***OCTOBER 2010 Gold and Silver Stocks/Options/Futures trading thread***

ProofCollection

The month of September was incredible for gold, and my futures trading account which is up 161% for the month. Either I'm getting lucky, the charts are "behaving," or I'm really in tune with the charts lately.

Thursday's move down has energized the charts and will allow it to proceed higher from here. Friday could be a good day of just sideways, or we might have to wait for Monday for new all time highs.

My forecast for October for gold is up, up, up, with increased volatility. Specifically, I see a high of 1330-1345 coming, probably in the first full week of Oct. At that point I expect a bigger retracement which could and probably should include the whole move from 1155 in July. From the 1340 area, a 38.2% retracement takes us back to ~1267, the previous long term all time high. This retracement will serve really well to frighten bull, shake off investors and speculators, and clear the air for upside. From there, gold should continue to 1420-1550. I fully expect 1400 by the end of October.

A lot of things are really coming together here, as I think as gold hits 1330-1340, silver will hit its target at 22.50-22.70, and then both will retrace. A 38.2% retracement for silver of the entire move from 17.75 would bring it back to 20.68. BTW, anyone who bought Aug 24 when I recommended buying at 17.75 (and never sold) is up $20,000 per contract right now (SI).

The DX downtrend will continue and I think DX (USD) will get smashed.

I've drawn in the parabola on the monthly chart so everyone can see the parabolic move.

On the daily chart, we're in a strong channel and the upper side of that is what we bounced off of today. As the move is going parabolic, expect us to breakout of the channel to the upside soon. Of course, the retracement to ~1267 will bring us down below the bottom channel, but only briefly.

ProofCollection

Support for gold for Friday is at 1267.5, 1287.8, 1298.8 and 1308.1. Resistance is at 1319.1, 1328.4, and 1348.7.

There's no reason we can't hit 1319 tonight/tomorrow, and it wouldn't take much to hit 1228.4 which is near a pivot projection I have at 1227.x.

Support for silver is at 21.17, 21.65, and resistance is at 22.23.

RedTiger

161%!? For one month!? Wowsers.

Please remember all us small fish when you graduate to be a whale size trader...

roadrunner

Nice job PC. With gold and silver's 5 leg down move today and subsequent sideways bounce, I'd expect more downside tonight or early tomorrow. Usually coming out of options expiration and end of month, end of bond auctions, we see a bounce by Friday into the new month. I agree either with a decent pullback sometime in the next couple of weeks. I don't rule out the possibility that it already started when gold hit $1315. The senior miners are acting oddly and generally weak, though Yamana, AEM and BVN are still showing strength. GDXJ seems to have made a downward turn now but GDX hanging stronger. Not a surprise since GDXJ blew the doors off GDX in September and is quite overheated. Even the CDNX looks like it has about peaked.

roadrunner

TWQG

That's a great month! I sold some AUY yesterday, wasn't +160% though.

Justacommeman

Great month PC! Congrat's............

I've made my hay in currencies this month. Also, my greatest single month since 2000. This is the chart I've been following as I'm not the sharpest tool in the shed. MJ

Complex US Dollar chart

SUMORADA

ProofCollection
.
Congrats on a great month

ProofCollection

I want to remind everyone that while I had a fantastic Sept, I have also had disastrous months like July. And that part of the ability to make over 100% in a month is due to using futures which are highly leveraged. A futures contract costs less than $6k and controls 100oz., so the leverage is 22:1. So when gold goes up $60 in a month, it's easy to make a pile of cash. October should be good for at least $75, so hopefully I can do it again.

Gold had a good day and a fantastic week setting a new all time high at $1322.

I'm a little conflicted at this point as everything looks really good for Gold as far as the next few weeks and months, but gold is very overbought which has me really concerned about an imminent, but brief correction in the near future. I'll reiterate my 1330-1344 price target, from which I think we'll see a fast correction down to around $1270. I would love this to happen as I could then stop worrying about it. I think gold NEEDS to do this in order to quell enthusiasm and to "spank" those who are just now getting on the bandwagon. Gold (and other trading vehicles) don't seem to like a hole lot of followers, so it tried to throw people off.

But the thing is, in a final stage of a parabolic moves, gold can get overbought and stay overbought for long periods of time.

I don't like to use stops, but I think the danger is increasing so my plan from here forward it to stop adding to positions and tighten up stops. Once we reach 1330 I'm going tp put in some stops at 1320 to preserve any profits to date, and I will do some selling between 1330 and 1340. I can always jump back in.

Part of the conflict is remembering several times last fall when gold was making its big move that I got over-cautious and I reduced my positions only to see gold take off even higher. It's a classic struggle with greed, but caution is the most prudent.

I'm really encouraged by the support and resistance levels for Monday, as they line up well with some of my targets which tells me that we could very well hit them on Monday... although the timing models I use show that Monday will probably be a very slow day and Tuesday should see lots of action. But then maybe something will happen this weekend to send gold up $25 real quick.

Support for Sun night/Monday is at 1311.9, 1317, and resistance is at 1325.6, 1330.7, and 1344.4.

So I think we'll see 1325.6 Sun night pretty easily, not sure what will happen from there.

edmundfitzgerald

The pullbacks are really insignificant in my book. I recently bought at 1196 oz. It went down to I believe 1157 after I bought,
and now it's at 1310. So the pullbacks are not really needed to "shake" some out IMO. I do like your 1400 call. It
will come quickly IMO. Novembers election results may make life a little more interesting.

percyb

I'm thinking there will be no pull back in the metals until the $ index falls into the 74-75 territory. We're currently at 78.09.

roadrunner

The pullbacks are really insignificant in my book. I recently bought at 1196 oz. It went down to I believe 1157 after I bought,
and now it's at 1310. So the pullbacks are not really needed to "shake" some out IMO....

They may have been insignificant to those who are buying physical for longer term, but a $40 down move would have rattled the cage of those buying paper contracts and gold equities. I'd bet a lot of them would have bailed after seeing gold drop from $1200 to $1157 figuring it was going all the way back to $950-$1050 as that seemed to be the overall sentiment about gold at the time. That pull back shook a lot of gold bugs out and have kept them out as they waited for another deep pullback which never really came. There were some hardcore gold bugs that were so sure gold was going to pullback from $1200-$1215 in August that they've been selling off their core every $15-$20. And here we are at $1320!

roadrunner

ProofCollection

RR is spot on. A small pullback for physical buyers is nothing, but when you're leveraged in futures at 22:1, any pullback makes your heart skip a little.

Those waiting for a deep pullback are going to be extremely disappointed. We're not in a typical market, we're in a parabolic move. Markets generally don't pull back in a move like this, although volatility will kick up and there will be some wild swings.

I'm curious what Cohodk's take is now. While his predictions about ending the year lower thatn (1200?) could still come true (but increasingly unlikely IMO), his trading range theory has been blown out of the water. I'd like to know what his charts are telling him now, or if he's holding on to his predictions about how the year ends and how well the dollar will do.

roadrunner

Cohodk's trading range was also seen in commodities as he was quite concerned about the CCI falling all the way back to long term support levels in the lower 300's (ie the deflationary cycle). It doesn't appear that is how things are playing out with commodities doing an about face and blowing past 500. If you cheapen the money, you push up the prices of raw materials/commodities. Even while excessive debt and derivatives are being wound down, the liquidity spigot is wide open (though not in plain view) and it's that money that is seeking out commodities and safe havens from falling fiat. Gold doesn't care how much debt has been reduced or how much money was lost in the stock market or in RE/CRE. It only cares how much liquidity is currently out there to chase tangible goods and how much more is anticipated in the near future. A lot of people, including me, probably expected the dollar to eventually hit 90-94 this year. That looks extremely unlikley now. The last run to 88 was more like a final gasp, not the start of a bull move in paper.

I like my chances for the end of year prediction at $1425 gold and $32 silver (plat $1900, pall $575). I think I'll be 10-30% too high on silver but maybe close on gold. I was figuring gold would run to $1500+ by November/early Dec. and then pull back some. 2010 was supposed to be an off year for gold.

roadrunner

renman95

Proof, that is "sick!"

Wolf359

At $20 silver I say we crossed the Rubicon, there is no going back. I can't imagine the bullion banks short position will survive at $25 silver...at some point they cave and then who knows. Rocket?

roadrunner

Clive on gold

Clive on silver

He's factoring in the very real possibility of continued breakouts from current levels in Gold, Silver, HUI.

Degraaf on gold

In agreement as well.

roadrunner

ProofCollection

Good articles RR, that guy seems to agree with me completely - I could just cut and paste the entire article here and call it my own.

The overbought condition is worrisome, which is why I will be cautious once we hit the targets I have been calling for.

ProofCollection

Today gold took a break from it's relentless upward movement, and it was overdue. But the downside was incredibly minor.

Tonight there may be more weakness, a pullback to 1312.4 would be a 38.2% retrace of a move off of Thursday's low, and others are targeting 1311.1 for a reversal. Though I think there's a chance we may have put in the bottom at 1313.3.

I still have a target for 1334 to 1340, and we should see some more upside energy on Tuesday, will be tough to make 1334, but not out of the question. Support is at 1308.7, 1312.3, resistance is at 1316.8, 1320.4, 1324.9, 1333.0.

I picked up another mini silver contract on a swoon in the silver mini contracts (YI) that wasn't reflected in the main comex contract SI. Silver contract YI swooned down to 20.07 (yes, 20.07) for about 1 minute before it quickly came back to the 21.90 area. My buy was pre-entered at 21.75 though so I didn't really take advantage of the move. 21.73 should offer support for tonight, and no resistance until 22.39!

Stocks are energized and ready for another move. SP500 is probably going to continue the main trend up, meaning today was a false breakdown. So tomorrow we'll either see the breakdown continue or reverse itself.

While I was concerned about a decent pullback off of gold 1334-1340 and silver 22.50, I'm not so convinced anymore. I think I'll still lighten up in this area and monitor closely and be ready to jump back in or bail out. I guess I'll know more when we get there. If we get there in one day then I will be concerned about a pull back, but if it takes all weak to get there, then the move may be sustainable...

meluaufeet

Hey P-C,

The micro contracts are coming soon aren't they... 10oz gold. Do you anticipate any meaningful changes to the futures market??? Will all micro contracts be squared via FRN's and GLD?

ProofCollection

I didn't know about the micro contracts, but I'm not interested, and I'm not sure why anyone would really bother other than to "get their feet wet." It'd be like playing $2 blackjack. You'll kill some time and you may make lunch money, but you won't get rich, especially after commissions.

The NYSE-Liffe contracts (33.2oz) are about as small as it's worth going.

Here's an article I found that tells more.

meluaufeet

Thanks for the reply P-C,

I was thinking that this would be a vehicle for monex customers and the like... they would tell their clients to 'hedge' their physical gold holdings...

MrOrganic

Ok i'll start the talk

anyone itchin to short here? or at least doing some research on what vehicle to use?

If i do it may be shorting plat/Pd. They fall ....its hard!

last time i mentioned it...silver when up $1.50, Gold $40

goingbroke

BOJ reverts to zero rates in surprise move

By Leika Kihara and Rie Ishiguro Leika Kihara And Rie Ishiguro – 26 mins ago
TOKYO (Reuters) – The Bank of Japan on Tuesday pledged to pump more funds into the struggling economy and keep interest rates at virtually zero, surprising markets and stealing a march on the Federal Reserve in providing a fresh dose of economic stimulus.

For months, the central bank had eschewed government calls for more decisive action, such as buying more government bonds, focusing instead on a limited funding scheme.

But in the face of growing evidence that the yen's strength was hurting the economy, the Bank of Japan cut its overnight rate target to a range between zero and 0.1 percent from 0.1 percent and pledged to buy 5 trillion yen ($60 billion) worth of assets.

It also said it would keep its benchmark rate effectively at zero until price stability is in sight. Core consumer prices have been falling from a year earlier since early 2009.

The purchases would roughly match the size of extra stimulus being considered by Prime Minister Naoto Kan's cabinet.

The assets, ranging from government bonds and short-term government securities to commercial paper and corporate bonds, would come under a temporary scheme that would also cover 30 trillion yen of such assets as collateral under an existing loan programme.

"The BOJ is bringing its monetary policy closer to quantitative easing, allowing market rates to hover near zero and pledging to keep a near-zero interest rate policy in the longer term until prices stabilize," said Naomi Hasegawa, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities.

BOJ policymakers have signaled in past weeks that they were considering a further easing of policy after Tokyo's intervention in the currency market in mid-September to check the yen's strength offered only temporary relief.

Most market players, however, had expected the central bank to opt for a relatively minor adjustment of its 30 trillion yen loan scheme that supplies banks with funds at its 0.1 percent rate.

"These steps are more aggressive than markets had expected. The BOJ's decision is a surprise and will have an impact on currencies due to the message it delivers."

CENTRAL BANKS UNDER PRESSURE

The surprise move weakened the yen against the dollar, pushed up Japanese government bond futures and helped stock prices turn positive.

The decision to cut interest rates was made by a unanimous vote, but board member Miyako Suda opposed the inclusion of government bonds among the types of assets the BOJ could buy using its pool of funds.

The BOJ is not the only central bank under pressure to do more to support an economy that is showing signs of faltering.

Financial markets expect the Fed to embark upon another round of asset buying to bolster a sluggish recovery as early as its November meeting. There are also calls within the Bank of England for further easing, although the bank has kept markets guessing on whether it will indeed do so.

In Japan, slowing export growth, a surprise fall in factory output and companies' worries that the strong yen may hurt the outlook have heightened the case for the central bank to ease policy.

The BOJ had already been edging nearer to quantitative easing by allowing the yen pumped into markets through currency intervention to remain in the financial system, instead of draining it.

($1=83.45 Yen)

ProofCollection

Yes, and rather than strengthening the dollar, DX is tanking on the news. The fed doesn't meet until Nov. They can have an emergency meeting or they can simply announce MQE (more Quantitative Easing). The race to the bottom is in full swing!

goingbroke

<< <i>Yes, and rather than strengthening the dollar, DX is tanking on the news. The fed doesn't meet until Nov. They can have an emergency meeting or they can simply announce MQE (more Quantitative Easing). The race to the bottom is in full swing! >>

I agree! times are getting bad and still on the move down! This week my wife and I saw a pimp driving a VW bug! when you see stuff like that you know the end is approaching! . Long term, of course, you don't want to hold US dollars, as the management is already clearing out space for it in the Mausoleum Of Defunct Currencies.

roadrunner

Ok i'll start the talk
anyone itchin to short here? or at least doing some research on what vehicle to use?
If i do it may be shorting plat/Pd. They fall ....its hard!
last time i mentioned it...silver when up $1.50, Gold $40

I briefly thought of that 2 weeks ago and stuck my toe in the water with my first ZSL (3x silver bear) purchase ever at 25.05. Charts indicated to me that ZSL was "starting to turn." It dove the next morning. It rebounded to around 24.85 by late morning and I jumped right back out coming to the realization that this is still a bull market and I don't have the guts/smarts to play with these guys on bears/shorts. ZSL jumped to 25.25 by the end of the day but the next day it was back on the downtrend. Since I orig took that position ZSL is now down 18%. What up turn? I didn't lose 1%...I saved myself 17%. All my best trying to time a silver or gold bear/short position. Saint Guru mentioned he was shorting DGP (gold bull ETF) a week or two ago as gold headed over $1300. He was planning to hold it until $1350. I wonder if he's still hanging in there? Stewart Thomson is right when he calls this the gold "punisher."

roadrunner

Justacommeman

Sold all my positions in AEM @ $73.54. GG @ $44.55 (all but one position) and all positions in KGC @ $19.55.This includes long time core positions. I will look to come back in on a pullback to the 9 or 20 EMA if that ever happens again.

MJ

jmski52

This week my wife and I saw a pimp driving a VW bug! when you see stuff like that you know the end is approaching! .



What exactly, does a zero interest rate structure imply? Are they gonna pay me to borrow dollars yet?

ProofCollection

What a move today! Made a 'pile-o-cash' today. Finally, we've taken out my targets! This month is starting off good, as month-to-date my futures account is up over 50% - hopefully I can hang on to those gains.

gold
Per my own advice, I sold off 90% of my positions at 1330-1340 with most of the selling at 1339.5. I think the pattern definitely needs a day or more to consolidate these gains, however, it is possible in a tremendous move like this for the consolidation to occur while continuing up. With all of the hype from a day like today, it's very possible. Personally, I'm betting and hoping for a 38.2% retracement back to 1331.5-1333 where I will re-load with some stops in the high 1320's.

Support for tonight/Wed is at 1322.2, 1332.6, resistance at 1351.8, and 1362.2.

New big picture goal is 1420 - and I see it by the end of the month and possibly within 2 weeks.

As far as timing patterns, today was likely to be the first day of an 11 day pattern, so the next 10 trading days should be a continuation of today's move. My concern about the pullback was that the first day of the pattern may have marked a correction or consolidation period, so caution was prudent. Now that the day is over, I don't think it is necessary to be so cautious any more.

silver
Silver blew right through my target at 22.50 and continued up another $.40+ - unbelievable! I unloaded all silver at 22.50. I even went short for about 2 seconds and got stopped out and gave up. Silver needs to consolidate as well. It's overdue for a big retracement. If it retraces Tuesday's move, look for a pullback to 22.50, if it retraces the entire move from 17.73, look for a return to $20.94. I just don't think we'll see the big retracement for a while yet, as the shorts appear to be covering and rumors are that the big banks are closing shorts and getting long. I'll get back in on a return to 22.50.

SP500
Stocks had a great day as well, breaking out of a wedge pattern which should mean more upside to come. Stocks could continue higher Wed. Definitely not safe to go short.

gold stocks
Many Gold stocks were a little disappointing today as with gold rocketing up and the SP500 doing well, you'd think mining stocks would absolutely rocket. Some did, but there were some disappointments in that many just had a good day (instead of a spectacular day). I sold off a bit of stocks when gold was at 1340, and my timing must have been good because most stocks I sold were near their highs for the day and have pulled back slightly. I'm starting to think that selling overall was a mistake, I'll see how things go here Wednesday and I will probably re-establish positions.

Closing thought #1: How many millions has Soros already made off of his recent entry into PM's?
closing thought #2: with all of the economic news out there - there's no one really to put 2 and 2 together, but central banks - especially our own - are in a WORLD of trouble. Worse, nothing is going to happen until after elections... in fact, that will probably be how this fall plays out. 2 more weeks of bullish PM's, 2-4 weeks lull for elections, and then boom, another couple of months of nothing-but-up as the poli-trixters try to "fix" the economy.

cohodk

Maybe we're finally done with those $2-3 days. While the result was (is) nice, those slow bleed up moves can be brutal for the impatient.

May nibble on ZSL at the open as slv is getting close to the upper end of channel. RSI at highest level since early 2008 so volatility should increase. Yippee!! I hate these 5 week, 1 direction moves.

Currencies are all out of whack right now, especially EURO. Best to just let the trend play out. Election time is a probable trend change, even if that change is only stability.

Heard where gold needs to hit $3000 to match the return on T-bills since 1980.

roadrunner

Heard where gold needs to hit $3000 to match the return on T-bills since 1980.

Be patient, we'll get there. The good thing is all that return will have been in 10-15 yrs, not 30 yrs. And at the end of this road, I'd much rather be in gold than treasuries...well, at least until the dollar is backed by something besides promises.

roadrunner

meluaufeet

Hey cohodk,

Nice to see you around...

btw: That was a nice pic of you and the better half.

Peace.

goingbroke

Here's something to leave you sleepless tonight. Go to http://banktracker.msnbc.msn.com/banks/. Click on your state on the map, and you can access the balance sheet of any bank in your state It will show you the "troubled asset ratio", that is the ratio of bad loans divided by the bank's capital and loan loss reserves. Bad loans include "Loans more than 90 days past due", "non-accruing loans" and "Other real estate owned" (foreclosures). National median is 15.00, i.e., 15%. A graph displays where your bank's troubled asset ratio stands in relation to the national median. If your bank's TRA stands above the national median, better think about a new bank.

edmundfitzgerald

<< <i>What a move today! Made a 'pile-o-cash' today.

silver
Silver blew right through my target at 22.50 and continued up another $.40+ - unbelievable! I unloaded all silver at 22.50. I even went short for about 2 seconds and got stopped out and gave up. Silver needs to consolidate as well. It's overdue for a big retracement. If it retraces Tuesday's move, look for a pullback to 22.50, if it retraces the entire move from 17.73, look for a return to $20.94. I just don't think we'll see the big retracement for a while yet, as the shorts appear to be covering and rumors are that the big banks are closing shorts and getting long. I'll get back in on a return to 22.50.

. >>




Congrats on that pile of cash, however I believe that anyone who shorts silver before the 26-28 range is playing with fire.
Good luck !

goingbroke

the dollar is behaving in a way that doesn't make sense to many observers. Bernanke was talking up fiscal responsibility, but the dollar continued dropping. It seems that just the thought that their might be further quantitative easing was enough to overcome anything else that might effect the value of the dollar. I am buying some farm land!

dontippet

I like the optimism, and the sky seems to be the limit. But, let's not forget that we were at the $22-$23 level a couple years ago before plummeting down to $8.

pmcollectour

<< <i>I like the optimism, and the sky seems to be the limit. But, let's not forget that we were at the $22-$23 level a couple years ago before plummeting down to $8. >>



And that's why if the long term upward trend is continuing, and we hit 22-23 a few years ago, then one can assume that
we are heading for the 27-30 range this time around. Let's see if the upward long term trend is going to continue. I say it does.

roadrunner

I like the optimism, and the sky seems to be the limit. But, let's not forget that we were at the $22-$23 level a couple years ago before plummeting down to $8.

We only got to around $21+ a few years ago. That's already been run over so the only overhead resistance points are from >30 yrs ago. The bigger difference is that $21+ in March 2008 was 48% above the 50 week moving average when it peaked out. Now that was seriously topped out. This current run of silver is only at 27% above the 50 week ma. While it is technically way overbought in the short term, silver usually gets to around the 40% point before finally topping out. More than likely an interim correction will occur before proceeding closer to that 40% number.

It's not the how high the price currently, it's how high it is relative to longer term trend lines.

roadrunner

jmski52

I almost bolted for the door to go down and open up an account at ScottTrade yesterday, in order to start buying some GDXJ. I didn't get past my door. Don't ask me why, I have some cash ready. I looked at it's chart and it's up about 40% this past year, but that's nothing in the scheme of things when the fireworks start.

I'm "all-in" in physical, and GDXJ would be my first entree' into paper in over 2 years. I know it's probably a good move for me, but geez - it's hard to actually make that move. Maybe I've become too comfortable and feel too secure with bullion.

Do the assets in small cap miners still represent a fair amount of leverage at today's gold price? I know that the large cap miners had sold forward alot of their balance sheets in the past but that they are now trying to pay off their leveraged positions. Which is better now for exerting leverage, a diversified small cap miner fund or a diversified large cap miner fund, assuming that they have about the same risk level?

Justacommeman

For what it's worth I sold 95% of all my mining stocks yesterday including long term core holds. I had a lot of double and triples. I sold because the charts were soooo soooooo extended. I will re-enter with GDXJ and GDX if and when the charts ever come back in. I feel naked and uncomfortable with cash and no skin in the miners at present. MJ

roadrunner

Do the assets in small cap miners still represent a fair amount of leverage at today's gold price? I know that the large cap miners had sold forward alot of their balance sheets in the past but that they are now trying to pay off their leveraged positions. Which is better now for exerting leverage, a diversified small cap miner fund or a diversified large cap miner fund, assuming that they have about the same risk level?

I know at these levels I wouldn't want to be stepping into GDX or GDXJ for the first time. But the assets in the gold miners in general are still valued considerably behind the gold price and have been that way since 2006-2008. They still have catching up to do. A long term chart of HUI vs. Gold will show that. I think the small cap miner funds will out pace the larger miners going forward. There will be times when they reverse roles (like maybe around now) to help even things up. But overall, GDXJ should outpace GDX over the next few yrs. In this current 2 month run GDX is up around 26% while GDXJ is at 41%. Which tells me the seniors might outperform juniors for a bit. Even with both GDX and GDXJ at all time highs, there are lots of miners within those indexes that aren't close to their former highs yet.

GDX and GDXJ charts

roadrunner

jmski52

With gold having been on a tear lately, I'll probably wait until it does hit the wall before I tiptoe in. It makes no sense to jump in during a screaming rally.

Besides, if the gold market stays hot, I can always pay the Mint a 30% premium and buy some of those hockey pucks instead. At least the premiums on those will be a barrier to entry that will eventually affect the mintage numbers in interesting ways...

percyb

<< <i>I didn't know about the micro contracts, but I'm not interested, and I'm not sure why anyone would really bother other than to "get their feet wet." It'd be like playing $2 blackjack. You'll kill some time and you may make lunch money, but you won't get rich, especially after commissions.

The NYSE-Liffe contracts (33.2oz) are about as small as it's worth going.

Here's an article I found that tells more. >>



It's probably more about capital requirements and margin that will allow more participants to get into the market than about "getting feet wet." IMO the paper flow will move to the 10 oz market. And that doesn't mean one only trades 10 oz. One can trade any amount above that in 10 oz increments.

goingbroke

MINNEAPOLIS – Former House Speaker Newt Gingrich is advising Republican candidates on November's ballots to frame the choice for voters between Democrats as "the party of food stamps" while selling the GOP as "the party of paychecks."These guys will do anything for election! There are no-short term fixes for the U.S. economy. That's the dirty little secret that America's leaders are loath to face. The sooner we stop pretending that we can reverse the decline for this year or next, or perhaps over the next two or three years, the faster our nation will be able to safely and soundly recover.

This crisis is not at all like economic crises of the last 50 years. It's much more like our own depression of the 1930s and Japan's economic tanking that began in the early 1990s. Massive debt is suffocating our growth. Worse yet, the experts really don't know what to do; all the traditional medicines have been tried, some at doses many times the usual curative amount. Still, this recovery is anemic.

ProofCollection

<< <i>With gold having been on a tear lately, I'll probably wait until it does hit the wall before I tiptoe in. It makes no sense to jump in during a screaming rally. >>



I know what you mean, but with great odds that we'll see 1400 before we see 1300, it can still make sense to ease in now.

Percyb:

<< <i>It's probably more about capital requirements and margin that will allow more participants to get into the market than about "getting feet wet." IMO the paper flow will move to the 10 oz market. And that doesn't mean one only trades 10 oz. One can trade any amount above that in 10 oz increments. >>



Yes, you can trade any quantity you want, but liquidity becomes an issue and at some point it gets ridiculous. The real problem comes in the commissions and fees. I think I pay about $5/contract, $10 round trip. For 100oz in micros that's $100 in commissions alone compared to $10 for a 100oz or $30 for 3 minis. At some points I have held 30 100oz contracts at a time and at that point you're buying and selling in 5 and 10 contract lots. For that kind of transaction you need liquidity. It's bad enough with the minis. No commercial traders will bother with the micros.

ProofCollection

gold
Wednesday was a bullish consolidation day for gold which even managed to gain a few dollars. Gold will be ready for move another move tomorrow. Didn't really get a good pullback to re-enter, so I've re-established positions in the high 1340's. We could (and probably will, knowing my luck) pull back to support at 1343.4 or 1336.2 tonight. 1337.3 is the 38.2% retracement of the most recent move up. But the pattern is so bullish that there's a good chance it won't even drop below 1345. My position is almost maxed out, as I am highly confident about the next move higher to one of the next resistance levels... If I had to bet, I'd say 1358 is safely in the picture for Thursday. 1369 is NOT out of the question.

Support is at 1336.2, 1343.4, 1347.4, and resistance at 1354.4, 1358.2, and 1369.2.

silver
Silver is on a tear again hitting a new 30y high tonight exceeding 23.25. Next targets are 23.35 and 23.49. I don' think 23.49 is out of the question.

SP500
Stocks are out of energy short term but rearing to go in the longer charts. It's likely Thursday will be a snoozer with stocks still needing to re-charge, but there is a possibility of more upside movement.

As far as mining stocks, I got back in today and managed to buy back most positions a few cents lower than I had sold Tues so things worked out OK. With gold on a tear for 1 more week if not 2, and with stocks charged up and ready to continue higher, it doesn't make sense to be out of the market waiting for a pullback that's not likely to happen until later this month. I think this will be one of those rare ocassions where the market keeps running and running (at least for a week or two), frustrating those waiting for the pullback who are missing out on the easy gains.

ksammut

Gold and Silver made a nice move up in the past few minutes (11 PM EST).

Gold reached $1352 and silver hit $23.32

Any news coming out of Japan or China?

ProofCollection

Update: GC and SI looking great tonight. 1369 target is almost a certainty for Thurs (currently at 1359).

My new target for silver is 24.04, achievable this week but more likely next week.

goingbroke

The US dollar index fell another 31.9 cents to 77.43. Clearly, the Nice Government have a plan, namely, to let the US dollar drop until the economy re-ignites. Good plan. Ought to kick in about, oh, say, 2092.Gold is up 20% this year alone.

The gap between the long bond yield and the 10-year note yield has widened to an eight-year high of 129bps from 92bps just six-months ago. This is the third highest spread in the past three decades.

Since the end of August, 10-year TIPS breakevens have risen from 1.5% to 1.8%.

There is no doubt that we have commodity prices firming, a weaker U.S. dollar and a monetary policy that seems aimed at reloading the gun. These are inflationary tailwinds. But we also have contracting bank credit, a 6% (and rising) personal savings rate, a 6.5% output gap and core inflation already south of 1%. These are warning signs, and the Treasury market refuses to sell off, which has thus failed, to ratify the great inflation trade.

cohodk

Thanks meluaufeet.

Made small trades on SLV puts and ZSL this morn. 15% and 1.7% respectively. Shoulda held as silver is dropping further as I write.

Every move in equities/metals/bonds/currencies can be directly traced to a move in the dollar. Tick for tick. Nothing is moving on its own fundamentals. I know some will argue about the fundamentals of gold, but thats for another time. Seems to me like a massive computer program. Machines may be able to replace mans physical labors, but not his intelligence. Makes me uneasy. Lots of emotion in the markets.


10:47 Edited to add. In the time it took me to write this, had I held my positions, returns would have been 41% and 3.2% repsectively. I suck!!!

11:14. Waited quietly for 2 weeks for this day and I blew it. Shoulda had 67% and 4.5% trades. Suck, suck suck!!

roadrunner

Some of the more battered miners on my watch lists

Nibbled on some IAG and MFN today. Could be more downside in miners and there are more I'd like to pick up. Still evaluating if this is a 1-2 day affair or the start of something longer

roadrunner