Gold’s Technicals Support Positive Fundamentals - 9 Key Charts

Tyler Durden's picture

Submitted by GoldCore

Gold’s Technicals Support Positive Fundamentals - 9 Key Charts

Gold is up 3.3% this week and headed for the biggest weekly advance since October as U.S. economic data was again worse than expected. This increased safe haven demand and the biggest exchange-traded product saw holdings rise to a two-month high.

Gold Prices/Fixes/Rates/Vols, February, 2014 - (Bloomberg)

Call options on gold, giving the buyer the right to buy June 2015 futures at $2,200 an ounce, surged 24% to a five-week high as prices climbed to a three-month high.

Gold in US Dollars, 2009 - February 2014 - (Bloomberg)

Gold has traded above the 100 day moving average since February 10, and is heading for a close above the 200 day moving average for the first time since February 2013.

A weekly close above the 200 day moving average and the psychological level of $1,300/oz will be very positive for gold and could lead to gold challenging the next level of resistance at $1,357/oz and $1,434/oz.

Gold is up 5.3% so far in February and 9.3% so far this year as concerns about emerging market markets, currencies, and the U.S. economy boosted safe haven demand.  Recent employment and sales data was poor. U.S. jobless claims reached 339,000 in the week ended February 8 and retail sales in the U.S. declined in January by the most in 10 months.

GOFO or Gold Forward Offered Rate (1989 - February 2014)

The fundamental outlook for gold remains encouraging as there continues to be robust physical demand for gold despite frequent sharp and sudden sell-offs in the paper futures market. Indeed, there are continuing stresses in the physical bullion market as seen in the Gold Forward Offered Rate (GOFO) rates. These are rates at which contributors, LBMA banks primarily, are prepared to lend gold on a swap against U.S. dollars.

Bloomberg Industries (January 2009 - February 2014)

Robust physical demand is also confirmed by the government mints and their coin and bar sales - many of whom had record sales in 2013. The U.S. Mint saw gold coin sales surge 63% to 91,500 ounces in January from 56,000 ounces in December. This was the highest monthly total since April, as sales continued to rebound from their August and September lows.

Chinese demand was quite weak in the last day or two but as ever with Chinese demand it is important to focus on the long term- the monthly and annual data, and fade out the daily noise.

After a massive, record year for Chinese gold demand in 2013, Chinese demand for gold in January was again staggering. SGE data shows that withdrawals from the Shanghai Gold Exchange vaults in January 2014 accounted for 247 tons. This is an increase of 43% compared to January 2013. It’s also more than monthly global mining production and an all-time record.

Bloomberg Industries (2011 - December 2013)

Gold is hemorrhaging out of the western banking system and flowing east to China and also to the increasingly important Asian precious metals hub in Singapore. Storage in Singapore is extremely attractive to the very risk averse, gold owning public. In just three weeks, we already have more bullion stored in Singapore than in Zurich and Hong Kong combined. Our research regarding storing gold in Singapore is the most widely downloaded and read research we have ever produced.

COMEX Gold and Silver Inventories (1999 - Feb 2014)

The flow of gold from west to east can also be seen in the COMEX gold inventory data which remains near multi year lows.

We are confident this trend will continue in the coming weeks, given the fragility of the western economies and banking systems. Indeed, it may lead to a COMEX default and a scramble to acquire physical gold amid surging prices.

Increasingly, gold investors are seeking the safest way to own gold and are avoiding paper gold and gold stored with banks in favour of fully segregated and fully allocated physical coins and bars, in their name, in safer jurisdictions.

Bloomberg Industries

Continuing rumblings of bail-ins and the risk of punitive taxes, levies and even confiscation of assets is contributing to the flow of gold from west to east. As is the ultra loose monetary policies of western central banks who continue to punish savers.

This week brought confirmation, if it were needed that loose monetary policies are set to continue. Doves Carney at the Bank of England and Draghi at the ECB have been joined by Yellen taking over at the Fed.

In her testimony to Congress, Yellen confirmed that she is set to be remain dovish and will continue with QE in the billions per month and maintain interest rates near zero. Yellen said the markets should expect the central bank to continue to follow the ultra low-interest-rate path laid out by her predecessor. She failed to outline the exit strategy of how and when the U.S. might be able to wean itself off the drug that is cheap money and debt monetisation.

It is important to note that while the U.S. money supply did not increase much in the final year of Bernanke’s stewardship of the Fed, it has accelerated as he leaves and Yellen takes over. Money supply in the form of M2 has surged in January and February and has doubled in pace so far this year.

Global Money Supply (M2) of U.S., EU, UK, Japan and China (1999- Feb 2014)

Despite the recent taper and a recent slight improvement in the U.S. annual trade and budget deficits, the U.S. financial position remains appalling as seen in the national debt. Then, there is also the small matter of the unfunded liabilities in the U.S. of between $100 trillion and $200 trillion.

The technicals of gold are increasingly aligned with the bullish fundamentals. Gold’s momentum and it’s holding above the 100 day moving average and now moving above the 200 day moving average are bullish indicators. As is the recent close above resistance at $1,294/oz. 

This is aligned with the still positive fundamental backdrop of significant macroeconomic, systemic, geo-political and monetary risk which is leading to significant demand for physical bullion globally.

Gold is good value at these levels. However, those considering accumulating gold should not assume that the correction is over as it may not be. There is still the potential of falls to test support at $1,180/oz and more range bound trading.

However, if the very positive demand and supply fundamentals are allowed to assert themselves then we should see gold enter a new bull market. Buyers are advised to dollar cost average into position to protect from further corrections and pullbacks and to always own physical bullion and have full title to it.

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Levadiakos's picture

Yawn. Bagholders' whine

CitizenPete's picture

Can you serve some baguette and cheese with that statement please?

AllThatGlitters's picture

I don't know about all those fancy charts.

All I know is gold has been going straight up when I look at it on the live chart.

Live Spot Chart:

Nice break higher!

bania's picture

thank god i loaded up on the juniors 2 months ago

BoNeSxxx's picture

Curious to me that one technical seems to be off... the premium for Phys at most dealers is as low as I have seen it since 2006.  

One would think that a physical squeeze in the markets would cause the premium/oz to be back near $100.

gmrpeabody's picture

I was expecting an attempt to route the metals today...

Maybe they are giving up? Are they just handing us a weekly close over $1300?

boogerbently's picture

After the large up for a ferw days, I switched from NUGT to're welcome.

RaceToTheBottom's picture

Some on WS already have their Phys and their new positions in paper, and now are goosing the Volatility.  Cause they are WS and manipulation is what they do

Sean7k's picture

There does appear to be ample supply, nice catch Bone. Now, how worried should people be that all the gold is going to one small, poorly defended country in China's backyard? Elites setting up shop? Or someone looking to swoop in for the theft of a lifetime?

gmrpeabody's picture

The next Bond movie... "Golden Bye".

eclectic syncretist's picture

We have lift-fucking-off, bitchez!

Muddy1's picture

And all I know is that gold isn't really going up in value, the fiat currencies are dropping in value, and it takes more toliet paper to buy Au and Ag.

TeamDepends's picture

With your finest SILVERware?  Look at it go!  Could this be $22 Friday?  Can you feel it?!?

CitizenPete's picture

Just think for the profit Goldman will make when they buy below 1000 later this year.

update: /sarc

forwardho's picture

Just think of the huge rush of capital into gold if it were to reach that hypothetical price.

Edit; glad for your edit.


Sufiy's picture

Gold Breaks 1,320: The Mother Of Short Squeeze Has Arrived

 Gold is sending its Happy Valentines to all Gold Bugs today and breaks $1320 on the massive short squeeze. Gold shorts will have their Blood Friday now. The real reason for this move is the realisation of the groundbreaking shift in the structure of the Gold market with the unprecedented demand of 2,181 tons of Gold from China in 2013. Janet Yellen testimony has opened the possibility To Taper The Taper andJames Rickards is calling for the Taper Pause in June. US dollar is going down very close to 80.00 level again. This level will be protected, but should the US Dollar break down below 80.00 Gold and Silver will go vertical towards $1,500 and $25 respectively.

Levadiakos's picture

You still holding that $50 silver?

MeMongo's picture

Got most of mine at $8. . Oh what's that you say?

JonNadler's picture

am surprised he's not bringing back the "if you bought in 1980 at 850 you got killed" line. For his ridiculous argument to work he has to assume everybody bought silver at 50

Harry Dong's picture


(And that $4 silver too)

Kaiser Sousa's picture

most dummys dont understand that as long as the phony paper price is not 3 digits it IS STILL UNDERVALULED....

been bying real money since 2007 -

SO WHAT YOU SAYIN'?.........

DormRoom's picture

Safe haven demand should be a  basket of currencies form nations with trade account surpluses, not gold.

Gold = hot money chasing another asset class, like the property bubble.  The gold bubble has been popping since 2011.  Unlike like <insert here>coin, you can't use it to escape capital control.  Gold as a safe haven is a historical accident, not destiny.

Charles Nelson Reilly's picture

Yeah dude..... A 5000 year bubble!?! A basket of currencies is a great idea, it's not like the lunatics who run the central banks of the world manipulate the value of their currency.

Honestly, what a dumb fucking post.

akak's picture

You know, maybe it's just me, but personally I wouldn't find a basket of turds any more appealing than any single turd.  I'm just funny that way.

Dr. Engali's picture

Yeah gold is a hot asset class in a bubble because 2% of the people own it..... idiot.

JailBank's picture

You got it dorm room. I am going to go trade my gold for Turkish Lira, Venezuelan Pesos, Yen, and some Thai Bhat. Nice sound basket.

DormRoom's picture

Basket of trading account surplus currencies only

johny2's picture

What I want to understand is with taper still on, how come price of PM are going up? The fundamentals only matter in the world free of London fixes, so what is the thing with the price of the paper gold? 

DormRoom's picture

A startup i know of is creating a Bancorcoin.  A crypto currency anchored to a basket of trading account surplus currencies. You get security, and a safe haven.

IridiumRebel's picture

Congratulations! You are our shithead of the day! Continue with your inane chatter and total nonsense.

MeMongo's picture

Quick! Buy some bit coin, oh wait :*(

Prisoners_dilemna's picture

Now would be a great time to buy cryptocoins.

Or do you prefer the Buy at the Top strategy?

Mongo is tarded?

Levadiakos's picture

He's trying to divert attention from his $1800 gold buy in

Dr. Engali's picture

The only reason why I care about gold's price is that it gets more expensive when I want to exchange fiat for money.

Sudden Debt's picture

June 2015 futures at $2,200


buying that is just stupid. Better buy something near price. $1500 is better and more safe

BandGap's picture

Sounds like gold's testicles are grabbing everyone.

Silver is the hammer today.

Caracalla's picture

Yeah, but if gold goes to $10,000 this year that will be one heck of a bargain!

douglas's picture

Reflecting on how significant up-days scare me more, here's a (slightly modified) post of mine from a down day in metals...

If at this stage you are not COMPLETELY convinced that PM's are highly manipulated to maintain control of a colapsing fiat monetary system then you probably have no business owning any precious metals besides personal jewelry - I would recommend that at this point you stop reading here, close out Zero Hedge and turn on MSNBC.  

If on the other hand you are awake and can see that not only are we waist-deep in manipulation but ever-nearer to a Global Monetary Colapse, then you should be COMPLETELY convinced that it's only a question of time before TPTB lose the ability to continue said manipulation.  If this is the case you should like me be rooting for the price of PM's to go down so you can acquire more. Rather than complaining about the manipulation, be thankful for it and continue to increase your holdings. After all, the day TPTB finally lose control, the world will become a much sadder place and comforts which we now enjoy will go away for the majority of the people of this world - in fact I suspect there will be significant loss of life...  Widespread wars could affect even those of us that have prepared for the worst.

Heres something to think about (coming from someone who is well over 60%-In PM´s, with physical holdings as large as 99% of any ZH´ers) ... The best part of all this is that even if we´re wrong about the current economic situation (which all evidence proves we are not) your life will be no worse for having a large horde of Gold and Silver, on top of that you'll sleep much better...  Note:  I hope its my paranoid instinct, but this current move up scares me more than any recent one, I´ve got a bad feeling that this could be ¨THE ONE¨...

Caracalla's picture

Yeah, but if gold goes to $10,000 this year that will be one heck of a bargain!

Car 54 Where Are U's picture

Why not by physical at a discount to spot? Shoot me an email and I'll show you how I have been doing it since last July...every month like clockwork!

F.A. Hayek's picture

If only Catherine and me had that money we gave that TV preacher...

John Paul George's picture

1st Time on site. Testing functionality...

BandGap's picture

Should read - teste's funkshunality

Welcome aboard.

jmcadg's picture

Right, who's not at their desk? Is it Kevin Henry? Get back to fuckin' work.

I want gold below $1250 and silver back under $20 by the end of the day.


JonNadler's picture

gold alaways seems to go up in NY snow days. It seems the boys can't smash gold from their ipads?

IridiumRebel's picture

I am investing in bitcoin. It's fool-proof.


UpdateThe amount of BTC that was stolen was calculated by Nicholas Weaver @NCWeaver – Computer Security Researcher, to be around:  4474.266369160003BTC that are with the value of about $2.7 Million.

It was just announced in a post by Defcon the Silk Road administrator (this post will be updated as soon as we get more info) -
Yes, what seemed to be an imaginary situation until not long ago, just became true, the silk road2  – the site who counted to be the security fortress of the deep web just has been hacked with its bitcoin stolen.  as he announced on the sites forums,  we pasted his post here:

Link to the original thread on Silk Road 2 Forums:  http://silkroad5v7dywlc.onion/index.php?topic=25091.msg491029#msg491029

=====Start Quote====

I am sweating as I write this.

Christmas brought grave news. I cannot adequately express how deeply honored I was by your unconditional support of my staff.

I do not expect the same reaction to today’s revelations. This movement is built on integrity, and I feel obligated to be forthright with you.

I held myself to a high standard as your leader, yet now I must utter words all too familiar to this scarred community:

We have been hacked.

Nobody is in danger, no information has been leaked, and server access was never obtained by the attacker.

Our initial investigations indicate that a vendor exploited a recently discovered vulnerability in the Bitcoin protocol known as “transaction malleability” to repeatedly withdraw coins from our system until it was completely empty.

Despite our hardening and pentesting procedures, this attack vector was outside of penetration testing scope due to being rooted in the Bitcoin protocol itself.

This attack hit us at the worst possible time. We were planning on re-launching the new auto-finalize and Dispute Center this past weekend, and our projections of order finalization volume indicated that we would need the community’s full balance in hot storage.

In retrospect this was incredibly foolish, and I take full responsibility for this decision.

I have failed you as a leader, and am completely devastated by today’s discoveries. I should have taken MtGox and Bitstamp’s lead and disabled withdrawals as soon as the malleability issue was reported. I was slow to respond and too skeptical of the possible issue at hand. It is a crushing blow. I cannot find the words to express how deeply I want this movement to be safe from the very threats I just watched materialize during my watch.

I’ve included transaction logs at the bottom of this message. Review the vendor’s dishonest actions and use whatever means you deem necessary to bring this person to justice. More details will emerge as we continue to investigate.

Given the right flavor of influence from our community, we can only hope that he will decide to return the coins with integrity as opposed to hiding like a coward.

It takes the integrity of all of us to push this movement forward. Whoever you are, you still have a chance to act in the interest of helping this community. Keep a percentage, return the rest. Don’t walk away with your fellow freedom fighters’ coins. DPR2 returned the cold storage. I didn’t run with the gold. But two people alone cannot move us forward. It takes an entire community committing to integrity – and though this crushing blow will not stop us, it sure is a testament to how greedy some bastards truly are.

Being a part of this movement might be the most defining thing you do with your entire life.

Don’t trade that for greed, comrades.

I will fight here by your side, even the greedy bastards amongst us.

This community has suffered great financial loss over and over again, and I am devastated that it has happened again under my watch.

Hindsight is already suggesting dozens of ways this could have been prevented, but we must march onward.

The only way to reverse a community’s greed is through generosity. Our true character is revealed during trying times.

If this financial hardship places you at risk of physical harm, contact me directly and I will do my best to help you with my remaining personal funds.

Now what.

Never again store your escrow bitcoins on a server.

Silk Road will never again be a centralized escrow storage.

This week has shown the collateral damage we can cause by being a huge target and failing in just one unforeseen area.

I am now fully convinced that no hosted escrow service is safe.

If I cannot trust myself to keep a hosted escrow solution safe, I cannot trust anyone.

Multi-signature transactions are the only way this community will be protected long-term.

I am aggressively tasking our devs on building out multi-sig support for commonly-used bitcoin clients. Expect a generous bounty if you have the skill to implement this.

Until then.

1. We will never again allow ourselves to be a single point of failure. We will never again host your Escrow wallets.

2. Vendor registration is closed while we regroup.

3. All listings on Silk Road are now No-Escrow (Finalize-Early) for 1-2 months while we implement multi-signature transactions and lobby for mainstream Bitcoin client multi-sig support.

4. All unshipped orders have been cancelled.

5. Vendors may link to other marketplaces on a trail basis until we launch multi-sig, then we will re-evaluate based on community input. We do not want to be a centralized point of failure, but we also do not want to lead our buyers into dangerous waters.

6. From this point forward DO NOT trust markets with centralized escrow. Use multi-signature transactions whenever possible, with trusted third parties as escrow providers.

Everything will be offline for 24-48 hours to minimize variables as we continue to investigate. The evidence we have below will be expanded based on our findings.

- ——————

No marketplace is perfect. Expect any centralized market to fail at some point. This is precisely why we must unite in the decision to decentralize.

We are relieved that our security procedures protected user identities, and that no servers were compromised. This was not a worst-case scenario: nobody will be getting arrested from this. Financial loss is terrible, but will not put all of us behind bars.

The details we have on the hacker are below. Stop at nothing to bring this person to your own definition of justice.

Humbled and furious,



EDIT: Fags downvote and do not explain. Grow a set and come into the ring of fight club. My condolences on getting your shit stolen.