***JUNE 2011 Gold and Silver Stocks/Options/Futures trading thread***

ProofCollection

This is a continuation of the monthly thread for discussing relatively short or near term movements in precious metals and related securities.

May saw gold trade in a range of $115, silver a range of $15!

On a weekly basis, both gold and silver continue onward and upward along their trendlines. With the impending end of QE and the increasing instability in the middle east, it should be an interesting month with continues high volatility.

Palladium does looking interesting. It may be done consolidating, or may need another month or two, but this is quite a move. Monthly chart:

ProofCollection

Gold is ready to finish this move, however it seems rather unexciting in light of the past few months. It is a fairly low-energy trend. I think the timing for the move to end on Thursday is spot on. I'm still looking for at least 1545, with a possible move to 1570 but certainly not higher. That might coincide with a further dip in the USD to the 73's again.

melikecoins

June time for vacation

Glen

renman95

PC, the 2008-2011 PA chart is impressive indeed. I'd like to see a pullback in time for next year's palladium Merc one ouncer. Wishful thinking.

Melikecoins, the "go away in May..." is looking better and better regarding stocks, whew, what a wallop today.

Greece splattered two May's in a row. RE getting a 2nd flush. "Debt" all of a sudden matters. A good summer to get a tan, a nice golden tan.

ProofCollection

Todays' move in stocks wasn't encouraging but is meaningless so far.

I liked gold's push up to 1551+, but I'm thinking that one last push on Thursday will be about all we get as we put in a short term top, so I am selling at just over 1550 tonight or tomorrow morning. It could make it to R2, which is 1562.5, but I just don't think so. Then we'll probably see a week of mild-downside.

goingbroke

Lift your eyes and listen. Don't miss this. If the present European financial crisis sneaks out from the pen the Nice Government Men presently have it trapped in, then silver will lose badly against gold. and this correction business will drag out a long time. If the NGM and their running dogs do their job and keep the panic penned up, then the gold/silver ratio will bottom sometime by end July, probably end-June. Thus the worse the crisis gets, the further silver will drop

cohodk

then the gold/silver ratio will bottom sometime by end July, probably end-June

I think it already has bottomed at 31 back in April.

revoldlog

<< <i>Lift your eyes and listen. Don't miss this. If the present European financial crisis sneaks out from the pen the Nice Government Men presently have it trapped in, then silver will lose badly against gold. and this correction business will drag out a long time. If the NGM and their running dogs do their job and keep the panic penned up, then the gold/silver ratio will bottom sometime by end July, probably end-June. Thus the worse the crisis gets, the further silver will drop >>



I don't quite understand what you mean. Can you explain a little bit on what is the relationship between European financial crisis to GSR?

derryb

PA chart indicates a need for an increase in margin requirement.

edmundfitzgerald

SURVEY SAYS

ProofCollection

There's a big cycle date (Armstrong) coming up Jun 13 that agrees with lots of other cycles dates so the following Monday should be VERY intersting and is expected by many to be the beginning of a big down trend. Not just for stocks but also for gold. Some are suggesting that this is about as high as it will get for gold this year. I'm not expecting much for next week, I think I will use next week to scale out of positions in preparation for this big date.

roadrunner

Armstrong's cycle model is based on business confidence rather than just a stock market peak. He's often said the 2 may or may not correlate. Therefore the cycle bottoming in the
next 2 weeks doesn't necessarily mean the stock market starts to rise again...or that it can't tank. The current 8.6 yr cycle ends in 10 days. The cycle began on 11/5/02 and peaked on 2/25/07. The stock market peaked over 8 months later. A 4.3 yr confidence bottoming cycle is now at hand. That means the next 4.3 yrs runs to a peak by Sept 2015 with the first interim peak occuring in July 2013. That sort of seems counter to what we're seeing with currencies, national/state/municipal revenues, etc. Hard to see a lot of confidence in business under current conditions. Then again, well run businesses can somewhat insulate themselves from those effects.

This business cycle run into mid-2013 "should" be similar to the run from Nov 2002 to Jan 2005. That was a period where gold stocks outperformed gold bullion. But gold still advanced 75% during that 2 yr period. Gold's best moves have come when Armstrong's confidence model is in a downward slide. There are 3 of those in each 8.6 yr cycle. So all we can look forward to over the next 2 yrs might "only" be $2750 gold with the "bigger" moves saved for early 2014, and 2016. Armstrong has pointed to the 2015-2017 period as the potential top for the commodity sector. Armstrong's cycles are on the longer term so trying to equate precise "turn" dates might be asking the model to do something that it can't.

roadrunner

Wingsrule

That's one of the reasons I love this place. Two well respected members discussing how they 'see' the market over the next period of time. One implies gold may be done for the year, the other stating that a big move is coming over an extended period of time.

Who is right? Perhaps both of them. Time will tell.

57loaded

wondered best place to post this....my conclusion was in this thread.
be sure to read past the third paragraph and get to the meat of the article's "BUY! BUY! BUY! part.

one way to beat the markets- WSJ June 5th

Mark, looks like another Western Conference team this year, just not ours, respectably.

ProofCollection

I guess I'm not sure what to make of Armstrong's cycle date, except that it coincides with other recognized cycle dates. I'm still torn on what to expect. The only thing I know is that there is likely to be a big move next Monday, and that whatever direction gold and stocks go, it is likely to keep going that direction for a while. It's important to know that these cycle dates are not precise.

Gold does look good for this week though, as the climb could easily continue another $10-30 from our current level at $1545.

Edited to add: PA on a nice run... back over $800 last night, on a straight up run from $700 in amonth. Now only about $55 from long-time (alltime?) high.

ProofCollection

Going long gold on this morning's dip to 1537. In at 1538. Looking and holding for a re-test of the all time high, 1570's.

57loaded

<< <i>I guess I'm not sure what to make of Armstrong's cycle date, except that it coincides with other recognized cycle dates. I'm still torn on what to expect. The only thing I know is that there is likely to be a big move next Monday, and that whatever direction gold and stocks go, it is likely to keep going that direction for a while. It's important to know that these cycle dates are not precise.

Gold does look good for this week though, as the climb could easily continue another $10-30 from our current level at $1545.

Edited to add: PA on a nice run... back over $800 last night, on a straight up run from $700 in amonth. Now only about $55 from long-time (alltime?) high. >>



i suppose and i dunno if M.A. takes into any account market anticipation with his cycles. either way it will be a coming week with much anticipation. he does state emphatically that a correction is needed for predictions to come to fruition. one can say if you've been in PM for over a few years, wait it out, then back the truck up. if one is recent buyer, it may be prudent to back out and wait.

cohodk

<< <i>There's a big cycle date (Armstrong) coming up Jun 13 that agrees with lots of other cycles dates so the following Monday should be VERY intersting and is expected by many to be the beginning of a big down trend. Not just for stocks but also for gold. Some are suggesting that this is about as high as it will get for gold this year. I'm not expecting much for next week, I think I will use next week to scale out of positions in preparation for this big date. >>




Im becoming increasingly concerned of the look of $XAU, GDX. Prices are below all key moving averages and the 50 has now crossed below the 150. XAU 193 is the line in the sand.

roadrunner

Im becoming increasingly concerned of the look of $XAU, GDX. Prices are below all key moving averages and the 50 has now crossed below the 150. XAU 193 is the line in the sand.

Yeah, GDX has been looking like dog meat. Still performing the same correction that started back in November. It's one huge ABC. Seems to me it's now at the back half of the C leg
which could take it to new lows for the year. Might take a few weeks or 2 months to finish up. One point of concern is that this is the first time since the 2008 massacre where GDX
was soundly rebuffed by an attempt to get back above the 50 and 200 dmas. No secret than the funds are still playing a long bullion - short miners that has squashed the miners for
the past 7 months. When/if this artificial stimulus is removed, the miners should snap back with ferocity. A gold move into the mid $1400's or lower could really magnify the GDX drop.

GDX does appear to be in the final leg of 5 wave set that began in early April. That means it will probably get at least an interim bounce soon. But I don't see anything but bearish oscillators in the GDX daily charts. The hourly chart seems to be showing 5 waves down over the past 6 days with a gap down this morning. Possibly some relief as the FED has heavy
POMO days today and tomorrow. There's no POMO currently scheduled after June 9th.

roadrunner

cohodk

Im short....





Also bot GDX puts and ZSL on The Bernankes comment late yest.

Wingsrule

This information was listed at TF's site and was sent to the CFTC. It's been mentioned in years past that nearly all of gold's gains were during overseas trading. 2010
has been no different. The times below reference the London fix.

Total trading days 254
Trading days PM fix over 2% higher than AM fix ZERO
Trading days PM fix over 1% higher than AM fix 2
Trading days PM fix either lower, or no higher than $5 211 (83.1%)

It should be obvious to anybody with a trained eye for sleuthing that something is badly wrong here. I find it incredible that for all of 2010 only TWO out of 254 trading days resulted in a PM fix higher than 1%. There was an 83% chance of either a lower close, or very minimal gain. This is totally consistent with the trading patterns for the first 5 months of 2011. Since the beginning of 2010 gold has rallied 41.5% without a SINGLE PM fix above +2%, and only 7 above 1%. There is an obvious seller who wants ALL Comex trading days capped at 1%. This is illogical from a trading perspective, and defies all fundamentals, technicals, and news-driven events.

***********************

The post above was from the May thread, and it got me thinking about how the bands were broken up, i.e., over 2%, lower / higher / somewhat hgiher, etc., so I decided to do a little sleuthing of my own.

Based on the Kitco data for all of 2010 (except Christmas Eve and New Years Eve, where there was no PM fix listed) there were 251 full days of data. When you look at the change between the AM fix and the PM fix, the ranges and the number of days were:

Change > -2.0%
1 day, 0.40%

Change between -2.0 and -1.0%
15 days, 5.98%

Change between -1.0 and 0%
125 days, 49.80%

Unchanged
7 days, 2.79%

Change between 0 and 1.0%
93 days, 37.05%

Change between 1.0 and 2.0%
10 days, 3.98%

Change >2.0%
0 days, 0.00%

When you analyze these statisically, there is only one flyer, i.e., a value that falls outside of the +/- 3 standard deviations. That occured on 10/19/10 when gold registered a $28.75 drop (2.10%) between the fixes.

Now, when you apply the same methodology to the changes between the PM fix on one day and the AM fix on the next, the results are as follows (note: there are only 250 data points in this range):

Change > -2.0%
2 days, 0.80%

Change between -2.0 and -1.0%
19 days, 7.60%

Change between -1.0 and 0%
74 days, 29.60%

Unchanged
1 day, 0.40%

Change between 0 and 1.0%
122 days, 48.80%

Change between 1.0 and 2.0%
28 days, 11.20%

Change >2.0%
4 days, 1.60%

There are 3 flyers in this data group; two on the top end (fix went up 'excessively') and one on the lower end (fix went down 'excessively').

Figures don't lie, statisticians do.

cohodk

Sold GDX puts and ZSL at about 11:15am edt. $xau and gdx bounced off the line. I dont think next time will be so lucky and will look to re-enter short.

jmski52

Wingsrule, I agree with you. And to think that all that has been happening in a strong bull market really makes me crazy if I think about it too much.

I'm not a trading guy, but isn't that behavior what you might expect in a short squeeze where market manipulation is allowed?

cohodk

Wingsrule,

How does that data compare to other markets, such as agricultural products, stock market, copper, ect? I may be important to see whether this phenomona is constrained to only PMs or all markets.

I am also not sure if you are comparing the information properly. You should compare PM fix to PM fix as that shows the true daily change, rather than PM vs AM. An examination of that info would be most helpful.

Wingsrule

I can do the PM vs PM change and will post something later tonight.

My original post was addressing a previous comment about the 'fix' that was on (pun intended) during normal COMEX hours. I was trying to correlate that to the 'rest of the daily' action.

InYHWHWeTrust

Very interesting, WR, thanks for the research.

cohodk

Looks like XAU and possibly GDX are gonna close at lowest levels since last Sept. Both are below 2 1/2 yr uptrends.

Looks like the "store of value" could be burglarized, if not hit by arson.


Edited to add after the close obversation. PMs and miners are putting up a good fight. So far no serious breakdown, but tomorrow is another day. The motion sensor turned on the light.

Wingsrule

Part 2.

First off, I had a conditional formatting error in my previous post on the PM-vs-AM fix regarding the number of flyers. The old value was twelve but the correct number is three. I have edited the post to reflect that.

Here is what you get when you analyze the PM fix for the day compared to the PM fix for the next day (250 data sets):

Range: a $34.50 drop (-2.87%) to a $39.00 gain (2.84%). There were zero flyers in this analysis when taken on a percentage basis, but the $39.00 gain did fall outside the +3SD parameter of $38.17. It was the only one on either side.

Change > -2.0%
9 days, 3.60%

Change between -2.0 and -1.0%
22 days, 8.80%

Change between -1.0 and 0%
78 days, 31.20%

Unchanged
6 days, 2.40%

Change between 0 and 1.0%
92 days, 36.80%

Change between 1.0 and 2.0%
36 days, 14.40%

Change >2.0%
7 days, 2.80%

109 of 250 days showed a drop versus 135 gainers. This is almost exactly opposite of the 141 losers and 103 gainers in the initial study which compared the AM fix to the PM fix.

Hope this helps.

Regards,

Mark

Wingsrule

The data for 2011 (through June 2, 2011) using the difference between the PM fix on one day and the PM fix on the following day. Data from Kitco's historical pages.

There are zero statistical flyers in this 102 data point group.

Range: $1,319.00 to $1,541.00
Average: $1,428.59

Change > -2.00%
0 days, 0.00%

Change between -2.00 and -1.00%
14 days, 13.73%

Change between 0 and -1.00%
27 days, 26.47%

Unchanged
0 days, 0.00%

Change between 0 and 1.00%
47 days, 46.08%

Change between 1.00 and 2.00%
13 days, 12.75%

Change > 2.00%
1 day, 0.98%

cohodk

Thanks for doing the work Wingsrule. Interesting the different conclusion. Giving a cursory glance, I cant find any statistical anomalies that would lead me to determine anything sinister was taking place.

Wingsrule

Using the silver fixes for 2011:

Range: $26.68 - $48.70 (silver fix)
Range: -$6.68 - $3.80 (daily change between fixes)

Changes > -10.0%
2 days, 1.9%

Change between -7.5 and -10.0%
2 days, 1.9%

Change between -5.0 and -7.5%
4 days, 3.8%

Change between -2.5 and -5.0%
10 days, 9.4%

Change between 0 and -2.5%
30 days, 28.3%

Unchanged
1 day, 0.9%

Change between 0 and 2.5%
32 days, 30.2%

Change between 2.5 and 5.0%
20 days, 18.9%

Change between 5.0 and 7.5%
2 days, 1.9%

Change between 7.5 and 10.0%
1 day, 0.9%

Change more than 10.0%
2 days, 1.9%

The only statistical flyer out of the 106 data points was the $6.68 drop between May 11 ($39.18) and May 12 ($32.50).

Interesting point is that due to the huge volatility, any change within 11.5% or so of the previous day would be considered part of a 'normal' distribution.

ProofCollection

Gold disappointed yesterday as I expected it to gain a little, but instead it continues sideways. I have reduced my position but I am still long.

SP500 looks destined to fulfill a larger 38.2% retracement to 1232 area... but stocks are oversold, so I'm looking for a decent rebound the next couple of days. Then it seems to be widely expected to see a bigger decline as QE ends. Although the old addage is probably true here. When everybody expects the markets to go one way, they go the other. The effect of the end of QE2 is one of the most anticipated events I can remember.

The latest McLellan newsletter is looking for a bottom in XAU (which usually applies to PMs as well) Wed or Thurs. Then after that there's another bottom "scheduled" for Jun 29. Not sure what to make of that yet.

So at this point I'm still just looking for short term ~$10 moves in gold to play, although I'm still looking for a possibility of a retest of prior highs which I plan to short.

ProofCollection

Gold remains sideways, but PA and PL continue to grind higher...

SP500 is looking pretty bad lately. I will be looking to short SP500 on any rally continuation Friday, as that appears to be the clearest move at the moment. None of the economic news is looking good at all. QE ending? Not a chance! A big QE announcement is the only thing that can turn around the dive that is coming, IMO.

Interestingly enough, I got my monthly MLS newsletter for the Phoenix area. They have a price prediction model that can predict average & median prices a few months out based on pending contract activity. While inventory has declined in a big way here lately, avg & median prices are looking to take a ~10-15% dive in the next 3 months, with the biggest dive coming in August. Granted the further out the less accurate, but with inventory declining and sales volumes very high, it's the pricing that tells the real story.... although pricing is a lagging indicator.

cohodk

<< <i>Gold remains sideways, but PA and PL continue to grind higher...

SP500 is looking pretty bad lately. I will be looking to short SP500 on any rally continuation Friday, as that appears to be the clearest move at the moment. None of the economic news is looking good at all. QE ending? Not a chance! A big QE announcement is the only thing that can turn around the dive that is coming, IMO.

Interestingly enough, I got my monthly MLS newsletter for the Phoenix area. They have a price prediction model that can predict average & median prices a few months out based on pending contract activity. While inventory has declined in a big way here lately, avg & median prices are looking to take a ~10-15% dive in the next 3 months, with the biggest dive coming in August. Granted the further out the less accurate, but with inventory declining and sales volumes very high, it's the pricing that tells the real story.... although pricing is a lagging indicator. >>




There will be no announcement of a QE III for many months. Too far away from elections. Why waste another bullet--or at this point a sharp stick-- so early? Gold, Silver, Plat, Pall, XAU, GDX all looking like potential to suffer greatly. We'll know more after next week.

There might be some good buys in the Greater Phoenix area, but be prepared for minimal gains for a long, long time. The market was grossly overbuilt.

ProofCollection

<< <i>There will be no announcement of a QE III for many months. Too far away from elections. Why waste another bullet--or at this point a sharp stick-- so early? Gold, Silver, Plat, Pall, XAU, GDX all looking like potential to suffer greatly. We'll know more after next week. >>


There's more reasons than you think. I agree the election will be a big part the fed's decisions, but Washington caters to Wall St, and a big market crash or decline gets a lot of attention and negative press. There's plenty of time for QE4 next year. My guess it they'll go for a more covert or unofficial QE move rather than a big announcement.



<< <i>There might be some good buys in the Greater Phoenix area, but be prepared for minimal gains for a long, long time. The market was grossly overbuilt. >>


Minimal gains in appreciation, but rental income is nice and stable. A 4-plex, built in 2004 that I sold for $490k on the outskirts (but backing to a mediocre muni golf course) is in the process of being short-sold for $140k. Each unit is rented for $600-700. That's $2400-2800 gross income per month. Who cares what the building is worth when it practically pays for itself in 5 years? The other aspect of the Phoenix market is that we were one of the first to crash, whereas it seems some cities have only really started significantly declining in the last year or two. Consequently I think we'll be one of the first to stabilize, and I thought we were stabilizing as our MLS inventory is down to about 30k from 50k, and 25-30k is pretty normal. The coming -10% price drop was a bit of a surprise given the sales numbers, although distressed sales still account for 2/3 of the market. Pricing probably won't stabilize until that number is cut down.

roadrunner

GDX and GDXJ look to be ready for a mercy bounce from here. GDX once again has cycled to the bottom of it's 7 month consolidation channel with negative divergences showing up.
The GDX/GLD ratio is the lowest it's been since about January 2009 with RSI the lowest (32) since November 2008. Looks like essentially 5 waves down now since early April and a
near complete ABC since November. Barring a repeat of July-Oct 2008 it's hard to see this ratio going a whole lot lower than 0.35. In the past 3 yrs it's been putting in major bottoms at the 15-16 month point, just about where it is now. The 0.35 level was strong weekly support from Nov 2008 to April 2009. The weekly volume for the ratio was significant and one
of the couple of highest seen in the past 3 yrs. Usually such spikes signify bottoms or tops. But not out of the woods with oscillators still showing downward momentum. Could yet
have another heavy week of volume sliding into equities/miners options expiration week. Gold still holding it's uptrend line from February and >20 dma.

GDX to GLD chart

FED POMO schedule was published today. Instead of the $6-$9 BILL dollar days they will now be running $4-5 BILL. Next week is Monday-Thursday with the heavy days. POMO ends on June 30th with 4 final days in a row. Total for the month of $62 BILL. The schedule tends to pump the first part of the week and then leaves Friday hanging, much like today.

There will be no formal announcement for QE3 unless Congress and the people beg for it. Doesn't matter though as it's already baked into cake even if J6P can't see it. If the hidden QE
gets sniffed out, they'll just find another way to route it around.

roadrunner

cohodk

Renting is the only way most people will make money in RE over the next decade. Question is, are there enough investors to buy these homes as rentals? But renting opens a whole 'nother can of worms. And who would the renters be? Retired persons? Its my impression that retirees prefer to own rather than rent. Is there still active building in the area?


$xau stubbornly holding onto the 193 level. Silver may have broken the mini uptrend off the May lows. I dont see any reason why the 200dma should not be tested. I wanted real bad to buy back ZSL but I hate carrying anything over a weekend. Hopefully the bottom will not fall out Sunday night. Sentiment indicators--on the stock market-- are EXTREMELY low and next week is an options expiration so given the rather precipitous drop in the stock market this month, the market makers will have reason to try to push prices higher.




Barring a repeat of July-Oct 2008 it's hard to see this ratio going a whole lot lower than 0.35

The ratio would stay the same if even if both fell by the same %. Just looked at the chart----I can 0.30 easily and a test of the lows a possibility.

roadrunner

The ratio would stay the same if even if both fell by the same %.

Agreed. The same way the USDX can remain even while the USDollar and other currencies continue to depreciate at equivalent amounts....giving the impression of a
steady dollar. Yeah, streadily declining. At least for the past several years gold has generally ramped up while gold stocks have strongly oscillated. In recent history
it's not often where both gold and gold stocks move upwards or downwards at the same pace. If the ratio is staying the same that would be a positive sign.

Just looked at the chart----I can 0.30 easily and a test of the lows a possibility.

While anything's possible 0.30 would probably require a significant deleveraging event commencing this summer. The drop that occured in 2008 took approx 7 months
with most of that drop occuring in the last 3 months. The current move already has 7 months under its belt with 2 weeks of blow-off volume already greater
than anything seen in 2008. Over the past 3 yrs the ratio has taken from 6-7 months on down legs and approx 9 months on the up legs. Just from a seasonal perspective
I could see hitting 0.325 within a month or so to finish off this 5th leg down from a set commencing from early April. From a symmetry standpoint in the 6+ month old ABC pattern
from early December it would be out of character if it penetrated 0.325 and lasted much more than the 7 months we saw in 2008. Over the past 3 yrs these shorter term down
moves have lasted about 7-9 weeks. This present one at 9 weeks now is already pushing it. But then again, anything can happen, at any time. Patterns can break.

Would agree that equities are probably ripe for a bounce. Dow 11,600 was a number that Walayat tossed out a few months back as the possible bottom for the early summer.
Starting to look a lot more reasonable. With 4 days of heavier POMO next week, that should be a plus for equities. Just occured to me that this past week was a bond week which
could explain the weakness in equities, and the typical hit to gold/gold stocks Mon-Wed with recovery commencing on Thursday. The lack of POMO Friday didn't help equities.

roadrunner

roadrunner

Massive early volume today in the GLD:UDN ratio. This is has usually occured at inflection points. But in looking back the past 3 yrs, the large majority of those occured near significant bottoms of gold price in $USD. The last 2 were Feb and August. The peak will probably ease off some or even evaporate as the morning goes on. But something to watch today to see how it ends up. The largest volume peak in the last 3 years was back in October 2008 as the deleveraging crisis was trying to finish out.

Hourly gap down in GLD at 150.5 from Thursday's open still asking to be filled. Similar comment for SLV and GDX. Equities have 4 days straight this week (Mon-Thurs) of $4-$5 BILL per day of POMO to help them along before expiration on Friday. No treasury auctions until end of month to supply headwinds. But that last week of the month should supply a beatdown.

roadrunner

cohodk

Massive early volume today in the GLD:UDN ratio


Is this ratio traded somewhere? Im just wondering how a ratio can have volume.

Gold needs to hold $1520. A break below and it probably tests the 200dma in coming weeks. Gold has not actually touched the 200dma for 2 1/2 years.

roadrunner

<< <i>Massive early volume today in the GLD:UDN ratio

Is this ratio traded somewhere? Im just wondering how a ratio can have volume.

Gold needs to hold $1520. A break below and it probably tests the 200dma in coming weeks. Gold has not actually touched the 200dma for 2 1/2 years. >>



Gold just broke the 20 dma. But lets watch for the 50 dma break before jumping into the 200 dma. The 144 dma has acted as rebound point for gold for the past 2-1/2 yrs.
And in several spots the 144 and 200 dmas have come very close to touching. Today's bounce off $1511 touched the uptrend line from February. The 50 dma is slightly below
that at around $1504. So it's not "towel throwing-in" time just yet. But I'll have to admit it's looking a tad shaky.

A ratio can have a volume if both items have their own volumes. I have routinely checked volume on the gold to silver ratio (GLD:SLV) for clues on direction. And surprisingly
the volume in some ratios does give off pretty consistent data, esp. around turning points. The GDX/SPY ratio volume is excellent for marking turns (tops or bottoms) with a large
volume spike. But you're right that the volume ratio is not traded, though one can effectively trade any ratio by dealing with the 2 parts individually...as you well know.

roadrunner

cohodk

Ok, gotcha on the volume thing.

Im not looking for a "throw in the towel" type of move, but I see nothing wrong with a normal/typical 10-15% correction. The trendline I drew was at 1520, which when broken at about 1pm yest resulted in a quick $8 drop. The 50dma at 1505 is the next line, but I see no reason why it should hold. Of course it could, but given the trendline break and weakening momo, the burden of proof is now in the bulls hands.

Stock market is bouncing today as expected given the extemely bearish sentiment.

Dollar is down against all currencies today except the Swiss Franc. Gold and silver with rather anemic bounces, maybe gets stronger as the day goes on. Silver tested the uptrend line from the start of the rally in August.

roadrunner

Some encouraging IH&S patterns building in multiple metals. And copper's recent surge is certainly a positive sign. But until breaking out of the current $1512-$1530 range,
gold is stifled.

Our own numismatist Barry Stuppler has a concise article today on his preferences on how to buy gold. In short, he gives some excellent insights into why miners have been
underperforming the metal. Nothing really new here, but it's all presented in one place via a concise argument. Can't say I disagree with anything he wrote. Inflationary
effects on labor and supply costs are taking their tolls on the miners as well as the obvious geo-political risks. Miners don't like inflation.

Barry Stuppler on gold

roadrunner

Justacommeman

I've been out of the miners for awhile and I'm still in no hurry to get back in. Not even a nibble ...............yet. MJ

ProofCollection

The gold charts are loaded with energy and have been for a few days. It could resolve either direction. Meanwhile, SP500 has shown NO strength, and with QE2 ending, is questionable despite being oversold.

A newsletter had some interesting commentary on gold stocks:

Gold mining stocks are down more than 15% on average from their all-time highs in April. Eric Roseman recently told Commodity Trend Alert subscribers that this has been one of the worst bouts of selling he’s seen in years, and ranks along with the 2008 credit crisis as the most severe correction for the gold mining complex. He calls the relentless selling “absolutely stupid.” We’re inclined to agree … gold has barely declined since May; it’s just 2% below its all-time high. But gold stocks have corrected in some cases up to 35% – a “major drubbing.” Andy Hecht says this enormous divergence won’t last … “Gold mining companies produce gold and sell it on the global market at the current price for gold bullion. So long as gold prices stay even close to current levels these miners are mega-profitable. Therefore, no way – gold can’t stay anywhere nea r current prices without shares in these mining companies recovering in a big way!” This could mean one of two things … either gold is too expensive at current levels – which we don’t believe – or gold-mining stocks are way too cheap. That means gold stocks like portfolio favorite Goldcorp (NYSE: GG) are a buy.

roadrunner

There are very few intermediate or senior miners that are only down 15%. Most of the ones I'm looking at are down 30-60%...some peaking as far back as November.

GDX is down 19% and GDXJ down 26%. It's easy to find well respected mines down >35%. Northern Dynasty, which arguably has the largest resource base next to Barrick and Goldcorp, is down 62% from it's 2010 peak. It has 177 MILL gold equiv ounces of reserves/resources which works out to be around $4.60 per ounce of gold. $47 MILL of those ounces are gold. In some of the larger takeover deals the seniors have been paying up to $200-$250/oz of proven reserves.

roadrunner

jmski52

Are the mining stocks following Ayn Rand's scenario from "Atlas Shrugged?" From Barry Stuppler's comments, it could be...

roadrunner

weekly GDX chart

The weekly oscillators finally got their bounce from oversold levels....plus 5 legs down since April. Bottoms up....or revisit summer/fall 2008?


roadrunner

roadrunner

Northern Dynasty up 20% the last 48 hrs. Nice move NAK! But now an hourly gap sitting 6% to take care of at some point. Now will comparable Novagold rebound in sympathy? Seems many were spooked by Soros and Cramer bailing on it. Interesting how Jaguar and Rangold both just filled their remaining gaps this week and then rebounded. The low for both of them was the day of the gap-fill. The weekly GDX chart in the previous post did a nice job of confirming this recent bottom to within 2 days. Now we see how well it holds. GLD has closed it's gap from the past week but GDX has a bit of work left. SLV has a ways to go to fill at 36.7 but probably headed there. Oil turned back abruptly this morning to fill yesterday's gap.

By end of the day Novagold did make a move of about 20c. That was good considering I unloaded NAK in the morning and moved 50% into NG. Would still like to get back into NAK.
Nice triangle/cup w/handle in gold over the past 6 weeks that's about at the end of it's pattern....pointing to $1700+. Would certainly be out of character during seasonal weakness, but
who knows. Gold/silver/copper futures option expiration looming on Monday, which puts Friday square in the cross-hairs....along with end of month, it's end of quarter squaring. 3 bond auctions next week as well but with significant POMO on 4 days to help offset.

Thousands of pages of Frankendodd and the associated maze of new regs just might end up giving a boost to mining stocks.

Dust Buster ....note Thursday's volume spike.

roadrunner

cohodk

<< <i> Bottoms up....or revisit summer/fall 2008?


roadrunner >>




I hope its not that ugly. Americans will not be caught off guard and let the banks replenish YOUR bank accounts with newly minted cash next time.


Gold/Silver still consolidating sideways. Gold vix just under 16--at the bottom end of the 6 month range. We should know in the 2 weeks which way gold will go for the rest of the summer.

roadrunner

Gold is running out of room banging into $1550 as well as being squeezed into the end of this 6 week triangle. Suspect it will break to the upside this week. PM's options expiration for the month, quarter, and first half of the year is Monday. Even with those headwinds I think the fact that silver has lagged so much that it will pull gold with it as it closes out it's 2 week gap at $37.40 (ie SLV at $36.70). There really has been no significant B wave bounce out of silver since bottoming at $32. It's quite possible we see a move to $41-$43 soon. But not putting any money on that as gold seems the far safer play right now. Only hold one silver miner, SVM that I picked up last week. I like the strength/turn in the miners.

Besides options expiration next week is a TBond auction week with 4 days of significant POMO (M-Thurs).

roadrunner