Options
***JUNE 2010 Gold and Silver Stocks/Options/Futures trading thread***
ProofCollection
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The next trading month is upon us, so here's a new thread.
My profit for May futures trading was 15.4%, as I was caught off guard a little bit by the steep correction. At one point I was up 100%+ with gold above 1240.
Get ready Mon night or Tuesday for gold's next move, which I expect to be up.
My profit for May futures trading was 15.4%, as I was caught off guard a little bit by the steep correction. At one point I was up 100%+ with gold above 1240.
Get ready Mon night or Tuesday for gold's next move, which I expect to be up.
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Comments
The long weekend is a good time for some perspective, as folks have time to think without the noise of the markets and the news cycle chattering away.
Here is the five year chart:
Some have cited a recent cup-and-handle formation on the gold chart. On the five year chart there are two base formations, each over a year long. One launched gold from $700 in September 2007, the next from $1000 in October 2009.
On the one year chart:
The most recent base at $1150 is about 14 weeks long. I would interpret the recent move as part of the launch from the year-long base at $1000, vs. a new up move. In general, the longer the base, the more fuel there is for the launch.
Both gold and U. S. Treasuries had a positive month in May, with TLT nudging out GLD in terms of one-month performance, with stocks as measured by SPY down over 8%. It remains to be seen whether gold and bonds can continue to rally together, because, in the long term, that is extremely unlikely. For those traders looking to short bonds via buying TBT or similar, this might be a decent entry point.
The 1225-1230 area is a key area of resistance. A breakout over this level signals the beginning of a much bigger move. I still don't think low to mid $1300's within the next 2 weeks (or at least by the end of the month) is unreasonable. I am adding to my position on a breakout over 1230.
Spent last weekend in Vegas. The place was hopping, but it was a holiday weekend with several big events in town. The casinos were busy with table limits fairly high on Sat & Sun nights. Parking garages were full or near capacity at night. Not sure if that's any economic indication or not. I gambled hard all weekend and broke even. Tried my hand at the WSOP, got to play with Phil Helmuth but I did not make it far enough to cash.
The above rhyming pattern is also present in the 10/2 TBond yield ratio which has lead a number of the sharp gold rallies, esp. the June-November 2009 rally. The fractals from June-November 2009 are very similar to the Dec-May 2010 fractals. The 2009 fractal was essentially an ascending triangle. The current one is more like a descending triangle or even a rectangle. But both made 2 major moves below the 50 dma and then lead 50 dma higher until following peaking.
roadrunner
Last night I saw the SP500 down below 1070 and it looked like a good opporunity to get long with minimal risk and it worked out well. Went long at 1069 and sold at 1093, for a $24 gain.
Looking at lots of other charts and timing models, a high for gold is predicted for Thursday, so it could be interesting to see how that works out. Perhaps a surge to 1250, followed by a correction back to 1230 and then onward and upward to $1300's by the middle of the month.
Looking at charts for stocks, stocks are looking extremely oversold and a lot of indicators are turning. This could be seen as a pause before more downside, but I think the bull rally is still intact and about to take off again. Looks like a great buy opportunity here. Since bonds are very overbought, money should be leaving bonds for stocks. Copper's looking like a buy too due to extremely low levels of open interest. I'm sticking with gold for now though.
The USD looks like it has topped out and is in for some short term downside which should also serve to boost gold a bit. It will help gold get over $1300. One headwind on gold could be the 1000euro mark, but if the USD declines then the euro price can hold while gold in USD increases. Some of the charts I saw showed the COT open interest levels have reached extremes which almost always accompany strong reversals. Such is the case for the USD which is looking bearish. Gold is overbought which could be problematic, but gold has room to become more overbought and there are no indications of any change in trend yet.
One thing's for sure. With lots of people calling for a steep decline in stocks, it's not likely to happen. The converse could be said about gold. Not a lot of near-term bullishness out there, so the conditions are ripe for more immediate upside.
My account was up 6.4%, which was all common stock or etf trading. Gotta love down markets, eh?
Didnt trade gold at all during the month--stock market had much more potential.
Did short a little gold via DZZ yest and sold this morn. Made 2.1% or 23c. Momo is weakening on gold as stock and bond markets around the globe stabilize.
Maybe a H&S on silver?
Knowledge is the enemy of fear
Getting close.
Is gold breaking the uptrend(parabolic?) move from late March?
Knowledge is the enemy of fear
<< <i>Is gold breaking the uptrend(parabolic?) move from late March? >>
I don't think so. After today the charts are charged up and ready for the next move, and a move over 1230 will be a great indication that the next move up is ready to resume. I'm still expecting $1300+ in the next few weeks. In fact, the timing cycles show that gold could have a solid run until Jun 18 or so. What's even better is that I don't think very many are bullish on gold right now, so conditions are ripe.
As far as stocks, the close today was lower than a 38.2% retracement of the last move up, so a correction down to 1010 (SP500) could be in store. However, the markets are so volatile right now I'm not convinced that this is a solid indicator. Best just to be on the sidelines at the moment. A nice move up wouldn't surprise me, but neither would a drop to 1010.
<< <i>
<< <i>Is gold breaking the uptrend(parabolic?) move from late March? >>
I don't think so. After today the charts are charged up and ready for the next move, and a move over 1230 will be a great indication that the next move up is ready to resume. I'm still expecting $1300+ in the next few weeks. In fact, the timing cycles show that gold could have a solid run until Jun 18 or so. What's even better is that I don't think very many are bullish on gold right now, so conditions are ripe. >>
Interesting. All I hear, especially from the business networks like CNBC is you better buy gold. People are even saying the is NO REASON gold could ever go lower. That kind of talk concerns me.
Gold went right to the uptrend line from March and bounced. Lets see what see does Monday.
Knowledge is the enemy of fear
<< <i>Interesting. All I hear, especially from the business networks like CNBC is you better buy gold. People are even saying the is NO REASON gold could ever go lower. That kind of talk concerns me.
Gold went right to the uptrend line from March and bounced. Lets see what see does Monday. >>
I guess I had better clarify. Yes, there is an overall general bullishness 'buy gold' sentiment everywhere. What I was referring to was the daily and weekly published commentaries and their short term views. I haven't seen anyone calling for $1300 gold this month, although there could be a few I haven't seen.
Knowledge is the enemy of fear
The daily GSR momentum indicators show the 14 day stochastics already in overbought territory as do the 20 day BB's. The BB's are way outside the upper channel. And at least over the past year they haven't stayed out there for more than a day. Considering GSR has just gapped vertically to 69 a pullback here makes some sense. before any more significant upside. If one draws a channel based on the upper trend line, GSR could still power to 72 on this run but probably needs a pullback/gap fill before going higher.
The only thing I saw unusual in the COT report was that the gold "spreaders" got rid of about 36,000 contracts (40%) which lowered total open interest a similar amount. Otherwise no great changes.
roadrunner
But, in looking at the chart again, I would not be surprised to see it hit 100 over the next year. The 50dma has pushed above the 200dma in March. The 50dma may be in an uptrend and the 200 just about to do the same. I can almost see the beginning of a major uptrend beginning. Will be interesting to see this chart develop over the next 6-9 months.
Interesting that you see an 8-month old rally, while I see a year long+ consolidation.
Knowledge is the enemy of fear
From a historical standpoint the GSR has only been >100 twice...and both of those were in the last 20-72 yrs: 1939 at 153 and then in the late 1980's at just slightly over 100. So one could say that the move to 90 in 2008 was a sequentially lower high of the prev. 70 yrs. On a longer term basis GSR is possibly still consolidating the 1939 high?
roadrunner
Overnight futures point to more pain in equities and very little movement in gold/silver. I think the world is more concerned about debt being paid rather than appreciation of metals. Return of assets(debt is an asset) vs return on assets. Platinum looks to have broken the uptrend off the Dec 08 lows.
Knowledge is the enemy of fear
In this weekly chart, silver's at the bottom of its channel. A bounce up here is the most likely move, IMO.
In this weekly gold chart, gold's in the middle of its channel but appears to be in the midst of a move upward. $1300 and even 1400 is clearly within the range of this channel.
Silver's having a nice move up as well...
roadrunner
Looks like a bottle rocket at the moment!
I knew it would happen.
roadrunner
I've never heard that before on CNBC. No, not ever.
I'm glad that they provide an unbias reporting platform. (not)
Added: If they wanna talk about a "crowded trade" they oughta be talking almost exclusively about Treasuries, no?
I knew it would happen.
<< <i>Nice call PC and jmski52. After a morning beat down to $1210 it bounced to $1238 last I looked. Looks like there is more like to the cup n'handle after all. Copper is falling off the cliff but silver is somewhat still hanging in there having bounce back to the $17.80's.
roadrunner >>
Over $18.10 now.
In today's case the announcement by the Iranian government that it plans to deploy its revolutionary guard to escort ships through the Israeli blockade appears to have triggered the move. I don't see how this situation can't or won't escalate. I don't see Isreal backing down. I don't see Iran backing down either. $1300+ gold here we come...
With today's slight upmove in some miners are lightened up on a lot of positions I had established over the past week. I passed on some quick 5-15% profits as gold moved to $1230 figuring they would run longer. At this point I was satisfied with getting out even and coming back to fight another day. There will definitely be some bigger shakeouts coming in the miners between now and late August. Still, they are heavily beat down right now. The 3 month Libor has been steady for a few days which is good news. But liquidity ratios of NZD/Yen, Euro/Yen seem headed down into a new leg. $BKX, $VIX, $CCI, and $BDI all look headed the wrong way as well, with plenty of bottoming to do. The GSR pulled back some but like $VIX seems like it wants to make a 3rd spike in a row. While GDX and GDXJ both moved up 2-3% today, it doesn't seem like enough with a 3% move in gold bullion. Goldcorp was a big mover today with almost a 5% gain (7% since Friday am). But with news late today of being ordered to shutdown their Guatemala mine due to human rights violations, the stock price will suffer considering the mine is 11% of company production. As I've been saying, gold mining is not an easy business and is only getting harder to compete.
This is a 3-10-30 bond week as well but probably will have little effect. It's the one in 2 weeks that will probably give the PM's a good smacking. That week includes a G20 meeting, gold/silver options expiring, a FED meeting, and a bond week. Quadruple witching. Maybe a good buying opportunity.
roadrunner
<< <i>This is a 3-10-30 bond week as well but probably will have little effect. It's the one in 2 weeks that will probably give the PM's a good smacking. That week includes a G20 meeting, gold/silver options expiring, a FED meeting, and a bond week. Quadruple witching. Maybe a good buying opportunity. >>
The timing of this works out for what I'm expecting. I expect gold to be strong this week and next, so a smackdown 2 Mondays from now would be right on time and fits with the timing models.
Gold's doing a good job of hanging onto gains. A dip tonight to ~1233 would give us a 38.2 Fib retracement to send gold off again and would be a great opportunity to add to positions. Gold may need a day or two to recover from today's move, but I wouldn't be surprised if it keeps going Tuesday. A decisive move over $1250 will be another great opp to add to positions if you want to wait for a confirmation that gold is ready for $1300. Target is $1335-1369.
Hard to tell where stocks are headed, but it appears to be down. This last move down still needs more consolidation. While it appears that gold will probably do well through next Friday, stocks will probably be weak until then.
Targets for the next move are 1261, 1290, 1335, and 1369.
Support for tonight/tomorrow is at 1223.7, 1231.2, and resistance is at 1242.5, 1250.0, 1261.3, 1280.1.
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......
The stock market adds to the perplexity of the situation. After yesterday's rebound it appears that the correction is over and more upside is to come... the move to SP500 1250... but there's not enough solid information yet to make this call until SP500 can break 1080 decisively.
An interesting look at the ECRI explains what we've seen with the stock markets and predicts what we can expect. We're still on the upward swing of "a" recovery, but as you can see with the leading indicator, in the next couple of months there's going to be a sharp pullback on the recovery.
As far as SP500 goes, it will be important to watch the 1110 level, but I think the market may just be ready to resume an upward march to the 1250 target.
I might not be posting much in the next couple of weeks as I will be in France on business. I'll have to ask around and see what the local sentiment is about bailing out Greece and Spain... I'm definitely NOT loading up on euros.
<< <i>Proof: One probably wants to be long the euro here for a trade as the shorts are crowding it. >>
True, I think I prefer the sidelines on this one.
Here's a spam I got from Omega PM (not sure how I got on their list):
It has reached a point where bullion (gold & silver) are outperforming collectible coins.
The same scenario occurred in 1980 when the metals hit their then all time highs. It seemed that no one cared about the collector value, just the metal content. I witnessed silver proof sets being destroyed, mint condition Morgan Dollars being melted, and St Gaudens being scrapped! It didn't matter the grade, no one cared.
Before that happens again and the collector premium is lost, you may want to convert those collectible coins to bullion. Modern issue coins (post 1950) are sliding in value quickly. I urge you to make the move now.
Any comments?
The same scenario occurred in 1980 when the metals hit their then all time highs. It seemed that no one cared about the collector value, just the metal content. I witnessed silver proof sets being destroyed, mint condition Morgan Dollars being melted, and St Gaudens being scrapped! It didn't matter the grade, no one cared.
Before that happens again and the collector premium is lost, you may want to convert those collectible coins to bullion. Modern issue coins (post 1950) are sliding in value quickly. I urge you to make the move now.
For the most part I agree that since summer of 2008 gold has been outperforming collectible coins, esp things like choice/gem MS/PF type coins for example. Early copper, some rarities, and a select few other areas have held their own or advanced. But it might not stay like this if/when more inflationary effects hit the economy. This is somewhat similar to the 1975-1976 lull in coins. But during that period gold also fell off by 50%. The big difference back then was that there was no world wide currency, banking, and soverign debt crisis occuring...so gold got pummeled with everything else. But from 1975 to 1980 top quality coins performed as well or better than gold. It was not unusual to see a 10X to 15X appreciation in top notch gem quality type coins from early 1975 to early 1980. No doubt if you held low quality material or really common material you didn't fare as well as gold. It always comes down to quality-rarity-demand. I really don't consider common silver proof sets or BU common Morgans as examples of rare coins. They get a high % of their value from the bullion.
For anyone desiring to do it, the move to bullion from numismatic coins should have occured back in the spring of 2008. But something tells me that before it's all over, quality numismatic coins will come roaring back once again, possibly outperforming gold. One has to realize that most of the % appreciation in gold back in the 1970's came during the the 1978-1979 period. It wasn't a very long window once gold went parabolic in later 1979.
roadrunner
The newspapers here in London are all about Spain's crisis and a proposed 250B euro resuce plan. I think Spain is going to take Greece from the headlines in the next couple of weeks, and may fuel gold's rise today and/or tomorrow as gold has rebounded to within $10 of a new all time high.
Now things I don't like are the rounding off of the S&P500 indicators which peaked out yesterday, $BKX peaked around 50, GSR looking to turn back up, and gap-ups in GDX and GDXJ. Usually those gap-ups seem to occur close to the end of a run, plus there are a decent number of intermediates and juniors that are headed the wrong way right now. And with most larger producers up nearly 4 weeks since their last bottom, these guys should be poised for at least a pullback from a cyclical standpoint. This would all rhyme nicely with SM options expiration tomorrow, gold futures and options expiration next week, a bond week, FED meeting, and a weekend G20 meeting. I'm sure there is a full moon in there somewhere as well (yup, the 26th...lol). The dollar also seems like it has reached a temp bottom with some rise coming shortly (cando and aussie rounding over too). Oil, natural gas, and copper seemed to be ready to pull back too. Gold has short of broken the mold a bit of the last 2 options expiration + bond week...so strength on Mon-Wed would hardly surprise me. But I would be surprised at strength in the miners.
Some guy named Puetz did an odd analysis of the 8 major crashes over the past umpteen years and they have all occured within a 9 day window of solar/lunar eclipses/full moons. Fwiw, the period of June 20-29 qualifies as a potential window though most of these end up expiring without fanfare. And another stat I found over on the Kitco gold forum though I did not verify it: stocks have been down the week after June quadruple witching (6/18) for each of the past 11 years. Interesting.
While the gold chart seems pointed to break upwards, I have to think it will be constrained by the events occuring next week as well as the fact that the SM and commodities seemed poised for a rest. Then things can be re-primed to start again into July 1st. The banksters have the opportunity, and certainly motive, why not take advantage of it? I'm currently waiting for some things to get cheaper next week.
roadrunner
<< <i>Some guy named Puetz did an odd analysis of the 8 major crashes over the past umpteen years and they have all occured within a 9 day window of solar/lunar eclipses/full moons. Fwiw, the period of June 20-29 qualifies as a potential window though most of these end up expiring without fanfare. And another stat I found over on the Kitco gold forum though I did not verify it: stocks have been down the week after June quadruple witching (6/18) for each of the past 11 years. Interesting. >>
Is that +/-9 days or 4.5? Not sure that's saying much... 18 out of 30 days is a pretty big window... and if he's referring to trading days....
All I know is that when the Greece news was hot, nothing else mattered, gold just went up. If Spain is about to hit that status, we could see the same thing.
>>
Puetz was not saying that so-called "Puetz windows" always lead to crashes, but that if a crash is going to occur, a Puetz window would be the likely time frame in which it would happen. Puetz windows tend to occur every year or two, while crashes are rare events.
...
The first window is June 21-July 5, and the second is July 30-August 7. If a significant top is going to occur in the [stock] market this summer, those are the likely windows ...
>>
The Puetz time frames would fit in with the head-and-shoulders rally top chart pattern in stocks that so many technicians are seeing.
As for gold, the PM forum is quiet considering new all time highs on gold futures. I see that as a positive for gold bulls. We've all seen the opposite: minute-by-minute thread updates with each $1 increment, and/or a swarm of newbies asking about where to buy their first gold, and what kind of gold to buy. I don't see any of that, so the forum sentiment indicator points to more upside.
I'm of this mindset, but still positioning accordingly. Sell bullion, esp "numismatic bullion" (AGEs & such), buy true numismatic value.
Rare coins in general have not done as good as gold, most maybe at most doubling or tripling since 2002 and then giving back some of that back since.
As for gold, the PM forum is quiet considering new all time highs on gold futures. I see that as a positive for gold bulls. We've all seen the opposite: minute-by-minute thread updates with each $1 increment, and/or a swarm of newbies asking about where to buy their first gold, and what kind of gold to buy. I don't see any of that, so the forum sentiment indicator points to more upside.
Thanks RedTiger for that summary on Puetz. And the reason we're all so "subdued" on gold is that this is the 3rd try at the $1250 mark. Been there done that. It will take $1300 to got us excited now. A final and 3rd leg up has been missing from the equation since the Feb bottom. Gold could certainly rocket thru the $1250 resistance and hit $1280 in a blink. Gold stocks are either getting ready to fly or getting ready to get whacked. I'm leaning towards the whacking because of all the big gaps formed on the seniors today.
roadrunner
I am also concerned about a possible breakout in Treasuries. The 10-yr has major support at 3.10%. I push higher in prices(lower yields) below 3.10% could easily project to 2.5%. The potential breakout in gold and Treasuries tells me there is a lot of concerned money out there. Something of significant importance in the international scene may occur in the next few weeks.
Im holding very little in the way of equities.
Knowledge is the enemy of fear
1- Institute a new monetary system with a new currency
2- Return monetary authority to the market and shut down
I see absolutely no reason why gold doesn't go to $1,900 by 2011. No one has any faith in the euro, and sooner or later the us dollar will fall as well.
Gold has been an easy trade the last 10 years. The next 10 wont be so easy. For the last 10 years, gold was hated, now it is loved. This change in perception, will lead to a change in rate of return. There is now a lot of expectation build into the price of gold. People now expect inflation, they expect the Euro to fail, they expect municipal default in the USA and more bailouts.
But, from a technical view, my comments earlier were for the very short term. Today's and Monday's trading will be important to say whether gold is going to advance on an accelerated run or not. A $20 gap down on Monday could easily negate todays move. There is more price resistance $20-30 higher. A break above would lead to a parabolic advance. When parabolas break, the outcome is rarely pretty.
Knowledge is the enemy of fear
I knew it would happen.
<< <i>Gold has been an easy trade the last 10 years. The next 10 wont be so easy. For the last 10 years, gold was hated, now it is loved. This change in perception, will lead to a change in rate of return. >>
Just to add to your comment, real estate was REALLY loved 2004-2006 and prices skyrocketed... The challenge is to identify whether we're at early 2004 or late 2006. I think we're still at early to mid 2004.
<< <i>
<< <i>Gold has been an easy trade the last 10 years. The next 10 wont be so easy. For the last 10 years, gold was hated, now it is loved. This change in perception, will lead to a change in rate of return. >>
Just to add to your comment, real estate was REALLY loved 2004-2006 and prices skyrocketed... The challenge is to identify whether we're at early 2004 or late 2006. I think we're still at early to mid 2004. >>
Real estate was more than loved, it was worshipped, cult like for a lot longer than 2004-06. More like 1995-2008. There are many cult adherents still today. I missed that bandwagon, only owning 1 house and 1 business in a not-so-bubbly area. I am NOT gonna miss this gold bandwagon.
<< <i>If you stand up close to a parabola, you can't tell it's rate of change very well. If you step back a bit, you can see where you really are. Step back, cohodk - we aren't breaking into a meteoric rise for awhile. It will however, be volatile - maybe more volatile than we've seen in our lives. Too many black swans floating amidst the debt bombs. It's gonna be touch'n go. Don't dump that gold or silver - you'll need it to compete with the Chinese and Arabs when you want to buy that US real estate. >>
If you compare the current move to past parabolas, the last 9-12 monthly candles of this move will be $100 or greater, some maybe even $200 or $300. The last few monthly candles have been ~$40, ~$65, and this month is at ~$40 at the moment. That monthly chart looks great, I don't see how you can discount the possibility of going "meteoric" in the next month or two.
So I can cease payments?
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you're in the right crowd with people like George Soros.
GDX and GDXJ ignored the SM options expiration today and are now within ear shot of their all time/52 week highs. I still have some concerns though because the volume on these is pitiful compared to what the peaks in December and May delivered. GDX is touching its upper 20dayBB as well. The GDX/SPY ratio often signals gold stock exhaustion by peaks. And right now it's well above the 20dayBB along with a volume spike to go along with it. 2 days of gap ups on many miners, along with some decent pull backs from peaks today may be a warning for next week. But as Thomson mentions, miners still have a ways to go to catch up to gold, so they will continue to give non-confirmation signals in price until they finally do perform. Weaknesses today in ags, copper, ng, etc. continue to give concern to the entire commod sector, including gold. I note market darling FRG (gold/uranium) dropped a whopping 10% today after being on fire for the past month. Possibly another warning shot to the rest of the sector? Gammon got pummeled again today for another -9% bringing it to a -22% drop in <2 weeks. I guess I still can't tell if the miners just ignited their boosters or have finally flamed out on this monthly run.
"It's money of course but let's also call it a "commodity! Then we can place a "paper" value on it and denominate it in all forms of future contracts. It will lose it's true value as money in peoples minds and be priced in an unrealistic paper format." ....Alan Greenspan on gold.
roadrunner
I had called for $1300 gold by mid June, and it looks like my call was a week early... I think we could see it by the end of next week or by the end of next month at the latest.
And of course, the one thing really going for gold right now is that I'm traveling and can't watch my positions as carefully as I usually do...