - Business Report, Apr 25 2010 11:35PM
?R to present artifact in honour of silver mining at Expo - Prague Monitor, Apr 25 2010 11:35PM
Venezuela mulls gold mining nationalization - Financial 24, Apr 25 2010 11:05PM
Gold edges higher as greenback rally stalls - Brisbane Times, Apr 25 2010 11:05PM
Traders urge banks to sell gold at fair price - Kathmandu Post, Apr 25 2010 10:55PM
Just found out that this week also has a pair of FOMC meetings. And the G-20 finance ministers met this past weekend. Makes for a potential quadruple-whammy week.
roadrunner
While the news is extra-positive on gold, that doesn't make it a bearish sign. In fact, wasn't the news fairly bullish before last fall's run-up? I seem to recall that it was, but I don't remember for sure. GLD ETF holdings are at or near an all time high, which is to be expected as gold rises to just under it's all time high. Physical prices are still low, and I think there's plenty of money waiting to get back into gold, especially when the bullish "signs" become more clear.
Edited to add: And perhaps the FOMC meeting might be the spark gold needs to really start moving. Of ourse, it could have the opposite effect, but my bet would be on no effect (more of the same).
Zeal on GLD and SLV inventories
I seem to recall that last fall's news leading into the September rally was on the bearish side. A lot of people missed that breakout from $930 to $990 after the summer lulled them to sleep.
FOMC meetings this week certainly shouldn't help gold until they're over on Wednesday. Also missed the fact that the G20 finance ministers met this past weekend. Wonder if they concocted anything?
While gold meandered down about $10 today it was the miner action that flagged my attention. The weakness in the weaker miners (BVN, GRS, AUY) seemed to continue. BVN was the leader today at minus 3% with "essentially" a large bearish engulfing candle (technically off by a couple of cents). BVN has been the poster child of miner downward movements as of late....at least for the weaker links. The stalwarts like IAG, EGO, NEM, AEM, etc. have prospered in spite of gold downward movements. So right now I see a bifurcation in both the seniors and juniors. Not sure which side will win out over the next few days. But usually where BVN goes, the others eventually follow. Newmont reported earnings today and Goldcorp and Barrick report Wednesday. 2 are expected to have solid reports.
How Goldman Sachs helped bankrupt Ashanti Gold in 1999.
Per the author Goldman had their hands all over this one. Once bankrupted, Ashanti was bought by AngloGold for peanuts. A little gold history for this week.
roadrunner
Reloaded on copper short today. Also went to heaviest short position on US equities since July 08. Sensing LOTS of giddiness among US investors while most charts are up against broken uptrends, pre-LEH peaks, parabolic, or have rolling momos. Possible shooting star today on $INDU chart.
EURO trying to make a stand. A close under 132 most likely trades to 125. This thi
Have a tight stop though as Rule #1 is Never Underestimate the Power of a Mania.
Knowledge is the enemy of fear
<< <i>Really good article about bond crash driving gold prices. This is the scenario that I believe will happen... The timing is the only thing I can't figure out... somewhere between 6 months and 10 years...
Bond Crash to Drive Gold >>
The walls of Jericho are already shaking. Less than a year I think.
Free Trial
I saw a different chart than Zeal's. It doesn't include as wide of a range:
<< <i>... Also went to heaviest short position on US equities since July 08. Sensing LOTS of giddiness among US investors while most charts are up against broken uptrends, pre-LEH peaks, parabolic, or have rolling momos. Possible shooting star today on $INDU chart.
...
>>
Wow, I'm impressed, SPY down about 2% as of this writing, that vacation to Alaska looks like it did wonders. It is a good feeling when trades go profitable immediately (something I haven't experienced much lately). Congrats.
First gold was taken down about $10 for the 2nd day in a row to $1145. This brought down the gold stocks for an initial hit with BVN and AEM leading the way. Then out of nowhere gold went springing back up to $1161 which dragged the gold stocks right back up, with some reaching new yearly highs. Newmont and Barrick came out with some excellent earning reports so that didn't hurt any. But around that same time the news of Greece being downgraded apparently brought the European markets falling down with the Dow/S&P in tow.
Gold has hung up there in the $1158-$1161 range while the Dow has sold off >150 pts. Would have expected gold to fall as well. Oil and copper taking hits, silver to some extent as well....but gold hangs probably as a currency alternative. Treasury yields falling like a stone as the trade is shifting to safety and liquidity/volatility indexes are jumping. Today's 2 yr bond auction will probably be strong. The FXE/FXY liquidity ratio had been in a descending triangle for the past few weeks. Today's action broke sharply below that base.
roadrunner
<< <i>Gold has hung up there in the $1158-$1161 range while the Dow has sold off >150 pts. Would have expected gold to fall as well. Oil and copper taking hits, silver to some extent as well....but gold hangs probably as a currency alternative. Treasury yields falling like a stone as the trade is shifting to safety and liquidity/volatility indexes are jumping. Today's 2 yr bond auction will probably be strong. The FXE/FXY liquidity ratio had been in a descending triangle for the past few weeks. Today's action broke sharply below that base. >>
You didn't mention the USD, up around .55 at the moment. When was the last time you saw gold hang in there like this with such a huge INCREASE in the USD index?
roadrunner
If that is the case (and I wouldn't be too surprised if it were), then won't gold be ready to make a major up move like a slingshot when the shorts have to unwind, even if only to a degree?
I knew it would happen.
I knew it would happen.
It seems I can find commentary and articles arguing opposite results from nearly every scenario. Personally I would think that most are positive for gold long term, but again I'm just learning and interested in what others here think. I do realize no one can see the future with certainty and maybe there are too many unknowns to really be sure what will happen, and sorry if I am asking too many questions.
The majors and intermediates displayed the most strength overall. After BVN got the tar kicked out of it on a quick 9:30-10 am 3% down move, it came back that 3% plus another 3% for good measure. What was quite different this time is that the miners followed a little bit of strength in gold rather than a lot of weakness in the general stock market. It's been quite a while since I've seen that. Usually the SM's influence had been trumping bullion. Is this a decoupling of gold and gold miners away from the dollar/stock & bond markets? I would never have expected this action today as gold options were expiring....esp. considering that all other PM's sold off today.
I only got 50% of my BVN and AUY goal on this downdraft as I was expecting it to last through tomorrow and possibly even go lower. That rapid downdraft may have been the final consolidation for the miners before they take off again. It sure doesn't feel like a headfake with volume increasing, prices rising, and gold taking out the $1171 resistance point during the toughest possible week of the month (bond week & options expiration). But I did note a couple of days ago that last August displayed that some type of underlying strength before it took off into early September ($930 to $990). That was the only combination bond/expiration week during the past 8 months that wasn't down. In fact it was a whipsawing several days much like we've seen the past few days. After that August breakout gold never looked back. This similar strength could be what takes gold back to $1200 similar to the $990 "weigh" point from last August.
Commodities may continue to move down (copper, Pall, Plat, etc.) but they've been running ahead of gold for quite some time. Both Plat and Pall could use a rest. Could be about time for gold to take the lead spot for a while especially with the Euro falling through key 1.33 support, and then even through 1.32. Today the safe havens were dollar, treasuries and gold....and maybe even gold miners.
I also track Jeff Kerns "SKI" index. And as of yesterday that went bullish on his 92-96 day USERX back index. Could be a very bullish indicator for the mining shares if this holds. And as long as the HUI/XAU don't fall more than 3-5% from here, the USERX PM fund should hold too. The USERX 92-96 back day index tracks down over the next 4 weeks (ie gold was weak during December). At least for now it is "hinting" at 4 weeks of strength potentially available before that 92-96 back Index starts to rise sharply again. Kern has noted that his 92-96 day SKI index has not forecasted a true bullish gold equities move since 2006. It also signalled the first bullish movement in miners from 2002-2003. It should be noted these initial 92-96 Index buy signals do fail fairly rountinely.
roadrunner
I don't think there's much disagreement around the PMs Forum that paper currencies are headed into the toilet while gold is slowly and surely headed up. Weak currencies drive gold prices up....not the other way around. All the emergency measures being taken today to "help" the world economies are only going to bring further hurt. The only disagreement is in the timing as to when gold breaks out to new highs. Some think gold will make new highs this year while others point to 2011 or even 2012.
Stuart Thomson has an interesting view on gold in this week's article. A good read on real assets vs. toilet paper.
Thomson on gold
roadrunner
It looks like the paradigm is shifting, to what is anyone's guess.
I knew it would happen.
The dollar completed 5 quick waves up over the past 1-2 days. It should rest for at least overnight. It's back to the highs it reached in late March. It will probably take some work to get through this resistance level.
roadrunner
I think stocks were weak because the USD was so strong. If the USD takes a break here, which I expect it to do, then stocks should recover nicely over the next couple of days.
Santelli gives today's 2 year bond auction a C+.
He makes some good points. You'd think the results would be better given the short term of the bonds (2 years) and the turmoil in Greece.
<< <i>Stuart Thomson has an interesting view on gold in this week's article. A good read on real assets vs. toilet paper.
Thomson on gold
roadrunner >>
Thanks, interesting article.
Thanks RedTiger. Like you I've been spinning my wheels for the better part of a year. Nickel and dime trades. I was getting tired of trying to run out bunt singles. Almost forgot what a 3-run homer feels like.
I dont see much difference in many equity charts today, than in gold from early Dec. Investor sentiment also seems eerily similar.
I did cover about 40% of my short position at close today as I have very, very little on the long side. Always take some profits. Still holding copper short which was up a whopping 9.6% today. The metal itself could drop another 15%.
Gold did benefit from the Euro decline. This is a very good sign. When currencies do stabilize, gold will stagnate. That wont be a bad thing either. Hopefully it will build a nice long base, for the bigger the base, the bigger the rally.
In Roadrunners link, the author wrote " If gold goes to $5000 in a short period of time, and I think it will (and that is the great danger, not how high gold goes, but the rate of change in price in time), what do you think the price of food will be, and what do you think will have happened to the standard of living?"
I would answer that a rally in gold from 250 in 2001 to 5000 in 20?? is the same increase as 35 in 1972 to 800 in 1980. Neither the price of food nor the standard of living changed much. I would also add that folks need to look at a chart of gold and silver just 6 weeks after those peaks.
I guess what irks me the most is that some gold bugs must resort to fear mongering to push an idea, especially when such scare tactics may not be needed.
Prices for many items--auto, grains, energy, homes--are at many years lows. There is no rampant inflation pushing gold higher, yet gold is higher. There is no need to scare people into thinking toilet paper will cost an ounce of silver, so why do it? Maybe they dont believe their own surmon?
Knowledge is the enemy of fear
Those 6 weeks after the peak in early 1980 came on the heels of a multi-year rising of interest rates to mid double digit levels....not following a 28 year decline in rates to low single digits. At least back then the economy could withstand rising rates....not so today. The other major differences back then was that our economy, banks, govt, states, and individuals were on much better financial footing. Of course there is also the small matter of $1 QUAD in otc derivatives still left to unwind. We're not at $5000 gold yet but only $1100. Let's not get too excited about the potential downside in commodities just after completing the first turn in the race followed by stumbling (ie 2008) in the middle of the backstretch. There's a lot of ground still to cover. The 2 charts in the linked article below don't have all that much in common yet.
Chart of 1970's vs 2000's gold
Prices for many items--auto, grains, energy, homes--are at many years lows. There is no rampant inflation pushing gold higher, yet gold is higher.
Those same commodities are also up 50-400% if one starts the charts back at 2002-2005 when the runs first began. The CCI is up 46% since November 2009. The parabolic move up and down in 2008 can be effectively tossed out due to trading "fever" and massive fund speculation on Wall Street. With that aberration negated commodities have been moving up for 5-8 years. Is that going to stop because of the Euro crisis? Homes, autos, computers, appliances, etc. are not commodities. Money has been gravitating towards harder/speculative assets for quite some time now. Isn't that representative of what inflation is all about as people look to find places to protect/earn with their money? Even lowly natural gas is up 2X since it's bottom back around 2002. Oil is up 4X. Most metals are up at least 2X. Grains are up 50-100% or more since 2005-2006.
The Gold to Silver ratio has finally broken out of this sideways funk of the past several weeks and has gone parabolic. It's definitely going to make a move to overbought status on the slow stochastic. That could take days or weeks. What's interesting is that the action now looks very similar to what it did during the Sept-Dec 2009 period. It also meandered sideways for a while in early September and then shot up towards the end of the month only to fall back as October began. That same pattern sort of followed in November. In case anyone forgot, gold was running strong from Sept-Oct as GSR was rising. It's not what was expected but it happened. We seem to be on a similar course right now. Rather than a crashing of both gold and silver we may be in store for gold rising much more than silver.
Still refreshing today to see gold/silver stocks follow gold rather than the stock market or GSR. Maybe someone finally figured out that those guys are actually mining real gold and not just paper chits with the letters "IOUAU" stamped on them. Today's strong earning's reports from Barrick, Goldcorp, and Hecla didn't hurt any. Interesting to see the major silver miners pushing noticeably higher in the face of weaker silver bullion. Even they are following gold.
roadrunner
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<< <i>Prices for many items--auto, grains, energy, homes--are at many years lows. There is no rampant inflation pushing gold higher, yet gold is higher. >>
Those same commodities are also up 50-400% if one starts the charts back at 2002-2005 when the runs first began. The CCI is up 46% since November 2009. >>
I disagree that autos are at any kind of a low, as my fairly recent efforts to replace 2003-2004 vehicles with similar replacements showed that prices have increased at least 10%. The housing market has been in an aberration since 2004 or before, so you can't really use housing as indicator; however, if you consider housing prices before the aberration (2002-2003), then housing prices had increased significantly over the previous couple of decades. Certainly, the cost to build has not decreased, especially if you factor out land.
I don't see how energy is at any kind of a low. My electric company has had rate increases every couple of years pretty steadily, and RR already mentioned oil & gas prices but you could easily add coal & uranium. Solar might be about the only form of energy that is cheaper.
And I still don't think you get an honest picture when you look at some of those asset classes, particularly over the past 20-30 years. Many industries have had large one-time cost reductions due to advances in technology and off-shoring. Further advances in technology are unlikely to push prices down further (it's hard to fathom the production of many items getting more efficient when it is already highly mechanized), and it will be hard to find cheaper sources of manufacturing labor than those already being used that weren't in use (to this extent) 10-20 years ago. Mining and farming technology has continued to improve efficiency, yet those costs, as RR has demonstrated, have continued to increase. I'm sure they'd be much higher without those efficiency improvements.
Rant over.
Covered some shorts yest morn. Still about 30% short. Not doing that bad today in light of a 120 pt rally in the DOW as shorts are concentrated in small-cap--underperforming market today, and basic materials---copper, nickel, coal-- which are largely lower. SP-500 has retraced about 62% of the downmove and thats probably all she wrote. I cant see new money coming into the market Friday, ahead of what may be a contentious weekend in Europe.
May add to large cap short.
Knowledge is the enemy of fear
Gold seems to be reacting simultaneously to Europe's struggle and to the dollar's revitalized status as a safe haven (!!!!????) as well. Argh.
Gone, it seems - are the good old days when we could count on the stability of central bank price manipulation of gold.
Why, oh why, can't the government and the bankers just tell us the truth about what's going on? Just kiddin.
I knew it would happen.
I think it's safe to say that gold has de-coupled from the USD, at least for a little while, and that is VERY bullish IMO. I took advantage of the dip in gold this morning to pick up another futures contract around 1163. I still maintain that the big move has begun (and gold is up over $50 since the beginning of the month), just not as quickly as I had anticipated but that just means that the rest of the move will be that much more intense.