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Morning Gold Fix: July 22, 2010
Commentary Courtesy of www.fmxconnect.com
Gold opened Wednesday’s trading at
$1191.8 per 100 troy ounces. After a day of up and down trading, with
prices falling as low as 1183.0 and rising as high as 1198.0, it ended
the day at very close to the same price, 1191.8. The metal has posted
slight gains this morning.
Bernanke: Reading the Tea Leaves
I
am not enthused by yesterday’s activity. Gold is unfortunately acting
like my observations warned. Weak longs are trapped above the market as
shown by options activity and intraday swings. Bernanke’s speech gave me
cause for further concern. Watching Gold while he was talking, and
having a position of my own I noticed a quick drop of a dollar right
before he went on. No big deal, but this is always a sign that a weak
hand is puking, not a weak hand initiating. Fair enough, I thought,
shake out the idiots before he speaks, and I continued to look for a
reason to buy.
Then he began speaking and my translation of his
comments were “ Deflation is the issue currently and I am considering
other ways to combat it.” That is what I took away from it in real
time. And Gold sold off another $6.00 right after the implication.
This is my issue. Bernanke could have said 3 things basically
1. Inflation Hawk: All is well, we are getting ready to remove the stimulus- should be bearish for everything
2.
Inflation Dove: I’m concerned we are adding more liquidity- should be
bullish if you think the liquidity will create asset bubbles or
inflation will come on its heels
3. No changes are forthcoming- not sure what that means
Ben
essentially said number 2 by my interpretation, but the markets crapped
out. Why is that? It’s because the market chose to focus on its
disbelief that fed policy can help now.
Very scary in my
opinion. Geez, the promise of continued easy money should be good for a
bullish spike in everything but it did not come. My conclusion is simple
when it comes to Gold: too many specs are long with no fresh money
coming in right now. Sell bad news, sell good news after the rally too.
That is what a dealer would do until fresh money comes in. As we near
August options expiration it is becoming clear that 1180 is asserting
itself as a magnet with 9500 contracts open. I Had hoped for 1200, but
hopes are fading fast. Options Report Here
How to Look for a Market Bottom
As
long as OI continues to decrease, look to fade rallies. When you see
the market sell off and OI go up, then shorts are getting in, and that
should put you on alert for a possible bottom coming, but not a buy
signal. The buy signal comes when OI turns upward in a rally, then
selling rallies is not advised, as weak hands are out and fresh longs
are coming. In a nutshell:
· Selloff w/ OI coming in= long liquidation
· Selloff with OI flat= strong hands weak hands transfer AKA distribution
· Selloff with OI increasing= shorts getting in
· Rally with OI increasing= initiation of longs
· Etc, etc, etc
The
trick to trading this way is reading the stochastics and finding the
dynamic equilibrium number for OI to bottom and top out at. That or you
could just have clients calling you to puke positions all day and just
front-run their limit orders asses until they capitulate and stop out
into your welcoming arms.
August
gold was down 5.6 to $1186.2 per 100 troy ounces as of 7:01 AM EST,
this morning. The September U.S. dollar index was up .505 to 83.210.
October platinum was down 8.2 to $1521.6 per 50 troy ounces. Silver was
down 2.32 cents to 17.780.
Wednesday Options Recap:
Put
buying continues to trickle in the short dated options but not as
urgently as it did last week. Volatility continues to soften in the
rally, and stabilize in the selloff suggesting trapped longs in the
market. The market is beginning to focus on August expiration. We expect
open interest to act as a magnet in the 1200 area. There was more
liquidation in Jun 11 and December 11 this time in straddle form. The
speculative funds are beginning to capitulate.
-Elizabeth Thawne
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oh, grow up and admit the market is manipulated. the option expiry max pain point is 1183. Option expiry is next Wednesday.
Wednesday afternoon after Comex close -- a "bottom". God knows how much Ben will have printed in the name of the US taxpayers to keep gold "bottoming" until then, but there is it. The CTFC is a joke.
Next Thursday....we will have the "rally"....lid lifted off the market.
All the rest of the chart reading in light of the reality is ludicrous.
I didn't junk you.
With that said, this post is a good indicator of why I think that some of the goldbugs are so full of shit that their eyes are brown.
"Gold is really worth 54000, if, if, if... (insert conspiracy theory)."
What a crock of shit. That is why I laugh at some goldbugs altogether. While the merits of bull versus bear are certainly debatable, a 4000% increase is just absurd, and not realistic at all.
http://www.zerohedge.com/article/guest-post-proof-gold-price-suppression
the absurdity is that we trade worthless scraps of paper for tangible items.
junk!
But it's what the paper represents that makes it valuable. It's a lot more than scraps of paper...
i did junk u...never personal just bisnezz...
it appears that u either r not aware of the documented manipulative undertakings of the international bankers who desperately must prevent the return of real money to the global economy, or u do not understand what constitues "real money" period. this has nothing to do with bull vs. bear market nonsense, rather the preservation or extirpation of a global debt coupon regimen designed to enlsave humanity to a world order controlled by a wealthy ruling elite...
"gold is money, nothing else..."
To: GGensler@CFTC.gov
Dear Chairman Gensler, With the signing into law of the new Financial Reforms by President Obama yesterday, it is time to immediately act on the long overdue concentration and manipulation of the Gold and Silver futures market by major US banks. Finally, the CFTC has all the weapons it needs in this fight. I congratulate you on your political victory and the courage you have shown in your resolve to achieve this vital goal. Based on the work of Ted Butler, I would formally ask you to enact position limits of no more than 1500 contracts per market participant either long or short in the Gold and Silver futures market. I would also ask the CFTC not grant any exceptions on this matter except to allow a brief window for participant to get into accord with the new limits. Thank you and Most Sincerely, Your NameDear Kooky McKookerson,
Gold went up 500% over the last decade, without any real correction in the past year and a half, and somehow you say it's still manipulated to the downside. How can it be manipulated to the downside if the price only rises? If there were massive shorts from big banks, wouldn't they be massively in the red by now? Yet they're making record profits. Your assertion is baseless and doesn't make sense.
Love,
J. Bravo
Speaking of 'baseless assertions that don't make sense'; just review JB's comment(s) for the most exemplary work.
Regards
Cheer up, the weekly chart looks great:
http://stockcharts.com/h-sc/ui?s=$GOLD&p=W&b=5&g=0&id=p22191914136&a=156853006&listNum=2
I figure that they can only go so far with dumping gold leases on the market before gold lease rates start to turn positive, and with the discount rate so low, there is only so much less the gold price is subject to price fixing. A decline of the discount rate and a collapse of the face value of gold leases would be a disaster for the price fixing regime.
Its not year 2000 any longer. The dynamics have changed here.
Spot Gold Price: somebody just stained their shorts...
That chart has a target of about 1300 if you draw an upper trendline. It also has a massive rising wedge though, bigger than the one that recently broke down.
Bring on the charts, dude!
The gold bull market can only last so long, but for the moment we are still in an uptrend in a bull market.
I can see the market taking care of devaluing currencies against gold, much as the U.S. government took care of that during the depression with policy moves. Almost all countries devalued their currency against gold.
I look at the rise in the gold price as a mitigating factor in a deflationary recession - devaluing currencies and soaking up excess liquidity.
paper is paper, gold is gold buy em
This article says what I always tell people on this site.
"Read the stochastics."
Best indicator ever. Also, MACD is a good way to see what's next.
I will say, however, that the stochastics are making a negative divergence on the monthly chart... that is bad, mmmm kay.
On the weekly chart, things look a little better in terms of slow STO.
On the daily chart, it looks like the STO is about to pop to the upside. Looks like we might get a relief rally soon in the price of gold.
It seems that 1220 would be a reasonable target for this pop, due to a retracement from the recent fall.
Is gold potentially making a H&S pattern? Or will it break the 50% fib off of the recent plunge and go higher? At any rate, this action should happen very soon.
In fact, if I bet on gold, I'd put money on it being bullish over the very short term. You'll never hear me say that, so you know it must be true.
spoken like a true daytrader
Damn, and minutes after I posted this, it rose ten dollars. I'm the shit. LOL
I'm not selling for a penny less than $54,000!!!
LMAO! I think that article takes the cake as the stupidest thing I've read all week. And I read a LOT.
Gold will not go higher than $52,500. You read it here first.
Tyler: it's annoying to say the least to have Johnny Bravo troll every gold posting with the obvious intent of ruining the thread.
He gets lots of attention and that is probably what he is really after, as a parent, can you imagine liking or loving a child like that? He was probably emotionally damaged as a kid.
Just everyone ignore him and he might go away.
There is more than one writing under the pseudonym "J B"
JB,
Scraps of paper exist as people have confidence in them, only. When people lose confidence, they will turn to the metal.
You are looking short game. Look long term, as the Chinese have.
edit: after singing in, my post did not append properly. It was in reference to JBs comment (483451) above..
I love Johnny put-a-Brav-face-on-a-hyperinflated-Capitalist-Crony-Economy-O's reasons why gold is in a bubble.
1. Because he says 'Goldbugs are full of shit'
2. Because 'Gold is going to 5000 if...put in your own reasons'
How can you argue with reasons like that?
Best part is, you dont have to. His antigold arguments are self-refuting.
Stay antigolden, JonyBoy
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