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Morning Gold Fix: July 28
Commentary courtesy of www.fmxconnect.com
Yesterday’s activity was a kick in the face to dip
buyers like me. If you read yesterday’s post and just ignore the first
line, I was spot on. But I ignored the signs and made an assumption
that the pin risk was stronger than the bowling ball around Gold’s
neck. Time to go back to just assessing events and risks and leave the
prognostication to the tea leaf readers. On that note, take a look at
this technical report out yesterday from Citi on our embattled yellow
metal. Full PDF here
Time to take a much more defensive stance on Gold
•While
we remain constructive on Gold from a long-term perspective the
shorter-term price action is now very disappointing with a severe
correction lower looking a real danger.
•Equities are performing
well with bullish weekly reversals on 4 major U.S. indices last week
and break of supports on VIX yesterday.
•U.S. yields are finally
rising with possible double bottom forming on U.S. 30 year yields at
4.12%. A break would suggest 4.40-4.50% again and drag 10 year yields
through the pivotal 3.05-3.10% area. U.S. 2 year yields are also
starting to rise and drag USDJPY higher with 89.00 mow looking on the
cards here.
•European sovereign spreads are falling sharply; German 2 and 10 year yields are rising as the curve flattens.
•EURCHF is bouncing strongly
•Industrial commodities (Copper and Crude in particular) are outperforming Gold in recent days.
•It’s
looking like a very pro-risk dynamic could be developing and as this
has been happening Gold has not been able to follow through towards our
$1,300 target
•The
base of the 2 year channel around $1,176 is now under threat and a
close below (Weekly) would suggest a danger of extended losses. Weekly
divergence at the recent highs also supports this danger.
•A weekly close through the base of this channel could suggest extended losses towards $1,030-$1,045 again.
•Could
it be that we are entering a multi-month pro-risk environment where
people feel less need to hold Gold as a hedge as other assets look more
attractive?
Gold monthly chart
Source: Aspen Graphics / Reuters 27 Jul’10
-Elizabeth Thawne
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Golden circle jerk in session.
...and you are the soggy biscuit.
Bukkake is actually a Japanese noodle preparation method.
Noodle is probably an apt description...
380 tonnes of BIS gold being dumped for effect can do a lot of damage. But it is as meaningless as every other assault on gold. Gold is a market where these things happen in the short term but never stick. Just stay off leverage because you cannot predict when the assaults will be launched. Techncial analysis in gold is worthless when there are so many CBs trying to paint the charts with a technical pattern that will trigger trader sales. But in the end, the CBs continue to lose the fiat paper game and gold continues to advance into new highs. The market always wins.
Quinv, you raise two great points.
Buy and hold gold without leverage, I am terrible at trading, never could get the hang of it.
My recently deceased friend, a good tech trader could NEVER make any sense of the gold charts.
Again Ms. Elizabeth who said that euro would stay between 1190 and 1120...
the only reason to buy gold is to preserve capital.
the buying power of gold remains an historical constant (+,- a few bucks). speculating on that buying power is where all kinds of other money is made or lost. again, wealth is preserved with gold_ not etf's or otherwise.
simple question: do graphs and technical anaysis work in these types of markets? I'm having doubts...
Simple answer: they never worked.
The recent 100 dollar drop in gold prices following a rising wedge on the chart would differ with that opinion.
Sure the technicals work, but do people use them?
And the answer is no.
Then, when they ignore the technicals, and the commodity does exactly what the technicals said, they want to blame the technicals.
The technicals were bearish, the market action was bearish. What else is needed to prove that the technicals are working?
Humans are good at seeing a pattern when there is no pattern and seeing patterns when there should be no patterns. I know, as I've spent a good deal of time working on fitting patterns to data to try to "predict" future possibilities.
How do you get your enemy to react the way you want them to? You feed them dis-information. You let them see patterns. You manufacture patterns. And when you have them where you want them, you change them. Game over.
You can't build a proper model because you aren't in possession of all the intel you'd need. Face it, you're either full of BS or you're an "agent" (you say you are right 100% of time - no one is right 100% of the time, unless the game is rigged).
Very good. Bravo! (Ooops. Didn't mean to use that term...)
Johnny will not reply to your comment because it is counter to his views.
Gold Bugs are so easy to fuck with. I've cancelled my Cable just because this is more entertaining. Johnny Bravo rocks.
Greg Brady NEVER rocked.
The Brady Bunch (S5) - "Adios, Johnny Bravo" pt.1/3
http://www.youtube.com/watch?v=xwHaL31KEOI
You'll disappear like a fart in a hurricane come September when Gold goes up.
Thanks friend.
I've never seen people get so emotional over a commodity. It's like I burned an American flag with a picture of Jesus on it. LOL
All the emotion seems to be on the side of those ridiculing gold. I've found it curious ever since I started reading ZH, how every gold thread brings out a bunch of posters rushing to tell everyone how stupid they are.
For the most part, it seems that those who buy PMs simply roll their eyes, make a snarky comment, and then move on with their lives. I have yet to see anyone's mind changed by any of the criticisms that regularly pop on these threads.
So, what's the point? Even the Jehovah's Witnesses eventually stop knocking when you've told them no enough times...
Second rule of Zero Hedge is never talk to Johnny Bravo, but do junk all his posts.
Actually, Michelle, Bravo did concede to me once that holding some gold is OK.
Bravo is here for the same reason many of us are: to have fun!
But in my case (and same for many others) I am here to learn as well. JB should read some history. Or get married and have a kid. That will turn him around real fast. Nothing like having a kid to get you thinking long term.
Thats because its not a commodity.
The value of gold has been constant for thousands of years.
http://www.amazon.com/Golden-Constant-American-Experience-...
High gold prices may sound like good news to gold bugs, but it's really bad news for the rest of us because it means our lives will be changing for the worse. I hold most of my savings in physical gold and silver (the end-of-the-world short). Nevertheless, I would much rather see gold hold at the $1,200 mark.
These guys at the top are not stupid, Obama knows exactly what is happening; just look at his new salt and pepper hair-do. Summers, Geithner, and Bernanke know in more detail what is discussed here every day on Zerohedge. So how does one explain their behavior? Well, I will tell you, they are building their life-boats while they play for time as the system spins out of control. Smart, but cowards none the less.
The overall trend is clear and today's volatility in the silver and gold markets tell us that "pressure" is building as people lose confidence in the dollar. But since the value of the dollar relies on confidence, a negative feed-back loop is developing.
You, sir, are correct. Price of gold is not important, value of gold is vastly understated.
You, sir are also correct.
It's the number of ounces you have, not the price.
Until we get to $50,000! Then I jump over to Bravo's side!
"The value of gold has been constant for thousands of years."
Here we go again:
$20 in 1913 to $36 in 1933 to $42 in 1942 to $1050 in 1980 to $255 in 1999 to $1265 in 2010 is constant?
What good is a thousand years when we live a hundred if we eat Smuckers?
Folks, gold is a trade, currently a fade, and certainly not made in the shade.
Value is not the same as price.
That job makes an old man out of anybody.
Bush suffered the graying of the hair as well:
http://latimesblogs.latimes.com/washington/2009/03/obamas-gray-hai.html?...
I've been in gold since 1998 and have been through this so many times...the price of gold drops a certain percentage and then all the gloaters come out with the same refrain: "ha ha, where's the $2000 gold now? You can't eat gold. Gold has no intrinsic value. This was a bubble, anyone could see that." etc etc etc.
And then some months or even a year later it's up to new all-time highs.
Every time gold drops, I ask myself: "might this really be the end of the gold bull market?" And in answer, I ask myself, "well, has the government become fiscally responsible? Have they cut spending and raised taxes to balance the budget? Have they abandoned their infatuation with moral hazard, whereby the government takes on all the serious risks of anyone in the country, and steps in with free money whenever a problem arises? Have the serious financial imbalances, the rampant debt, been cleansed from the system?"
And for the years I've owned gold, the answer is always no. Not only have they not addressed any of the serious fiscal problems, they are making them worse, doubling down on disasterous "solutions" like stepping in to save GM or taking Fannie and Freddie's obligations completely onto the government's books. The prevailing mindset - "government should fix all problems in the country; no one should ever lose their money, but should be made whole by government; problems are fixed by spending money; oh, and by the way, don't raise my taxes" - is exactly the same. Therefore the ultimate destination of national financial ruin is still guaranteed.
Nothing has changed. The government, having decided to absorb all moral hazard in the economy, is in the process of burning up its remaining slack and credibility. They may engineer a rise in the stock market for a while. Hell they might do it for several years. Maybe there's even enough residual credibility and faith in the US government's financial power for them to drag this out for another decade. But just like happened in Weimar Germany, the national mood can change in a matter of weeks. The loss of faith can happen that fast, and seem to come out of nowhere. I can't take the risk that I will be able to anticipate that and jump back into gold at just the right time. So I will continue doing what I've done since 1998 - hold on and keep asking whether any fundamental change has occurred to make me think the financial problems have been truly addressed.
So far that approach has yielded me about 15% per year of return, every year, for more than ten years.
So I find it almost comforting when there's a downdraft in the gold price and all the naysayers come out again. This is about the fifth or sixth time it's happened in gold in the last decade. Just business as usual.
MnMark, I too having been buying gold for decades. An oz or two or three at a time.
"Just business as usual."
Well stated.
Well said. I've been a buyer since 1999 and have been sleeping like a baby for years.
The trend is your friend, until it's not. Today it is.
Johnny how old are you? youre pretty young aren't you? ..hence you can probably be forgiven for not knowing that things went on before you were born, and that there's nothing new in this world (except an all fiat system - thats pretty new at only 40 years old)
have you even heard of the London Gold Pool in the 60's?
http://en.wikipedia.org/wiki/London_Gold_Pool
manipulation can work for a while, but not forever. this has been tried before, it eventually failed then, and the same WILL happen again.
ALL organisms and empires rise, flourish, and fall. ALL of them. and nobody can beat the markets forever, NOBODY, not even "the Fed"
timing is everything of course, but long term there is only one outcome.
hence betting against the manipulation is:
a) the contrarian trade
b) the historically intelligent view. (assuming intelligence is defined as the ability to learn from mistakes, either yours or predecessors) - so by all means dabble with their paper ponzi while it lasts, but for your own sake, get some real money stashed away too, because the paper ponzi will end in your lifetime.
or don't, and be one of the sheeple who "never saw it coming", I dont really care either way, but lets be clear, there is NO WAY OUT of this.
http://buygoldsilver.org/2010/01/gold-2010-beyond/
your call
Why would any rational person assume that holding a currency of a bankrupt nation would be feasible or logical. Certainly for a time as the fiat system has its heyday there would be benefit in its exchange for goods capacity, but only if the said currency is provided by the government treasury and not a private institution. Gold is entrusted as an anti-fiat currency when the government debt and loss of purchasing power literally implodes the original fiat paper. Gold or silver is the history of entrusted exchange devoid of manipulation as much as humanly possible through the ages. For those who wish to hold on to a soon to be baseless currency as the US dollar, be my guest.
Well said.
Gold price up $224.20 from one year ago or 23.93 % - Source Kitco
I'll keep buying physical gold as long as I keep getting junked by sheeple for saying 911 was an inside job because support of the sheeple for Bilderberger false flag deceptions is the best leading indicator of all.
+ 5!
Physical Metals Run on LBMA in Play NOW. COMEX Next?http://www.youtube.com/watch?v=jS_WVxdNs0E
the main governments of the world have decided to support all paper assets until further notice- all fundamentals would say to sell them all but you would be trading against the real big money
you have to hand it Jonny, the boy is tireless in his trolling. And this for an investment he doesn't believe in. Who would spend this much time trolling for something they're against than Jon no nads NAdler
An interesting theme being dug out here is the 'misinformation' one... Control which ideas inhabit peoples heads, you can pick their pockets. Not difficult to demonstrate - Derren Brown or church offerings or any stock market manipulation routine.
A calculation of time and effort suggests that Jonny Bravo's 'paid to troll' position is partially true. I see a lot of similar patterns against articles on global warming - i.e. lashings of truth sprinkled with occasional assertions and misdirection - comletely defensible. Organised efforts?
They need only force any non-fiat meme into submission (strategy=saturation) and they win their game regardless of anything else. To acheive this on the internet requires specific kind of play. My 2 cents worth.
Gold has been losing upside momentum on its major tops since May 2006. Silver is giving both short and long term upside non-confirmations to gold's rally. After 11 years of bull market, the general public have become frantic gold buyers in the last couple of years i.e. after many years of rally are already done and past. The psychology of never-ending bull market into the indefinite future is now well entrenched. On the internet, it is rampant. you can hardly find a financial web site which does not have a bullish gold take, including here at ZeroHedge.
Inflation going up? Buy gold! Deflation coming? Buy gold! Currency collapse coming? Buy gold! Factor A, B, or C likely? Buy more gold, especially on the dips!
Although I believe that in the long term, gold's trend is definitely up a lot more than the present levels, at this stage, there are simply too many gold cheerlearers who have climbed on board the bandwagon. They will have to be shaken off before any long term trend can proceed.
For anyone who was bullish and bought gold ten years ago like Marc Faber, congratulations. You have done well. Those price levels are highly unlikely to be revisited at all. For anyone who has bought gold over the last two to three years and is touting gold $5,000, $10,000 $20,000 etc. with no correction worth the name is just a mug and has no clue how to read a market properly.
Like the stock market, gold is an excellent short sale about now. Anyone taking the short side will likely get far better results than the mass of Johnnys-come-lately. When the next leg of the long-term gold bull market finally arrives, they will have been long shaken off and left behind.