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About Gold And The 200 DMA

Tyler Durden's picture


Many are doing their damnedest Ph.D.-best to somehow fuse economic theory and technical charting, and state that a breach of the 200 DMA in gold is indicative of imminent price collapse. And then there are facts. Such as this nugget from Stone McCarthy which looks at previous episodes of the 200 DMA breach and concludes based on severity of trendline penetration compared to average, that "this is just one reason we see strong potential for a rebound as participants reduce short exposure." So much for technicals.

Full note from SMRA:

For the first time since January 2009, gold closed below its 200-day moving average on Wednesday. Today's Chart of the Day puts Wednesday's -2.8% violation of this long-term smoothing line into perspective, by comparing it to the average violation of both the general and upward sloping 200-day average since 1999.


The slope of a moving average is something that many analysts fail to address when trying to determine potential turning points on a chart. Although gold has been working lower for more than 3 months now, the current upward slope of the 200-day line reinforces the fact that gold's long-term trend is still to the upside.


If we simply consider the general direction of the 200-day moving average since the start of the yellow metal's secular bull move in late 1999, gold's average distance below this line is -3.70%, with a maximum undercut of -19.2%. On the other hand, if we only consider gold's performance when the slope of the 200-day line is higher, the average violation is -2.19%, with a maximum undercut of -10.8%.

And SMRA's short-term preice implication conclusion:

On its own, gold's -2.8% violation of the 200-day line on Wednesday has already surpassed the average violation dating back to 1999. Short-term, this is just one reason we see strong potential for a rebound as participants reduce short exposure.

Lastly, absolutely none of this matters one iota when the central banking cartel resumes printing.


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Thu, 12/15/2011 - 08:50 | 1982598 holdbuysell
holdbuysell's picture

The last I checked base money has continued to grow.

Thu, 12/15/2011 - 09:01 | 1982607 Harlequin001
Harlequin001's picture

Really, who gives a shit?

Central banks are buying, so who's selling?

Gold buyers see no fundamentals in paper money and in that nothing has changed, so since when does a breach of the 200 DMA make any difference?

Thu, 12/15/2011 - 09:02 | 1982625 trav7777
trav7777's picture

it pretty much slashed right through it, never a good sign

but life could be worse, you could be a silverbug

Thu, 12/15/2011 - 09:20 | 1982639 Harlequin001
Harlequin001's picture

If silver drops through $27 I'll be changing more gold for silver, and more at $25, $20 and so on.

I don't have any issues with holding silver...

but it will be nice eventually to be back 90% gold 10% silver and without the volatility once the price has popped...

Thu, 12/15/2011 - 09:37 | 1982731 tooktheredpill
tooktheredpill's picture

gold, silver, up, down, techicals, who knows. I remember being in NY back in April and being bombarded endlessly with mindless ads where Joe Bloggs and Mary Jones are buying gold and then so should you. I couldn't help but think they were trying to squeeze the last little bit out of the market.

Thu, 12/15/2011 - 09:56 | 1982806 Harlequin001
Harlequin001's picture

Who gives a shit about technicals in a manipulated market. My only interest is that silver is more volatile, so buy it when markets are down and move to gold when they're up.

Simple stuff, really...

Thu, 12/15/2011 - 10:31 | 1982971 French Frog
French Frog's picture

Looking at the "% below the uptrending 200ma" graph, there are also 3 spikes to -5% and 1 to -10% since 1999 so rather than taking an average of -2.8% for entry, i would scale-in and not be all-in at these levels.

It's all very well looking at the -2.8% line, but maybe a 1/3 entry here and another 1/3 entry at -5% (if seen around 1538) and finally keeping a last 1/3 for the -10% scenario (currently at 1457).

Knowing how easily paper shorts can be issued by those who want the price of gold down and bearing in mind that "at the moment" it is easy to frighten the weak long hands by pushing the argument that there might not be any 'real' QE coming out of the ECB, i would be a bit conservative at these levels.

Also bear in mind that the -5% (1538) very nearly coincide with the last low at 1531 + the current trendline from the 2008 lows is at 1534; that's a lot of reasons why we're likely to visit this area before another move up but a break of that and the paper producing short machine will go into overdrive and we'll likely see the 1465/75 area.

Thu, 12/15/2011 - 09:39 | 1982741 Smiddywesson
Smiddywesson's picture

If silver drops through xyz I'll do absolutely nothing.  All of the misteps and bad luck I have had over the last few years has been responding to anything these monkeys do to the PM markets.  I did ok trading paper, and I think I know the game well enough to pick up some fast cash during the pm shorts to come, but we seem close enough to end game to focus exclusively on well timed stacking of physical.  (No offense intended to paper traders)

Thu, 12/15/2011 - 09:16 | 1982659 SRSrocco
SRSrocco's picture


During the takedown yesterday in silver, Apmex sold over 40,000 American Silver Eagles.  I would assume if we include all the other large online precious metal dealers like Tulving and etc, probably at least 100,000 of these went out the door.

The more the paper price of gold and silver fall, the more phyiscal buying comes in.  I am simply amazed at the lack of understanding by those who should know better on what money really is.  One fella told me that a Federal Reserve Note is backed by the GDP of the country.  As you can see, there will be a lot of Assumptions flushed down the toilet along with pension plans, 401k's, IRA's, CD's, Bonds and etc when the US Dollar finally dies.

Technical Analysis is dead.  Silver should be trading at least at $150+ an ounce.  To say it was overbought at the end of April of this year at $49.50 is silly to say the least.  In my book its still a huge balloon held 500 feet underwater.

Again, it takes patience to watch the Clowns like Gartman on CNBC regurgitate rubbish that GOLD IS IN A BUBBLE.  Gartman needs a goat milk enema as it looks like the stress of bending over to his paper masters is taking a toll on his body and appearance.

Lastly... the US Dollar does not have a lot of time on its side.  This may be one of the last greatest opportunities to finally rid oneself of worhtless paper assets and put them into physical ones before the PHAT LADY SINGS.

Thu, 12/15/2011 - 09:19 | 1982672 Harlequin001
Harlequin001's picture

I agree, Op Twist is about the last or near to the last means of creating money without visibly printing it.

Two months maybe three before Bernanke has to either print or suffer a liquidity induced collapse of his paper and then bang goes the pm prices.

When rates rise and Bernanke can no longer print there will be no more cheap cash with which to short pm's wheat, corn or any other commodity and then you'll see prices fly.

Until then, I couldn't give a stuff about any 200 DMA, never did...

Thu, 12/15/2011 - 09:49 | 1982779 Smiddywesson
Smiddywesson's picture

LOL SRS, you just called the end of the USA.  Timing a 37 year collapse is difficult enough, but it's impossible here because the Bernank can print just as much as the thirsty banks need to keep things staggering along while he and his counterparts stack gold.  Yes, it's all going to collapse, but it ain't over yet.  There's at least one or two pm smack downs left in the system before it collapses.  At the very least.

Thu, 12/15/2011 - 10:33 | 1982976 trav7777
trav7777's picture

wow...a whole 100k oz in a sea of 800Moz *annual* production.  You bugz better get busy

Thu, 12/15/2011 - 10:45 | 1983025 Pladizow
Pladizow's picture

What the fuck is wrong with you?

Thu, 12/15/2011 - 10:57 | 1983078 oddjob
oddjob's picture

His barrels of oil are blocking his driveway, its a blight on the neighborhood.

Thu, 12/15/2011 - 15:43 | 1984319 akak
akak's picture

What the fuck is wrong with you, Trav?

The allowable length of a single ZeroHedge post is not sufficient to answer this question.  But if I may grossly condense the answer:

  • A collectivist mindset
  • Fear and hatred of darkies
  • Jealousy for having been proven wrong on silver
  • Self-loathing for having prematurely sold his silver
  • Blind, sweeping hatred in general
  • A bitter and execrable personality
Thu, 12/15/2011 - 11:03 | 1983101 tmosley
tmosley's picture

*Implying that ASEs are the only form of silver.

*Implying Trav is an idiot.

Thu, 12/15/2011 - 09:14 | 1982665 Sudden Debt
Sudden Debt's picture

Not if you're living in Europe! :)

Silver eagles still selling at 32 euro per piece.

And I don't sell. I just wait. and buy. and wait. and buy. and wait....

Thu, 12/15/2011 - 11:06 | 1983119 Ratscam
Ratscam's picture

just bought some in CH for 30. i guess the VAT makes the difference :)

Thu, 12/15/2011 - 11:53 | 1983335 XitSam
XitSam's picture

How popular are Silver Eagles outside the USA?

Fri, 12/16/2011 - 04:38 | 1986256 Ratscam
Ratscam's picture

not so much the silver eagles rather the canadian maple leaf and the austrian philharmonic - very much in favor but definitely never a problem to buy here within two days from any swiss bank

Fri, 12/16/2011 - 09:53 | 1986559 XitSam
XitSam's picture

Thanks, Rat.

Thu, 12/15/2011 - 09:34 | 1982718 clones2
clones2's picture

Some of you gold bugs need to chill the hell out. :-)

The FACTS are that Gold did slice right through the 200dma.  And if you look at the chart of Silver and Gold - you can see two perfect head and shoulder breakdowns.  Both have been nailed hard the past 4 months...  This stuff does trade on technicals as well, and if you look at some of these textbook moves on the chart - thats hard to argue.

Also, I really haven't seen anyone calling for an "imminent collapse" because of the 200dma breach.

Note: Silver and Gold are GREAT long-term investments - I do not debate that.  But we have also seen a major bull run the past few years - and without major money printing or QE before an election in 2012.  There may not be much reason to bounce hard from these levels.

Wouldn't be surprised to see another 10% fade and consolidation the first half of 2012... 

Fundamentally... I am on your side!  Technically - I'll wait a little bit to buy more.

Thu, 12/15/2011 - 10:38 | 1982998 trav7777
trav7777's picture went thru the 200 like it wasn't there.  Expect a retest and then place your bets

Thu, 12/15/2011 - 10:50 | 1983040 Harlequin001
Harlequin001's picture

The European banking system is in full collapse, why are we even discussing a 200 DMA?

Whatever happens, I'm still going to hold just as much gold and silver, it will just be worth more when I convert it back to US dollars and spend it.

I'm chilled...

Thu, 12/15/2011 - 15:32 | 1984361 akak
akak's picture

The European banking system is in full collapse, why are we even discussing a 200 DMA?

Agreed.  One (rationally) does not alternately cancel and then repurchase their home insurance policy based on their daily estimation of the risks of fire or flood, nor does it make sense to suspend one's fire insurance policy in the midst of a raging wildfire merely because one suspects that the firemen might be on their way.

Thu, 12/15/2011 - 09:03 | 1982631 longonSpam
longonSpam's picture

This is a massive new short by -somebody- if I ever saw one. Anyway thanks Jamie, thanks Lloyd. BoughtTFD Bitchez!!!

Thu, 12/15/2011 - 10:03 | 1982841 Smiddywesson
Smiddywesson's picture

It takes a lot of effort for them to push down gold and silver on their own, but during a general market sell off, they are pushing PMs in the direction of the current, so the sell off is to be expected.  This will only increase as the markets sell off, delighting us in our new discounted pm purchases and testing our emotional fortitude with respect to our existing cost basis. 

This is a game of chicken, in which the Bernank only prints enough to stall and buy gold, while being pressured by the impending collapse to pull the pin and revaluate gold and then print like crazy.  Sooner or later he has to make his move.  Hang tough everybody, when gold is revalued, it won't matter what your paper gains or losses were back in December, they will be only a small fraction of your gains under the new price.   

Thu, 12/15/2011 - 10:14 | 1982896 longonSpam
longonSpam's picture

Fuckin A. Like anybody is going to care whether they bought at 1600 or 1700 when it's over 10 just to begin, every Eagle counts though.

Thu, 12/15/2011 - 11:40 | 1983286 WhiteNight123129
WhiteNight123129's picture

Well the tea leaves tell us that US dollar is a safe bet. Sell your Gold buy Treasuries!!.... Just kidding.


Thu, 12/15/2011 - 08:52 | 1982599 GeneMarchbanks
GeneMarchbanks's picture

'Lastly, absolutely none of this matter one iota when the central banking cartel resumes printing.'

BTFD 'nuff said.

Thu, 12/15/2011 - 09:06 | 1982644 youLilQuantFuker
youLilQuantFuker's picture

Amen. Who give a sit about intraday swings or even monthly price variations.

We all know where this bish is headed.

Thu, 12/15/2011 - 08:52 | 1982602 SwimmininNawlins
SwimmininNawlins's picture

Maybe I'm just not getting it, but how can gold go down when everything I read points to a global economic collapse?  It doesn't make sense to me.

Thu, 12/15/2011 - 09:17 | 1982671 fonzanoon
fonzanoon's picture

Thanks for the link GeneMarch....I live in the U.S. So according to that link if I have money in useless dollars and believe in gold (which I do) I am about to be rewarded with an incredibly strong dollar which would enable me to buy more gold at lower prices...even though the U.S has been the worst offender with the printing press? It baffles me. 

Thu, 12/15/2011 - 08:58 | 1982614 WonderDawg
WonderDawg's picture

Deleveraging/liquidating leads to a collapse in all asset classes in a scramble for cash.

Thu, 12/15/2011 - 09:05 | 1982640 SwimmininNawlins
SwimmininNawlins's picture

So this means it is a good time to buy, correct?

Thu, 12/15/2011 - 09:06 | 1982643 Harlequin001
Harlequin001's picture

Basically yes, if you can handle the short term loss...

Thu, 12/15/2011 - 09:12 | 1982661 WonderDawg
WonderDawg's picture

I'm buying a little here and there on the way down. If it gets below $1000 I'll start loading up. That's my strategy, but everyone has their own ideas.

Thu, 12/15/2011 - 09:25 | 1982689 Harlequin001
Harlequin001's picture

I'm fully invested in gold and silver and have been for years, swap between the two when I need to, and more so at times like this.

If you're waiting for $1,000 I don't think you'll ever be fully invested, which means that you'll always lose out, its only the scale that matters...'

Thu, 12/15/2011 - 09:39 | 1982738 WonderDawg
WonderDawg's picture

Like I said, we all have our own ideas about what's going on, and I put mine out on the table. Fortunately, I do have the ability to change my strategy if circumstances dictate. I try to stay flexible and open-minded.

Thu, 12/15/2011 - 11:02 | 1983099 Harlequin001
Harlequin001's picture

'I try to stay flexible and open-minded.' - that is the key, isn't it...

Thu, 12/15/2011 - 10:11 | 1982881 Smiddywesson
Smiddywesson's picture

So this means it is a good time to buy, correct?

Better than yesterday, but not as good as tomorrow, until there is no tomorrow, and then it's too late to buy.

Sorry, not trying to be cryptic.  There will be better PM prices in the future as conditions worsen, but you can't time when Bernanke decides to revalue gold and then print, so if you wait you might miss the boat.   Everyone should have a core position against the coming collapse/revaluation, both of which can come at any time.  Additional funds should be kept ready for lower prices as the market sells off and drags down PMs.  Sorry, nobody can tell you how low prices will go before Bernanke makes his move, but if they unleash all their margin hikes, you can bet they are using them because they won't need them soon.  In that case, buy everything you can because the revaluation of gold is coming.

Thu, 12/15/2011 - 09:16 | 1982666 Sudden Debt
Sudden Debt's picture

a collapse of the paper assets. physical PM's now sell with a mayor premium.  

Thu, 12/15/2011 - 08:59 | 1982616 Quintus
Quintus's picture

Because the price of Gold, and Silver for that matter, is nolonger determined by old-fashioned concepts such as physical 'Supply' and 'Demand'.  Rather it is set based on how many paper contracts (99% of which are cash settled) some guys on Wall St. decide to supply.  Producers and Consumers of the actual metal have almost no say in what the price level is.

It's rather as if the price of Oil was set based on the supply and demand of something else completely, like Beans.  Want to lower the price of Oil?  Just flood the market with beans et voila.  There may be screaming demand for Oil and not enough supply, but the market says beans are being sold in great quantity, therefore Oil goes down.

It's nuts, but that's how the metals markets work these days, and it explains why the big price declines normally happen when Comex paper is open and the London physical market isn't.

Thu, 12/15/2011 - 09:57 | 1982660 scatterbrains
scatterbrains's picture

It's just as Tyler said, the fed can't print until 900ish SPY.  A good indication of how gold is not in a bubble is the fact that traders are buying paper i.e. stocks and bonds anticipating the print moment but not doing the same with gold. If gold is bubbly shouldn't they be buying it as well?

If anything this suggests that paper is in a bubble and pm's are discounted/undervalued.


Thu, 12/15/2011 - 09:03 | 1982629 Peter Pan
Peter Pan's picture

If you focus on the short run, nothing makes sense. It's only against the backdrop of the long run that true patterns and lasting outcomes emerge. We often see lousy teams beat the best teams, we often see donkies win horse races and we often see red coming up 10 times in a row on a roulette table. Eventually we realise that these are simply statistical possibilities or straight out manipulations. Gold seemingly "died" between 1980 and 2000 but did it really? No, because we now know the truth of what was really perpetrated by a fiat/credit hypnotised society and a manipulative Fed/Banking system.

You can either trust in government to give your fiat dollars continued value, or you can trust in the umpteen thousand replays of history that have seen paper in all its forms bite the dust and gold survive without the assistance of government.

 At the end of the day go with whatever makes you comfortable as long as you are prepared for the loss.

Thu, 12/15/2011 - 15:41 | 1984390 akak
akak's picture

You can either trust in government to give your fiat dollars continued value, or you can trust in the umpteen thousand replays of history that have seen paper in all its forms bite the dust and gold survive without the assistance of government.

Very nice!

It is a historical lesson that the clueless contemporary deflationists, however, cannot ever seem to absorb --- to their eventual and inevitable loss.

Thu, 12/15/2011 - 10:40 | 1983008 fredquimby
fredquimby's picture

Then continue here ....The MF Global Chronicles.....

Thu, 12/15/2011 - 08:57 | 1982612 My Taint
My Taint's picture


Thu, 12/15/2011 - 09:00 | 1982619 Downtoolong
Downtoolong's picture

When Gold is roaring  skyward everyone talks and brags about their strategy to BTFD. Then when TFD happens they write dissertations instead, questioning what it means. Get some balls. Just buy it already.

Thu, 12/15/2011 - 09:20 | 1982676 AmazingLarry
AmazingLarry's picture

Egzzzaktly! Just buy it, but don't eat it, already and STHU.

Thu, 12/15/2011 - 09:00 | 1982620 westerman
westerman's picture

The problem is that paper gold can be priced at any price and doesn't follow the laws of economics. It can be created out of thin air and can disappear when the banksters want it to. The price of gold could go to 100 000 or 5 if CME wanted to.

Thu, 12/15/2011 - 09:11 | 1982655 mogul rider
mogul rider's picture

that's an opportunity - not a problem

Thu, 12/15/2011 - 09:21 | 1982683 fonzanoon
fonzanoon's picture

Westerman to your point no one I know own's physical. But a lot of people I know started speculating with gld and slv. If slv can be bought right now for 28 bucks but actual SE in a store cost 32 bucks. It seems that until armageddon happens the paper guys stand to do better. Is this correct?

Thu, 12/15/2011 - 09:01 | 1982622 You Lie
You Lie's picture

What a crock of shit.   Maybe you had better go look at the chart in 2008.   It violated it while it was sloping upwards.    Then it proceed to further collapse and it sloped downward for a year.   But not at first!

This site is becoming more and more untrustworthy.

Thu, 12/15/2011 - 09:10 | 1982653 WonderDawg
WonderDawg's picture

Still a great site, you just have to sort through the bias. Gold will never be disparaged here, even if it's tanking. If PMs go down, it's manipulation, if they go up, it's going to the moon. Take the information provided, do your own analysis, and reach your own conclusions.

Thu, 12/15/2011 - 09:13 | 1982662 mogul rider
mogul rider's picture

gold pumpers are disparaged every day here. It's just that there's too many of them to disparage.


do you own DD is good advice

Thu, 12/15/2011 - 09:52 | 1982754 Widowmaker
Widowmaker's picture

That bias has long lept off this site. When shoe shine boy is buying gold you sell.

This site shoeshiners and even dipshits I know hold gold. These are the vast majority of you.

It's 100% emotion driven garbage.

Gold trade due for a correction down, and you ain't seen it yet.

Gold bugs don't sell, and that is fine too.

Thu, 12/15/2011 - 09:59 | 1982821 tmosley
tmosley's picture

My shoeshine boy (not to mention Trav) is stockpiling dollars.

Contrarian indicator if I ever saw one.  The dollar is the biggest bubble in AMerica, bitchez.

Thu, 12/15/2011 - 10:42 | 1983012 trav7777
trav7777's picture

let's see here...I called silver a short at 49.  SPECIFICALLY advised caution and gave a techical reason.

You laughed and called me stupid for that.

Here we are with Silver in the fucking TWENTIES, you fuckin bitch, and you are behaving as if it were really in the 60s!

Your approach seems to be to pretend that REALITY DOESN'T EXIST.

REALITY is that YOUR predictions FAILED MISERABLY, YOU WERE WRONG, and YOU cost a lot of people a LOT of money.  WHOEVER followed your shameless cheerleading on the runup from the 30s to 50 LOST MONEY.

That is a FACT, you fking BITCH.  So is that the DOLLAR has done BETTER than silver since several of us called short.

The truth is that YOU are the biggest fade around here.

Thu, 12/15/2011 - 11:03 | 1983102 oddjob
oddjob's picture

Well Trav your down 20%+ with your 'oil to da moon call', I guess your losses could be considered noble, or just fucking dumb.

Thu, 12/15/2011 - 11:07 | 1983121 tmosley
tmosley's picture

The shoeshine boy here REALLY likes dollars.

Of course, shoeshine boys can't be expected to understand that it is impossible to time some things, even if you get lucky sometimes, nor does he understand the concept of the "average" cost.  Shoeshine boys like him can't be expected to remember, or to have even HEARD of past price movements, and will naturally think that prices can only move in one direction, and that any move against the long term trend makes the people who have successfully played that trend "wrong".

The moral of the story--don't listen to shoeshine boys.

Thu, 12/15/2011 - 09:16 | 1982667 junkyardjack
junkyardjack's picture

Prices never go down, what part of that don't you understand? 

Thu, 12/15/2011 - 09:04 | 1982636 chinaboy
chinaboy's picture

Such a trader dominated, rule based market. I guess the future of comex gold is like nymex WTI. It will be a secondary index to some international market.

Thu, 12/15/2011 - 09:08 | 1982637 Paul Thomason
Paul Thomason's picture

Using technical analysis to refute the value of technical analysis?. A novel approach.

Thu, 12/15/2011 - 09:07 | 1982641 mogul rider
mogul rider's picture

Gold is a disaster!!!


Excuse me = my bus is backing up............




(PS - the Gartman short works perfectly. Thanks dipshit)

Thu, 12/15/2011 - 09:07 | 1982649 vegas
vegas's picture

Trading off the 200 DMA. And they pay these guys how much?

Thu, 12/15/2011 - 09:08 | 1982650 youngman
youngman's picture

For me this is a great buying opportunity.....this a a strange event.....not fundimental driven...some banks...some doing this to the long term ..and that is like 1 month will win......and  winning is the new thing

Thu, 12/15/2011 - 09:09 | 1982651 mogul rider
mogul rider's picture

I love technical analysts.

Kinda reminds me of the network techie screaming that the network is being hacked and he can't stop it

I reach over and unplug the router.


Beware of geeks with an idea

Thu, 12/15/2011 - 09:12 | 1982656 Peter Pan
Peter Pan's picture

The question is not WHO IS SELLING but WHO IS BUYING at the moment? Can someone enlighten us?

Thu, 12/15/2011 - 09:38 | 1982733 hungarianboy
hungarianboy's picture

Hedgefunds and banks are selling. Central banks are buying

Thu, 12/15/2011 - 09:38 | 1982734 hungarianboy
hungarianboy's picture

Hedgefunds and banks are selling. Central banks are buying

Thu, 12/15/2011 - 09:39 | 1982739 Fred C Dobbs
Fred C Dobbs's picture

I heard Max Keiser say on Alex Jones's radio show that people are selling GLD and SLV and that is why gold and silver are going down.  

I am going to buy another ounce of gold today.  

Thu, 12/15/2011 - 09:41 | 1982746 youngman
youngman's picture

And more importantly ..who is buying the paper...and who is buying the real metal....the metal wins in the end...

Thu, 12/15/2011 - 09:13 | 1982663 razorthin
razorthin's picture

And, the head and shoulders breakdown is at its target.  Go fukk yourself manipulators.  We'll get your fukking equities soon.

Thu, 12/15/2011 - 09:20 | 1982675 bobert727
bobert727's picture

Ah the 200 Day moving average...why because its a nice round number? Because it sounds good saying "The 200 day moving average"?

Why not the 192 day? or the 187 day? or the 207 day?

Most people that throw out this kind of thing not only don't know what they are talking about but have not looked back historcally to see if it even means anything

The fact that all the talking heads on CNBC talked about it probably means it has little significance




Thu, 12/15/2011 - 09:22 | 1982686 razorthin
razorthin's picture

Since there are still only traders in the pit and at the prop desk; and traders use technical analysis, not fundamentals; and because they've all learned and come to accept that the 200 DMA means something, it does.

Thu, 12/15/2011 - 10:43 | 1983015 Smiddywesson
Smiddywesson's picture

Since there are still only traders in the pit and at the prop desk; and traders use technical analysis, not fundamentals; and because they've all learned and come to accept that the 200 DMA means something, it does.

Absolutely, and even if one believes that technical analysis has absolutely no predictive value, it measures precisely what the market is doing.  How something that measures what the market has done in the past can be useless, or how one can trade without making such an assessment, is beyond me.   However, if someone wants to criticize some aspect of technical analysis, say candlestick patterns, and say they don't work, then that's a valid issue, but to say technical analysis in general is worthless is utterly ridiculous.  It is of great worth in assessing what is going on.  It's predictive value depends on the market and how you use it.

Thu, 12/15/2011 - 09:27 | 1982695 Hannibal
Hannibal's picture

Are we talking about  "paper gold"  here?

Of course!

Thu, 12/15/2011 - 10:50 | 1983049 bill1102inf
bill1102inf's picture

Yes, the super leveraged thing that determines what you can sell your physical for if you can find a buyer. Paper Spot - x% = how many fiat tickets you receive.

Thu, 12/15/2011 - 09:30 | 1982707 hungarianboy
hungarianboy's picture

gold to 1350

Thu, 12/15/2011 - 09:33 | 1982708 Smiddywesson
Smiddywesson's picture

Lastly, absolutely none of this matters one iota when the central banking cartel resumes printing.

On 11/21/2002, the Bernank laid out the five things a central bank can do to defeat deflation after interest rates are pinned at zero.  He's already done the first four things.  Option five reads as follows:

"...there have been times when exchange rate policy has been an effective weapon against deflation.  A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-1934, enforced by a program of gold purchases and domestic money creation.  The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly...The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market."

The components of this fifth option are:

1.  Gold purchases (and in the case of the 30's, confiscation)

2.  Devaluation of the dollar by an upward (surprise) revaluation of the gold price.

3.  Then, a rapid program of printing.

Notice that we have printed only as much money as necessary to kick the can.  If central banks really intended to print our way out of this then what are they waiting for?  The only long term measure being taken has been they are buying gold, so step one above is a check.  When central banks have enough gold, gold will be revaluated THEN you will see aggressive printing.  You won't get any warning, it will all be sprung on you at once.  Gold bugs are not going to see the kind of printing they have anticipated until it is too late for you to buy gold at reasonable prices.  Gold will be revaluated and then you will see real printing.  In fact, as I have said before, we are likely to see the first unrestrained attack on gold where they use all remaining margin hikes and tricks immediately prior to the revaluation announcement, because at that point, the price suppression sceme will be over.  They will grab as much gold off the market as possible and not care about decoupling the paper price from the physical price because the jig will be up.     


Thu, 12/15/2011 - 09:51 | 1982785 eddiebe
eddiebe's picture

Smiddy, thanks for explaining (again). You've got it spot on right.

Thu, 12/15/2011 - 09:56 | 1982804 longonSpam
longonSpam's picture

That would assume the Bernank does a 180 and tries some transparency for a change AND that there's still physical reserves at the NY Mint etc. At this point I wouldn't be surprised if he dumped not only ours but Germany's & everybody else's as well. Even if it is all there best guess by anyone was revaluation at post QE2 M1 & M2 was in the neighborhood of $33k/oz just to satisfy foreign holdings. Even Robo got that memo so how does this 'option 5' work in this environment? I'm all for nuclear Holocaust & other fun stuff but how is this going to come to pass?

Thu, 12/15/2011 - 11:17 | 1983162 Smiddywesson
Smiddywesson's picture

I don't have a clue.  There are too many variables.  Even if we could try to figure out how many US dollars are out there, and how much gold we have in reserves, and extrapolate how high they have to ramp gold prices, we still wouldn't know how defaults affect the equation, or how many dollars they are willing to print when the printers start rolling.  All we know for sure is this was his game plan in 2002, he's been following that gameplan to the letter, and central banks have been buying gold all over the world, all at the same time while titanic efforts are being made to suppress gold prices. 

I wouldn't call springing the trap and revaluing gold transparency.  Quite the opposite, it's a massive deception.  How is it going to come to pass?  I don't know.  The world is a lot more complex than it was when Strong/Montague/Schacht played this game post WWI, and WWII still happened.  Inasmuch as Russia, China and the US have more young men than they have jobs, and lots of paper will be destroyed in the transition (including our household net worth) it will probably end in a war.

As for the gold itself.  Central bankers knew about the problems with the dollar since the late 60s.  That's why they closed the gold window and invented the petro dollar, to buy time.  Somebody has been buying for a decade, long before there was any public recognition that there were problems in the banking or housing industry, and it wasn't just the gold bugs.  It's my belief that the biggest central banking institutions have been buying for years, and the reason there were no audits at Ft. Knox is there's more gold there than could be explained.  I think when thing went bust after the tech stock bubble, Greenspan started the transition.  He reinflated the bubble and they bought up all the gold they could so they could sell that gold to lesser central banks during the period leading up to the collapse.  In other words, they kept the game plan a secret between just a few powerful insider central banks and bought straw hats in January, not July.  That's why, with almost complete dominance of the PM markets, gold still managed to climb 20% a year for a decade.  Does anyone today think they couldn't have crushed gold in 2006?  They were buying.  That's why today central banks will tell you what they bought and when (if you can trust the numbers), but where they buy is a mysterious secret.  That inoccuous bit of information wouldn't be a secret if they could tell you.  The reason they can't tell you is they are buying from the conspirators like the Fed.  That's why there isn't panicked buying by central banks, they control the rate of their purchases by agreement (something they have always done) but that agreement is enforced by access to gold sold to them by the Big central banks that stockpiled gold in anticipation of the failure of the current system.  Central banks are buying gold that was removed from the market over the last ten years.     

Thu, 12/15/2011 - 11:58 | 1983363 longonSpam
longonSpam's picture

Thanks for taking the time for a spot on analysis, my assumption would involve at least some measure of honesty and actual market dynamics and the next time anyone does that will be the first time. It just comes back to the same thing day after day, year after year that is the reason we're all here. There has to be a debt jubilee like for real for everybody and duh trustbusting the likes of which the world has never seen. I can't even pay attention to the action anymore no matter how stupid, riddled with fraud and opaque none of it matters and we're all going down with the Titanic to a huge extent.

Thu, 12/15/2011 - 11:03 | 1983104 SIOP
SIOP's picture

Good post Smiddy.  I remember Bernanke saying these things and I remember then wondering how they can possibly confiscate gold, in this case there is no need to when the price can be manipulated easily.

Interesting post and makes me think and want to do some more research of my own.  Thanks. :)

Thu, 12/15/2011 - 12:12 | 1983441 XitSam
Thu, 12/15/2011 - 14:10 | 1983981 Arcturus
Arcturus's picture

In 1933-34 we were on the gold standard and price was determined by the gov't. Please explain to me how the gov't can revalue gold worldwide today?

Thu, 12/15/2011 - 17:38 | 1984995 Smiddywesson
Smiddywesson's picture

Oops, should have covered that.

Easy, just reverse the process.  The prices of gold and silver have been compressed like a spring since the 30's, so the twin keys to "revaluing" gold are already baked into the cake, they can simply let go of the price and gold and silver prices will skyrocket naturally.  They can also use their resources to manipulate prices higher rather than lower, because it will now be in their self interest to have high prices.  The mechanism to do so would be to artifically flood the market with buy orders, something I think they can handle.  One truely awful thought I had was they might try to keep production off the market by somehow restricting the miners through an international environmental agreement.  There are lots of ways for them to get what they want with gold only at $1600.

We are also ignoring the probably scenario that we are going onto some sort of a gold referrenced system in which central banks could fix the price of gold.  Too many variables to guess.

Thu, 12/15/2011 - 20:07 | 1985576 Smiddywesson
Smiddywesson's picture

Forgot to add the argument that since it was Bernanke's idea, he probably has some idea of how he would pull off a "revaluation."  We can only guess.

Thu, 12/15/2011 - 09:36 | 1982729 onebir
onebir's picture

The 200 day SMA was downward sloping in H2 2008, so what's the 'upward sloping 200 day SMA' that this is showing deviations from?

Thu, 12/15/2011 - 10:02 | 1982833 FunkyOldGeezer
FunkyOldGeezer's picture

Gold is a confidence game just like any other. Breaching 200 MA knocks confidence. Simples.

I'll say it again. With all the SHTF and about to get even worse and Gold and Silver being monetary metals, WHY AREN'T they priced considerably higher than they currently are? WHAT does it take for a crisis to be a proper crisis?

Something ain't right. What is it?


Thu, 12/15/2011 - 10:09 | 1982871 Kina
Kina's picture

The cabal re selling the global availablility of silver each week. A consistent concerted effort by TPTB to supress gold and silver over and over....YET gold and silver are sill up quite a bit.

Go see Harvey Organ's site to see what is going on.

TA means shit and people are crazy to think that it means much in the case of PMs when there is consistent massive manipulation of the markets by TPBT, but when they step out for a while....up it zooms.  Central banks are buying gold hand over fist...yet the price goes down? TA is telling nothing except how resilient PMs have been in the face of corruption.

Thu, 12/15/2011 - 21:01 | 1985660 omniversling
omniversling's picture

I'm no expert, but how about:

estimated x100ish paper GLD and SLV than exists available physical on the planet. paper is easy to manipulate with a keyboard. Physical not so (that we know of, yet). Major market players like JPM who may have short positions can crash prices at will (and may still be able to even after the recent MFG 'physical hijacking') through their 'arrangements' with dealers/exchanges. See JPM/CME/MFG links below.

Gut feeling is that something major is winding up like a catapult. CBs are buy tons of gold, and of course need to get best price. Also reckon that instability and unpredictability deliberately stops Joe and Joanne Average from getting on Max Keiser's 'buy silver to flush the Fed' programme, and frightens 'the weak hands'.

It's patently clear that there is a massive fraud taking place globally right fkkin' now, in every marketplace. Only 10 days ago most of us had to do a total re-write when the scale of hypo and rehypothecation was revealed. Who knows what is coming next...and which will be the first cascade domino to fall. Maybe it was MFG. Jim Sinclair has a good rant on the contribution of that theft of trust to breaking the system:

When the collapso occurs and prices start to go skyward it will be very difficult to obtain physical. I live near the Perth Mint, and even when gold was pushing 1900, and silver 50 in May this year, it was impossible to get physical OTC. There was a up to 6 month wait for most 'convenient' bar denominations. 

Fluctuations in 'paper PMs' can take place virtually, true value in PM's rises virtuously. Patience..

Here are a few links that I found very helpful in improving my understanding of what's going on...the unknown pieces of the plan are not accessible to us minions..yet. (thanks ZH, and ZHead Postors for all this priceless info...indebted and grateful for all your efforts):


Thu, 12/15/2011 - 10:10 | 1982876 nathan1234
nathan1234's picture

When fiat currencies are collapsing, Governments and Banks are bankrupt, if Gold and Silver move down thank your stars it is available cheap.

Since all currencies are in effect debt- a promise to pay by the Governments- use this debt to buy real assets- so you dont need to refer to Governments to claim your wealth.

5000 years of history bear relevance to this fact.


Thu, 12/15/2011 - 10:16 | 1982906 eddiebe
eddiebe's picture

At these prices it is nothing for the central banksters to buy up all the available physical in the market. The trick for them is to shake the tree and make it available, and to keep it all hidden and distorted out of view. Thence the terrorist tactics of bear market raids. Rinse and repeat. They wil continue to do this as long as it works. When it doesnt work anymore they change the rules.

With the focus on Europes problems it makes sense for them to do this now while the sheeple of the world still rush into the dollar.

Thu, 12/15/2011 - 11:23 | 1983189 Smiddywesson
Smiddywesson's picture

The trick for them is to shake the tree and make it available, and to keep it all hidden and distorted out of view. Thence the terrorist tactics of bear market raids. Rinse and repeat. They wil continue to do this as long as it works. When it doesnt work anymore they change the rules.

Yes, or they will step in to prevent a collapse.  Until then, rinse and repeat.

Thu, 12/15/2011 - 12:17 | 1983467 AldoHux_IV
AldoHux_IV's picture

Lastly, absolutely none of this matters one iota when the central banking cartel resumes printing.

That in a nutshell is that, risk assets need to go down in order for that to happen.

Thu, 12/15/2011 - 12:52 | 1983625 CuriousPasserby
CuriousPasserby's picture

It seems to me that drawing charts and showing similarities with other charts makes people feel better, feel like they can figure out what is going on, like they have some control, but in reality, no one knows, and no one can accurately predict future prices. Too many variables.

Every year 1000 gurus make predictions and some are right some are wrong, like throwing darts. No one knows.



Thu, 12/15/2011 - 14:26 | 1984083 reTARD
reTARD's picture

It's all manipulated. The Bernank, along with his buddies at JPM, et al, man-nip-u-late the vastly paper controlled spot prices. Technicals don’t matter. ;-)

I'm more concerned with what they fix the price at after we move back to some kind of gold standard and hopefully it would be after we have another American Revolution to overthrow every single person in government (or people who have the power to make decisions) and have a "reset."

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