***APRIL 2013 Gold and Silver Stocks/Options/Futures trading thread***
ProofCollection
Posts: 6,154 ✭✭✭✭✭
This is a continuation of the monthly trading thread to discuss the trading of PM-related stocks, options, and futures.
The only thing to discuss at the moment is how low will it go. Key supports were broken Tuesday and it looks headed lower from here. Some targets are $1460 with a worst-case at $1230.
The only thing to discuss at the moment is how low will it go. Key supports were broken Tuesday and it looks headed lower from here. Some targets are $1460 with a worst-case at $1230.
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This is Cypress Effect causing an example of unintended consequences right before our eyes !
Paper GLD is now accelerating the decoupling process from the price of the physical GLD
People always seem to forget that the paper price is what pushed physical UP in the first place.
Knowledge is the enemy of fear
Just did'nt want this thread to get lost in the pile........
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 may have been premature, but I bought an ounce of physical on this morning's brief dip below $1500.... gotta love real-time pricing. Will buy more on any further dips as I feel downside is limited from here. I am in no hurry though, I think we've got a few months before we see any real upside. GDXJ is within $1 of my buy target, and I feel that the bottom will be close once my buy target is achieved.
GLD 150, 149, 147, and 145 all filled. That resets things back to the summer 2011 breakout to $1900 from the $1480's low.
The GLD level of 145 supported gold for 2-1/2 months in mid-2011. So getting below the $1488 level for good will take a bit more work.
A weekly close under $1523 today could/should signal a transition to a full blown gold cyclical bear. Gold's monthly rsi and macd have now taken out
the 2008 lows. Huge negative divergence in play.
GDX filled a gap from summer 2009 at $32.50.
SLV is lagging though with gaps remaining at 24 and 25.
I'm getting better at short term price movements.
"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
<< <i>Monday March 04, 2013 8:04 PM I think the GSR breakout is about 2-3 weeks away. So there is still time to raise fiat currency. >>
Throw away your crystal ball....you were off by a couple of weeks.
btw...great call.
Commodities breakdown.
Knowledge is the enemy of fear
However, the charts do not look good and point to more downside unless this breakdown is just a fake-out.
requirement is $5400 per contract. (Initial margin is $5940, Jun contract value at Friday's close was $150,140).
Speculators fully using this margin went below ZERO equity on Friday and those
who stepped in towards the close on Friday are wiped out today.
This is affecting other commodities such as copper and oil.
CMX trading begins at 8:20 AM this morning, that is when the real action starts.
<< <i>There will be nasty margin calls on gold and silver. I will focus on gold where the CMX maintenance
requirement is $5400 per contract. (Initial margin is $5940, Jun contract value at Friday's close was $150,140).
Speculators fully using this margin went below ZERO equity on Friday and those
who stepped in towards the close on Friday are wiped out today.
This is affecting other commodities such as copper and oil.
CMX trading begins at 8:20 AM this morning, that is when the real action starts. >>
Futures trading actually started Sunday afternoon, and hopefully those traders had stops in place. And to assume that those traders without stops in place were "wiped out" and are facing margin calls is another huge assumption. Yes, they may have some paper losses but their account and position sizes may have had the margin to accept the loss.
today in the Jun contract alone.
That dwarfs all other trading.
Reports are of heavy margin calls and trader accounts being liquidated.
2.5 hours today, represents more gold than all the gold held by GLD, the largest gold
exchange traded fund.
The GLD, by the way, has been getting steady redemptions all year and has been selling gold itself.
<< <i>The big players trade on the CMX during regular hours. So far, 42 million oz have traded
today in the Jun contract alone.
That dwarfs all other trading.
Reports are of heavy margin calls and trader accounts being liquidated. >>
I'm sure that is the case, but there are no futures traders that don't keep an eye on prices outside of CMX hours, it is simply too risky. And none of them waited until 8:20 this morning to take action as there is no reason to wait and incur extra losses.
Wow... the blood keeps coming. $1356.60 low at the moment. Not sure when it will happen, but the 38.2 retrace will be at least $76.
"Their choice was either this solution, or wait until Monday and be subject to potentially heavy losses should margin calls go out over the weekend. With no time to think and survival instinct kicking in, the physical holders most likely did what they could to protect themselves. They went in and shorted the futures market."
Brilliant play to hammer prices by whoever pulled it off.
What will be interesting is how much of a selloff in equities will occur to raise cash for metals margin calls.
Could it be that somebody's trying to push investors into the dollar corner of the room? Seems that would be the perfect place to have them all right before a dollar devaluation event.
"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
should hold today's decline.
I would expect a sharp rally, but after that is just guesswork.
Knowledge is the enemy of fear
I bought some GDXJ, GG, and SLW today.
<< <i>Welcome to the world of illiquid investments. >>
We have long passed the point of anything trading in paper in NY, Chicago, and London as an "investment." Just one big play pen w/o regulations or rules for the big boyz.
All investments are illiquid at one time or another. Gold was illiquid back on Sept 23rd and 26th 2011....same setup as this current hit (Friday/Monday). Gold down $200 in 2 days.
But if you have physical gold in qty, it's not illiquid. Just give the Chinese Central Bank a ring if you a few tonnes of gold to sell. Liquid as melted butter. The stock market has been
illiquid a few dozen times in the past 50 years. In fact, sometime in the next few days, weeks, or months, we will get to see first hand how illiquid the stock market can become. Still,
I've yet to hear of anyone ever being turned away from bullion or coin shops if they had gold ounces to sell.
<< <i>All investments are illiquid at one time or another. Gold was illiquid back on Sept 23rd and 26th 2011....same setup as this current hit (Friday/Monday). Gold down $200 in 2 days.
But if you have physical gold in qty, it's not illiquid. Just give the Chinese Central Bank a ring if you a few tonnes of gold to sell. Liquid as melted butter. The stock market has been
illiquid a few dozen times in the past 50 years. In fact, sometime in the next few days, weeks, or months, we will get to see first hand how illiquid the stock market can become. Still,
I've yet to hear of anyone ever being turned away from bullion or coin shops if they had gold ounces to sell. >>
Heck, if you are a Cypriot, your savings account was illiquid (and still is?) for quite a duration over the past few weeks.
<< <i>What do you think RR, is it time to back up the truck on gold stocks? And which ones are you favoring?
I bought some GDXJ, GG, and SLW today. >>
I don't know about backing up the truck. I do know that gold hit a key resistance line today forming a nice parallel channel over the past 19 months. That support line is
formed from the May 2011 high ($1575) high and includes the Sept 2011 ($1532) and April 2013 (so far) lows. Nice neat channels are often good places to bounce from even
if cohodk's 50% fib of the 11 year move ($1300) has yet to be reached. We did hit the 50% fib of the bullish C wave ($864 to $1923). The move from $681 to $864 was actually
part of the original correction from the 2008 high of $1033. After that 2 massive hit of -$200 in Sept 2011, gold bounced for 6 weeks. We probably won't get that this time around as
weekly and monthly gold charts are in total distress. The monthly chart has enormous neg divergences where rsi and macd are well under 2008 lows. The lower monthly Boll Band
has been breeched by $90. Prior to the past few months, the gold price has never even approached the lower monthly BB since the pre-2001 era. RSI's in weekly gold are now
slightly below 1998 lows (22)....the last time they've been this low (19-20 today). Daily gold rsi hit 16, first time under 20 this entire bull market. The RSI lows are back in 1997 near
10 for the daily and weekly. Even after rsi bottoms, price usually meanders lower for quite some time. In 2008 it took 1-2 months for price to bottom after the daily rsi low came in.
I bought some miners on the morning dip. There are some worthwhile cheap juniors and seniors that are on important trend lines. A safer bet is probably just to go with GDX or
GDXJ. Still have a number of gaps in GDX that aren't far away at $28, $26, $23. Fairly decent support another 20% lower for GDX. Bought some BRD today at the dip after selling
out last week. Miners will follow gold down regardless of how cheap they get. And who knows what they will do if the stock market craters. At least for know they've been moving
inverse to stocks. But a deleveraging event where everyone runs to cash and treasuries could crush them again. But prices were cheap enough for me to buy this morning. Things are
looking parabolic in DUST, NUGT, GSR, etc. The 12 yr HUI uptrend line hits around the 200-220 right now. That's 20% lower and would be about worst case imo. That would retrace
nearly all of the 2008-2011 move in miners. Stock market getting nailed today too, especially Dow Transports. Large money shifts occurring from sector to sector as this pounding
goes on. Looks like David Nichols' fractal energy just released itself.....in the opposite direction.
some junior charts
Gold volatility starting to approach the Sept 2011 peak of 43.
senior charts - Barrick's bad news on the Pascua Lama project last week got the ball rolling even before gold tanked
I think the big move from the 2001 lows around $250 is over.
"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
Didn't buy it then...now the real reason. But there's probably more. IMO this is an opp for buying once the carnage is over.
<< <i>CME raises gold and silver futures margin requirements >>
No surprise, given the gold volatility index...
BTW, heard from several dealers today. They say, where is the panic selling? No one has called them or stopped by to sell their physical gold. ZERO sellers.
My favorite line was from Schiff: "Fear is driving people to the dollar, fear of the dollar is just around the corner."
I highly recommend it to anyone interested in the current economic enviornment.
"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 knew it would happen.
Stocks are also looking worrisome. The SP500 needs to bounce here pretty badly, although I think the lack of liquidity at the moment could lead to that big black swan event in stocks very soon. Liquidity problems almost always cause the big crashes.
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>Could the black swan event be a collapse of PMs? Who would be expecting that? >>
It certainly could. The next big PM rally could definitely start with a huge, fast drop in PMs. But I think that's the scenario where you see a huge arbitrage opportunity so it won't last long. As in the current price depression, the actual material is fairly scarce. There is little physical selling.
It seems there is a pretty good consensus that the paper price drives the physical price. It doesnt have to be dollar for dollar, but there is a direct relationship. So wouldnt it be possible for the physical price to move higher without a single ounce being purchased--just paper gold buying?
Knowledge is the enemy of fear
<< <i>How much physical selling was there in 1980?
It seems there is a pretty good consensus that the paper price drives the physical price. It doesnt have to be dollar for dollar, but there is a direct relationship. So wouldnt it be possible for the physical price to move higher without a single ounce being purchased--just paper gold buying? >>
Sure, in a normal market. But imagine the scenario where people are driving around or calling PM dealers and there is limited or no inventory or very high (and recently raised) premiums. And it's the same story everywhere... Suddenly that buyer is willing to pay more, and the paper price is meaningless because of the perceived scarcity. So will that ever happen? Maybe when the US dollar crisis happens, whenever that may be.
GSR is positioned exactly like August 2008. And unlike 2008, the current GSR is working off a massive IH&S with a half way pattern from 30-60. Next move could be another 20-30 pts. The 2007-2008 pattern had no such bullish base to work off. It just exploded from nowhere due to Lehman and the boyz. We have a strong monthly breakout in April 2013 GSR…just like August 2008. It is what it is. If today's gold bump to $1425 was the ending of bear flag half way point, we could be headed to the lower $1100's fairly soon. Next week is end of month OE/TBond auction week. FOMC meeting is the week after next. The set up is there. COT report showed commercials doing fairly little unwinding of their net short positions, as if they know there is plenty of time left. Managed money (large specs) dumped a net 19K in gold shorts and 10K in silver shorts. But there's still plenty of short ammo left all around. Not a good picture. Any miners I bought this week I already bailed on. The bounces yesterday and today gave some relief.
<< <i>
<< <i>How much physical selling was there in 1980?
It seems there is a pretty good consensus that the paper price drives the physical price. It doesnt have to be dollar for dollar, but there is a direct relationship. So wouldnt it be possible for the physical price to move higher without a single ounce being purchased--just paper gold buying? >>
Sure, in a normal market. But imagine the scenario where people are driving around or calling PM dealers and there is limited or no inventory or very high (and recently raised) premiums. And it's the same story everywhere... Suddenly that buyer is willing to pay more, and the paper price is meaningless because of the perceived scarcity. So will that ever happen? Maybe when the US dollar crisis happens, whenever that may be. >>
We are currently in a normal market. There is nothing happening now that hasn't happened before. Everything is quite normal.
There is no shortage of pm, just a shortage of people willing to take a loss. Metals will not strengthen until people take losses, or throw in the towel.
Very sobering roadrunner. Ugh.
Knowledge is the enemy of fear
Don't use me as your indicator or we could be looking at $700.
I knew it would happen.
<< <i>We are currently in a normal market. There is nothing happening now that hasn't happened before. Everything is quite normal.
There is no shortage of pm, just a shortage of people willing to take a loss. Metals will not strengthen until people take losses, or throw in the towel.
I agree. We haven't had th USD crisis yet either. But the day is coming. Just wish I knew when.
<< <i>
<< <i>We are currently in a normal market. There is nothing happening now that hasn't happened before. Everything is quite normal.
There is no shortage of pm, just a shortage of people willing to take a loss. Metals will not strengthen until people take losses, or throw in the towel.
I agree. We haven't had th USD crisis yet either. But the day is coming. Just wish I knew when. >>
Dollar is still due to make a 3 yr bottom in summer 2014. It has limited time to make a fresh crisis high like it did from Aug-Nov 2008. But it only needs a month or two
to go parabolic. If GSr continues its breakaway, the dollar will probably go with it. Not all GSr rallies have lead to lower gold prices. From 1998-2003 GSr doubled from
40 to 80. But since gold was already in the toilet it went up by 50% by May 2003. Silver was down to flat in that recessionary period. The only other period where I see
a rising GSr as bullish to PMs was Aug-Dec 2007 as gold and silver rallied out of their 15 month consolidations during the first signs of the banking crisis. But typically, rising GSr
has not been kind to PMs. If the boyz can smash gold for $300 with relatively little movement in the dollar why should we even bother correlating the two in the future?
<< <i>Metals will not strengthen until people take losses, or throw in the towel. >>
That's what drove the price down. Strengthening hands will drive it back 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
Um, let me think. You have a good point there. I wonder how many consecutive $300 smashes it might take to get a reaction? We now have a gold price by fiat, apparently. At least, temporarily until the market re-asserts (which it will).
When I was a kid, nobody owned gold at all. A gold coin was only something I could look at in Redbook. Nobody could really give me an explanation about why gold coins weren't used, except that "they were banned". Nobody really gave me a good explanation as to "why?" When I asked why Indian pennies weren't used anymore, the answer I got was "they're obsolete". Same kinda deal. Nobody really wanted to get into the details. It simply was.
I know that I'm rambling a bit, but those type of answers that I remember from so long ago didn't quench my interest or understanding of what precious metals are, or why they are desirable. It seems that most people do have some innate understanding of what actually conveys value in its own essence, even though they may not understand the market machinations - especially the political ones or the behind-the-scenes action.
Ask any drug dealer or politician about gold, and they will tell you that it's valuable. Putting a dollar value on it is only what the market does, but gold & silver pretty much speak for themselves. Always have.
I know the charts have been destroyed for the time being. It sounds, looks and feels like a lousy investment now. The last time I actually felt this way was when I started buying silver at around $8.00. Before I knew it, I was buying it at around $12.00. Well, we aren't quite down to those levels, but that was also before all these new $Trillions were spewed out by the Fed.
At the very least, I think we've just about reached fair market value equilibrium and that it won't take much now to push the price, if & when the psychology turns itself around. Maybe Obama's meeting with the 15 banking prezidents has just a wee bit to do with the market drop. I don't know the reasons, but I suspect that the bond market needed some triage.
I knew it would happen.
added to M0, gold and silver would have flown. In late 2008 they juiced M0 by $800-$1,000 BILL and gold flew 40% in 6 months. In 2011 they added $700 BILL to M0
and gold responded with +35 to +40% again. M0 being stagnant for 18 months (until Oct 2013) was one of the reasons gold was in consolidation for so long. It's quite odd that
as soon as the money base starting getting juiced in October to the tune of $480 BILL gold has fallen 25%. Plus 40% or minus 25%, you do the math. It was as if the FED was
saying, "don't count on that correlation in the future. We can push prices and markets wherever we want." They'd seen that act play out twice before.
M0 graph 1 year....this was basically margin or betting money for the big banks
M0 graph 5 years
<< <i>If the boyz can smash gold for $300 with relatively little movement in the dollar why should we even bother correlating the two in the future? >>
Smashing gold is irrelevent to dollar index. While in recent years the gold price has acted inversely to the dollar index, a smash by the boyz to gold will not affect the dollar index. Normal gold price movement should be correlated to dollar index movement.
The dollar index is determined by value of the United States dollar relative to a basket of foreign currencies. These currencies and their percentage of weight are:
Euro (EUR), 57.6% weight
Japanese yen (JPY) 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight and
Swiss franc (CHF) 3.6% weight
The euro carries so much weight because it is the sum of the individual pre-euro currencies used in the index formula before the EU was formed in 1999. The dollar index formula should probably be updated to reduce so much impact from one single currency. Keep in mind the FED has global reach and can indirectly affect the dollar index by indirectly affecting one of the other currencies that make up the formula. Smashing one of the currencies that does determine dollar index should normally increase dollar index and therefore have a negative affect on PMs.
Also keep in mind you can have a strong dollar index and still a weak dollar as long as it is less weak than its competing currencies. As long as gold continues to move inversely with the dollar index, negative events affecting the formula participants, expecially the euro and the yen, will continue to have a negative impact on the price of gold. This is why metals watchers should keep an eye on international currency events.
"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>
<< <i>Metals will not strengthen until people take losses, or throw in the towel. >>
That's what drove the price down. Strengthening hands will drive it back up. >>
But I thought no one was selling?
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>Metals will not strengthen until people take losses, or throw in the towel. >>
That's what drove the price down. Strengthening hands will drive it back up. >>
But I thought no one was selling? >>
I think there are very sellers of physical bullion at the moment other than the ETF's (SLV, etc.). Joe6P and the Asian public aren't selling their silver on this down move.
Most want to buy more but are being met with "sold out" signs or premiums of $4 oz. Went through the Heritage bullion fax sheet from Friday and they're still asking
$30 for circ Morgans. No shortage of sellers of long futures contracts. Buyers might outnumber sellers by 10-1 at the moment when it comes to "in-hand" bullion. I'll talk
to my local roving dealer tonight and get his take. He's been buying $20K worth of bullion/scrap every week for the past 5 years. Should have some thoughts on what J6P
and the jewelers are doing. Even 6-12 months ago he said the amount of scrap out there was steadily drying up.
Derryb. My gut feel is just maybe, the FED got gold down to bail out all the big banker shorts before the mania phase begins in gold. If the dollar is getting ready to head
down into a 3 yr low soon, they'll want gold low so that on the rebound it would have much more trouble ending this year higher or exceeding $1800-$1900. They didn't want the
next phase in gold to begin from $1500's. There's a huge disconnect out there right now between physical and paper bullion...and it's getting worse. That will trigger than mania
phase of gold when everyone finds out the paper bullion game is a scam. It will be musical chairs with 10 players and only 1 or 2 chairs. I realize the dollar index is just comparing
various falling objects headed to zero...even if the indexes don't change. But the public and economists pay attention to them as if they are rigid measuring sticks where a USDX of
0.8 five years ago is by definition identical to 0.8 today (ie dollar purch power or value unchanged). Nothing could be further from the truth. Just looking at M0, M2, debt, derivatives,
etc. tells you that cannot be the case. Until the USDX is actually anchored to a fixed core value of weighted tangibles, or the CPI made up of a rigid/fixed basket of goods with
unchanging quality or volume, they are indicies for "show" rather than for "go." And it's the "show" that seems to drive the markets in the short term.
<< <i>Derryb. My gut feel is just maybe, the FED got gold down to bail out all the big banker shorts before the mania phase begins in gold. If the dollar is getting ready to head
down into a 3 yr low soon, they'll want gold low so that on the rebound it would have much more trouble ending this year higher or exceeding $1800-$1900. They didn't want the
next phase in gold to begin from $1500's. There's a huge disconnect out there right now between physical and paper bullion...and it's getting worse. That will trigger than mania
phase of gold when everyone finds out the paper bullion game is a scam. It will be musical chairs with 10 players and only 1 or 2 chairs. I realize the dollar index is just comparing
various falling objects headed to zero...even if the indexes don't change. But the public and economists pay attention to them as if they are rigid measuring sticks where a USDX of
0.8 five years ago is by definition identical to 0.8 today (ie dollar purch power or value unchanged). Nothing could be further from the truth. Just looking at M0, M2, debt, derivatives,
etc. tells you that cannot be the case. Until the USDX is actually anchored to a fixed core value of weighted tangibles, it is an index for show rather than for go. >>
Gold Price Attack First US Response in Currency War Escalation
" A theory that the weaker yen would drive money market investors to other currencies has not really panned out, and so fears that those investors may move to monetary metals is one motive for attempting to undermine the safe haven status of precious metals. . . Central banks are terrified that a strongly responsive gold price correlation to capital fabrication levels could trigger a destabilization of confidence in their fiat currencies."
"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