<< <i>Its too bad gold isnt more a currency than a commodity. >>
I'm glad it's money and not a currency. I like the fact it can't be created out of thin air except in the futures make believe market. The day is approaching that make believe will disappear and reality will set in. Temporary low metal prices are due to nothing more than temporary high economic hope.
"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>Its too bad gold isnt more a currency than a commodity. >>
I'm glad it's money and not a currency. I like the fact it can't be created out of thin air except in the futures make believe market. The day is approaching that make believe will disappear and reality will set in. Temporary low metal prices are due to nothing more than temporary high economic hope. >>
I was in Elko, NV a few days ago. Believe me, gold is being created everyday.
Gold is just another asset that is sometimes used in barter for other goods, services, other assets like currencies. It us no more money than a unit of human labor.
Is temporary low metal prices the same as temporary dollar strength, cuz I've been hearing that for 5 years now.
<< <i>And with the stock market crash coming in the next week or so >>
Really?....Coming from you, I'm not holding my breath.( but as the saying goes, even a broken clock tells the correct time twice daily) I suppose I deserve that, I have been pretty far off until lately. But look at the chart for the SP500... It looks like a topping pattern to me. That with the other clues, timing models, global liquidity drying up, the fact that the markets had a nice run the first half of the year, and Armstrong agreeing it looks pretty inevitable. I dare you to take a big long position right now...
<< <i>Its too bad gold isnt more a currency than a commodity.
Crash in the next week? You still long gold? >>
>>
Yes, still long gold. I got in at $1210 so I'm in great shape. I added more at $1315. I'll bail if it looks like a collapse below $1300, but I'm encouraged by the way gold has help up during this consolidation. $1440 will be here soon. Then there will probably be a long consolidation to take the rest of the year.
They are making more gold every year...about 1-1/2% of the existing world gold supply each year (2700 tonnes) - or about $110 BILL per year world wide.
Of course at the same time, they are adding to fiat currencies at the rate of 5-15% per year as well as sovereign debt at a similar or higher amount. The US creates more fiat currency than that in under a month.
And demand for US dollars far outweighs demand for gold.
PC, if you think the stock market is going to crash, then why do you think gold will go higher? I believe history has shown that gold always suffers when stocks collapse, no?
<< <i>And demand for US dollars far outweighs demand for gold.
PC, if you think the stock market is going to crash, then why do you think gold will go higher? I believe history has shown that gold always suffers when stocks collapse, no? >>
The cause of an equity crash will determine the direction of gold. Economic history as a tool went out the same window as economic reality. Time to throw away the text books and shift a paradigm or two.
"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>And demand for US dollars far outweighs demand for gold.
PC, if you think the stock market is going to crash, then why do you think gold will go higher? I believe history has shown that gold always suffers when stocks collapse, no? >>
Not quite always.
Gold powered up 50% from 1999 to 2003 as the stock market peaked and tanked. Most of those gains came during the peak of the recession from 2002-2003. Silver didn't play along though and was slightly down as GSR rose from 46 to 82. A similar effect was seen from October 24th 2008 to March 9th 2009 as stocks continued to fall while gold rose sharply. If we look at the very strong 1975-1976 stock market rally, stocks tanked big time starting in January 1977 just as gold was lifting off the pad for its final 40 month run (Sept 1976 to Jan 1980). The 1970's clearly showed periods where stocks tanked and gold did quite nicely. We're in the same type of broadening wedge pattern (2001-2013) as seen from 1966-1976. Only last time around there wasn't unlimited QE to the banks to make the 1976 high exceed the 1973 high. This time around we're making a higher high (2013 vs. 1976).
Yes, what RR said. Sometimes the markets and gold are directly correlated, sometimes they switch and are inversely correlated. The relationship between gold and stocks cannot be relied upon.
Even look at the past 6 months. Gold fell significantly while stocks rallied. I think the best bet here is to view both markets separately.
It is very easy to pick select timeframes to support an argument. I'll go on record right now and say if the stock market crashes next week or even next month, then gold will be lower.
I'll take the counterpoint that if the stock market crashes next week or next month (August or Sept) then gold will not crash with it. And by that I mean will not make a lower low under $1180. This current gold daily cycle is either over already or will be over within 1-2 weeks. By that time I don't see a potential gold "smash" until October/November time frame....regardless of what the stock market does. If the stock market does crash by Sept my thoughts are that those monies will be looking at what's been smashed down over the past 1-2 years, commodities (including gold and silver) should be choices on those lists. I'm figuring gold is going to grind higher seasonally.
The one exception to my theory is that if gold does a sharp rebound to the $1425-$1525 range by August or September (ie no grinding, just flying). That could coincide with a peaking stock market. And in that situation both would be due to correct, possibly at the same time. I guess it depends on whether gold grinds or flys. And if gold does fly to those higher levels, any "crash" will still be higher that the lows we saw on Friday ($1283). First order of business is how much, if any of the $1180-$1280 range does gold retrace in August? Support at $1277-$1282 for now. Gaps littered all the way down to $1197 with a concentration of them in the $1220's, $1230's, and $1250's.
Roadrunner, how about this? A 20% drop in stocks results in a 10% drop in gold. If so, then PC gets wiped out. Thats what I was getting at in the first place.
However if stocks were to drop 40%, then Baleys target of $888 will come to fruition.
<< <i>Roadrunner, how about this? A 20% drop in stocks results in a 10% drop in gold. If so, then PC gets wiped out. Thats what I was getting at in the first place.
However if stocks were to drop 40%, then Baleys target of $888 will come to fruition. >>
We've already had 10 months of negative divergence between the stock market and gold/gold miners. If stocks fell 20% I'd sort of expect gold to be up, not down. And if stocks fell 40% due to a deleveraging type crash, I still wouldn't expect gold to be under $1,000. And more than likely, gold would probably be up in this scenario as well.
<< <i>Roadrunner, how about this? A 20% drop in stocks results in a 10% drop in gold. If so, then PC gets wiped out. Thats what I was getting at in the first place.
However if stocks were to drop 40%, then Baleys target of $888 will come to fruition. >>
We've already had 10 months of negative divergence between the stock market and gold/gold miners. If stocks fell 20% I'd sort of expect gold to be up, not down. And if stocks fell 40% due to a deleveraging type crash, I still wouldn't expect gold to be under $1,000. And more than likely, gold would probably be up in this scenario as well. >>
I'm inclined to agree with this based on previous gold/stock history. Unless its another outright financial panic then the dumping of everything beside Bonds may be in order at least on a temporary basis till the smoke clears. Habits are hard to break.
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I've reduced my position but I am holding on here as long as long as it holds 1280, which is the 38.2% retracement of the move up. There are several indicators that fireworks are about to start in the stock market. The precise day is Wednesday but I always give that a day or two leeway. I think that will finally send metals over $1340 and on up to $1440.
<< <i>I've reduced my position but I am holding on here as long as long as it holds 1280, which is the 38.2% retracement of the move up. There are several indicators that fireworks are about to start in the stock market. The precise day is Wednesday but I always give that a day or two leeway. I think that will finally send metals over $1340 and on up to $1440. >>
Well let's see...Gold down another 1+%......Dow down...1/2% so far today. I think it's time to toss your "crystal ball."
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
<< <i>Gold didn't even need a market crash to drop.
Under 1300. You still long PC? What are your thoughts? >>
They smoked it overseas last night which left all the dirty work done by NY open. In any case, gold's typical daily cycle of 18-28 days (occasionally stretching to 32+) is pretty close to up. Today was day 27. Even the June smash didn't last this long (26 days). One big difference is that this cycle peaked on day 17 vs. all the other ones of the past 10 months that peaked early on days 4-10. That suggests a change in structure occurring. 3-10-30 yr TBond auctions today through Thursday. After 17 days up, a 6 to 12 day correction was being called for. Gold didn't need any news to go down. It was just due to go down and fill some gaps (just like GDX filling the gaps at $26, $24 this past week). When this cycle ends by end of this week or early next week, it doesn't matter what the SM does, gold will cycle up again. And odds would favor another 13-18 day advance. If the Aussie can continue to turn and get back above 90....and the dollar craters under 81.40, that should help quite a bit. GSR at 65 is so far showing a down month. In fact it has broken under the 3 month uptrend line and back tested it yesterday. It's still following the December 2008 pattern (as are GLD and GDX which did strong backtests into secondary bottoms into the first Friday of December 2008 on cycle days 28-29). In two more days if GDX stays under $24.29 it will generate a buy signal based on falling below the closing prices of 16-20 days ago. New moon today gives a cycle turning window into Wednesday or so. A number of things seem to be pointing at the next 1-5 days to shift the gold (and silver) cycles back in the UP direction. Nothing is guaranteed though. It's possible that gold could head up for only 3-10 days like it did for the entire past 9 months and then crash again. Maybe the 17 day rally was just a red herring to pull more bulls in. We shall see.
Yesterday's NY dump left a nasty 98 cent spot gap at $1309...among 5 others from $1302-$1315. That big gap occurred at 10:00 am in an orchestrated dump. So we will be coming back to that point soon enough. The $1295 gap from 2 Sunday's ago was of a similar size and took 9 days to fill. GDX has backtested the breakout of the 2nd fan line from June/July. Problem with that is that there is still about a $1 gap sitting right under current price ($23.19-$24.03).
roadrunner....can you boil that down into a short clear explanation for those of us who do not understand the technical stuff. Exactly what are you saying here? Gold and silver higher? Lower? What exact time frames and to what levels are you suggesting. Seems like a lot of techno talk which means little to the uninitiated. Much appreciated.
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mariner, when they talk about "filling a gap", the idea is that a large jump or a large drop in price (a gap up or a gap down) just doesn't happen very often, especially when there is no particular news to accompany such a move.
A gap usually means that the price has been manipulated, usually when trading is thin and volume is almost non-existant. It means that normal trading activity wasn't really taking place, and that the price will usually come back to "fill" that gap as some of the real traders come back into the market to take advantage of what is apparently a bargain price. This can happen both on the way up, and on the way down.
In other words, the market will still act like a real market after the manipulators are done doing their thing. The real market takes place during active trading on normal or high volumes. If a gap happens and trading activity is normal or high, it also means that there is some big news story that is affecting the price, like closing the Straits of Hormuz, or something on that order.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>roadrunner....can you boil that down into a short clear explanation for those of us who do not understand the technical stuff. Exactly what are you saying here? Gold and silver higher? Lower? What exact time frames and to what levels are you suggesting. Seems like a lot of techno talk which means little to the uninitiated. Much appreciated. >>
I edited the post to make it a little clearer. Gold will almost certainly turn within 1-5 days from here. The only question will be how low can it go and how many days will it take before it peaks following the turn into the next 18-30 day cycle. For most of this daily cycle gold was operating inverse to the dollar. Starting this week they started moving in the same direction. Apparently, someone doesn't want gold to be a dollar safehaven if/when it breaks down under 81.40.
jmski, you will see and understand the markets much better when you stop looking for manipulation.
Roadrunner, the gold market today is nothing like 2008-09.
I do like your technical analysis, but over the last few years you have gotten away from KISS. I did that early on in my analysis education and it only confused me, created doubt, and eventually poor trading. When one is too close to the trees he often cant see the path.
cohodk, ZeroHedge has pretty well documented how HFT is used to manipulate the markets. You simply can't deny it. When silver drops $1 without a single trade being executed the whole wide world over, you think it's only a normal trading event? When Libor was exposed, you think that was bogus? Regardless of your trading skills and insight, the big money doesn't let you in on the game. It's that simple. Don't tell me that you anticipate every market move. It just doesn't happen.
Q: Are You Printing Money? Bernanke: Not Literally
QE and ZIRP are tools designed to manipulate markets. Give up trying to convince non-believers of this fact. Use knowledge of market manipulation to your advantage.
"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
Gold's daily cycle low came in on day 28. It would have been day 25 (Friday) if not for the orchestrated takedown overnight on August 5th at the $1309 point. In any case that large 98 cent gap is now filled. End of today would have been the "easy" 16-20 day back pricing "buy" signal if GDX had stayed under $24.30. But not to get. They gapped it right up from the start and then powered it all day. Those waiting for the easy signal couldn't get in. Today's 30 yr TBond auction rated a "D" by Rick Santelli. Worst one in 2 years with a lousy 2.11 bid to cover ($16 BILL tendered). Sure looks like GSR has officially broken down. The daily and weekly charts have numerous problems. August 2013 continues to play out like December 2008. Is the 27 month GSR bull now at the end? Feels just like the first week in December 2008. Only thing out of place is the stock market near all time highs. That is also point where oil and commodities bottomed in general. So that's not quite in tune either with oil still over $100. It's like fall of 2008 only more inflationary due to all the QE injections while the big banks are under major stress again.
Monthly chart of GSR. Once stoch-rsi bottoms out it loves to stay there for 1-2 months or longer. Macd about ready to cross down. CCI is just starting to accelerate away from the 100 line towards 0. Once at 0 it should at least tag the -100 line. The CCI peaks have been about 9-10 months apart. This last rally lingered in price even though CCI peaked back in April on month 10. The rally in price just refused to go down as late comers jumped onboard the gold smackdown. The previous 2 CCI peaks resulted in price dumping within a month or so. Not this last time. But the negative divergence in CCI has been quite obvious for many weeks. Notice the classic triple-headed pattern from Feb-June often seen at GSR peaks. Upper Boll Band has turned flat and the lower one is miles away though screaming up. It’s gonna be hard to turn GSR back up from this bearish looking setup. It does seem like December 2008 (the last hurrah for GSR) is playing out in August 2013. The dollar heading down under the 81.40 support point only adds to this picture. The 3 week GSR shows a briefly busted H&S pattern that projects to 62.5. If GSR can't retake the 65 line, that could play out. The weekly chart is very close to a negative macd cross and shows slight neg divergence now. The daily chart has very large negative divergences in play. It has found current support at the daily lower bollinger band (64.2) and the 10 week uptrend line.
Rambus' recent public article "dollar - diamond in the rough" and big breakout coming just got crushed or in the best case, heavily detoured. Dollar now under 81.0...and headed to 79 to meet the projection of the multi-month dollar expanding wedge/broadening top pattern. That's the same pattern Dust has been riding on and it if plays out will take Dust to around the 200 dma ($65). Rambus HUI to 160 charts have been all over the internet for the past 12-18 months. While they are pretty and logical, it doesn't mean that any particular H&S has to play out, regardless of how "hot" a neckline/trendline may become. Dust had an amazing run from the $20's to $168...and then this latest 7-8 days in a row straight up from $70 to $108 as gold was winding down into the last few days of its typical 20-30 day cycle. And with what's been going on with gold it wouldn't surprise me in the least if Dust reversed higher yet again. The weekly Dust chart below shows this furious last rally to be a backtest of the broken 8 month uptrend line. There were warning signs over the past few months as the expanding wedge whipsawed around that things were not right. Like the GSR, its weekly and daily momentum peaked in April but price continued to rally as latecomers piled on during May-June. The dollar's weekly momentum peaked in February. The 9 month bull market run in Dust appears dead...or at least seriously wounded.
Silver looking like once it takes out $20.60 it will be a quick ride to $22.00. If that was the daily cycle bottom for gold the daily rsi didn't go below 40. That would be a change in trend as well where all the dips before this took it to 15-30.
"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
Nice breakouts of multi-month downtrends yesterday in copper and platinum yesterday. Silver just popped its head a little bit above the 6 month downtrend line. Cocoa broke a 2 year downtrend a few days ago. Sugar is close to breaking out. AUD and USD appear to have made turns. The dollar should eventually head to .79 to fulfill the projection of the 3 month expanding wedge. Dust has a similar pattern and appears to have broken down. GSR is linked to both of those and has been losing momentum for 3 months now.
COT report showed a 29K commercial shift to the short side with a short to long ratio leaping from 1.13 to 1.28. Considering that gold went down for all 5 days of this Wed-Tues reporting period, it would appear that the specs made out by closing shorts and adding longs for this week's run up. What's noteworthy is that the producer/merchants were totally flat. It was the swap dealers who went 28K net short this past week. Managed Money went 17K net short. That's a whopping 45K net short by those those 2 groups. With commercials flat, that leaves the other reportables to carry all those net longs. Yup, the O/R's went 40K net long...mainly by closing out 38K in short contracts. It would seem the smart money this week was the the O/R's. An almost identical positioning was noted in silver, though not as great as the gold move. Silver's commercial short to long ratio is now up to 1.17. The August Bank Participation Report shows that the 4 US banks reporting have increased their Net Long position even further....by 14,756 contracts to 59,473 net long.
I have to wonder if Cohodk is expecting his low of buy of GLD this month as it is starting to look like GLD may have seen the low for this summer. That's not to say we couldn't revisit $1100-$1200's gold by end of year. But more commodities seemed to be finishing up bottoming formations. I still think money that has been pouring into stocks for the past 10 months is slowly finding its way into commodities and metals. Even copper was written off for dead at $3.00 but has now broken out of its 6 month downtrend.
<< <i>Well let's see...Gold down another 1+%......Dow down...1/2% so far today. I think it's time to toss your "crystal ball." >>
Not yet. This evening gold has recovered to $1330. The retrace was a bit deeper than I expected but I think that is going to be the nature of the advancement for the rest of the year. The move to $1500 will have some scary looking pullbacks along the way, but I think we've just about seen the last of $12xx gold. That's why I'm not going to try to get too fancy and trade in and out on this move, I'm just going to buy and hold for the $280 move and then beyond.
Gold looks to be in position to break through $1350 resistance this week.
Added: I've also got my eye on corn. Looking for a bounce here with the USDA report coming out.
Gold did better than expected on this final(?) bounce...right to the top of its daily resistance cloud at $1334, just like GDX did on Friday at around $27.00. Would be asking a lot to blow right through there, miners couldn't on their first attempt. Silver has run up right to the top of the 1 month up channel. That makes all three, GDX, gold, and silver having reached important short term targets.
The $1 Sunday night gap up of July 21st ($1295) lasted 9 days which was quite unusual. The next big gap we had after that lasted 3 days. Tonight’s $1.12 gold gap up probably will get filled in one of this month's OpEx weeks. $1334 gold also hits the top of gold’s current 3-4 day up channel. I guess the question is how far can gold run before a return to fill tonight's gap? The $1295 gap up resulted in a $53 two day move before retracing. Monday and Tuesday are lower resistance days of this OpEx week. The Sunday night July 21st $1295 gap up came at the start of wave 3 of 5 of 5. Tonight’s gap at $1314 also appears to be in a 3 of 5 of 5 slot. Recall that we already gapped up at $1292 in the 3 of 3 of 5 wave (breakout gap). There was also a breakout gap on wave 1 at $1274. This is now the 3rd one. Is it possible that tonight’s gap was the exhaustion gap….or do we get the $50-$60 as in July? It took minimal volume to take price from $1320 to $1332 tonight. And the volume got heavy near the top (selling?). A gap left behind at $1318 strengthens the case somewhat for a retrace. We've already learned from previous large gaps that NY doesn't like to be left out of these upside moves. So that also strengthens the odds that they will get their chance to give the seal of approval for the run to $1314-$1334....though maybe not right away.
GSR looks totally busted now and has entered a gap down wave 3 of 3 recognition point by heading into the 63's. Any uptrends since March have been broken. Next level of support comes from further back in time to the 52-60 range. Recall the large gaps that were left behind at 55 and 57. December 2008 GSR continues to replay. Silver gapped up through the important $20.55-$20.60 area leaving the run to $22 exposed. The dollar gapped up tonight as well which doesn't fit what we saw end of last week. AUD moving down. But I look again and now the dollar has filled the opening gap and is tanking HARD back towards 81.0. Nice head fake. And now the dollar is back up higher....a double head fake. USD pairs of JPY, CAD look to be finding bottoms here. If that's the case I'd be surprised if gold went higher than the $1334 resistance point. Interesting to note that there is a nuclear position of 125,000 contracts in GDX $24 August puts. It dwarfs anything on the board. And that position grew by 10K into the end of last week.
<< <i>I'm not a big believer in the gap theories, but regardless, I don't see any in tonight's charts... (here's the 5min chart) >>
The gap is very obvious on the 1 min to 2 hr Netdania spot gold price charts. Same for silver. I've been following these gold gaps very closely since November. They are very accurate prompts with about a 90-95% fill rate in the short term (10 min to 24 hours) and 95-98% fill rate in the longer term (days to 2 weeks). Gaps tonight at $1318.54 and $1313.73. If the history of the past 9 months is any guidance, the $1.13 gold gap at $1313 should not last more than 1-9 days.
The 1 minute chart isn't showing any gaps either. I also wonder about your data provider or what data you're looking at, because gold futures trade in $.10 increments so a $1.13 gap is not possible. Would either be $1.1 or $1.2. My charts are all the 24 hour futures charts where as you mentioned, trading only stops for about 45m per day. As you can see in the header of my screenshot, the chart is for the December gold futures 100oz contract.
". . . the fact that JPMorgan swung from a short side corner in COMEX gold in December to a long side corner now, it puts a lie to all the stories that the bank is only hedging for clients. What possible hedging would call for a short corner on the market being reversed to a long side corner in nine months?"
"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
Are these contracts actually on the books of JPM proper, or have they been entered on behalf on the mining companies for the purpose of hedging their mining operations?
I have asked this question dozens of times yet never get an answer.
<< <i>The 1 minute chart isn't showing any gaps either. I also wonder about your data provider or what data you're looking at, because gold futures trade in $.10 increments so a $1.13 gap is not possible. Would either be $1.1 or $1.2. My charts are all the 24 hour futures charts where as you mentioned, trading only stops for about 45m per day. As you can see in the header of my screenshot, the chart is for the December gold futures 100oz contract. >>
It's possible that what NetDania is providing is not gold futures contract pricing. But the price moves in 1c or smaller increments much of the time otherwise their would be gaps after nearly every min with 10c minimum moves. I've seen a number of other analysts who I follow mention the same gaps so I know I'm not seeing things. To me saying gold only moves in 10c increments is like saying 19th century unc coins only move in $5, $10, $25, $50, $100, increments because the price guides list to the nearest round dollar figure.
<< <i>Are these contracts actually on the books of JPM proper, or have they been entered on behalf on the mining companies for the purpose of hedging their mining operations?
I have asked this question dozens of times yet never get an answer. >>
I wonder if the BPR can shed any light on this. The 4 reporting US banks just went even longer on gold this past month to the tune +59K net long. All reporting banks (US and non-US) are significantly long as well.
<< <i>The 1 minute chart isn't showing any gaps either. I also wonder about your data provider or what data you're looking at, because gold futures trade in $.10 increments so a $1.13 gap is not possible. Would either be $1.1 or $1.2. My charts are all the 24 hour futures charts where as you mentioned, trading only stops for about 45m per day. As you can see in the header of my screenshot, the chart is for the December gold futures 100oz contract. >>
It's possible that what NetDania is providing is not gold futures contract pricing. But the price moves in 1c or smaller increments much of the time otherwise their would be gaps after nearly every min with 10c minimum moves. I've seen a number of other analysts who I follow mention the same gaps so I know I'm not seeing things. To me saying gold only moves in 10c increments is like saying 19th century unc coins only move in $5, $10, $25, $50, $100, increments because the price guides list to the nearest round dollar figure. >>
The CME group (Comex) clearly states that the minimum fluctuation is $.10: Contract Specs
<< <i>Added: I've also got my eye on corn. Looking for a bounce here with the USDA report coming out. >>
If any of you bought corn Monday morning as I did, you made a nice 2.5% with more gains likely this week.
Gold's hanging on nicely. I'm not sure if gold is quite ready to bust through 1348-1350 but it is possible. I'm looking for another challenge to that level tonight or Tuesday.
Me neither. Waiting for Sunday night's $1315-$1326 spot gap area to completely filled. Thought we'd get that today but stopped at $1319. Price should go down during the Wed-Friday OpEx period. Then a bounce next week.....followed by another potential OpEx hit. This week's hit may be mild as gold still may want to challenge the $1360-$1375 before too long. GSR is definitely mortally wounded. And December 2008 continues to play out exactly. At some point (now, 61, 60) it could stage a bounce to recover some of this 6 pt drop. But note that it has fallen 10 pts or more several times during the past 2 years w/o any real bounces.
A brief explanation of spot gold pricing and why gaps may appear here and not on Comex quotes. There are various spot gold providers which tend to be very consistent and competitive. The gaps created are real and they tend to fill with >90% consistency. The pricing is generally tracked to within 1c.
Basically the spot price is the price prevailing in the physical gold market. I think to get a thorough grasp of where the spot price comes from, one must understand the workings of the physical gold market. The physical gold market is essentially an interbank OTC market centred in London.
The main participants and quote providers in the spot gold market are the market makers (or gold dealers) who are mainly international banks, including the clearing/bullion banks (the LBMA lists 11 of its members as Market Makers and 5 among them as clearing members). There are also other gold dealers, and brokers (the biggest broker being ICAP). These gold agents operate in the main physical gold trading centres of London, Zurich and New York, and during Asian hours, Hong Kong and Tokyo. The end client base of these gold dealers and brokers include the majority of the central banks that hold gold, private sector investors, mining companies, producers, refiners and fabricators. The market makers (or gold dealers) can also take positions on their own accounts.
The spot price quoted is for one fine troy ounce (100 percent pure gold), and I am assuming that all the quotes are for loco London gold (LBMA specs gold, for settlement and delivery in London in 2 business days). Because of the OTC nature of the physical gold market, there is no volume or last done price, since the quotes come from different sources (not a central exchange where there is always one last traded price and volume data.) However, dispite the many sources of quotes, there are only small differences between the different quote providers because of competion to post the best bids and offers, and the fact that dealers and brokers will minimise the differnces through arbitrage. The twice-daily London Gold Fix should serve as a point of convergence for the many sources of spot gold quotes.
Reuters spot gold instrument is XAU= and currently this quote has 9 active contributors, mostly big international banks and ICAP. Netdania say they get quotes from the 5 most active market-makers. (Their charts display the bid price.) The Kitco website indicates that their spot quotes come from bullion dealers active in any of the main physical gold trading centres around the world. CNBC TV's spot gold quote appears to be Thomson-Reuters' XAU= instrument.
RR, I guess I misunderstood but you are not looking pure futures quotes, you must be looking at some other index or indicator.
I still don't believe in the gap filling concept as I think it's all pretty much coincidental. Prices for everything move up and down so much that filling gaps is pretty much inevitable over a long enough time frame. It may happen a lot (90% as you claim) but there's enough unfilled gaps that will probably never be filled to make it anything more than an interesting observation for me. The concept just leaves too many questions, because there are many stocks or other instruments that have very little volume which naturally leads to lots of gaps. Then you have things like gold that trade in several different vehicles 100oz futures, 10oz futures, GLD ETF, XAU, etc., and different markets that lead to the question if you have a gap in one instrument but not others does that foretell a future move for gold overall? By subscribing to the gap theory, you dismiss the notion that any meaningful and lasting move can occur outside of standard market hours because any gap-up caused by a market not being open at night will always be filled, thus negating the overnight move (at least temporarily). Then of course you can get into details of what time frames, because if you go down to a small enough time frame you'll have more gaps also, so what time frames does this apply to?
Cohodk, yes, I did close my corn position and made sure the position didn't turn into a loser. I thought after yesterday corn would turn around but I guess it's not ready yet. I think weather concerns are going to come into effect fairly soon and start pushing prices up, but the timing on that will be difficult.
PC, my experiences has only been NetDania spot gold and silver. I would agree that most other vehicles leave way too many gaps to the point of making analysis impossible except on much larger time frames. But gold works down to the minute. Silver is tight for some periods of time but for the most part, also too gappy to track, unless those gaps are large like 5c or greater or in a larger time frame like 10 min to 2 hours. Spot gold between NY, Globex, Sydney, Asia, and London provides prices 23 hours and 15 min per day. GLD, GDX, SLV and others have their own issues with daily and hourly gaps as they trade only 6-1/2 hrs or slightly more if they have an overseas parallel. Tracking those is bit harder and less consistent than gold's 1 min spot gaps. And the few times the gold gaps are seen on 5 min, 10 min, hourly, 2 hour charts, it's usually because they coincide with an exact time period (ie 8:10, 8:30, 9:00, 10:00, etc.).
Over the past 3 days gold has formed a small H&S with a neckline at $1323. It projects down to $1302. May or may not play out now that it appears that an ABC in 3-3-5 format has played out down to $1315 tonight.
I think weather concerns are going to come into effect fairly soon and start pushing prices up, but the timing on that will be difficult.
My yearly trek across the country led me to believe the crops are all quite healthy. Whether healthy enough to justify the destruction in pricing we've seen is another question. Im not looking to trade any grains right now, but as RR mentioned a week ago, sugar is interesting. As is coffee.
<< <i>Interesting that corn lost almost 1/2 its value since the drought scares of last year.
Shoulda shorted pork chops.
I am not a buyer of gold at 1335. >>
Cohodk, does gold look any better here after 24 hours?
Gold cycled down to $1316 and then back to $1335 in the past 24 hours. Miners are in full breakout mode. Silver and gold have broken out to some extent as well. SLV rsi at 69.2. The GSR at 61.0 starting to flatten out a bit and taking off the exponential descent. For GSR, it's now worse than Dec 2008. Full bearish engulfing monthly candle as of today, though still early in the month. Have to expect a bounce back in GSR at some point. Positive divergences in the 4hr/8hr charts. A round number of 60.00 may be the ending target.
The move down was a 38.2% retrace of the surge back up. This has re-energized gold for the next advance. With the strength of the other items you mentioned, I think gold could be ready to break out of this consolidation; however, gold does have a way of lingering a lot longer than I expect. So if gold isn't ready to advance over $1350 just yet, then we may bonk against it again and fall back down, but not as low as last time.
<< <i>The move down was a 38.2% retrace of the surge back up. This has re-energized gold for the next advance. With the strength of the other items you mentioned, I think gold could be ready to break out of this consolidation; however, gold does have a way of lingering a lot longer than I expect. So if gold isn't ready to advance over $1350 just yet, then we may bonk against it again and fall back down, but not as low as last time. >>
I'm watching gold so far retrace nearly the exact pattern from July 17th to August 7th. Most obvious on the 4 hour chart. A gap up above $1350 will put that that to rest though. Following that same pattern means sideways/whipsawing/or somewhat higher into next Tues/Wed's full moon period and then down into the end of month OpEx week (Tu/Wed). Some gaps tonight on the overseas open. I think those have to be retraced down to $1335 (or even $1333) before assaulting the $1350 level. Would not be surprised to see a retrace to $1324 by Friday. But gold has been grinding consisently higher since it turned back up at $1316 this morning. No stopping it right now. I don't think the NY boyz want to see $1350 taken out w/o them. Or if it does, they'll want their own crack at it later???? Silver getting above $22.00 would probably help lift gold too to catch up.
Comments
<< <i>Its too bad gold isnt more a currency than a commodity. >>
I'm glad it's money and not a currency. I like the fact it can't be created out of thin air except in the futures make believe market. The day is approaching that make believe will disappear and reality will set in. Temporary low metal prices are due to nothing more than temporary high economic hope.
"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>Its too bad gold isnt more a currency than a commodity. >>
I'm glad it's money and not a currency. I like the fact it can't be created out of thin air except in the futures make believe market. The day is approaching that make believe will disappear and reality will set in. Temporary low metal prices are due to nothing more than temporary high economic hope. >>
I was in Elko, NV a few days ago. Believe me, gold is being created everyday.
Gold is just another asset that is sometimes used in barter for other goods, services, other assets like currencies. It us no more money than a unit of human labor.
Is temporary low metal prices the same as temporary dollar strength, cuz I've been hearing that for 5 years now.
Knowledge is the enemy of fear
<< <i>
<< <i>And with the stock market crash coming in the next week or so >>
Really?....Coming from you, I'm not holding my breath.
I suppose I deserve that, I have been pretty far off until lately. But look at the chart for the SP500... It looks like a topping pattern to me. That with the other clues, timing models, global liquidity drying up, the fact that the markets had a nice run the first half of the year, and Armstrong agreeing it looks pretty inevitable. I dare you to take a big long position right now...
<< <i>Its too bad gold isnt more a currency than a commodity.
Crash in the next week? You still long gold? >>
>>
Yes, still long gold. I got in at $1210 so I'm in great shape. I added more at $1315. I'll bail if it looks like a collapse below $1300, but I'm encouraged by the way gold has help up during this consolidation. $1440 will be here soon. Then there will probably be a long consolidation to take the rest of the year.
Of course at the same time, they are adding to fiat currencies at the rate of 5-15% per year as well as sovereign debt at a similar or higher amount.
The US creates more fiat currency than that in under a month.
PC, if you think the stock market is going to crash, then why do you think gold will go higher? I believe history has shown that gold always suffers when stocks collapse, no?
Knowledge is the enemy of fear
<< <i>And demand for US dollars far outweighs demand for gold.
PC, if you think the stock market is going to crash, then why do you think gold will go higher? I believe history has shown that gold always suffers when stocks collapse, no? >>
The cause of an equity crash will determine the direction of gold. Economic history as a tool went out the same window as economic reality. Time to throw away the text books and shift a paradigm or two.
"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>And demand for US dollars far outweighs demand for gold.
PC, if you think the stock market is going to crash, then why do you think gold will go higher? I believe history has shown that gold always suffers when stocks collapse, no? >>
Not quite always.
Gold powered up 50% from 1999 to 2003 as the stock market peaked and tanked. Most of those gains came during the peak of the recession from 2002-2003. Silver didn't play along
though and was slightly down as GSR rose from 46 to 82. A similar effect was seen from October 24th 2008 to March 9th 2009 as stocks continued to fall while gold rose sharply. If
we look at the very strong 1975-1976 stock market rally, stocks tanked big time starting in January 1977 just as gold was lifting off the pad for its final 40 month run (Sept 1976 to
Jan 1980). The 1970's clearly showed periods where stocks tanked and gold did quite nicely. We're in the same type of broadening wedge pattern (2001-2013) as seen from 1966-1976.
Only last time around there wasn't unlimited QE to the banks to make the 1976 high exceed the 1973 high. This time around we're making a higher high (2013 vs. 1976).
Even look at the past 6 months. Gold fell significantly while stocks rallied. I think the best bet here is to view both markets separately.
Knowledge is the enemy of fear
low under $1180. This current gold daily cycle is either over already or will be over within 1-2 weeks. By that time I don't see a potential gold "smash" until October/November
time frame....regardless of what the stock market does. If the stock market does crash by Sept my thoughts are that those monies will be looking at what's been smashed down
over the past 1-2 years, commodities (including gold and silver) should be choices on those lists. I'm figuring gold is going to grind higher seasonally.
The one exception to my theory is that if gold does a sharp rebound to the $1425-$1525 range by August or September (ie no grinding, just flying). That could coincide with a peaking
stock market. And in that situation both would be due to correct, possibly at the same time. I guess it depends on whether gold grinds or flys. And if gold does fly to those higher levels,
any "crash" will still be higher that the lows we saw on Friday ($1283). First order of business is how much, if any of the $1180-$1280 range does gold retrace in August? Support at
$1277-$1282 for now. Gaps littered all the way down to $1197 with a concentration of them in the $1220's, $1230's, and $1250's.
However if stocks were to drop 40%, then Baleys target of $888 will come to fruition.
Knowledge is the enemy of fear
<< <i>Roadrunner, how about this? A 20% drop in stocks results in a 10% drop in gold. If so, then PC gets wiped out. Thats what I was getting at in the first place.
However if stocks were to drop 40%, then Baleys target of $888 will come to fruition. >>
We've already had 10 months of negative divergence between the stock market and gold/gold miners. If stocks fell 20% I'd sort of expect gold to be up, not down.
And if stocks fell 40% due to a deleveraging type crash, I still wouldn't expect gold to be under $1,000. And more than likely, gold would probably be up in this scenario as well.
<< <i>
<< <i>Roadrunner, how about this? A 20% drop in stocks results in a 10% drop in gold. If so, then PC gets wiped out. Thats what I was getting at in the first place.
However if stocks were to drop 40%, then Baleys target of $888 will come to fruition. >>
We've already had 10 months of negative divergence between the stock market and gold/gold miners. If stocks fell 20% I'd sort of expect gold to be up, not down.
And if stocks fell 40% due to a deleveraging type crash, I still wouldn't expect gold to be under $1,000. And more than likely, gold would probably be up in this scenario as well. >>
I'm inclined to agree with this based on previous gold/stock history. Unless its another outright financial panic then the dumping of everything beside Bonds may be in order at least on a temporary basis till the smoke clears. Habits are hard to break.
Under 1300. You still long PC? What are your thoughts?
Knowledge is the enemy of fear
<< <i>I've reduced my position but I am holding on here as long as long as it holds 1280, which is the 38.2% retracement of the move up. There are several indicators that fireworks are about to start in the stock market. The precise day is Wednesday but I always give that a day or two leeway. I think that will finally send metals over $1340 and on up to $1440. >>
Well let's see...Gold down another 1+%......Dow down...1/2% so far today. I think it's time to toss your "crystal ball."
<< <i>Gold didn't even need a market crash to drop.
Under 1300. You still long PC? What are your thoughts? >>
They smoked it overseas last night which left all the dirty work done by NY open. In any case, gold's typical daily cycle of 18-28 days (occasionally stretching to 32+) is pretty close to up.
Today was day 27. Even the June smash didn't last this long (26 days). One big difference is that this cycle peaked on day 17 vs. all the other ones of the past 10 months that peaked
early on days 4-10. That suggests a change in structure occurring. 3-10-30 yr TBond auctions today through Thursday. After 17 days up, a 6 to 12 day correction was being called for.
Gold didn't need any news to go down. It was just due to go down and fill some gaps (just like GDX filling the gaps at $26, $24 this past week). When this cycle ends by end of this week
or early next week, it doesn't matter what the SM does, gold will cycle up again. And odds would favor another 13-18 day advance. If the Aussie can continue to turn and get back
above 90....and the dollar craters under 81.40, that should help quite a bit. GSR at 65 is so far showing a down month. In fact it has broken under the 3 month uptrend line and back
tested it yesterday. It's still following the December 2008 pattern (as are GLD and GDX which did strong backtests into secondary bottoms into the first Friday of December 2008 on
cycle days 28-29). In two more days if GDX stays under $24.29 it will generate a buy signal based on falling below the closing prices of 16-20 days ago. New moon today gives a cycle
turning window into Wednesday or so. A number of things seem to be pointing at the next 1-5 days to shift the gold (and silver) cycles back in the UP direction. Nothing is guaranteed
though. It's possible that gold could head up for only 3-10 days like it did for the entire past 9 months and then crash again. Maybe the 17 day rally was just a red herring to pull more
bulls in. We shall see.
Yesterday's NY dump left a nasty 98 cent spot gap at $1309...among 5 others from $1302-$1315. That big gap occurred at 10:00 am in an orchestrated dump. So we will be coming
back to that point soon enough. The $1295 gap from 2 Sunday's ago was of a similar size and took 9 days to fill. GDX has backtested the breakout of the 2nd fan line from June/July.
Problem with that is that there is still about a $1 gap sitting right under current price ($23.19-$24.03).
Nov/Dec 2008 GLD chart - not that much different from today's
Exactly what are you saying here?
Gold and silver higher? Lower? What exact time frames and to what levels are you suggesting.
Seems like a lot of techno talk which means little to the uninitiated.
Much appreciated.
A gap usually means that the price has been manipulated, usually when trading is thin and volume is almost non-existant. It means that normal trading activity wasn't really taking place, and that the price will usually come back to "fill" that gap as some of the real traders come back into the market to take advantage of what is apparently a bargain price. This can happen both on the way up, and on the way down.
In other words, the market will still act like a real market after the manipulators are done doing their thing. The real market takes place during active trading on normal or high volumes. If a gap happens and trading activity is normal or high, it also means that there is some big news story that is affecting the price, like closing the Straits of Hormuz, or something on that order.
I knew it would happen.
<< <i>roadrunner....can you boil that down into a short clear explanation for those of us who do not understand the technical stuff.
Exactly what are you saying here?
Gold and silver higher? Lower? What exact time frames and to what levels are you suggesting.
Seems like a lot of techno talk which means little to the uninitiated.
Much appreciated. >>
I edited the post to make it a little clearer. Gold will almost certainly turn within 1-5 days from here. The only question will be how low can it go and how many days will it
take before it peaks following the turn into the next 18-30 day cycle. For most of this daily cycle gold was operating inverse to the dollar. Starting this week they started
moving in the same direction. Apparently, someone doesn't want gold to be a dollar safehaven if/when it breaks down under 81.40.
I knew it would happen.
Roadrunner, the gold market today is nothing like 2008-09.
I do like your technical analysis, but over the last few years you have gotten away from KISS. I did that early on in my analysis education and it only confused me, created doubt, and eventually poor trading. When one is too close to the trees he often cant see the path.
Knowledge is the enemy of fear
I knew it would happen.
"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
Monthly chart of GSR. Once stoch-rsi bottoms out it loves to stay there for 1-2 months or longer. Macd about ready to cross down. CCI is just starting to accelerate away from the 100 line towards 0. Once at 0 it should at least tag the -100 line. The CCI peaks have been about 9-10 months apart. This last rally lingered in price even though CCI peaked back in April on month 10. The rally in price just refused to go down as late comers jumped onboard the gold smackdown. The previous 2 CCI peaks resulted in price dumping within a month or so. Not this last time. But the negative divergence in CCI has been quite obvious for many weeks. Notice the classic triple-headed pattern from Feb-June often seen at GSR peaks. Upper Boll Band has turned flat and the lower one is miles away though screaming up. It’s gonna be hard to turn GSR back up from this bearish looking setup. It does seem like December 2008 (the last hurrah for GSR) is playing out in August 2013. The dollar heading down under the 81.40 support point only adds to this picture. The 3 week GSR shows a briefly busted H&S pattern that projects to 62.5. If GSR can't retake the 65 line, that could play out. The weekly chart is very close to a negative macd cross and shows slight neg divergence now. The daily chart has very large negative divergences in play. It has found current support at the daily lower bollinger band (64.2) and the 10 week uptrend line.
Rambus' recent public article "dollar - diamond in the rough" and big breakout coming just got crushed or in the best case, heavily detoured. Dollar now under 81.0...and headed to 79 to meet the projection of the multi-month dollar expanding wedge/broadening top pattern. That's the same pattern Dust has been riding on and it if plays out will take Dust to around the 200 dma ($65). Rambus HUI to 160 charts have been all over the internet for the past 12-18 months. While they are pretty and logical, it doesn't mean that any particular H&S has to play out, regardless of how "hot" a neckline/trendline may become. Dust had an amazing run from the $20's to $168...and then this latest 7-8 days in a row straight up from $70 to $108 as gold was winding down into the last few days of its typical 20-30 day cycle. And with what's been going on with gold it wouldn't surprise me in the least if Dust reversed higher yet again. The weekly Dust chart below shows this furious last rally to be a backtest of the broken 8 month uptrend line. There were warning signs over the past few months as the expanding wedge whipsawed around that things were not right. Like the GSR, its weekly and daily momentum peaked in April but price continued to rally as latecomers piled on during May-June. The dollar's weekly momentum peaked in February. The 9 month bull market run in Dust appears dead...or at least seriously wounded.
GSR weekly
Silver looking like once it takes out $20.60 it will be a quick ride to $22.00. If that was the daily cycle bottom for gold the daily rsi didn't go below 40. That would be a change in trend as well where all the dips before this took it to 15-30.
"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
COT report showed a 29K commercial shift to the short side with a short to long ratio leaping from 1.13 to 1.28. Considering that gold went down for all 5 days of this Wed-Tues reporting period, it would appear that the specs made out by closing shorts and adding longs for this week's run up. What's noteworthy is that the producer/merchants were totally flat. It was the swap dealers who went 28K net short this past week. Managed Money went 17K net short. That's a whopping 45K net short by those those 2 groups. With commercials flat, that leaves the other reportables to carry all those net longs. Yup, the O/R's went 40K net long...mainly by closing out 38K in short contracts. It would seem the smart money this week was the the O/R's. An almost identical positioning was noted in silver, though not as great as the gold move. Silver's commercial short to long ratio is now up to 1.17. The August Bank Participation Report shows that the 4 US banks reporting have increased their Net Long position even further....by 14,756 contracts to 59,473 net long.
I have to wonder if Cohodk is expecting his low of buy of GLD this month as it is starting to look like GLD may have seen the low for this summer. That's not to say we couldn't revisit $1100-$1200's gold by end of year. But more commodities seemed to be finishing up bottoming formations. I still think money that has been pouring into stocks for the past 10 months is slowly finding its way into commodities and metals. Even copper was written off for dead at $3.00 but has now broken out of its 6 month downtrend.
This market post only viewable until 11 pm Pacific time Sat night
Yes.
Take a look at the charts on this page. Notice all the gaps up and down on all commodities. This is all part of normal trading.
Especially look at feeder cattle. Im sure the trading here clearly demonstrates nefarious actions to shift steak from Kenmore grills to Weber grills.
Knowledge is the enemy of fear
<< <i>Well let's see...Gold down another 1+%......Dow down...1/2% so far today. I think it's time to toss your "crystal ball." >>
Not yet. This evening gold has recovered to $1330. The retrace was a bit deeper than I expected but I think that is going to be the nature of the advancement for the rest of the year. The move to $1500 will have some scary looking pullbacks along the way, but I think we've just about seen the last of $12xx gold. That's why I'm not going to try to get too fancy and trade in and out on this move, I'm just going to buy and hold for the $280 move and then beyond.
Gold looks to be in position to break through $1350 resistance this week.
Added: I've also got my eye on corn. Looking for a bounce here with the USDA report coming out.
The $1 Sunday night gap up of July 21st ($1295) lasted 9 days which was quite unusual. The next big gap we had after that lasted 3 days. Tonight’s $1.12 gold gap up probably will get filled in one of this month's OpEx weeks. $1334 gold also hits the top of gold’s current 3-4 day up channel. I guess the question is how far can gold run before a return to fill tonight's gap? The $1295 gap up resulted in a $53 two day move before retracing. Monday and Tuesday are lower resistance days of this OpEx week. The Sunday night July 21st $1295 gap up came at the start of wave 3 of 5 of 5. Tonight’s gap at $1314 also appears to be in a 3 of 5 of 5 slot. Recall that we already gapped up at $1292 in the 3 of 3 of 5 wave (breakout gap). There was also a breakout gap on wave 1 at $1274. This is now the 3rd one. Is it possible that tonight’s gap was the exhaustion gap….or do we get the $50-$60 as in July? It took minimal volume to take price from $1320 to $1332 tonight. And the volume got heavy near the top (selling?). A gap left behind at $1318 strengthens the case somewhat for a retrace. We've already learned from previous large gaps that NY doesn't like to be left out of these upside moves. So that also strengthens the odds that they will get their chance to give the seal of approval for the run to $1314-$1334....though maybe not right away.
GSR looks totally busted now and has entered a gap down wave 3 of 3 recognition point by heading into the 63's. Any uptrends since March have been broken. Next level of support comes from further back in time to the 52-60 range. Recall the large gaps that were left behind at 55 and 57. December 2008 GSR continues to replay. Silver gapped up through the important $20.55-$20.60 area leaving the run to $22 exposed. The dollar gapped up tonight as well which doesn't fit what we saw end of last week. AUD moving down. But I look again and now the dollar has filled the opening gap and is tanking HARD back towards 81.0. Nice head fake. And now the dollar is back up higher....a double head fake. USD pairs of JPY, CAD look to be finding bottoms here. If that's the case I'd be surprised if gold went higher than the $1334 resistance point. Interesting to note that there is a nuclear position of 125,000 contracts in GDX $24 August puts. It dwarfs anything on the board. And that position grew by 10K into the end of last week.
<< <i>I'm not a big believer in the gap theories, but regardless, I don't see any in tonight's charts... (here's the 5min chart) >>
The gap is very obvious on the 1 min to 2 hr Netdania spot gold price charts. Same for silver. I've been following these gold gaps very closely since November. They are very accurate prompts with about a 90-95% fill rate in the short term (10 min to 24 hours) and 95-98% fill rate in the longer term (days to 2 weeks). Gaps tonight at $1318.54 and $1313.73. If the history of the past 9 months is any guidance, the $1.13 gold gap at $1313 should not last more than 1-9 days.
". . . the fact that JPMorgan swung from a short side corner in COMEX gold in December to a long side corner now, it puts a lie to all the stories that the bank is only hedging for clients. What possible hedging would call for a short corner on the market being reversed to a long side corner in nine months?"
"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 have asked this question dozens of times yet never get an answer.
Knowledge is the enemy of fear
<< <i>The 1 minute chart isn't showing any gaps either. I also wonder about your data provider or what data you're looking at, because gold futures trade in $.10 increments so a $1.13 gap is not possible. Would either be $1.1 or $1.2. My charts are all the 24 hour futures charts where as you mentioned, trading only stops for about 45m per day. As you can see in the header of my screenshot, the chart is for the December gold futures 100oz contract. >>
It's possible that what NetDania is providing is not gold futures contract pricing. But the price moves in 1c or smaller increments much of the time otherwise their would be gaps after nearly every min with 10c minimum moves. I've seen a number of other analysts who I follow mention the same gaps so I know I'm not seeing things. To me saying gold only moves in 10c increments is like saying 19th century unc coins only move in $5, $10, $25, $50, $100, increments because the price guides list to the nearest round dollar figure.
<< <i>Are these contracts actually on the books of JPM proper, or have they been entered on behalf on the mining companies for the purpose of hedging their mining operations?
I have asked this question dozens of times yet never get an answer.
I wonder if the BPR can shed any light on this. The 4 reporting US banks just went even longer on gold this past month to the tune +59K net long.
All reporting banks (US and non-US) are significantly long as well.
Bank Participation Report
<< <i>
<< <i>The 1 minute chart isn't showing any gaps either. I also wonder about your data provider or what data you're looking at, because gold futures trade in $.10 increments so a $1.13 gap is not possible. Would either be $1.1 or $1.2. My charts are all the 24 hour futures charts where as you mentioned, trading only stops for about 45m per day. As you can see in the header of my screenshot, the chart is for the December gold futures 100oz contract. >>
It's possible that what NetDania is providing is not gold futures contract pricing. But the price moves in 1c or smaller increments much of the time otherwise their would be gaps after nearly every min with 10c minimum moves. I've seen a number of other analysts who I follow mention the same gaps so I know I'm not seeing things. To me saying gold only moves in 10c increments is like saying 19th century unc coins only move in $5, $10, $25, $50, $100, increments because the price guides list to the nearest round dollar figure. >>
The CME group (Comex) clearly states that the minimum fluctuation is $.10: Contract Specs
<< <i>Added: I've also got my eye on corn. Looking for a bounce here with the USDA report coming out. >>
If any of you bought corn Monday morning as I did, you made a nice 2.5% with more gains likely this week.
Gold's hanging on nicely. I'm not sure if gold is quite ready to bust through 1348-1350 but it is possible. I'm looking for another challenge to that level tonight or Tuesday.
Shoulda shorted pork chops.
I am not a buyer of gold at 1335.
Knowledge is the enemy of fear
<< <i>I am not a buyer of gold at 1335. >>
Me neither. Waiting for Sunday night's $1315-$1326 spot gap area to completely filled. Thought we'd get that today but stopped at $1319. Price should go down during the
Wed-Friday OpEx period. Then a bounce next week.....followed by another potential OpEx hit. This week's hit may be mild as gold still may want to challenge the $1360-$1375
before too long. GSR is definitely mortally wounded. And December 2008 continues to play out exactly. At some point (now, 61, 60) it could stage a bounce to recover some of
this 6 pt drop. But note that it has fallen 10 pts or more several times during the past 2 years w/o any real bounces.
A brief explanation of spot gold pricing and why gaps may appear here and not on Comex quotes. There are various spot gold providers which tend to be very consistent and
competitive. The gaps created are real and they tend to fill with >90% consistency. The pricing is generally tracked to within 1c.
Basically the spot price is the price prevailing in the physical gold market. I think to get a thorough grasp of where the spot price comes from, one must understand the workings of the physical gold market. The physical gold market is essentially an interbank OTC market centred in London.
The main participants and quote providers in the spot gold market are the market makers (or gold dealers) who are mainly international banks, including the clearing/bullion banks (the LBMA lists 11 of its members as Market Makers and 5 among them as clearing members). There are also other gold dealers, and brokers (the biggest broker being ICAP). These gold agents operate in the main physical gold trading centres of London, Zurich and New York, and during Asian hours, Hong Kong and Tokyo. The end client base of these gold dealers and brokers include the majority of the central banks that hold gold, private sector investors, mining companies, producers, refiners and fabricators. The market makers (or gold dealers) can also take positions on their own accounts.
The spot price quoted is for one fine troy ounce (100 percent pure gold), and I am assuming that all the quotes are for loco London gold (LBMA specs gold, for settlement and delivery in London in 2 business days). Because of the OTC nature of the physical gold market, there is no volume or last done price, since the quotes come from different sources (not a central exchange where there is always one last traded price and volume data.) However, dispite the many sources of quotes, there are only small differences between the different quote providers because of competion to post the best bids and offers, and the fact that dealers and brokers will minimise the differnces through arbitrage. The twice-daily London Gold Fix should serve as a point of convergence for the many sources of spot gold quotes.
Reuters spot gold instrument is XAU= and currently this quote has 9 active contributors, mostly big international banks and ICAP. Netdania say they get quotes from the 5 most active market-makers. (Their charts display the bid price.) The Kitco website indicates that their spot quotes come from bullion dealers active in any of the main physical gold trading centres around the world. CNBC TV's spot gold quote appears to be Thomson-Reuters' XAU= instrument.
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<< <i>Added: I've also got my eye on corn. Looking for a bounce here with the USDA report coming out. >>
If any of you bought corn Monday morning as I did, you made a nice 2.5% with more gains likely this week.
Corn down 3.5% today. Did you get out in time?
Knowledge is the enemy of fear
Knowledge is the enemy of fear
I still don't believe in the gap filling concept as I think it's all pretty much coincidental. Prices for everything move up and down so much that filling gaps is pretty much inevitable over a long enough time frame. It may happen a lot (90% as you claim) but there's enough unfilled gaps that will probably never be filled to make it anything more than an interesting observation for me. The concept just leaves too many questions, because there are many stocks or other instruments that have very little volume which naturally leads to lots of gaps. Then you have things like gold that trade in several different vehicles 100oz futures, 10oz futures, GLD ETF, XAU, etc., and different markets that lead to the question if you have a gap in one instrument but not others does that foretell a future move for gold overall? By subscribing to the gap theory, you dismiss the notion that any meaningful and lasting move can occur outside of standard market hours because any gap-up caused by a market not being open at night will always be filled, thus negating the overnight move (at least temporarily). Then of course you can get into details of what time frames, because if you go down to a small enough time frame you'll have more gaps also, so what time frames does this apply to?
Cohodk, yes, I did close my corn position and made sure the position didn't turn into a loser. I thought after yesterday corn would turn around but I guess it's not ready yet. I think weather concerns are going to come into effect fairly soon and start pushing prices up, but the timing on that will be difficult.
Over the past 3 days gold has formed a small H&S with a neckline at $1323. It projects down to $1302. May or may not play out now that it appears that an ABC in 3-3-5 format has played out down to $1315 tonight.
I think weather concerns are going to come into effect fairly soon and start pushing prices up, but the timing on that will be difficult.
My yearly trek across the country led me to believe the crops are all quite healthy. Whether healthy enough to justify the destruction in pricing we've seen is another question. Im not looking to trade any grains right now, but as RR mentioned a week ago, sugar is interesting. As is coffee.
Knowledge is the enemy of fear
I knew it would happen.
<< <i>Interesting that corn lost almost 1/2 its value since the drought scares of last year.
Shoulda shorted pork chops.
I am not a buyer of gold at 1335. >>
Cohodk, does gold look any better here after 24 hours?
Gold cycled down to $1316 and then back to $1335 in the past 24 hours. Miners are in full breakout mode. Silver and gold have broken out to some extent as well. SLV rsi at 69.2.
The GSR at 61.0 starting to flatten out a bit and taking off the exponential descent. For GSR, it's now worse than Dec 2008. Full bearish engulfing monthly candle as of today, though
still early in the month. Have to expect a bounce back in GSR at some point. Positive divergences in the 4hr/8hr charts. A round number of 60.00 may be the ending target.
<< <i>The move down was a 38.2% retrace of the surge back up. This has re-energized gold for the next advance. With the strength of the other items you mentioned, I think gold could be ready to break out of this consolidation; however, gold does have a way of lingering a lot longer than I expect. So if gold isn't ready to advance over $1350 just yet, then we may bonk against it again and fall back down, but not as low as last time. >>
I'm watching gold so far retrace nearly the exact pattern from July 17th to August 7th. Most obvious on the 4 hour chart. A gap up above $1350 will put that that to rest though.
Following that same pattern means sideways/whipsawing/or somewhat higher into next Tues/Wed's full moon period and then down into the end of month OpEx week (Tu/Wed).
Some gaps tonight on the overseas open. I think those have to be retraced down to $1335 (or even $1333) before assaulting the $1350 level. Would not be surprised to see a retrace
to $1324 by Friday. But gold has been grinding consisently higher since it turned back up at $1316 this morning. No stopping it right now. I don't think the NY boyz want to see $1350
taken out w/o them. Or if it does, they'll want their own crack at it later???? Silver getting above $22.00 would probably help lift gold too to catch up.