<< <i>Got long GDX. Lets see if this dog still has any bark. >>
Sold this weeks covered calls against position. Would result in 3.2% return over 3 days if called away. But not sure if that happens as GDX is up against the broken trendline and is close to filling last weeks gap and the 20dma. >>
Again the 20dma proved death. GDX didnt get called away, although I wish it did. May have to sell deep in the money next week.
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Perhaps. Apple is by far the most popular stock among day traders, swing traders, option traders. A less visible, less manipulated play might be QQQ (AAPL is 20% of that index), or even SPY (AAPL is 7%).
You were warned at the top of page 2 of this thread.
Im not sure its "over", but could be just a much needed rest. Been noticing lots of "interesting" trading in the market leading stocks--AAPL, LULU, PCLN, CMG--prior to about 2 weeks ago. I've seen this price action before.
You were warned at the top of page 2 of this thread.
Im not sure its "over", but could be just a much needed rest. Been noticing lots of "interesting" trading in the market leading stocks--AAPL, LULU, PCLN, CMG--prior to about 2 weeks ago. I've seen this price action before.
Silver walking the line. >>
I breezed right past that. I thought that was just you rambling on about the gold chart. I need to slow down.
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Tuesday/Wednesday promises to be a big deal for gold due to a convergence of several timing cycles. The resolution could go either way but I think the favored direction is upward, based on previously-mentioned sentiment levels. I'm copying a chart from one of my newsletters which I think shows definitively how PMs are oversold at the moment and ripe for a large up-move.
It sure feel like we're overdue for a move up, but I'm not too enthusisastic about the back to back Options Expiration weeks coming up. This week could start to see the usual hits to GDX and even GLD by Wednesday, then next week gold OE is on Thursday 4/26. Basically a 7-9 trading day period of opportunities for the banksters and hedgies. Then pile on the usual end of month fun next week along with the usual 3 TNote auctions + FOMC meeting. I think the best we can hope for is a sideways move for the next week and a half.
Jim Rodgers just came out with something where he felt that gold's 11 straight years of gains is tempting fate. While he's not buying gold at these levels, he's also not selling. But how comparable are the 1970's to this last decade? Rodgers doesn't feel gold has had enough of a correction to date and that maybe another 40% correction could occur. But, gold has had 2 heavy duty corrections over the past 10 years. These don't count? Is there something magical about Dec 31st (ie end of year) that takes precedence over everything else that happens intrayear? Those 2 corrections happened to come after such big runs, that even the subsequent large corrections couldn't drop the price lower by the end of the year. Also note the huge corrections in silver (60% and 47%) that occurred at those same times. How about the 60-90% correction in mining prices in 2008? There certainly has been plenty of correcting in commodities in this 11 yr cycle. Gold has held up better because it is the closest thing to money in the bunch. Gold was not actively managed in the 1970's quite like it is today. The London Gold Pool manned by the G7 of that era folded up shop in 1968 after running out of easy gold to dump. It just may be that the central planners are ok with gold rising a fairly steady 15-20% per year, rather than the huge 50-100% moves it made in 1972, 1973, 1974, 1977, 1978, and 1979. Slow and steady can be dealt with. A doubling of the gold price in only 3-6 months as was seen 3X in the 1970's isn't gonna fly quite yet. If gold were not managed as well today, it probably would have already doubled up in a matter of months (or worse) followed by a massive pull back where a down year could more easily occur. Did banks carry $400-$600 BILL in gold (and $200 BILL in silver) otc derivatives in the 1970's to help manage price? That's 4 yrs of world production for both metals. The heaviest short position so far in silver occurred in 2008 when the banks held paper derivs worth 19 yrs of silver production.
11 yrs is indeed a long time to achieve higher prices at the end each year. I suspect the world's debt, M1/M2, and otc derivatives haven't taken any years off in the past 11 years either...or 21 yrs for that matter. I don't see anyone calling for a huge correction in debt, M2, and derivatives. What we're seeing is a washout of 60 and 120 yr economic cycles coming to a head in the next few years. At the same time the world's 97 yr old debt-money system is being squeezed to death. I don't know why 11 yrs stacks up more strongly than cycles 5X-10X as long. Show me another time in the past 120 yrs where the bankers and govts around the world leveraged a purely paper financial system to this degree.
Rogers could end up being right. But he also knows he could be wrong. That's why he's not selling any of his "insurance." Why sell something that the govt and big banks are so determined to control? Other than silver's move into April 2011 and gold's in August 2011, they've done a pretty good job in keeping the tortoise up with the hare.
rr, the economic "planners" know that they have to bleed off the pressures from rising debt constantly or it will blow up. They haven't had a chance in the past 11 years to take their hand off of the pressure relief valve, and the economy isn't giving them any room to play. If anything, the debt is still gathering faster than they can open up the valve. Inflation is the only politically-viable method they have to relieve some of the pressure.
The fact that they must lie about inflation and unemployment is telling.
They screwed up bigtime when they allowed the derivatives to run rampant. Have you ever ridden "no hands" on a bicycle down a narrow mountain path with no guardrails - blindfolded? Me neither. But that's what our brilliant economic planners are doing. A deflation will wreck the whole world's economy and they know it. On the other hand, the debt is math. Pure & simple.
Q: Are You Printing Money? Bernanke: Not Literally
RR, I guess I would also then argue that oil is due for a correction because it's been rising for decades as well. But I just don't see any serious corrections coming given forseeable market dynamics. It might come back down to the $70's, but that would be the extent of any pullback IMO.
I think we have to remember that it's really not the value of gold and oil that's changing, it's the value of the dollar that's changing, with some temporary market premium adjustments from time to time.
<< <i>RR, I guess I would also then argue that oil is due for a correction because it's been rising for decades as well. But I just don't see any serious corrections coming given forseeable market dynamics. It might come back down to the $70's, but that would be the extent of any pullback IMO.
I think we have to remember that it's really not the value of gold and oil that's changing, it's the value of the dollar that's changing, with some temporary market premium adjustments from time to time. >>
Jmski52, I like the analogy to a relief valve needing constant attention. And it's also true that relief valves are typically sized for a worst-case, but realistic "accident." The current debt/derivatives mess needs a whole lot more relief valves as the orig system was massively underdesigned. The relief valves were designed for a system <one tenth this size. On this particular boiler the relief valves are already all lifting at full capacity but pressure continues to rise. The only alternative has been to periodically open bottom and surface blow valves to bring pressure closer to normal for short periods.
PC, oil already experienced an annual correction where it broke a string of higher annual prices (ie yoy based on Dec 31st). Silver has done so as well. But gold has yet to break the "annual" string which was Rodgers' point. I while I can agree with him and Cohodk on that.... I also agree we need to look at the inverse of this equation which is fiat currency and sovereign debt....both of which show no signs of letting up.
The question of a gold correction lies in whether or not investors view the current price as reflecting the already increased and increasing debt. Afterall, more debt really isnt an unknown, and the unknown is what drives prices.
PC---oil dropped from 150 to 30--almost 80% in 9 months. Gold hasnt done anything like that--its been Mr. Steady Eddy. Until it isnt.
Seemed like very odd behavior today with the dollar getting hammered yet gold was rangebound in the $1640's. The dollar fell to a lower level than last week when gold hit $1680. Either gold was being heavily capped to usher it closer to next week's Options Expiration, or it has lost a lot more of its luster. Guess we'll know more by next Wed/Thursday. Next week TBond auctions as well as FOMC meeting. Always good for volatility.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Roadrunner, yup we gonna know soon the next direction for the metals.
Derryb, usually stocks lead commodities. Miners have been such lousy performers over the last 2 years relative to gold, that maybe this doesn't hold true? Or maybe this time is different?
Im gonna stick with history and say that the miners are predicting poor PM price performance. Miners have to reverse soon to change my mind.
Sold 1/2 GDX position. T'was a boring week.
Commods and currencies are giving me the feeling that volatility is about to increase in the next 1-3 weeks. Im positioned accordingly-----cash!!
Today, I actually thought about opening a ScottTrade account in order to buy some GDXJ (like I almost did about 1 1/2 years ago).
Then, I also drove around for awhile to see what rental properties might be for sale today. Didn't see anything I wanted to run the economics on.
Well, I'm glad I got all that out of my system.
Added: Regarding oil, I listened to John Hofmeister in an interview last night (I forget which program had him on), and I urge anyone interested in the energy markets to google his name and then go to his website "citizensforaffordableenergy.org" to do some research. He was the CEO for Shell Oil.
He does think that natural gas should be tapped as a primary transportation source. He listed Canadian Oil as the 5th option, which I had thought was one of our best bets. I've been considering a position in the North Dakota play, but now it looks like a bit more in-depth research is required.
T.Boone Pickens has been promoting nat gas for awhile, and the potential for increasing employment by about 3 million over 10 years that Hofmeister mentioned seems like an attractive number that, when added to the energy independence initiative, sounds pretty good.
Since nat gas is abundant and cheap, the stock prices are low right now. Seems like a good idea for further research.
I also finished reading the first of my trial subscription Richard Russell newsletters this afternoon. He thinks that Sturm Ruger and Smith & Wesson are good for the next few years.
Q: Are You Printing Money? Bernanke: Not Literally
I sold 95% of my gold stocks a couple years ago and have been waiting patiently to get back in. I may start toe holding. MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Since nat gas is abundant and cheap, the stock prices are low right now. Seems like a good idea for further research
I traded DVN for $1.28 profit today. It had a nice write-up in Barrons over the weekend.
Mining stocks as a group at lowest levels in over 2 years. Im grasping for straws in trying to pick a bottom, but the Jan 2010 low on XAU does coincide with a 50% retracement of the move from Mar 2009 to Nov 2010 thru Sept 2011 peaks. This area is at about 150---XAU currently at 160. So maybe "only" another 6% downside in the miners group?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Been hearing the dollar is "temporarily" higher for 5 years now. Eventually this becomes a trend. >>
My five year dollar chart confirms your trend suspicions.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I also finished reading the first of my trial subscription Richard Russell newsletters this afternoon. He thinks that Sturm Ruger and Smith & Wesson are good for the next few years. >>
Rugers LCP380 is a great carry gun. Carry it in your back pocket in a wallet type holster which the gun can be fired still in the holter. It is fast, dependable and gives six 380 shots in a 9.36 oz package.
NumbersUsa, FairUs, Alipac, CapsWeb, and TeamAmericaPac
Dollar now teetering on the 6 month uptrend line as well as on the 3 month H&S neckline. Why futures still have a huge gap from 75-76 on the 8 hr chart (Oct 31) is puzzling considering how efficient they are at clearing even tiny gaps on the 1 minute chart. Time for dollar to decide if it's back to 80 or <79. Both gold and the dollar have put in some volatile expanding wedge patterns over the past 12 hours. Which one gets to breakdown? They both can't. For an options expiration week they were not able to move gold down very far. And on today's feeble attempt to hit gold < 2hrs before FOMC minutes (to $1624), it rebounded almost instantly. Miners did extremely well today considering what they were up against. But all they really did was fill the gap up to GDX 46. FOMC minutes seemed to be slightly more accomodative than the last round. GSR (gld/slv) closed the first big gap (52.6-54.0) that had been around for a while. Still some gaps around 55.5 and 57.5 but the short term parallel upchannel ends around 55ish. If that's a contracting wedge formed off the Feb 29th smackdown, it may have already ended.
Considering how often gold is hit during the Wed/Thursday of end of month OE weeks, today's peformance was quite bullish. Maybe it's a bankster bull trap in disguise. We still have Thursday to get through.
I agree, gold looked bullish at the end of the day today. Any downside from here has to be limited. Read some interesting stuff in a newsletter today to remind us all why interest rates will be low for many years to come, a la Japan:
Now, America’s monolithic debts and liabilities aren’t a newsflash. But what no one is talking about is the fact that 70% of America’s outstanding debt comes due in five years. Our government — and, by extension, We the taxpayers — are sitting atop the world’s largest adjustable-rate mortgage, the very kind that destroyed tens of millions of homeowners in the housing crisis.
The average interest rate on America’s debt today is just under 2.19%, and Congress is already spending more than $450 billion a year just on interest payments, or 18% of the income taxes the Treasury collects annually.
So what happens if rates nudge up by 1%? What if they double to about 4.5%, where they sat prior to the financial crisis? The day-to-day cost of running America would begin to rise and could potentially spiral out of control, just as rising rates imposed a death spiral on over-extended homeowners.
In many cases, homeowners just threw the keys in the mailbox and walked away. But, of course, America doesn’t have that option. Debt repayment would consume the dollars needed to run the government. Lawmakers strapped for money would have to cleave costs out of the budget … or raise taxes … or dramatically print more dollars, destroying the value of our currency.
Lawmakers strapped for money would have to cleave costs out of the budget … or raise taxes … or dramatically print more dollars, destroying the value of our currency.
Isnt this what Europe is doing today? Is the Euro being "destroyed"?
<< <i>Lawmakers strapped for money would have to cleave costs out of the budget … or raise taxes … or dramatically print more dollars, destroying the value of our currency. Isnt this what Europe is doing today? Is the Euro being "destroyed"? >>
Not yet, but it is coming. Do you really think the problem in Europe is solved and getting better now? I contend it's just getting started. They've done a great job of kicking the can down the road. But eventually, the road will come to an end. Just wait until Spain and Italy actually starts to deal with the reality of their finances. Interest rates in those countries have only begun to rise, and they can afford to pay the higher rates for a little while... I'm sure we've all seen the numbers. It doesn't matter what the US raised taxes to, it's wouldn't make a dent in the problem. And our politicians don't have the stones to make any of the cuts necessary to make a difference, especially when they insist on referring to cuts with the gimmick of multiplying by ten and saying $xB over the next 10 years.
So what happens if rates nudge up by 1%? What if they double to about 4.5%, where they sat prior to the financial crisis? The day-to-day cost of running America would begin to rise and could potentially spiral out of control, just as rising rates imposed a death spiral on over-extended homeowners.
The rates can't nudge up as long as the top 5 banks/FED/Treasury continue to pile on the otc interest rate contracts. Rates attempted to nudge up last year (ask Bill Gross). But by adding $100 TRILL in otc derivs in the first 6 months of last year (most were IR contracts), any chance of rates rising was removed. In fact, they fell and caught many off guard. With >$250 TRILL in otc IR swaps at risk, these big banks aren't going to allow those contracts to perform and bankrupt them. It doesn't hurt that the FED and ECB have their back. In fact the the international deriv's lobby will either "forever" delay any meaningful Dodd-Frank reforms or help gut the original intentions of the bill. No reform here. The beauty of IR swaps is that they are opaque and don't even show up in a report until long after the damage is done. There's no way for J6P (or even Bill Gross) to know what's coming at them. The Euro and European Union have nowhere to go but down as the entire premise has been flawed since day one. So the game plan will be to systematically remove weaker nations one by one from the Union. That could "save" the "new" Euro...for at least some period. The big EU banks have an even bigger risk from otc IR contracts than the US banks do. So they need the FED available to keep pumping money into their system. Liquidity is liquidity as far as the gold price is concerned. Doesn't matter if it's injected in the US or in the EU...or both.
Nice that this morning the dollar dipped further under 79 to 78.90...opens up further possibilities. UUP has fallen below it's 200 dma (3 taps and down?) and under the 3 month H&S neckline as well. A strange start to OE Thursday with gold running up into the mid-$1650's. Are the banksters retreating back to the more familiar $1660-1662 line once again? Today is the last TNote auction of the month (7yr). No real change to the Gofo's as they hang in the lower 30's. Sifo's however have continued a very slow climb throughout April. TIPs have shaken off some recent weakness and are back to the short term highs. Gold continues to generally follow the TIPs. SIL to SPY volume ratio spiking sharply up this morning indicating lots of interest in SIL. For the 2nd day in a row GDXJ/SPY volume ratio looks strong....GDX/SPY as well. 10yr to 2yr Treasury yield ratio is now in it's 3rd surge upwards over the past 6 weeks and headed for the 200 dma. It made a huge "triple" last year from April to September that helped to propel gold's rally. If it can finally clear the 200 dma and keep going it will be a strong tail wind. Note that last year's correction had 4 dips and took 5 months. This latest correction (if complete) took 6 months and also had 4 dips.
Do you really think the problem in Europe is solved and getting better now
Not at all. As you I've been bearish on Europe for years and is why, going all the back to 2008, that I have been saying the dollar is not going to .60 as was the populist opinion at the time. Maybe the dollar does go lower, but it wont be tomorrow.
I think it is also obvious that the Central banks want to inflate their way out of this problem, but they are having a very difficult time. Will they succeed? Time will tell.
Bond holders in Spain and Italy will take haircuts. Capital will be lost. Can the ECB print enough to make up for the losses? Probably not. Deflation will hit both countries, just as it has Greece. Notice the trend?
Closed SLV puts at .84c. So lost 10c on 60% of position and made 31c on 40%. So overall a 6% profit. Nice V-bottom reversal on silver taking it just under 30 yest and grabbing the stops.
Had covered calls on GDX just in case the market blew up, but have since rolled them to a higher strike--so run GDX run.
Sold tomorrows NEM puts. Seems like juicy premium, but earnings will be reported in the morn so I may be a shareholder of NEM after tomorrows close.
<< <i>I think it is also obvious that the Central banks want to inflate their way out of this problem, but they are having a very difficult time. Will they succeed? Time will tell. >>
I don't think it's been difficult for them to inflate at all. I think the dollar is performing exactly as they want it to. I don't think they want it any higher or lower than it is right now. The fed is still in control, for now...
GDX being held back today by Goldcorp's lousy report and 6% drop today (ie production down 18%). The other heavies seem to be frozen because of it. A good NEM report would be nice. But it's been dealing with flattish to lower production as well in 2012 so I won't hold my breath. It's getting harder for these bohemoths to grow considering geo-political risks are only increasing. Quality acquisitions are far and few between, or years off (ie Novagold, Seabridge, etc.). Look what happened to Kinross after heavily overpaying for Red Back.
<< <i>I think it is also obvious that the Central banks want to inflate their way out of this problem, but they are having a very difficult time. Will they succeed? Time will tell. >>
I don't think it's been difficult for them to inflate at all. I think the dollar is performing exactly as they want it to. I don't think they want it any higher or lower than it is right now. The fed is still in control, for now... >>
The price of nothing is higher in Europe, except for German and Swiss bonds. Real estate, wages, equities are all in decline. Europe where the problem is now is battling deflation not inflation. They are losing the battle.
GG, like most of the miners right now, looks like the place where good money goes to die. Trade them quick, or don't trade at all.
Miners, GLD, and SLV volume ended up fairly low today. I'd call the GDX volume anemic which is concerning. Not what you'd expect if they are ready to continue to rally. The weekly GDX volume was good however even if a lot of it came on whipsawing around the bottom. The weekly GDX candle was not quite a hammer but pretty close. True weekly hammers in GDX have been quite scarce the past year and a half. SIL, and GDXJ looked to be the best volume performers. SIL has had some very strong up-volume days in the past 3 weeks. The broader CDNX has been the steller performer the last 3 days with increasing volume. So that's confirming the gen'l mining complex. Weekly bullish engulfing candle on GLD with 2 daily closes >20 dma as well as bullish alignment on the triplet ma's of 3 ema/10 ema/20 dma. It's been a few months since those conditions last existed. Weekly candlestick analysis suggesting buy signals across the PM sector (GLD, SLV, SIL, GDX, GDXJ, GLDX).
COT report was very interesting. Silver commercial short to long ratio dropped further this week to a tiny 1.46. Only during a 3 week period at the end of the Dec/early January "crush" was this ratio any lower (ie 1.34-1.39). They normally move this ratio by dropping or adding shorts. The past several weeks/months they've done it by mainly adding longs. It's been a long time since the commercials had 48,000 longs logged on their scoreboard. I don't see anything close to this even as far back as Dec 2008. In any case looks bullish. The short to long ratio has dropped from 2.5 to 1.46 since this year alone. At silver price peaks the ratio reaches 2.6 to 3.0. Gold contracts shifted about 8600 net to the long side, also bullish. The commercials have been closing out dollar shorts as the dollar dropped. The short to long ratio has dropped from 14 to now <5 as commercials position for the next dollar rally. But with back to back black weekly candles, the dollar has some work to do as it closed under 79.0. I like Petch's analysis of the USDollar in the article below.
Yeah RR, we're just not quite getting the capitulation type of volume needed to make a bottom. GG vol on the selloff was strong, but not overwhelming. Its possoble that the bottom will be more drawn out---many, many months of basing--before a rally can begin.
NEM puts expired worthless. I like selling something, collecting the money, and having it go to zero the next day.
Im watching the European banks for signs of market direction.
The momo stocks---AMZN, PCLN, AAPL, CMG continue to trade together. There is no individual buying of these names, just a large asset allocation program. I dont like it.
GLD closed right on the 2 month downtrend and probably needs to advance next week or gravity reasserts itself.
GLD closed right on the 2 month downtrend and probably needs to advance next week or gravity reasserts itself.
I'm not seeing that. GLD left the 2 month downtrend behind on Wed during that last dip to 157.5. After breaking above the 2nd two month fan line anchored at the Feb 29th high, GLD slid down the down trend line for 2 weeks during mid-April. The last 3 days was spent moving away from it. The 3rd fan line was crossed on Thursday. Since gold likes to retest those fan lines a move back to 159 is certainly possible. GDX is slightly above the 2 month downtrend but could easily fall back to 46 to retest it. Slight gap up on GDX Friday almost assures a drop to refill it.
I was drawing a resistance line from the 174 peak to the 157.76 bottom. But I can definitely see this line as it goes back to early February. Seems both of them are in play, but now up against your upper channel line. Thanks for the chart.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
This is even clearer when the ETF market is expressed as a percentage of the physical market. While in 2009 ETFs looked poised to overtake the market in physical bullion and coins, by 2011 they constituted merely a tenth of the physical market:
I would love to see his computation of the above statement. In Jan 2009, GLD-just one of the ETFS-, held about 26 million ounces of gold. Today it holds 41 million ounces. A 58% increase. So lets do a little math. If in 2009, 25 million ounces comprised 75% of the gold market then the overall market was 33 million ounces. And today, 41 million oz is just 10%, then the overall market is 410 million oz. So the market increased 1200% in just 3 years. Where did all the extra gold come from? Or am I reading something wrong? What is his point? I find it very difficult to believe that in 2009 the physical market was only 33 million oz when there are 5 billion oz above ground.
keep in mind that we do not know their are physical reserves backing the ETFs. We do know that they claim to have the metal.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I would love to see his computation of the above statement. In Jan 2009, GLD-just one of the ETFS-, held about 26 million ounces of gold. Today it holds 41 million ounces. A 58% increase. So lets do a little math. If in 2009, 25 million ounces comprised 75% of the gold market then the overall market was 33 million ounces. And today, 41 million oz is just 10%, then the overall market is 410 million oz. So the market increased 1200% in just 3 years. Where did all the extra gold come from? Or am I reading something wrong? What is his point? I find it very difficult to believe that in 2009 the physical market was only 33 million oz when there are 5 billion oz above ground.
I'd have to agree. Those numbers just didn't seem to make sense. I went to the WGC website for more details but you have to be a member to get anything. I'd just assume not be a logged in member of WGC's website. China is probably the world's largest buyer of gold by far and we have no clue as to what they are doing. According to the IMF they bought no gold in March..........yeah, right! Imo the gold ETF's were continuing to take a larger bite out of the gold pie each year. But that could have retreated somewhat since gold peaked in August/September of last year. There's a zillion tons of paper gold out there. And the question does remain, now much of it is really covered?
<< <i>keep in mind that we do not know their are physical reserves backing the ETFs. We do know that they claim to have the metal. >>
GLD "supposedly" holds less than 1% of all the gold above ground. Seems inconsequential. >>
It's definitely consequential as the difference in annual gold supply vs. demand is a primary driver of price as opposed to current world above-ground gold supply. The above ground supply is so well spread out that its total effects are neutered. You might as well consider most of the world's jewelry gold tossed to the wind, and the gold that is really backing fiat currency to be untouchable (until sovereign bankruptcy occurs). The CB's claim to have 31,000 tonnes of gold but considering they have been divesting of around 400-500 tonnes per year for 15-20 yrs, it's unlikely they have anything close to that. A couple hundred tonne per year difference in gold is quite significant. 400-500 tonnes per year is now what the reporting central banks are buying and look what that did to price in 2011. If you factor those buying w/o reporting it's probably 800-1200 tonnes per year, or more. If GLD's 1284 tonnes was inconsequential then why do CB's need to double count leased gold?
The IMF for years "threatened" to sell their unencumbered cache of 404 tonnes of gold. It had an effect each and every time they made that threat. Good that it's now gone whether it was paper accounting or real physical. The GLD reserves of 1284 tonnes is most significant. The world just fought over control of Libya's 144 tonnes. Now they salivate on getting their hands at Greece's remaining gold (with Italy, Spain, and Portugal targeted). When Central Banks owned a much larger % of world gold 1284 tonnes may not have mattered so much. But the CB's don't have an extra 1284 tonnes at their disposal to just dump into the market as they did 5, 10, or 15 yrs ago. They need every tonne of that to back current obligations and provide some strength to battered currencies and economies...as well as looking forward to the future when gold will probably be part of the next major currency basket. Think of gold as like water on earth. The earth is abundant in salt water and fresh water combined, yet only a small portion of all that is readily available for drinking and farming. That's how gold is with much of the 155,000 world tonnage locked down and effectively unavailable, at any price. It's the usable and trading quantities of gold that matter more (ie annual gold mining output, recycled gold, exchange based gold). Recyclable gold has gone a several year upswing but appears to be on the wane now. What's going to replace that difference?
I hear what you are saying Roadrunner and strongly believe that the creation of the ETFs has had a profound effect on the price of PMs. However, theoretically, this relatively miniscule amount of gold shouldnt have had those pricing impacts.
GLD probably hasn't had the huge effect we may think it has. With gold rising 6.5X in price, that has been applied to the world's entire 155,000 tonnes, effectively bringing total gold value from $1.2 TRILL to about $8.2 TRILL. The real effect behind the scenes is the gradual rebalancing of sovereign debts and fiat imbalances to the pog. With or without GLD this still would have occurred....and probably faster since there would have been one less major entity for the banksters to mess with. Without GLD, the mining shares and other facets would have taken up the slack. There were no ETF's in the 1970's yet gold managed to double in price in <6 months on 3 different occasions. That's what the PTB are preventing from managing the gold price. They know it will rise. They just don't want a doubling in 6-12 months to trigger other atrocities in the markets. It's frequently stated that the PTB have done a lousy job holding down the pog considering it's gone from $252 to $1921. True enough. But that run took over 10 yrs, not 3 yrs like it did from 1971-1974 (5.5X) and then again from 1977-1980 (8.3X). Even gold's first major run from 2001-2008 was 4X over 7 yrs, a big improvement. And the last run from $681 to $1921 (2.8X) over 3 yrs was not quite so good, but still superior to the 1970's. Dragging this on is what they have achieved. And dragging it out further as they reposition for the "quickening" is the goal. The ETF's have given a very tiny % of the world's gold investors somewhere to go. But the vast majority of gold "investors" own physical metal. In the respect GLD and SLV are tiny snapshots of an entire system.
JPM was able to pick up 5 MILL oz of silver during last weeks smackdown and deposited it on Friday in preparation for this week's deliveries. Should just about cover them. The Comex deliverable silver inventory was getting pretty low again.
This snippet from TF's blog today:
China has now imported 436 tonnes of gold through Hong Kong over the past eight months. This compares to imports of a mere 57 tonnes over the same eight month-period a year earlier (July 2010 - February 2011). The net new demand implied by this increase is 379 tonnes, which when annualized equates to 568 tonnes of new demand in a market that supplies 2,810 tonnes per year in mine production. Recent IMF data also shows that at least 12 countries increased their physical gold reserves by 58 tonnes in the month of March, with Mexico, Turkey, Russia and Kazakhstan making sizeable purchases. 58 tonnes annualized equates to 696 tonnes of demand per year. We know that central banks bought 439.7 tonnes of gold in 2011, and if the pace of recent central bank purchases continues, it will equate to another 256 tonnes of net new change in the physical gold market.
The significance of this demand shift is striking. If we combine China's implied net change of 568 tonnes with the central banks' net change of 256 tonnes, we're left with a demand shift of over 824 tonnes vs. an annual mine supply of 2,810 tonnes. That represents close to a 30% net change in the physical gold market in 2012. If we remove the portion of global gold production produced by China and the other non-G6 central bank gold buyers (like Russia and Mexico - because we know they're not sellers), we're now dealing with over 824 tonnes of demand change hitting an annual global mine supply of a mere 2,170 tonnes - representing a 38% shift. Although we have been continually reminded that 'fundamentals don't matter' in today's marketplace, there isn't a physical market on earth that can withstand that type of demand increase without higher prices over the long-run, and the gold market is no different. There are no sellers of physical gold that we know of who can satiate that scale of new demand, and global gold mine supply has been virtually flat for over the last ten years. Even if we incorporate the estimated 1,600 tonnes of "recycled gold" that the World Gold Council insists on including in its annual gold supply estimates, the numbers above still suggest a net change of 19%. Who is going to give up their gold purchases to make room for this scale of new demand? Where is the gold going to come from? We ask because we don't actually know.
After looking at everything and getting caught up, I think the bottom for gold is just about in and the launch is imminent, although it could be several weeks before we see anything. If anything, gold should be in for at least a +$100-150 move. There are several reasons to come to this conclusion.
The first reason is that gold has been going sideways for quite some time, and all of the energy from the blast to the $1900's has disapated and we're currently around the average level of the penant, $1660. Nichol's weekly fractal indicator is full of energy.
Another reason is gold stocks. The XAU and GDM charts look awful. The perfect time to buy is when no one else is buying and the charts show this. The price oscillators are all at negative apexes meaning that a reversal is quite likely. Asset levels of funds like the RYPMX are at very low levels.
Another reason is gold's 13.5 month cycle, which called for a bottom in April which is believed to have been established a couple weeks ago. This typically should "free up" the pattern to start its next move up (or down) for the next ~7 months.
All in all, it looks to me like a great place to load up on quality stocks like GG and SLW and a good place to get long.
Comments
<< <i>
<< <i>Got long GDX. Lets see if this dog still has any bark. >>
Sold this weeks covered calls against position. Would result in 3.2% return over 3 days if called away. But not sure if that happens as GDX is up against the broken trendline and is close to filling last weeks gap and the 20dma. >>
Again the 20dma proved death. GDX didnt get called away, although I wish it did. May have to sell deep in the money next week.
Knowledge is the enemy of fear
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Is AAPL finally rolling over? MJ >>
Perhaps. Apple is by far the most popular stock among day traders, swing traders, option traders. A less visible, less manipulated play might be QQQ (AAPL is 20% of that index), or even SPY (AAPL is 7%).
<< <i>Is AAPL finally rolling over? MJ >>
You were warned at the top of page 2 of this thread.
Im not sure its "over", but could be just a much needed rest. Been noticing lots of "interesting" trading in the market leading stocks--AAPL, LULU, PCLN, CMG--prior to about 2 weeks ago. I've seen this price action before.
Silver walking the line.
Knowledge is the enemy of fear
<< <i>
<< <i>Is AAPL finally rolling over? MJ >>
You were warned at the top of page 2 of this thread.
Im not sure its "over", but could be just a much needed rest. Been noticing lots of "interesting" trading in the market leading stocks--AAPL, LULU, PCLN, CMG--prior to about 2 weeks ago. I've seen this price action before.
Silver walking the line. >>
I breezed right past that. I thought that was just you rambling on about the gold chart. I need to slow down.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
GDX and even GLD by Wednesday, then next week gold OE is on Thursday 4/26. Basically a 7-9 trading day period of opportunities for the banksters and hedgies. Then pile on the usual
end of month fun next week along with the usual 3 TNote auctions + FOMC meeting. I think the best we can hope for is a sideways move for the next week and a half.
Jim Rodgers just came out with something where he felt that gold's 11 straight years of gains is tempting fate. While he's not buying gold at these levels, he's also not selling. But how
comparable are the 1970's to this last decade? Rodgers doesn't feel gold has had enough of a correction to date and that maybe another 40% correction could occur. But, gold has had 2 heavy duty corrections over the past 10 years. These don't count? Is there something magical about Dec 31st (ie end of year) that takes precedence over everything else that happens intrayear? Those 2 corrections happened to come after such big runs, that even the subsequent large corrections couldn't drop the price lower by the end of the year. Also note the huge corrections in silver (60% and 47%) that occurred at those same times. How about the 60-90% correction in mining prices in 2008? There certainly has been plenty of correcting in commodities in this 11 yr cycle. Gold has held up better because it is the closest thing to money in the bunch. Gold was not actively managed in the 1970's quite like it is today. The London Gold Pool manned by the G7 of that era folded up shop in 1968 after running out of easy gold to dump. It just may be that the central planners are ok with gold rising a fairly steady 15-20% per year, rather than the huge 50-100% moves it made in 1972, 1973, 1974, 1977, 1978, and 1979. Slow and steady can be dealt with. A doubling of the gold price in only 3-6 months as was seen 3X in the 1970's isn't gonna fly quite yet. If gold were not managed as well today, it probably would have already doubled up in a matter of months (or worse) followed by a massive pull back where a down year could more easily occur. Did banks carry $400-$600 BILL in gold (and $200 BILL in silver) otc derivatives in the 1970's to help manage price? That's 4 yrs of world production for both metals. The heaviest short position so far in silver occurred in 2008 when the banks held paper derivs worth 19 yrs of silver production.
11 yrs is indeed a long time to achieve higher prices at the end each year. I suspect the world's debt, M1/M2, and otc derivatives haven't taken any years off in the past 11 years either...or 21 yrs for that matter. I don't see anyone calling for a huge correction in debt, M2, and derivatives. What we're seeing is a washout of 60 and 120 yr economic cycles coming to a head in the next few years. At the same time the world's 97 yr old debt-money system is being squeezed to death. I don't know why 11 yrs stacks up more strongly than cycles 5X-10X as long. Show me another time in the past 120 yrs where the bankers and govts around the world leveraged a purely paper financial system to this degree.
Rogers could end up being right. But he also knows he could be wrong. That's why he's not selling any of his "insurance." Why sell something that the govt and big banks are so determined to control? Other than silver's move into April 2011 and gold's in August 2011, they've done a pretty good job in keeping the tortoise up with the hare.
The fact that they must lie about inflation and unemployment is telling.
They screwed up bigtime when they allowed the derivatives to run rampant. Have you ever ridden "no hands" on a bicycle down a narrow mountain path with no guardrails - blindfolded? Me neither. But that's what our brilliant economic planners are doing. A deflation will wreck the whole world's economy and they know it. On the other hand, the debt is math. Pure & simple.
I knew it would happen.
I think we have to remember that it's really not the value of gold and oil that's changing, it's the value of the dollar that's changing, with some temporary market premium adjustments from time to time.
<< <i>RR, I guess I would also then argue that oil is due for a correction because it's been rising for decades as well. But I just don't see any serious corrections coming given forseeable market dynamics. It might come back down to the $70's, but that would be the extent of any pullback IMO.
I think we have to remember that it's really not the value of gold and oil that's changing, it's the value of the dollar that's changing, with some temporary market premium adjustments from time to time. >>
Jmski52, I like the analogy to a relief valve needing constant attention. And it's also true that relief valves are typically sized for a worst-case, but realistic "accident." The current
debt/derivatives mess needs a whole lot more relief valves as the orig system was massively underdesigned. The relief valves were designed for a system <one tenth this size. On this particular boiler the relief valves are already all lifting at full capacity but pressure continues to rise. The only alternative has been to periodically open bottom and surface blow valves to bring pressure closer to normal for short periods.
PC, oil already experienced an annual correction where it broke a string of higher annual prices (ie yoy based on Dec 31st). Silver has done so as well. But gold has yet to break the
"annual" string which was Rodgers' point. I while I can agree with him and Cohodk on that.... I also agree we need to look at the inverse of this equation which is fiat currency and sovereign debt....both of which show no signs of letting up.
PC---oil dropped from 150 to 30--almost 80% in 9 months. Gold hasnt done anything like that--its been Mr. Steady Eddy. Until it isnt.
Knowledge is the enemy of fear
Link
Either gold was being heavily capped to usher it closer to next week's Options Expiration, or it has lost a lot more of its luster. Guess we'll know more by next Wed/Thursday. Next
week TBond auctions as well as FOMC meeting. Always good for volatility.
James Turk says its time to buy gold stocks.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Derryb, usually stocks lead commodities. Miners have been such lousy performers over the last 2 years relative to gold, that maybe this doesn't hold true? Or maybe this time is different?
Im gonna stick with history and say that the miners are predicting poor PM price performance. Miners have to reverse soon to change my mind.
Sold 1/2 GDX position. T'was a boring week.
Commods and currencies are giving me the feeling that volatility is about to increase in the next 1-3 weeks. Im positioned accordingly-----cash!!
Knowledge is the enemy of fear
Then, I also drove around for awhile to see what rental properties might be for sale today. Didn't see anything I wanted to run the economics on.
Well, I'm glad I got all that out of my system.
Added: Regarding oil, I listened to John Hofmeister in an interview last night (I forget which program had him on), and I urge anyone interested in the energy markets to google his name and then go to his website "citizensforaffordableenergy.org" to do some research. He was the CEO for Shell Oil.
He does think that natural gas should be tapped as a primary transportation source. He listed Canadian Oil as the 5th option, which I had thought was one of our best bets. I've been considering a position in the North Dakota play, but now it looks like a bit more in-depth research is required.
T.Boone Pickens has been promoting nat gas for awhile, and the potential for increasing employment by about 3 million over 10 years that Hofmeister mentioned seems like an attractive number that, when added to the energy independence initiative, sounds pretty good.
Since nat gas is abundant and cheap, the stock prices are low right now. Seems like a good idea for further research.
I also finished reading the first of my trial subscription Richard Russell newsletters this afternoon. He thinks that Sturm Ruger and Smith & Wesson are good for the next few years.
I knew it would happen.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I traded DVN for $1.28 profit today. It had a nice write-up in Barrons over the weekend.
Mining stocks as a group at lowest levels in over 2 years. Im grasping for straws in trying to pick a bottom, but the Jan 2010 low on XAU does coincide with a 50% retracement of the move from Mar 2009 to Nov 2010 thru Sept 2011 peaks. This area is at about 150---XAU currently at 160. So maybe "only" another 6% downside in the miners group?
Knowledge is the enemy of fear
European Splintering Escalates: Dutch Government Falls; Slovakia Government Collapsed in March; Czech Government Collapse Coming Right Up
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Europe is unraveling at the seams this week, should result in stronger dollar, temporarily.
European Splintering Escalates: Dutch Government Falls; Slovakia Government Collapsed in March; Czech Government Collapse Coming Right Up >>
Been hearing the dollar is "temporarily" higher for 5 years now. Eventually this becomes a trend.
Interesting how no mention of the "death cross" on gold by the pundits. Funny how when this happens for equities their demise is widely broadcast.
Knowledge is the enemy of fear
<< <i>Been hearing the dollar is "temporarily" higher for 5 years now. Eventually this becomes a trend.
My five year dollar chart confirms your trend suspicions.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Knowledge is the enemy of fear
Knowledge is the enemy of fear
The chart looks rangebound (against a basket of other fiat currencies, right?)
I knew it would happen.
<< <i>
I also finished reading the first of my trial subscription Richard Russell newsletters this afternoon. He thinks that Sturm Ruger and Smith & Wesson are good for the next few years. >>
Rugers LCP380 is a great carry gun. Carry it in your back pocket in a wallet type holster which the gun can be fired still in the holter. It is fast, dependable and gives six 380 shots in a 9.36 oz package.
Knowledge is the enemy of fear
how efficient they are at clearing even tiny gaps on the 1 minute chart. Time for dollar to decide if it's back to 80 or <79. Both gold and the dollar have put in some volatile expanding
wedge patterns over the past 12 hours. Which one gets to breakdown? They both can't. For an options expiration week they were not able to move gold down very far. And on today's
feeble attempt to hit gold < 2hrs before FOMC minutes (to $1624), it rebounded almost instantly. Miners did extremely well today considering what they were up against. But all they
really did was fill the gap up to GDX 46. FOMC minutes seemed to be slightly more accomodative than the last round. GSR (gld/slv) closed the first big gap (52.6-54.0) that had been
around for a while. Still some gaps around 55.5 and 57.5 but the short term parallel upchannel ends around 55ish. If that's a contracting wedge formed off the Feb 29th smackdown,
it may have already ended.
Considering how often gold is hit during the Wed/Thursday of end of month OE weeks, today's peformance was quite bullish. Maybe it's a bankster bull trap in disguise. We still have
Thursday to get through.
Now, America’s monolithic debts and liabilities aren’t a newsflash. But what no one is talking about is the fact that 70% of America’s outstanding debt comes due in five years. Our government — and, by extension, We the taxpayers — are sitting atop the world’s largest adjustable-rate mortgage, the very kind that destroyed tens of millions of homeowners in the housing crisis.
The average interest rate on America’s debt today is just under 2.19%, and Congress is already spending more than $450 billion a year just on interest payments, or 18% of the income taxes the Treasury collects annually.
So what happens if rates nudge up by 1%? What if they double to about 4.5%, where they sat prior to the financial crisis? The day-to-day cost of running America would begin to rise and could potentially spiral out of control, just as rising rates imposed a death spiral on over-extended homeowners.
In many cases, homeowners just threw the keys in the mailbox and walked away. But, of course, America doesn’t have that option. Debt repayment would consume the dollars needed to run the government. Lawmakers strapped for money would have to cleave costs out of the budget … or raise taxes … or dramatically print more dollars, destroying the value of our currency.
Isnt this what Europe is doing today? Is the Euro being "destroyed"?
Knowledge is the enemy of fear
<< <i>Lawmakers strapped for money would have to cleave costs out of the budget … or raise taxes … or dramatically print more dollars, destroying the value of our currency.
Isnt this what Europe is doing today? Is the Euro being "destroyed"? >>
Not yet, but it is coming. Do you really think the problem in Europe is solved and getting better now? I contend it's just getting started. They've done a great job of kicking the can down the road. But eventually, the road will come to an end. Just wait until Spain and Italy actually starts to deal with the reality of their finances. Interest rates in those countries have only begun to rise, and they can afford to pay the higher rates for a little while...
I'm sure we've all seen the numbers. It doesn't matter what the US raised taxes to, it's wouldn't make a dent in the problem. And our politicians don't have the stones to make any of the cuts necessary to make a difference, especially when they insist on referring to cuts with the gimmick of multiplying by ten and saying $xB over the next 10 years.
The rates can't nudge up as long as the top 5 banks/FED/Treasury continue to pile on the otc interest rate contracts. Rates attempted to nudge up last year (ask Bill Gross). But by
adding $100 TRILL in otc derivs in the first 6 months of last year (most were IR contracts), any chance of rates rising was removed. In fact, they fell and caught many off guard. With
>$250 TRILL in otc IR swaps at risk, these big banks aren't going to allow those contracts to perform and bankrupt them. It doesn't hurt that the FED and ECB have their back. In fact
the the international deriv's lobby will either "forever" delay any meaningful Dodd-Frank reforms or help gut the original intentions of the bill. No reform here. The beauty of IR swaps
is that they are opaque and don't even show up in a report until long after the damage is done. There's no way for J6P (or even Bill Gross) to know what's coming at them. The Euro
and European Union have nowhere to go but down as the entire premise has been flawed since day one. So the game plan will be to systematically remove weaker nations one by one
from the Union. That could "save" the "new" Euro...for at least some period. The big EU banks have an even bigger risk from otc IR contracts than the US banks do. So they need the
FED available to keep pumping money into their system. Liquidity is liquidity as far as the gold price is concerned. Doesn't matter if it's injected in the US or in the EU...or both.
Nice that this morning the dollar dipped further under 79 to 78.90...opens up further possibilities. UUP has fallen below it's 200 dma (3 taps and down?) and under the 3 month H&S neckline as well. A strange start to OE Thursday with gold running up into the mid-$1650's. Are the banksters retreating back to the more familiar $1660-1662 line once again? Today is the last TNote auction of the month (7yr). No real change to the Gofo's as they hang in the lower 30's. Sifo's however have continued a very slow climb throughout April. TIPs have shaken off some recent weakness and are back to the short term highs. Gold continues to generally follow the TIPs. SIL to SPY volume ratio spiking sharply up this morning indicating lots of interest in SIL. For the 2nd day in a row GDXJ/SPY volume ratio looks strong....GDX/SPY as well. 10yr to 2yr Treasury yield ratio is now in it's 3rd surge upwards over the past 6 weeks and headed for the 200 dma. It made a huge "triple" last year from April to September that helped to propel gold's rally. If it can finally clear the 200 dma and keep going it will be a strong tail wind. Note that last year's correction had 4 dips and took 5 months. This latest correction (if complete) took 6 months and also had 4 dips.
10yr to 2yr yield chart
Not at all. As you I've been bearish on Europe for years and is why, going all the back to 2008, that I have been saying the dollar is not going to .60 as was the populist opinion at the time. Maybe the dollar does go lower, but it wont be tomorrow.
I think it is also obvious that the Central banks want to inflate their way out of this problem, but they are having a very difficult time. Will they succeed? Time will tell.
Bond holders in Spain and Italy will take haircuts. Capital will be lost. Can the ECB print enough to make up for the losses? Probably not. Deflation will hit both countries, just as it has Greece. Notice the trend?
Closed SLV puts at .84c. So lost 10c on 60% of position and made 31c on 40%. So overall a 6% profit. Nice V-bottom reversal on silver taking it just under 30 yest and grabbing the stops.
Had covered calls on GDX just in case the market blew up, but have since rolled them to a higher strike--so run GDX run.
Sold tomorrows NEM puts. Seems like juicy premium, but earnings will be reported in the morn so I may be a shareholder of NEM after tomorrows close.
Knowledge is the enemy of fear
<< <i>I think it is also obvious that the Central banks want to inflate their way out of this problem, but they are having a very difficult time. Will they succeed? Time will tell. >>
I don't think it's been difficult for them to inflate at all. I think the dollar is performing exactly as they want it to. I don't think they want it any higher or lower than it is right now. The fed is still in control, for now...
A good NEM report would be nice. But it's been dealing with flattish to lower production as well in 2012 so I won't hold my breath. It's getting harder for these
bohemoths to grow considering geo-political risks are only increasing. Quality acquisitions are far and few between, or years off (ie Novagold, Seabridge, etc.).
Look what happened to Kinross after heavily overpaying for Red Back.
<< <i>
<< <i>I think it is also obvious that the Central banks want to inflate their way out of this problem, but they are having a very difficult time. Will they succeed? Time will tell. >>
I don't think it's been difficult for them to inflate at all. I think the dollar is performing exactly as they want it to. I don't think they want it any higher or lower than it is right now. The fed is still in control, for now... >>
The price of nothing is higher in Europe, except for German and Swiss bonds. Real estate, wages, equities are all in decline. Europe where the problem is now is battling deflation not inflation. They are losing the battle.
GG, like most of the miners right now, looks like the place where good money goes to die. Trade them quick, or don't trade at all.
Knowledge is the enemy of fear
COT report was very interesting. Silver commercial short to long ratio dropped further this week to a tiny 1.46. Only during a 3 week period at the end of the Dec/early January "crush" was this ratio any lower (ie 1.34-1.39). They normally move this ratio by dropping or adding shorts. The past several weeks/months they've done it by mainly adding longs. It's been a long time since the commercials had 48,000 longs logged on their scoreboard. I don't see anything close to this even as far back as Dec 2008. In any case looks bullish. The short to long ratio has dropped from 2.5 to 1.46 since this year alone. At silver price peaks the ratio reaches 2.6 to 3.0. Gold contracts shifted about 8600 net to the long side, also bullish. The commercials have been closing out dollar shorts as the dollar dropped. The short to long ratio has dropped from 14 to now <5 as commercials position for the next dollar rally. But with back to back black weekly candles, the dollar has some work to do as it closed under 79.0. I like Petch's analysis of the USDollar in the article below.
David Petch
NEM puts expired worthless. I like selling something, collecting the money, and having it go to zero the next day.
Im watching the European banks for signs of market direction.
The momo stocks---AMZN, PCLN, AAPL, CMG continue to trade together. There is no individual buying of these names, just a large asset allocation program. I dont like it.
GLD closed right on the 2 month downtrend and probably needs to advance next week or gravity reasserts itself.
Knowledge is the enemy of fear
I'm not seeing that. GLD left the 2 month downtrend behind on Wed during that last dip to 157.5. After breaking above the 2nd two month fan
line anchored at the Feb 29th high, GLD slid down the down trend line for 2 weeks during mid-April. The last 3 days was spent moving away from it. The 3rd fan
line was crossed on Thursday. Since gold likes to retest those fan lines a move back to 159 is certainly possible. GDX is slightly above the 2 month
downtrend but could easily fall back to 46 to retest it. Slight gap up on GDX Friday almost assures a drop to refill it.
Knowledge is the enemy of fear
<< <i>What I be seeing.
I was drawing a resistance line from the 174 peak to the 157.76 bottom. But I can definitely see this line as it goes back to early February.
Seems both of them are in play, but now up against your upper channel line. Thanks for the chart.
It's all about counter-party risk
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Paper vs. physical:
It's all about counter-party risk >>
This is even clearer when the ETF market is expressed as a percentage of the physical market. While in 2009 ETFs looked poised to overtake the market in physical bullion and coins, by 2011 they constituted merely a tenth of the physical market:
I would love to see his computation of the above statement. In Jan 2009, GLD-just one of the ETFS-, held about 26 million ounces of gold. Today it holds 41 million ounces. A 58% increase. So lets do a little math. If in 2009, 25 million ounces comprised 75% of the gold market then the overall market was 33 million ounces. And today, 41 million oz is just 10%, then the overall market is 410 million oz. So the market increased 1200% in just 3 years. Where did all the extra gold come from? Or am I reading something wrong? What is his point? I find it very difficult to believe that in 2009 the physical market was only 33 million oz when there are 5 billion oz above ground.
Knowledge is the enemy of fear
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I'd have to agree. Those numbers just didn't seem to make sense. I went to the WGC website for more details but you have to be a member to get anything. I'd just assume not be a
logged in member of WGC's website. China is probably the world's largest buyer of gold by far and we have no clue as to what they are doing. According to the IMF they bought
no gold in March..........yeah, right! Imo the gold ETF's were continuing to take a larger bite out of the gold pie each year. But that could have retreated somewhat since gold peaked
in August/September of last year. There's a zillion tons of paper gold out there. And the question does remain, now much of it is really covered?
<< <i>keep in mind that we do not know their are physical reserves backing the ETFs. We do know that they claim to have the metal. >>
GLD "supposedly" holds less than 1% of all the gold above ground. Seems inconsequential.
Knowledge is the enemy of fear
<< <i>
<< <i>keep in mind that we do not know their are physical reserves backing the ETFs. We do know that they claim to have the metal. >>
GLD "supposedly" holds less than 1% of all the gold above ground. Seems inconsequential. >>
It's definitely consequential as the difference in annual gold supply vs. demand is a primary driver of price as opposed to current world above-ground gold supply.
The above ground supply is so well spread out that its total effects are neutered. You might as well consider most of the world's jewelry gold tossed to the wind, and the
gold that is really backing fiat currency to be untouchable (until sovereign bankruptcy occurs). The CB's claim to have 31,000 tonnes of gold but considering they have
been divesting of around 400-500 tonnes per year for 15-20 yrs, it's unlikely they have anything close to that. A couple hundred tonne per year difference
in gold is quite significant. 400-500 tonnes per year is now what the reporting central banks are buying and look what that did to price in 2011. If you factor those
buying w/o reporting it's probably 800-1200 tonnes per year, or more. If GLD's 1284 tonnes was inconsequential then why do CB's need to double count leased gold?
The IMF for years "threatened" to sell their unencumbered cache of 404 tonnes of gold. It had an effect each and every time they made that threat. Good that it's now gone whether it was paper accounting or real physical. The GLD reserves of 1284 tonnes is most significant. The world just fought over control of Libya's 144 tonnes. Now they salivate on getting their hands at Greece's remaining gold (with Italy, Spain, and Portugal targeted). When Central Banks owned a much larger % of world gold 1284 tonnes may not have mattered so much. But the CB's don't have an extra 1284 tonnes at their disposal to just dump into the market as they did 5, 10, or 15 yrs ago. They need every tonne of that to back current obligations and provide some strength to battered currencies and economies...as well as looking forward to the future when gold will probably be part of the next major currency basket. Think of gold as like water on earth. The earth is abundant in salt water and fresh water combined, yet only a small portion of all that is readily available for drinking and farming. That's how gold is with much of the 155,000 world tonnage locked down and effectively unavailable, at any price. It's the usable and trading quantities of gold that matter more (ie annual gold mining output, recycled gold, exchange based gold). Recyclable gold has gone a several year upswing but appears to be on the wane now. What's going to replace that difference?
Knowledge is the enemy of fear
total gold value from $1.2 TRILL to about $8.2 TRILL. The real effect behind the scenes is the gradual rebalancing of sovereign debts and fiat imbalances to the pog.
With or without GLD this still would have occurred....and probably faster since there would have been one less major entity for the banksters to mess with. Without GLD, the mining
shares and other facets would have taken up the slack. There were no ETF's in the 1970's yet gold managed to double in price in <6 months on 3 different occasions. That's
what the PTB are preventing from managing the gold price. They know it will rise. They just don't want a doubling in 6-12 months to trigger other atrocities in the markets.
It's frequently stated that the PTB have done a lousy job holding down the pog considering it's gone from $252 to $1921. True enough. But that run took over 10 yrs, not 3 yrs
like it did from 1971-1974 (5.5X) and then again from 1977-1980 (8.3X). Even gold's first major run from 2001-2008 was 4X over 7 yrs, a big improvement. And the last run
from $681 to $1921 (2.8X) over 3 yrs was not quite so good, but still superior to the 1970's. Dragging this on is what they have achieved. And dragging it out further as they
reposition for the "quickening" is the goal. The ETF's have given a very tiny % of the world's gold investors somewhere to go. But the vast majority of gold "investors" own physical
metal. In the respect GLD and SLV are tiny snapshots of an entire system.
JPM was able to pick up 5 MILL oz of silver during last weeks smackdown and deposited it on Friday in preparation for this week's deliveries. Should just about cover them.
The Comex deliverable silver inventory was getting pretty low again.
This snippet from TF's blog today:
China has now imported 436 tonnes of gold through Hong Kong over the past eight months. This compares to imports of a mere 57 tonnes over the same eight month-period a year earlier (July 2010 - February 2011). The net new demand implied by this increase is 379 tonnes, which when annualized equates to 568 tonnes of new demand in a market that supplies 2,810 tonnes per year in mine production. Recent IMF data also shows that at least 12 countries increased their physical gold reserves by 58 tonnes in the month of March, with Mexico, Turkey, Russia and Kazakhstan making sizeable purchases. 58 tonnes annualized equates to 696 tonnes of demand per year. We know that central banks bought 439.7 tonnes of gold in 2011, and if the pace of recent central bank purchases continues, it will equate to another 256 tonnes of net new change in the physical gold market.
The significance of this demand shift is striking. If we combine China's implied net change of 568 tonnes with the central banks' net change of 256 tonnes, we're left with a demand shift of over 824 tonnes vs. an annual mine supply of 2,810 tonnes. That represents close to a 30% net change in the physical gold market in 2012. If we remove the portion of global gold production produced by China and the other non-G6 central bank gold buyers (like Russia and Mexico - because we know they're not sellers), we're now dealing with over 824 tonnes of demand change hitting an annual global mine supply of a mere 2,170 tonnes - representing a 38% shift. Although we have been continually reminded that 'fundamentals don't matter' in today's marketplace, there isn't a physical market on earth that can withstand that type of demand increase without higher prices over the long-run, and the gold market is no different. There are no sellers of physical gold that we know of who can satiate that scale of new demand, and global gold mine supply has been virtually flat for over the last ten years. Even if we incorporate the estimated 1,600 tonnes of "recycled gold" that the World Gold Council insists on including in its annual gold supply estimates, the numbers above still suggest a net change of 19%. Who is going to give up their gold purchases to make room for this scale of new demand? Where is the gold going to come from? We ask because we don't actually know.
The first reason is that gold has been going sideways for quite some time, and all of the energy from the blast to the $1900's has disapated and we're currently around the average level of the penant, $1660. Nichol's weekly fractal indicator is full of energy.
Another reason is gold stocks. The XAU and GDM charts look awful. The perfect time to buy is when no one else is buying and the charts show this. The price oscillators are all at negative apexes meaning that a reversal is quite likely. Asset levels of funds like the RYPMX are at very low levels.
Another reason is gold's 13.5 month cycle, which called for a bottom in April which is believed to have been established a couple weeks ago. This typically should "free up" the pattern to start its next move up (or down) for the next ~7 months.
All in all, it looks to me like a great place to load up on quality stocks like GG and SLW and a good place to get long.