***JULY 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.

BigRick

Silver vol has fallen through the basement and you can't even give away Sep 100 Calls (remember when they you couldn't buy them for less than $1,000 a couple of months ago? :HMMMMM.

roadrunner

There were actually legit calls for $100 silver a few months back? That's incredible. Don't follow the prices of calls/puts but I guess that shows how stupid some people can be.
What's the price for $10 September puts? Has it swung back just as far the other way?

roadrunner

BigRick

Lowest strike for SI SEP Puts is 15. Last was .005 (i.e. $25).

roadrunner

Special Gold Report dated July 4th

The link to Safehaven.com has a Special Gold Report that is quite interesting. Some of the comparative charts you will rarely see w/o a paid subscription somewhere.
I didn't read the whole report but found sections 16-19 interesting, particular their interpretation of the safest and most unsafe mining jurisdictions.

Good reading on gold in general. The authors consider the pros and cons fairly well.

roadrunner

calleocho

good reading indeed.

cohodk

Glad I covered 1/2 my ZSL on Friday, but not happy it was only half. Momos and price/volume trends are still negative so gonna sit on positions for a bit longer.

I've been quite neutral to bearish on $XAU/GDX over the last few months and while miners (as a group) havent broken down, they havent gone higher either. The failure to breakdown must be respected. There was even some divergence last week with the stocks higher and the metals lower. Perhaps the miners are finally nearing the end of this year long consolidation--it is now time for the group to put up or shut up. Im neutral as potential for whiplash is high.

roadrunner

GDX moved above some resistance today at the 55 level. But this also coincides with hitting the top BB's for the 1 hour and daily. Something has to give. Gold and silver are at key back test points from the recent down trend. If gold can continue up past $1518-$1520 then it might ring in some fresh bullishness. BPGDM (bullish %) on the GDM/HUI is back above the 5 day moving average which is the first step for miners to regain bullishness. It's been under the 5 dma for most of the past 2 months. All in all the picture is perfectly muddled with multiple indicies at key points, but not having broken through. I wouldn't be at all surprised if miners have already put in their low for the summer considering the drubbing they have taken since November. But it doesn't mean they can't move sideways for another 2-6 weeks. One major point in GDX's favor is the 5 distinct legs it put in on this last drop. That could have been a 7 month ABC (5-3-5) completing. Maybe gold still has a retest of the $1440-$1450 region left in it, but it sure is refusing to cooperate.

The SPY and USDollar were mostly flat today so there was no negative input to weaken GDX as gold soared. It's almost risen far enough to equal it's Feb left shoulder. The dollar is still coiling up inside of it's 2 month consolidation from where a strong move is likely.

For miners, Tuesday has seemed to be a strong day most weeks and Wed weak. So I went back over the past 7 months just to verify. Sure enough, Wed down days have outnumbered the up days by around 2-1 (20-11). Tuesday up days have outnumbered downdays 18-13. Though the current week is shortened, I'd sort of expect Wed this week to follow this trend. Jobs report "wild card" due out Friday. No TBond auctions this week.

Gold forward/lease rates have dropped for the past 6 days. That's still pointing toward bearishness. Silver rates have been fairly steady over the past week or so. Had silver been able to close above $35.60 today it could have turned the tide bullish. Ended up being pushed back to $35.50 in NY. But it's right there.

On the GSR scene it continues to consolidate inside an ascending triangle formed over the past 2 months. What's interesting is that since May 4th, there have been 6 touches of the new uptrend line, including today's touch. The GSR pullbacks over the past several weeks have only lasted 5-6 days as this triangle is converging. Today was the 5th day in the latest GSR pullback. Maybe tommorow is the 6th and last?

gold to silver ratio

ZSL's hourly chart has gaps $2 higher and $0.50 lower from its current level. Since that lower gap at $17.50 is so close, maybe it dips first to pick that up before rebounding. ????


roadrunner

goingbroke

The way the PM prices are going it reminds me of when I was a kid my mother always told me to stay away from mouse traps. You can imagine how much good it did to tell a little boy to stay away from something with springs, wire, and a sudden explosion of noise and movement. But I learned through my pigheadedness that playing with a mousetrap inevitably results in the bail snapping down sharply on the player's finger. Always.

ProofCollection

I agree RR... it would take a decisive move over 1520-1525 to be bullish, but that last move really surprised me. Not sure what to think of it yet, it's not part of any short term trend. In the short term, gold is going to have to at least retrace part of the last move up, so we're probably looking at touching the 1501 area tonight/tomorrow. Silver also had a tremendous move, but I just don't think it's going to mean anything just yet.

I think overall the markets are going to be in a holding pattern for the next few weeks with the uncertainty over the budget/spending battle. There is definitely strong support for gold, so downside is probably going to be limited overall, I think the the next couple of weeks will be pretty wild and unpredictable but basically go nowhere.

Interesting how the Martin Armstrong turn dates so far have yet to really materialize into any new trend, but SP500 stocks have definitely recovered nicely.

roadrunner

Gold and silver certainly kept things interesting today. Still, the gaps formed on Tuesday's opening suggest revisiting those points in the near future ($1488 gold, <$34 silver)

As seems typical for GDX, it was bullish on a Tuesday, jumped early Wed morning, then peaked around noon. Has been slowly declining since, though not yet indicative of a pull back. If it follows the weekly cycle it should cool off some on Thursday and Friday. Seems to have a lot of momentum on its side as it follows the S&P/Dow. Copper has formed sort of a rounding off pattern. And like plat and pall, peaked before today's open. Gold and silver peak around mid-day and then held pretty close to that. Are copper, plat and pall hinting at the next direction?

The Dow has formed an expanding wedge over the past 3 days while the S&P looks more like a diamond, both consolidation patterns. Looking for GDX clues....don't see anything. There may not be any POMO but you wouldn't know it.

ZSL dipped down to pick up that lower gap today at $17.40. The gap higher remains. Looks like it is turning on the hourly chart but the daily chart gives more room to the downside.

roadrunner

cohodk

I "tripled" up on ZSL at 17.20 this morn. Silver has rallied back to the sharply descending 50dma. That "should" turn it back. Im not looking for more than a quick trade at this point. The bounce off 33+ was very impressive and makes this a KEY price level.

Mining indices have rallied back to the 150 and 200dma, which should also be resistance, but lots of cross currents in the group. 20% either up or down wouldnt surprise me, nor would 3 more months of sideways action.

calleocho

what would actually surprise you then?

roadrunner

With the lousy jobs report today gold got a boost at the expense of most everything else to jump from $1534 to $1546.....just barely enough for GLD to close out its hourly gap left from
the June 22nd drop. Now all the metal and equity hourly gaps are sitting below.

GSR managed to drop a little but seems to have steadied between 42.0 to 42.3 with no clear direction though the short term trend remains slightly downward. Today it touched both the
rising 50 dma line as well as the bottom 20 day BB's and the mid May peak before it went on it's final sharp descent to 31.

roadrunner

ProofCollection

Last night I was going to reply that cohodk's move with DSL was probably a good one, but this morning probably proved that one wrong, at least so far. This week's whole move appears to be defying the expectations of just about everyone. And this whole move has happened without any significant pullback.

Hard to say how much upside may be left. 1550 is a pretty tough resistance area, but with the recent strength gold is showing it just might be able to attempt a new ATH, although I wouldn't expect it to be anything higher than about $1600.

Still, there's a "big low" predicted for gold for July 26, 27. which also corresponds to some lows for SP500 as well, as well as being near the debt ceiling D-Day...

roadrunner

Interesting gold patterns over the past 10 yrs

Some nice detective work by wave analyst QuadG. August 2011 has a number of things going for it on a cyclical level. Good reading.

Here's the pasted link: http://majormarketmovements.blogspot.com/2011/07/gold-lt-putting-au-in-august.html
In a nutshell, gold has bottomed in August in each of the past odd numbered years going back to 1999. It promptly moved up sharply in every case. August 2011 awaits.

roadrunner

cohodk

<< <i>what would actually surprise you then? >>



50% in either direction. Although either would be welcomed.


ZSL has to bounce in the next day or 3, otherwise it may not.

Wingsrule

Picked up ZSL at Friday's close and sold a handful of silver at a local show today (swapped half the proceeds for AGEs). We shall see.

derryb

ZSL is a widowmaker! Be careful. While I can do some serious damage with AGQ, ZSL has not once made me money.

Wingsrule

I'm batting about .500

cohodk

<< <i>ZSL is a widowmaker! Be careful. While I can do some serious damage with AGQ, ZSL has not once made me money. >>




Both are widowmakers. ZSL did nearly double in just 5 days back in May, while AGQ lost more than half. Timing is everything.





An article from Barons.

cohodk

Doubled up again on ZSL at 16.90. Sold that portion at 17.27. Still holding original, and "triple up" position.

cohodk

WOW, silver got a nice little spanking in the time it took to write that last post. Sold triple up position at 17.69. At 17.94 now. Sheesh!!! Shoulda held. Still have original position.

ProofCollection

The dollar has broken out of it's triangle to the upside, based on Euro weakness and "new" concerns about Italy. The financial media is a joke, several European countries are in such bad shape it's kind of interesting how they pick the crisis of the day to report on, as if it is new.

While I'm definitely expecting a pullback in gold, I can definitely see where gold can keep going. The flight to safety is on, and it's hard to see gold pulling back significantly when there are such huge concerns in Europe as well as the "debt ceiling countdown" here in the US. There is buying on any weakness. Like Cohodk pointed out though, any play on weakness needs to be very short term - take your profits when you can get them.

I really wish I was long at this point but I don't feel comfortable getting long at these levels. I want to see a pullback. But overall I don't have a good feel for the near term direction so I'd best just stay out.

Wingsrule

Closed out up 4.5% or so. That, and a 7 for 7 from NJ made it a very nice day!

cohodk

Sold last of ZSL at 18.23.

Gonna wait for another pattern to develop.

ProofCollection

Interesting how gold continues higher, with Tuesday's high less than $5 from an ATH. Still, we have had 6 up-days in a row so another is not probable. A pullback is sorely needed, but nothing seems to be able to stop gold right now.

Interestingly, silver is not confirming this move.

The weekly chart for gold is loaded with energy and is ready for another trend, and it could go either way from here. Gold is actually pretty precarious here, as this could be a double top on the weekly chart...

Everything tells me that gold should break upward from here, but I can't rule out a big collapse or decline.

BigRick

Bought an SI Dec 120 Call for a single tick yesterday (i.e. .001 or $5).

Sold it this morning for .010 or $50.

These were going for OVER $1,000 a few months ago when I told everyone that if they had the stones, it was a GREAT TIME to sell calls.

derryb

<< <i>Sold last of ZSL at 18.23.

Gonna wait for another pattern to develop. >>


I see a pattern.

ProofCollection

I think we're at the end of this run in gold that I have missed out on. $1600 should provide round number resistance for now, but this could be one of those moves that just never pulls back to offer a good entry point. Up $100 in 2 weeks! Gotta take a break soon. Finally silver is confirming the move, but it needs to get back over $40.

Besides all of the economic happenings in the US and Europe, I'm thinking that the new Pan Asia Gold Exchange (launched Jun 28) is potentially having a big influence as it *should* put an end or thwart shennanigans at the Comex.

Can't find the article at the moment, but China has reported that they are intending to exceed the US in national gold reserves, and their annual demand is going to be around 800 tons this year and up to 1000 tons next year. This is A LOT of demand when annual gold production is (IIRC) ~ 2000 tons.

Nichols points out that the weekly chart is ready for a new trend and that the most recent weekly trends lead to 20.x% increases, which will put gold up around $1800.

cohodk

Agreed PC. There is/was a perfect storm for gold over the last 2 weeks. European countries failing and talk of US default. If gold didnt move on that news I would be worried. When a hurricane hits the initial winds do the most damage.




Sold tomorrows ZSL 14 put. I think it expires worthless, but if I get put then my cost would be 13.80.

roadrunner

Looking like time for ZSL to run a bit again. 3 higher gaps to choose from: 15, 17 and 20. The 15 would appear to be a shoe-in if just on an opening jump tomorrow.
Over the course of today both gold & silver look to have formed most of a H&S. If one takes the head of that pattern, it also forms a separate H&S which was broken
down this morning and then backtested by both gold and silver. Silver and gold both hugging up against the upper down channel line. Would expect something around
$1565-1575 / $37.00-37.50. But once again, gold has been quite resilient about hanging near the $1590 level. Sinclair's next angel happens to be $1600 on the nose.
Seems that his angels have often been rally stopping points. For now, just looking at Friday's stocks expiration with possibly a carryover into Monday. That's all the time a
pullback might last. But it's also possible to cycle all next week. Gold and silver options expiration is a week from next Tuesday (26th).

GSR made another touch of the 2 month consolidation triangle today at 40.5. It spent most of the day fighting around 40.7 to 41.3. Since the close its pushed up to 41.4 to 41.5
so it would seem to be in a liquidity retreat mode for now. The consolidation was very symmetric with a nice ABC pattern filling it. This last GSR leg was 12 days down, very similar
to the 10 day leg in May. In looking back a few months the decreasing volume pattern of the last 3 days is very similar to late January when the trend accelerated downwards.
For GSR, decreasing volume was the hallmark of that long drop from 68 to 31. No way yet to say if silver is ready for another surge after a headfake, or decline for a while.
If GSR falls under 40 (the bottom of a consolidation rectangle) then it's probably off to the races for silver.

GSR chart

roadrunner

derryb

Silver is a coiled spring ready to reclaim the $40s. Not a good time for ZSL. I'm going with AGQ.

cohodk

This is setting up for a decent trade.





http://dbfunds.db.com/dba/index.aspx

roadrunner

Now getting close to the influences of July gold/silver options expiration (Tuesday 7/26). So there's not a lot of calendar time left for gold to continue running up w/o headwinds. That final week of July also includes TBond auctions Tues-Thursday. Those end of month auction week are usually negative. This week was also an auction week and probably would have been negative for gold as well had not Ben B. spoke on Wednesday. Last year gold fell on Friday, Monday, and Tuesday leading into expiration. Here's a summary of other years. All of the pullbacks were significant.

2010 Taken down on Friday the week BEFORE expiration. Then down Mon-Tues and a final bottom Wed.
2009 Tues/Wed of expiration week
2008 Taken down the Tuesday BEFORE exp week and never stopped pushing until mid-August (first signs of the 2008 crash)
2007 Wed/Thurs/Friday of exp week. Monday was initially down but Tuesday provided a sharp but brief head fake back up. Then Wed-Friday down.
------- Should be noted that the week before was a strong rise. But exp week took all that back and then some.
2006 Hammered Mon-Friday the week BEFORE expiration. Bottom reached on Monday of exp week.
2005 Taken down week BEFORE expiration Tuesday-Friday.
2004 Taken down week BEFORE expiration Tuesday-Friday. Bottom reached on Tuesday of exp week.
2003 Tues-Friday of expiration week all down. Bottoms on Monday the following week.
2002 Taken down week BEFORE expiration Tuesday-Friday. Retested bottom on 1st day in August, then up again (this was the drop from $326 to $300).
2001 Taken down week BEFORE expiration starting Thursday. Ended the Thursday of expiration week.

I was surprised at the number of take downs the week before (7/10....70%). I'd give more creedence to recent dates. Both 2007 and 2009 were similar "odd" years much like 2011 where strong runs were already underway from June or early July. In each case they pulled back just a tad under 4%. Gold should finish off this run at $1600 or somewhat above, if it hasn't already, and then sometime next week will probably level off in preparation for expiration week.

roadrunner

morgansforever

The smart move is to wait for Aug. 2 before buying gold right?
If the ceiling is raised, how signifigant will the drop be?
If not reached where will it rise to?

cohodk

ZSL puts expired worthless.

I dont often use logarithmic charts as these are usually suited for long-term trends and my trading is usually short term, but I thought this chart was interesting. It clearly shows the dramatic rise in the price of gold over the last 9 1/2 years. But what I find most interesting is the as the near non-existance of volatility since mid-2009. The rally has been extremely orderly with only minor corrections and smooth contained rallies. There is still a rising wedge pattern in place and current prices are at the top of the both the 2 and 5 yr trendlines.

My interpretation would be for an increase in gold volatility with the trendlines being broken (top or bottom lines) in relatively short order.

jmski52

That's kind of an amazing chart, cohodk.

The Black Swan is my bedtime reading now. The lifespan of a turkey can be charted as a consistantly rising trend for the 1st 1,000 days and from the turkey's perspective, i.e., traditional analysis - one would not predict that on the 1,001st day (the day before Thanksgiving), the chart drops to zero.

However, from the butcher's perspective the drop to zero on the 1,001st day is much more predictable. We don't know what we don't know - but someone else may in fact know much better than we do.

cohodk

So are you saying gold is a turkey?

jmski52

I'm saying that we all take our best shot.

Seriously, if I see some better options than precious metals, I'll be tiptoeing in. Nuthin' yet, tho.

Spooly

Great chart cohodk! You should post that chart more often.

ProofCollection

This move in gold continues to frustrate myself (and probably others) who didn't get on board and are waiting for a pullback. We now have 10 consecutive days of green candles, and none are even really dojis. Incredible. So gold is overdue for a correction, the trend is exhausted. It is trying my patience to wait, but I don't have the stones to short gold here. Given the size of the move up it's going to be (or should be) a decent 38.2% correction because I'm now convinced that gold is ready to rock and roll for a nice big weekly trend, possibly ending in the $1800 zone in the next 2 months.

Near term upside targets are 1630-1650.

The one thing that gives me pause is that McLellan is expecting a top July 21 and is still expecting a decent bottom July 26-27. This leads me to think we'll get a resolution to the big debt ceiling problem about a week from now which will probably trigger the rest of the move.

I don't necessarily agree with how the lines are drawn on Cohodk's last gold chart as they certainly could be drawn differently; however, the shape and conclusion are basically the same. Here's my weekly chart which shows a real nice ascending channel which we are at the top of. I do think that gold is ready to break out of this channel for good or at least fora while.

derryb

<< <i>I'm saying that we all take our best shot.

Seriously, if I see some better options than precious metals, I'll be tiptoeing in. Nuthin' yet, tho. >>


Start warming up VXX in the bullpen.

pmcollectour

I see that production is down with some North American junior miners. How are the big boys doing with production ?

roadrunner

<< <i>I see that production is down with some North American junior miners. How are the big boys doing with production ? >>



I haven't looked at any official 2nd quarter earning's reports yet but some of the big boys have had some hiccups this year (Newmont, Agnico Eagle, IAG, Eldorado, BVN, etc.).
But then you have Goldcorp and Yamana that have kept posting big numbers. It's definitely no slam dunk as even though gold prices were rising this year, mining costs and
risks were escalating as well.

ZSL just might still get a crack at trying to fill that gap at 15+....maybe even the higher one at just under 17.

Edit: Nope, old ZSL petered out at $14.80 during Wed's open. Running out of chances as GSR cycles right around 40 (1600/40) in preparation for the next move.

roadrunner

ProofCollection

I haven't been posting much as I'm just observing, waiting for my entry point. Clearly we are consolidating the last move up, although gold continues to show a lot of strength. With the low predicted for July 27th along with it matching up with other cycle dates, I expect the consolidation to take until then to re-charge the charts. That's also within a realistic window for a resolution on the debt ceiling or some other important event to spark the rest of the move. I still expect a bigger retracement though, as a 38.2% retracement will take is into the 1560's. I expect this move to be fast, as gold is showing a lot of strength. I am going all in at that point, and I do expect a move to approx $1800. I would expect this move in gold to move silver at least into an upper $40 range if not higher.

roadrunner

It appeared at first that this takedown was in full swing this past Tuesday. But it was basically a one day affair. The rest of the week has been cycling back and forth.
Looks like gold put in a rather convoluted B wave from the first dip, all the way back to $1607. And I wouldn't be surprised if on Sunday night or early Monday it gives
one more kick back up to $1606-$1611, maybe even to a new all time high.....then succumbing to options expiration Monday and Tuesday. With the strength gold has been
demonstrating it just might not move back down below the $1581 low from this past week. But it also hasn't had an adequate retest of the $1552-$1560 breakout area.

From the info I posted earlier in the week, gold should face some stiffer resistance on Mon-Tuesday, even through Wednesday. Next week also a Tues-Thursday TBond auction
week as well. The Feds won't want PM's and the stock market flying while they try to sell bonds. And as always, the last 2 weeks of July are typically one of the weakest times
of the entire summer. We really haven't seen much yet. And if gold gets out of this with nothing less than $1550-$1581, it will have showed tremendous resilience.

roadrunner

ProofCollection

We got a bit of a pullback today but gold is still showing A LOT of strength. The middle of this week is supposed to mark a low in gold, so (if true) it remains to be seen if this is where gold takes off from or if there is a quick swoon or dip coming. I'm still anxious to get in long, trying to be patient and waiting for the right entry point. I was hoping for a pullback to $1560's, but that's looking less likely. Now I think a pullback to 1600 or a bit lower might be about all to expect here.

PA and PL doing well, and it's about time.

roadrunner

Plat and Pall got a lift yesterday when the CFTC found against a trader for end of day "banging" (ie manipulation) in the pgms. But odd that they can't find such a thing in gold and silver, unless they are only interested in EOD banging rather than start of day and mid-day banging....lol. I'd be the first to admit that the banksters rarely hit gold at EOD when it's far more efficient to whack the Globex at 1:30-2:00 pm just after Comex close.

GDX looks like it's headed down to do some gap filling after maxing out ROC, BB's, and CCI in the past 1-2 weeks. GLD has a lot of gaps sitting lower, with some easily achievable ones sitting at $1592 and $1600. Same comment for SLV. I don't think PM's are gonna sit here leaving gaps unfilled while the miners do some serious consolidation. But who knows, maybe they will. The small pennant formed today on the hourly gold chart is waving at $1595, an area that was hotly contested in the last few weeks. Gold, silver and plat all put in broadening top formations in the past 24 hrs. Remains to be seen how secure that is. Miners lead the way up and have been consolidating for the past 1-2 weeks. If they are still leading the way, then physical should follow. With debt ceiling issues hanging fire, hard to say what PM's will do from here. They could fly either way. From a dollar adjusted view, gold actually peaked several days ago....and not technically at $1629 today.

dust buster

roadrunner

ProofCollection

Aug thread started.