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***AUGUST 2012 Gold and Silver Stocks/Options/Futures trading thread***
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This is a continuation of the monthly trading thread to discuss the trading of PM-related stocks, options, and futures.
IMO, gold is setting and getting ready for a huge move to the upside, potentially after the FOMC meeting starting off the month. I have seen speculation on both sides about whether they are ready to launch more QE or whether they will wait. To me, it looks like gold wants to run sooner than later but the real indicator is a decisive break of the $1630-40 level.
I am only looking for a ~$400 move to $2000-2100 but more optimistic estimates of $3000 are probably not unreasonable. Especially if a global QE unleashes simultaneously.
IMO, gold is setting and getting ready for a huge move to the upside, potentially after the FOMC meeting starting off the month. I have seen speculation on both sides about whether they are ready to launch more QE or whether they will wait. To me, it looks like gold wants to run sooner than later but the real indicator is a decisive break of the $1630-40 level.
I am only looking for a ~$400 move to $2000-2100 but more optimistic estimates of $3000 are probably not unreasonable. Especially if a global QE unleashes simultaneously.
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M0 (for a close up view, select 1 yr, and then "redraw graph")
Incredible 53-1 NUGT to DUST volume ratio on this morning's slide. Nugt filled its gap at around 8.15, but of concern is that GDX, GDXJ, and GLD didn't. This looks to be total, towel throwing time in Nugt. Don't see the stock market or commods in general getting hit as hard as the PMs. The volume in Nugt in less than one hour was 2X greater than any daily volume seen during the May lows. Amazing. Why even wait for the FOMC when you can get this done well in advance? What's more interesting is that the volume ratio built up steadily from open until around 11 pm (20-1 to 53-1). It's still holding right around 49-1. The largest 1 day ratio over the past 2 yrs was around 22-1. Only 2 choices from here. Miners are headed to much deeper lows or this was one of the best pocket-picking excursions of all times. Nugt was pushed down 14%, then has since rebounded 14%....a 28% swing. But that pales to REE which dropped 30% and then got it all back.
Still more room for another down leg in gold to coincide with the FOMC minutes. GLD fell back and back tested the 20 and 50 dma's dma this morning. But the gap in the upper 153's is close by. Maybe saving that for Ben or Thursday's full moon. These large bottom shadows in the candles for GDX, GLD, SLV, etc. suggests there was interest in buying at these morning lows. The GDX/SPY volume ratio was off the charts today as well. 2-1/2X larger right now on the daily than anything seen in the last 3 yrs. This is either incredible capitulation or a crash warning. So far, it seems a lot more likely to be capitulation. There were also huge volume ratio spikes in GLD/OIL and GLD/UDN. Gold's 8 hr lower BB now at $1580 which has often provided strong support.
GSR's Stoch-Rsi coming up for its 2nd move above the 0.8 line and a retag of the upper daily BB. Usually, Stoch-Rsi only makes 2 or 3 peaks before treating again. With CCI and Macd in slow downtrends (neg diverg), I'd give the advantage to a downtrend continuing. Macd peaked much higher last October with a GSR of 56. But it still has a bullish alignment on its various ema's and dma's. GSR
Another interesting stat is the Nugt's volume today is 1.5X that of GDX today. Before today it's never even been more than 50% of the GDX volume. While GDX technically filled the daily gap from the 24th (again), there's still a 60c gap on the hourly. When gold and miners leave the station for good, they will probably leave gaps behind that will last for months just as they did 1-3 years ago. We just don't know when that final lower gap is the goodbye kiss. We've been disappointed a lot of times in 2012 as time and time again, these lower gaps got filled.
In looking at the highest volume trades in the industrials today, Nugt came in at 2nd place so far only behind Alcoa. In looking at the top 20 volume
players today most seem to be key players in mining, energy, rare earths, etc. I think they were trying to send a message. So it's no surprise to me
that Nugt was totally thrashed along with GDX. GDXJ and SIL had smaller than normal daily volumes. This volume is not consistent throughout the
gold and silver miners. Seems to me they went for where the bang for the buck was maximized. Senior gold miners and Rare Earths seemed to have seen the biggest
whacks and volume surges. Most of the damage to the smaller stocks like GDXJ and SIL occurred in the first 5 minutes and then relented. But nothing explains what
occurred with Nugt today where 16 MILL shares traded in 30 minutes (3X highest daily volume of the past 3 weeks). That was an intergalactic hit. Why an I not suprised
that GDX/NUGT are at the center of the whole thing?
10-15 min after the open. Just didn't expect a pull back close to the May lows occurring with only a $10-$15 drop in gold. I can't imagine that any trader with a nugt sell
stop today didn't get it hit. If this was just a computer glitch why did the Nugt drop go on for 15 minutes?
The exchange cancelled trades in stocks including China Cord Blood Corp, which rose as much as 151 per cent on huge volume, Quicksilver Resources, Reaves Utility Income Fund, Wizzard Software, E-House (China) Holdings and American Reprographics.
There was unusual trading in the shares of Dole Food, Radio Shack, CoreLogic, and, on European bourses, Unilever, Alcatel-Lucent and Anheuser-Busch.
Oh, maybe I know. To divert attention from the obvious. Yeah, thats it. Make the sheeple think this was a "computer glitch" by hitting the shares are their favorite beer. That will fool them. Hehehehe--we be evil banksters.
LOL
Sorry, couldnt resist.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
<< <i>I hear ya roadrunner. But I see absolutely no need to manipulate a highly leverage etf. Perhaps the leverage is the reason for the huge volume. >>
Such huge Nugt volume leverage has never been there before on previous days where GDX reached 30 MILL shares. Why was today 400% different with similar conditions?
The other leveraged PM etfs, AGQ,USLV,UGLD,DUST,ZSL saw no such volume leverage (ie no more than about half or less of previous volume spikes). Even Dust has seen
higher volumes than today's on 10 occasions this year. Nugt sticks out like a sore thumb. I've watched the Nugt/Dust volume ratio closely over the past year and it usually
tracks in the 3X to 12X range. Excursions in the 15X to 22X are rare, even in early morning trading. 22X was the previous daily high. It opened around that value and just
kept climbing, sitting at 50 for quite some time. It slowly wound down to close at a volume ratio of 35. Things were clearly out of whack for something that I've never seen
higher than 22X even in the first 30-90 min of trading. An 18X to 22X ratio has indicated a massive move one way or the other. Once I went to 30 I was dumbfounded. Then
came 40....then 50. It was nuts. I can sort of explain all the other moves today....just not this one. And fwiw, what fund would be playing with Nugt to this extreme? I don't
think a fat finger, or even a Knight induced mistake could have accounted for this. 10 MILL in sell stops sitting 10-14% lower than yesterday's close could be a partial reason.
They got every one of those.
Anyway, gold came back down and touched the top of the triangle consolidation from above. This is quite a common thing to happen upon a breakout of a triangle consolidation. In fact, I was going to point this out a few days ago that I was waiting for such a move to load up. So I think the pattern is setting up nicely but it is vulnerable here. Who knows, maybe we're in for another month or two of sideways action.
There was no conspiracy to drive NUGT lower.
Knowledge is the enemy of fear
<< <i>There's a couple of possibilities after today. The fed didn't give us the news that was needed to send gold running. Thursday the ECB ends its meeting so I suppose an announcement from the ECB could trigger a move as well. And if that doesn't do it, Friday's unemployment report may do the trick.
Anyway, gold came back down and touched the top of the triangle consolidation from above. This is quite a common thing to happen upon a breakout of a triangle consolidation. In fact, I was going to point this out a few days ago that I was waiting for such a move to load up. So I think the pattern is setting up nicely but it is vulnerable here. Who knows, maybe we're in for another month or two of sideways action. >>
I kinda want to believe this is the case PC, but im not so sure. The breakout was weak and depending on how the trendlines are drawn it could be falling back into the wedge. Silver may be a leader here, watch it.
Knowledge is the enemy of fear
Since my thinking is that we're at a low of sorts I established a position today at about 1588, but I am ready to bail if there is any follow-on weakness. I am worried about getting taken out in a whipsaw reaction though, but such is the risk.
"Right now, Bernanke is playing the stock market like a fiddle. Strongly hinting at QE-3 to the media in order to jig the market upwards, - then disappointing market Bulls after big rallies, by holding pat and keeping his powder dry. Mr Bernanke aims to stay politically neutral ahead of the Nov 6th elections, and the last window of opportunity to launch QE-3 before Nov 6th has probably closed. If the Fed unleashed QE-3 before Nov 6th, and if the Republicans capture the White House, the Fed chief would pay a heavy political price in January. The “Audit the Fed” bill would become a reality and so would the dismantling of the Fed’s secretive interventionist schemes in the marketplace. Mr Ron Paul has set the wheel in motion, - only time will tell if American voters are ready to restore the slogan, “Free Markets for Free People." - Gary Dorsch, 7/31/12
Give Me Liberty or Give Me Debt
McLellan's indicators expected a gold bottom which we got yesterday. The next thing due is a top around Aug 14.
on the bottom of the triangle in the $1565-$1580 range is still within reason and doesn't break the structure. I see it is a symmetric triangle rather than a descending. GLD still has a
small hourly gap left from the 24th (153.5) that equates to gold of around $1582. There is also a bit of a higher GLD gap left up around a gold equivalent of $1613. We could see both
of those fillled in August. One good thing is that the next pressure week for gold is 1-1/2 weeks away when GLD and GDX options expire. But next week is clear other than a 3-10-30yr
TBond auction week. Those usually aren't all that negative when they aren't combined with OE or FOMC weeks. But we should see some pressure reapplied by the 14th-17th. The last
week of the month should provide fireworks with a combined OE week and set of TNote auctions. Volume in Nugt today was pitiful at 2.5 MILL shares....a far cry from the 21 MILL two
days ago.
Give Me Liberty or Give Me Debt
<< <i>Buying GDXJ @ 20.06, lots of it. >>
How come? Why that particular.
Give Me Liberty or Give Me Debt
Still, volume hasn't been quite there on this last up move. GLD has filled all nearby gaps (high and low). But it's at about the end of another 8 day topping cycle (now 7th day per
4 hr chart). Dow seems stretched at 13,200 especially with a higher VXO gap left a couple of days ago. Miners will rotate into their weak OE period next Tues-Wed. Doesn't
give them a whole lot of time to move up. Seniors are constrained by the 50 dma right now which also keeps GDXJ in tow. If GDX can bounce one more time to fill that gap just
below 46 it will help. But gold looks sluggish like it wants to cycle down to the bottom of the triangle one more time ($1590-$1600). GLD/SLV ratio (GSR) trying to break below the
50 dma but still hanging tightly to it. Until GSR breaks sharply below that 50 dma line, the action will remain topsy turvy.
Quarterly reports continue to trickle in on the juniors. And as a whole, they aren't very good. These guys have their work cut out for them going forward. Tues-Thursday this week are 3-10-30 yr TBond auctions. Today's 3 yr was solid at 3.5 bid to cover with $32 BILL sold. More often than not these auction weeks make it hard for gold and miners to get a footing. Significant lower gaps in some miners gives me some concern (GSS, AZK, FNV, HMY, GFI, GOLD). Last month, all the miners dropped together in a "team effort" to help AU finally fill its very deep gap. Miners have been brutal the past 10 months in leaving no gap unfilled.
IMHO, the bottom is in for gold but how long we trade sideways remains to be seen.
Give Me Liberty or Give Me Debt
Knowledge is the enemy of fear
Here's the weekly chart.
Potential for failure remains high. Thats all I can say
Knowledge is the enemy of fear
this week. Then OE effects would take over. But with miners tanking so early today, and gold following suit, this isn't a good sign for the rest of this week. Moon change on
Friday fits in nicely as well......
I'm not trying to say gold can't go lower, but as I've said before, investors and ETFs aren't exactly loaded up on PMs & PM stocks at the moment so they can't exactly dump large inventory on the market unless they go short. But lack of buyers could cause weakness as well.
Billionaires Soros, Paulson Bet Big on Gold
I wouldn't bet against these guys...
As far as the current pattern goes I still think we're looking at a few more weeks of sideways with another trip up to 1630 and down to 1600 coming...
Maybe they both get lucky again.
Knowledge is the enemy of fear
It may be the bubble that never pops, or the bubble that gets adopted de facto as a last resort standard. The politicians are loathe to let that happen, because at that point the public finds out that they can't deliver.
So, it's the ultimate contest between de facto vs. fiat, with all sorts of other implications.
I knew it would happen.
<< <i>CHART OF THE DAY: The World's Central Banks Are Bulking Up In Gold >>
Lets see. When central banks were selling=gold at lows. When central banks are buying= gold at highs?
Knowledge is the enemy of fear
still be a small portion of their total reserves. It's sort of comical that news reports show excitement for nations picking up 10-50 tonnes of gold per year. But, who knows
how much of that "bought" gold are just paper claims on some IMF or US/London/German vault somewhere. And then you have China probably buying on the sly at
500-800 tonnes per year overshadowing everyone else combined. Central banks were sellers of gold for at least 15 years, maybe even 25 years. They have become net
buyers of gold now for approx 2 yrs. If it took 15 or more years of them selling gold to hit bottom, I suspect it will take more than 2 yrs of buying to find a top.
Knowledge is the enemy of fear
China is looking to find means to sustain their economy. They are on a buying spree around the world buying up commodity sources (foods, metals, energy, etc.).
I don't think it's realistic for them to solve the extended sustenance problem overnight. But having a currency backed by something is certainly a good start. And even
if they do make it to the 6,000 tonne level, that's still only around $300 BILL at today's levels (ie 75 days of US budget spending). That's a fairly small fraction of the total
Chinese reserves and assets. Seems like a smart idea to match the gold reserves of both Germany and USA. When those countries sell off all their gold, then maybe
China will do the same. For some reason having stores of gold worked pretty well for building empires in the 16th to 20th centuries (he who had the gold made the rules and
boomed industrially). People willingly came to the countries with "gold." Until a new paradigm gets "discovered," what worked before could well work again. One thing is for
certain, the debt, derivatives, and donuts paradigm seems to have shot itself in the foot. China is making inroads on the sustenance issue by shifting some of its reserves from
paper assets to harder assets. Can't aruge with that.
But also worth noting is that platinum is up over $100 in the last 4 days and looks poised for a great run. Anyone wanting a 2012 Platinum Eagle should order it NOW.
And look at Platinum! Hope you all bought your 2012 APEs... mint just raised the price.
Palladium looking good too.
Silver looking good and back above $30!
Added: The last time we saw this something was in the works... this time there are two great possibilities. The fed comments of an official QE3 coming soon or Israel attacking Iran and/or Syria blowing up. Looks to me like insiders are loading up and not allowing any real pullbacks. Serious accumulation is happening.
Saying that, there is some possible resistance in the 30.25-30.70 range, we are in the midst of that range now. we may see some consolidation taking place, but the underlying trend appears to be solidly up.
"the situation is less favorable for the precious metals mining stocks than it is for the underlying metals."
Give Me Liberty or Give Me Debt
<< <i>All I am saying is that selling makes lows and buying makes tops. What these central banks want with gold is beyond me. They should be exchanging theur worthless fiat for something that provides sustinance for their people. Cuz if the people ain't happy they will find they no longer have a central bank. Oh how history repeats. >>
It's quite possible that they now see gold as a store of value in times of uncertainty - something many informed readers here realized long ago. It's more likely they have always seen gold as a store of value and have recently admitted to themselves that their failing crisis management now dictates a protective move to a store of value. I personally view their move to gold to be an admission that they have failed in their great economic recovery experiment and they have run out of ammunition - time to self-preserve.
The US central bank in particular is not in the business of providing sustinance to the people - it is in the business of providing profits to it's private owners and pacifying political leaders who allow it to do so at great cost/debt to "the people." FED actions that do not directly reduce the peoples' paychecks often reduce the value of what's left of those paychecks. There is nothing "federal" about the FED except that it's license to steal remains blessed by complicent federal representatives who get a cut of the booty.
Give Me Liberty or Give Me Debt
<< <i>Miners To Underperform Precious Metals in the Weeks to Come
"the situation is less favorable for the precious metals mining stocks than it is for the underlying metals." >>
I have to disagree with the negativity to mining stocks in the article, but I have no opinion on whether metals will outperform mining stocks or v.v.
The SP500 actually looks to be in great shape to rally over the next few months, at least until the election. And with a QE liquidity injection stocks will have a difficult time going down. Now if metals take off like I think they are about to, then I think this recipe bodes well for mining stocks overall.
So my prediction for what's going to happen is that gold will climb to $1700 in the next few days in anticipation of QE3. But after being disappointed, gold will pull back to the mid or low $1600's until the mid-Sept FOMC meeting where QE3 is finally announced.
I think I just say this because there is too much anticipation of QE3 and the markets don't like to be predictable. Although gold is more than ready for a move RIGHT NOW, the markets love to tease.
<< <i>
<< <i>Miners To Underperform Precious Metals in the Weeks to Come
"the situation is less favorable for the precious metals mining stocks than it is for the underlying metals." >>
I have to disagree with the negativity to mining stocks in the article, but I have no opinion on whether metals will outperform mining stocks or v.v.
The SP500 actually looks to be in great shape to rally over the next few months, at least until the election. And with a QE liquidity injection stocks will have a difficult time going down. Now if metals take off like I think they are about to, then I think this recipe bodes well for mining stocks overall. >>
Much of the value of a mining stock is tied to the gold it pulls from the ground. As that supply gets smaller (peak gold?) it is producing less product while its costs to do so normally become greater. "Underground reserves" are estimates only and are only proven correct many years later after it has all been removed from the ground.
A rising gold price is only good for a gold mine if it can pull gold from the ground. Shrinking supply and rising costs should be considered along with a rising gold price. The gold price can go to the moon, but reductions in production are negative to a stock's value.
Give Me Liberty or Give Me Debt
<< <i>Interesting article from Zero Hedge about the Jackson Hole meeting. I think I kind of agree that no QE will be announced at JH and instead will be delayed until the Sept FOMC meeting.
So my prediction for what's going to happen is that gold will climb to $1700 in the next few days in anticipation of QE3. But after being disappointed, gold will pull back to the mid or low $1600's until the mid-Sept FOMC meeting where QE3 is finally announced.
I think I just say this because there is too much anticipation of QE3 and the markets don't like to be predictable. Although gold is more than ready for a move RIGHT NOW, the markets love to tease. >>
I've got a feeling the scenario you spelled out is already priced into the market.
<< <i>Much of the value of a mining stock is tied to the gold it pulls from the ground. As that supply gets smaller (peak gold?) it is producing less product while its costs to do so normally become greater. "Underground reserves" are estimates only and are only proven correct many years later after it has all been removed from the ground.
A rising gold price is only good for a gold mine if it can pull gold from the ground. Shrinking supply and rising costs should be considered along with a rising gold price. The gold price can go to the moon, but reductions in production are negative to a stock's value. >>
Yes, but the comments above are with reference to the "weeks to come" not months or years to come, so a relatively short time window where gold production (and costs) are fairly certain and predictable and don't factor into price changes (unless something happens or is announced that will affect production).
Naturally, mining stocks are still a business with profits and expenses and a rising sale price means increased profits. But you can never forget that you still need an overall successful mining operation with competent management, stable cost structure, and all other factors that lead to profits.
<< <i>Interesting article from Zero Hedge about the Jackson Hole meeting. I think I kind of agree that no QE will be announced at JH and instead will be delayed until the Sept FOMC meeting.
So my prediction for what's going to happen is that gold will climb to $1700 in the next few days in anticipation of QE3. But after being disappointed, gold will pull back to the mid or low $1600's until the mid-Sept FOMC meeting where QE3 is finally announced.
I think I just say this because there is too much anticipation of QE3 and the markets don't like to be predictable. Although gold is more than ready for a move RIGHT NOW, the markets love to tease. >>
I think I wrote a few weeks from my meeting in JH that nothing special was gonna happen. Gold and silver remain in their respective downtrends (consolidations). Massive potential of disappointment for both longs and shorts.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
Today's $1652 low tagged the 2 week uptrend line. But I think tagging the 6-7 week line makes more sense where RSI (8 hr) can get back down to <40 where the 18-20 day
cycle peaks have been bottoming at. Miners have only a little more work to do to fill gaps from last Monday's gap up. SLV has a lot more work to do as it has been
more resilient (gaps at 29 and 28). Two TNote auctions down so far this week. 2 yr Note auction was 3.94 bid to cover while the 5 yr was just
I still prefer to draw the line at the top of the candlestick rather than the wick, and it was just a false breakout that we saw a few months ago. The next breakout isn't going to be false...
The fractal energy levels along with the volatility levels are just waiting to release into a new move. I will grant the caveat that it could be a few more months (post election?) due to the fact that the next trend to start will be on a larger weekly or monthly time frame, so waddling around at these levels for another month or two doesn't mean much in those timeframes. But the move is coming, and my money is on sooner rather than later.
Agreed on that!! A break to the upside finally gets people back to even after a year+ hold. Then they still be stuck in a sideways pattern. Or a break to the downside completes only a typical 38% retracement. But those holding gold at $1800+ wont be very happy and will SCREAM manipulation when gold carries a 13 (or maybe 12) handle.
Knowledge is the enemy of fear