This page has been archived and commenting is disabled.
Morning Gold Fix: June 29, 2010
Courtesy of www.fmxconnect.com
Gold closed at $1238.6 per 100 troy ounces yesterday, falling $18 from its open after a technical failure just outside record levels. The selling has continued in Asian & European trading with gold down about $4 for the day currently.
Whither Gold?
Yesterdays’ activity was not much of a surprise to us. It seemed like the Gold of old. Speculators get long, cover shorts going into an event that can have an impact on Gold (G-20). Nothing happens immediately relevant to Metals during the event. Participants look at each other for 30 minutes as the market starts out flat. Then it dawns on the weak longs, that they have the patience of gnats, and the selling starts. This is Gold behavior circa 1997.
The fact is that there was a real reason to sell yesterday. Europe’s austerity rhetoric trumped the U.S. Spendthrift philosophy. What would happen to gold if everyone stopped spending and sovereign debt was reduced like Europe hopes? That would not be bullish for anything, hence a selloff in gold is not unreasonable. But here is the catch…. If people stop spending, how do you intend to service the existing debt? So Europe is full of it. They want us to keep on spending while they tax their own populace and set up barriers to imports. The only thing the Europeans will be buying over the next 20 years is Bordeaux and BMWs.
You default when you cannot service your debt. Who would default? The public would default first to their bankers, which would cascade uphill to the banks and then the government. So, you must prevent individual defaults. How do you do that? Devalue, debase, depreciate. You go to the presses. So you see, Europe has to print money no matter what they tell us.
Yesterday, I called the Krugman-Geithner-Bernanke loose money types the KGB. Little did I know that the real KGB was alive and kicking. Apparently, Gold is a factor in whatever the Russian spies were doing in the U.S. But if you wish to read something interesting on the concept check out page 95 of this pdf by one of our favorite analysts, James Rickards. In it he describes how Russia would destabilize the U.S. dollar as a reserve currency and gold’s role in it. I promise after you read it, you won’t make any tinfoil hat jokes ever again.
August gold was down 3.6 to $1235 per 100 troy ounces as of 7:13 AM EST, this morning. The September U.S. dollar index was up .478 to 85.91. July platinum was down 18.2 to $1547.4 per 50 troy ounces. Silver was down 9.3 cents to 18.59.
-Elizabeth Thawne
For Market Prices Click Here
»
- 3416 reads
- Printer-friendly version
- Send to friend
- advertisements -
Since yesterday came as no surprise, please enlighten us as to what is going to happen today and tomorrow.
A Timmy PHD would say: The shit is going to hit the blogs!
"No surprise" isn't the same as "expected" or "predicted."
I wouldn't be surprised to discover that you owned gold, but I still wouldn't presume.
Tomorrow, Blodget takes us public, and all those who shamelessly pimped our drivel day after day will cash out their options.
"The fact is that there was a real reason to sell yesterday. Europe’s austerity rhetoric trumped the U.S. Spendthrift philosophy"
I do not regard rhetoric as a reason to sell, particularly when it is apparent to anyone with even a passing familiarity with the situation that the aforementioned rhetoric is completely hollow and, to borrow from the Bard "A tale told by an idiot, full of sound and fury, signifying nothing".
I think she was talking short term traders, and they do find daily reasons. I seem to remember at least one poster here selling some of their own holdings yesterday.
Case-Schiller says all is good ;) [/sarcasm]
But paraphrasing what Robert Schiller said today "We may have already started a double dip in housing."
Andrew Roberts at RBG may have it right with a sharp bond rally and commodities and stocks headed off a cliff.
Is gold a commodity?
You betcha...
That's right, gold is a commodity - just like any other. That is why Central banks the world over hold wheat, cotton, soybeans and pork bellies in their reserves as well as that other commodity 'Gold'.
"Gold is money, and nothing else" -- John Pierpont Morgan
Quintus,
I go apeshit, when people still insist Gold is a Commodity.......
It's been the ONLY real money on the planet since man started doing business, even in barter.
To say Gold is a commodity is ignorance of history, and it's properties.
But, eveyone has an opinion.............
And, NO< There was absolutely NO REASON for selling it yesterday............Are we different today than yesterday,fiscally, is Europe?.( no,their even worse off, the PIIGS are going (D_O_W_N)first.
Hell no.....every day that passes is WORSE.
There is nothing, NOTHING to turn this around without a major depression at best.........ZILCH.
You picked up on the sarcasm right? :-)
Depression = deflation.
"Gold is a hedge against inflation" is what all the gold commercials tell me.
Doesn't seem to bode well for gold. Maybe they should change their commercial to "gold does well as an asset when short sighted people think that the world will end tomorrow"
And then of course it gets killed in a recovery.
So WHY is gold not a commodity?
WHAT makes it not a commodity, besides saying that "everybody who thinks its a commodity is ignorant" (without explaining why)
Yawn.
"Gold is a hedge against inflation" is what all the gold commercials tell me.
Maybe you should look for some more authoritative sources of financial information than Cash4Gold advertisements? On the other hand, since your mind is already made up as regards the value of gold and is not open to any reconsideration of your position, why bother?
Right, that's enough troll-feeding for today.
Gold is also money, so it is a hedge against depression (where deflation happens in terms of gold only, not fiat paper).
Commodities are widely useful, and are generally used up at about the same rate that they are produced. In the case of gold, this is obviously not the case, as 99% of the gold ever mined is still sitting in bank vaults.
Gold will only get "killed" in an environment where rates rise up to and above the true inflation rate, currently around 10%. "Recovery" doesn't do shit to gold, as you would know if you have had two brain cells to rub together over the course of the last decade which has been filled to the brim with "recoveries".
Yawn is right. You repeat the same shit on every gold post even as gold goes up to record highs on a major trend and 10 year bull market.
I am certain you are just like any other gold hater that is so confident in your beliefs that you short gold right?
Gold is not a commodity, as people keep explaining to your dense, useless gray matter, because it is a global currency that has been in place for 6000 years. And every fiat currency in history has disappeared/expired/gone extinct.
But "money" is nothing more than a commonly traded commodity.
Stop worshiping money, and start thinking in real terms.
Anything that is only money and nothing else has no intrinsic value.
Absolutely.
Along with the qualities of Durability, Portability, Limited Supply, Fungibility etc, it is an essential requirement of any successful form of 'Money' that it has no intrinsic value, and therefore is not useful for any other purpose.
As long as everybody is willing to return to a barter based economy, and is happy to personally acquire and store their wealth in the form they will ultimately require - i.e. big piles of food, lots of barrels of gasoline etc, then there is no need for Money.
On the other hand, as long as a group of people wish to take advantage of the benefits delivered by indirect exchange facilitated by some form of commonly accepted 'Currency' and a convenient means of storing wealth which can be converted at a later date to the necessities of life then something will have to fulfill the role of 'Money'.
Gold is the best 'Useless' thing humanity has ever found which can reliably fulfill the role of Money. Therefore, while it, quite rightly, has no intrinsic value in itself, it would be foolish to argue that money (and Gold as it's ultimate expression) has not added any value to society and is therefore valueless.
Gold is even more useless than oil.
to elaborate... gold works as a commonly traded commodity (money) because it has value as a commodity. This is why we don't trade fool's gold, instead, you fool. Try to make a radiation shield lining in your space suit out of fool's gold. Want the best audio from your electronics, try making the contacts and wire out of fool's gold. Shoot, even jewelry is very hard to make out of anything other than gold.
Whatever mate. You run along and polish your unique and special theory that 'Money is a commodity'. When you're finished it, the world will, no doubt be aghast that they have overlooked this oh-so-obvious reality. They might even make you Fed chairman for this stunning insight. Of course it IS a unique commodity in that it is not consumed, has no supply constraints, no production costs.....
Are you really suggesting that gold is valuable because people make spacesuits out of it? For fuck sake. Silver is an industrial/precious metal hybrid. Gold is not. I would be most interested if you can point me in the direction of any data indicating gold prices being affected by the factory demand from hi-fi makers. Or spacesuit manufacturers for that matter. As for jewelry demand, While somewhat significant, it's far from the main driver of gold price, and much of what is counted as jewelry is, in fact investment demand, particularly in India.
Your thinking makes a change from the usual moronic 'Gold is worthless 'cos it has no uses and you can't eat it' angle though.
If gold has no value, then it has no value.
I would argue that gold has value and that it's rate of exchange with other commodities is not arbitrary, as you claim.
Also, the burden of proof seems to be on your side, as you're the one making magical claims about an element on the periodic table having no value in reality.
Oh, wait, you say it has value as money. How much? In terms of money? Are you thinking dollars, maybe? I know, we'll say gold is worth one ounce per ounce.
I'm still shocked by your view that gold shouldn't be so pricey if we're using it for spacesuits and other such amazing tech. If it were used in making toilet paper, then you'd be saying it's low price had nothing to do with it's physical properties.
Not only is gold a commodity, currencies are a commodity as well. How are they not?
Because their only value is the one people assign to them?
It's a relief to find someone who's can think more than one move ahead.
Yes, currencies are all best thought of as just commodities. They are "currencies" because they are the most commonly traded commodities.
But, of course, people gotta make a religion out of everything and worship gold as money.
Sarah P, is that you ?
No, it's Nadler, whoever that is.
Nadler is this moron:
http://www.kitco.com/ind/nadler/jun292010.html
Man are we going to get hammered this week. Looks like all the bulls are going to be slaughtered for the BBQ's this week...
Yours appears to be a unique opinion.
Well, so far at noon ET, the bulls ARE getting slaughtered.
Can't agree with this article.
Oh really, Lizzy? Then WHY did the gold open interest rise 4268 contracts to 603,688 if the gnats were puking their long positions? There was heavy BUYING by the gnats as the banks went SHORT against all gnats.
It was one thing and one thing only: A Bear Raid By The Corrupt Bullion Banks!
Get a clue, Lizzy !!!!!
Lone Star,
+10000...........a serious effort.
They cannot afford for Gold to get legs and RUN...........
The last laugh will be on them, the physical will take off, supplies are already getting tight, premiums in Europe are well over 10%,and supply is drying up.
+++
You should know, since you were one of those pushing the price down, Turd.
Relax sweetheart, I'm long gold. I'm positive weak longs sold and strong shorts added yesterday.I also know that large funds took in metal in the sell-off adding to longs. It has been the cycle all the way up. The market has to wash out hot weak money before the deep pocketed fundamentalists come in and buy. The market is doing what it always does, culling the weak. Right now it is the weak smaller longs. When they give up, it will be the bullion bank shorts against the central anks and the macro fundamentalists like Paulson and Soros.
And then there is my options report, which is also bullish and accurate.
Options Report
Despite the downward spiral of futures today, options activity today was almost entirely bullish. Speculative funds came in putting on directional plays in August, December, and February. First the Feb 1450/1550 call spread was purchased approximately 1500 times. Next, a December condor centered around the 1500 area was purchased as well. Finally, after the washout in futures, and marking the low of the day. A spec came in and purchased the August 1200/1280 risk reversal. Market makers were happy to sell everything to the speculators as they were long volatility and slight nervous about the lack of bullish directing. At the end of day, volatility was higher, especially in the back months. The options market continues to behave in a bifurcated manner. The short dated months are dominated by ETF activity while the back dated months are dominated by large macro players.
That said, words and opinions dont make the market go up or down, but flame on if you must.
Liz
I'll give you credit for this, Liz. This is spot on.
The fact is that there was a real reason to sell yesterday. Europe’s austerity rhetoric trumped the U.S. Spendthrift philosophy. What would happen to gold if everyone stopped spending and sovereign debt was reduced like Europe hopes? That would not be bullish for anything, hence a selloff in gold is not unreasonable. But here is the catch…. If people stop spending, how do you intend to service the existing debt? So Europe is full of it. They want us to keep on spending while they tax their own populace and set up barriers to imports. The only thing the Europeans will be buying over the next 20 years is Bordeaux and BMWs.
You default when you cannot service your debt. Who would default? The public would default first to their bankers, which would cascade uphill to the banks and then the government. So, you must prevent individual defaults. How do you do that? Devalue, debase, depreciate. You go to the presses. So you see, Europe has to print money no matter what they tell us.
Thanks for your informative reply Liz, I'll bookmark your column. We need all the accurate info on PM movement we can get. Your first paragraph exactly reflects my experience as a goldbug since '05, and is also consistent with the info that Jim Sinclair and Dan Norcini put out at jsmineset.com.
We PM investors need this kind of overview......really helps on days like today.
One of the most helpful one-liners I've heard about gold: "Gold takes the stairs up, but takes the elevator down". I've forgotten the attribution, but it perfectly describes my experience as an investor, and the last couple of days.
You only mentioned weak longs selling in your original article, and it seems unlikely that they could move the price down that fast on their own. In other words, it is far more likely that the strong shorts (ie bullion banks) did most of the damage.
Right. but when weak longs ( fragmented, smaller funds wiht small VAR parameters) come sto sell telegraphing their trade, the smart money gets out of theway and tries to buy the exhaustion point. The strong shorts sell lightly but sloppily to trigger stops. and voila, a small sell order that must get filled triggers a massive book imbalance.
The Dealing banks look for signs of weakness before they press, just like a tell in a poker hand. You have more money than me, you see me blink, you go all in risking asymetrical money because my var is smaller and you read me. We had ways to combat this back in the day, by "coming in backwards", or bidding to one dealer and sellign to another to protect our true intentions. But black box funds are easy pickings for dealers.
Nothing happens immediately relevant to Metals during the event.
- Europe told G8 may use public funds for banks
As Eddie Izzard might say, "Quod the fuck?!", TD? How do you reconcile these two statements?One more thing, Lizzy. Isn't it interesting that ONCE AGAIN the price of the metals are:
> Silver: $18.66 -- SIX SIX which is where it is ALWAYS held ($16.66, $17.66)
> Gold: $1234.50 -- ONE TWO THREE FOUR FIVE and if it could trade in pennies it would be SIX
This has been going on for weeks...
Get a clue, Lizzy !!!!!
JP Morgan the person, and JP Morgan the entity would disagree.
Times have changed since 100 years ago.
JP Morgan is dead, and JPM is short gold.
JPM is also dead. As in the living dead. Much like the living dead, it seeks out and attempts to destroy things with real value, like brains (successful in your case), and gold.
Yep. This time it's different. New paradigm. Definitely.
We're so smart now that we could never fall into the same old trap of destroying our fiat currency system by over-printing and debasing it....could we?
John Bridges talks up gold while his firm sells it...
http://www.caseyresearch.com/displayGsd.php
It is good enough to understand one's enemies.
You don't need to agree with them.
So why quote JPM as an argument for reality?
We so-called "goldbugs" (translation: successful investors) are used to this.
I held on during the awful smackdown in Nov08, and bought many gold stocks at their rock bottom.
We are all used to being martyrs to the cause -- the "cause" in this case being increased personal wealth.......certainly a cause I can believe in.
BTW, newish gold investors should have a bookmark at www.jsmineset.com, and particularly read Dan Norcini's posts for a very experienced gold trader's take on daily PM movements. I assume more experienced goldbugs already know about it, but if not, they've kept me in the market during some hard times the past 5 years, to my great benefit.
When fuckers attack...stand your ground.
I was quite happy to pick up a Maple Leaf yesterday on sale. I'll look at getting more if the price keeps falling.
I'm sticking by this. Feel free to pile on if I'm dead wrong by Friday.
by Turd Ferguson
on Mon, 06/28/2010 - 16:10
#439487
I don't know if anybody really gives a shit what the fuck I say but here goes anyway.
The Evil Empire, upset that last Monday's takedown failed to produce the intended result, came back today with the exact same move, at the exact same time. Do not be surprised if they have a little more short-term success this week. In fact, in an attempt to ensure success, they will continue their interventions all the way down past 1225 this time. By sometime tomorrow or Wednesday, gold will trade all the way down to the 50-day MA, around $1220. At that point, things turn critical. If its enough to scare some weak hands, then you may get a serious rout down to 1200 and the technical damage on the weekly chart will be sufficient to keep gold penned in till Labor Day. However, after last week's action, I am optimistic that most longs are beginning to see through the manipulative powers of JPM et al. I suspect that anyone with the courage to start/add positions between 1220 and 1225 will be greatly rewarded. The move from there will blow through 1262 next time, set off all kinds of buy stops above 1265 and charge all the way to 1290 and then 1350.
The 1220 low that I predict is coming, probably within 36 hours, will be the last time you will be able to buy at that price for a long time to come, if ever.
But what do I know, I'm just a caveman...
i like the mix of technicals & market knowledge. But then I would say that, being long myself for the same reasons.
Couple of other things:
1) Long term - Gold in 2009-2010 is a linear chart - that's not a bubble. Bubbles are exponential and more.
2) Short term - Gold in EUR is very well supported. As soon as that goes flat on the day, bids come in. Keep an eye on EUR/USD.
3) USD will be a safe haven until it's not, which will be every time US economic data is released. Gold will spike each time. Am planning to be holding long positions over payrolls.
Good luck.
Caveman Thog (alias TF)
i know you read sinclair as i do. in case you haven't checked this yet...
http://harveyorgan.blogspot.com/
i hope it stops at 1200. gonad size of small investor soon to be measured.
I agree. That is why this week is so important.
If The Evil Empire fails again this week, we will not see 1220 again for a long time.
Yes, I check JSM about 10 times a day. I even have Jim's email address! (goofy smile and grin)
fwiw, 11 AM eastern and gold is holding its own...
(and get that shit eatin' grin off your face)!
Be patient. "They" will not give up easily this week. There will be several big pushes down in the next 24 hours to try to get down through 1220.
That said, if yesterday was a repeat of last Monday, today sure looks a lot like last Tuesday.
Gold is doing pretty well vs. equities as of noon today.
Gold gets taken down, the Bearing will do his part to take physical out of the system.
http://www.24hgold.com/english/news-gold-silver-did-the-g-8-push-us-closer-to-gold-confiscation-.aspx?article=2982031656G10020&redirect=false&contributor=Julian+D.+W.+Phillips
(for those who read the Rickards pdf linked to in the article)
Rickards and I have been on the same wavelength when it comes to applying theories from natural science to economics. If the study of complex adaptive systems weren't so popular the last two decades, I'd of thought he was reading my mind. I wonder how many others are also thinking along these lines...
Gold just went green. Come on silver.
You would think silver would have an easier time changing colors...
Maybe it's the lighting.
As first suggested on June 23, looks like the equity counter trend rally has ended.
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
Rally time! Gold up $4.40
Damn right...just came back to my office to a nice surprise
Again, don't get too excited just yet.
Last Tuesday was an up day, too. The lows of the week were put in Wednesday morning. Let's see what happens overnight.
stupor pooper
Don't get me wrong, I'm not trying to piss on anyone's parade. A move straight back up would greatly benefit my futures account. Just be cautious for the next couple of days.
I wasn't serious with that remark...I know what you mean.
This new update from Dan Norcini is exactly what I mean:
These buyers are stepping into bouts of weakness seeing it as an opportunity to acquire the metal cheaper realizing that the conditions which have led to gold’s rise are not getting better but are actually deteriorating. It is this fundamental reality which is inspiring the bulls to join the battle against the enemies of the metal who continue to rely solely on market technical factors generated by price action for their only weapon of attack. In other words, the entire bear argument in gold is derived SOLELY from the price action on the technical charts. If the bulls can call that bluff, particularly if they would force these paper loving shorts to stand and deliver the physical gold, the whole military complex of the perma gold bears would crumple overnight. The bullion banks are spitting into the eye of a hurricane and daring the storm to get them wet. If gold bulls can once again build on their gritty performance of today, just as they did last week, the gold shorts had better start looking for some damn good wet suits.
If gold proves too strong for the takedown, watch 'em kneecap silver soon.
Ah, but then gold will pull silver up. What's good for gold is good for silver the morning after.
yep, hoping that symbiotic relationship holds. i worry that their taking silver out pulls gold down with it - the back door to gold price manipulation.
seen it done so many times... i am waiting for the final PM showdown, and i think it's coming real soon. but as has been said here already, the banks won't be giving up the ghost easily. epic battle.
Good point about using the smaller market for silver to bring down the price of gold, but I also think this is like talking about the gravitational pull between two masses. When one mass is far greater than the other, you can more easily move it by using the leverage provided by the smaller mass. However, the larger mass is still the larger factor, which is partly why I see silver rising to meet gold more than I see gold falling to meet silver. As they both climb, the gains in silver should be significantly greater.
well, for my own selfish(?) reasons i hope you are right, thesapien. and over the LONG haul i agree. but this short-term stuff is nagging me (tho i must say that nagging suffices for the void my ex left me at this time).
big, don't let the short term stuff nag you! Find something else to be allowed to nag you!
Holding your gold & silver will be very wise. I am pretty sure we are right, and the PM bears are wrong.
Big Time.
"As money comes in, some of it goes staright into precious metals."
"2010 is going to be a rough year, we better have lot to drink"
Said the Bearing various times!
My favourite...P&F chart... http://hopersomianonna.blogspot.com/2010/06/cardigans-my-favourite-game-uncensored.html
Gold is hard cash, unencumbered by counterparties or un-repayable debt obligations the way paper currencies are these days.
Silver is also hard cash with the same properties accept its also a lot more rare and far more useful in an ever growing number of ways.
While gold is at about 1/2 of its inflation adjusted high, silver is at about 1/6th. The only two major exchange commodities I know of that didn't exceed their previous inflation adjusted highs during the last run up in commodities a couple of years ago. Why? They are supressed primarily by the primary bullion dealers and banking operatives for the US and UK Central banks. This is true even as more non-aligned Central Banks drive central banks in aggregate towards net consumers rather than net sellers of Gold.
Yes, the primary Bullion Derivatives operatives, and oddly custodian of the largest silver ETF, is in my opinion, working with the direction of the US and UK monetary authorities to hold gold and silver down and by having such huge positions in the silver and gold derivatives markets this bank plus the UK operations and one or two other US primary dealers use both silver and gold to derivatives to keep gold down.
Gold is and silver are not merely hedges against inflation, they are hedges against currency entropy, debasement and insecurity. The greater the counterparty obligations of a currency via debt become, the less valuable that currency becomes as all such debt becomes obviously not repayable at anything close to the current valuations of those currencies in terms of real goods. Whether we suffer an inflationary or deflationary inbalance, real money will be the natural go to repository.
When someone on the algo side or in the other fund sides or the sovereign nation / pension fund side finally gets there head out of the black box mentality, they'll see how this algorithm could work.
long gold in the derivatives
Take Delivery of all the Physical Silver you can
Silver is a Tiny Market
Taking delivery of substantial proportions of the available silver has a lot of leverage in the paper market
Silver is a Long Lever to Gold
Yeah, this is a hypothetical and I can not do it myself but it seems to be screaming, "give these bullion banks and Mr. Summers some of his own medicine and JP Morgan while your at it."
Where are the Hunt Brothers when you need them. Old school market players have all retired it seems. "Just let the computer do it all."