On Gold's Recent Resilience

Tyler Durden's picture




 

Some might be surprised by the title's positivity, but while the barbarous relic has meandered in an ever-compressing (triangle pattern) series of waves in the last few months, it has rather notably outperformed relative to global risk aversion, CFTC positioning, and central bank balance sheet dynamics - especially in the last few weeks. Whether the yellow metal's zero-yield is now 'technically' attractive to safe-haven flows relative to the NIRPs of Germany and Switzerland - or in fundamental anticipation of the next bout of central bank largesse, Citi's global macro strategy group remain bullish of the precious metal and the charts below suggest they are not alone.

$1650 seems like the key 'technical' line in the sand for another leg up as the small (and large) triangles come into play...

 

but Gold's resilience in the face of...

1. a 'slowing' or contracting global central bank balance sheet...

 

2. volatility in Citi's risk-aversion index (GRAMI)...

 

3. and a notable 'apparent' derisking based on CFTC Futures & Options Net Positioning...

 

It seems there is either a degree of buying in precious metals that is anticipating an increase in risk-aversion OR it is anticipating central bank largesse. What is critically clear is that gold's gyrations and uncertainty relative all of these three indicators since the end of LTRO2 has fallen suggesting its diversification and 'hedge-ability' for both risk-on (liquidity-driven exuberance) and risk-off (safe-haven sourcing in a NIRP world) is increasingly appealing.

 

One thing is sure - the view that precious metals are a put on political stupidity remains front-and-center - as fundamentals take a back-seat to the monetary addiction of the world's advanced economies (and perhaps tonight's negative nominal GDP print for Japan - leaving the nation in deflation 50% of the quarters of the last 5 years - is priming for more print-and-be-damned excess - though China's reverse-repo test should be a concern for all those 'hoping' for stimulus extravaganza)

 

Charts: Citi

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Sun, 08/12/2012 - 22:37 | 2699961 valkir
valkir's picture

Gold bitchez.Have a nice week.

Sun, 08/12/2012 - 22:42 | 2699968 Thomas
Thomas's picture

That triangle seems endless. Are we there yet?

Sun, 08/12/2012 - 22:46 | 2699976 erg
erg's picture

It has been an exercise in patience. Wait for it...

This wedge is running out of wiggle room.

Sun, 08/12/2012 - 22:58 | 2699994 Thomas
Thomas's picture

Been real long--John Homes long--since 1999. I gots me patience.

Sun, 08/12/2012 - 23:24 | 2700027 Precious
Precious's picture

It's "HoLmes" and I have no idea why I know that.

Sun, 08/12/2012 - 23:47 | 2700074 knukles
knukles's picture

And his costar Linda Cockgobbler.
I don't know either.

Sun, 08/12/2012 - 23:53 | 2700085 knukles
knukles's picture

Who reputedly bore 19 children without morning sickness

Mon, 08/13/2012 - 00:05 | 2700102 boogerbently
boogerbently's picture

Do infants usually have morning sickness?   :)

Mon, 08/13/2012 - 06:10 | 2700344 AldousHuxley
AldousHuxley's picture

government confiscated gold and they will do it again....

gold won't save anyone.

US government can label all gold owners a terrorist and detain them indefinitely without a warrant along with their gold holdings.

 

That is the law of the land. police, CIA, FBI will enforce those laws on you and your family.

 

folks, things are getting serious. laws are being passed to prepare for war here and abroad. few good congressmen are kicked out. banksters reign free, multinational executives reign free. CFR, CIA, TLC, bilderbergs are in full control now. you have nowhere to run. enjoy brainwashing on TV.

Mon, 08/13/2012 - 07:33 | 2700352 GetZeeGold
GetZeeGold's picture

 

government confiscated gold and they will do it again....

 

Well actually everyone gave it up because they trusted the government and thought they could help and they did get $20 dollars for their $20 gold coins......things are a tad bit different this time around. OK.....I'm kidding....thing are a LOT different this time around.

 

 

Mon, 08/13/2012 - 23:31 | 2702954 Chicken_Little
Chicken_Little's picture

GetZeeGold yes in 1933. Only 10% of the gold coins were turned in and a few days later gold was revalued from $20 to $35. . Only 10% of everyone that had them trusted the government and turned them in. Gold bullion coins were against the law until I think 1974. Then the US Mint started producing Gold and Silver Eagles for us poor citizens to buy and bury in our back yards. Jim Rickards says gold will be eventually revalued to save the USD and there will be a 90% windfall profit tax on all of us that have it and trade it above board. Silver is real winner in the end. No government can confiscate silver. Buy a few green monster boxes of silver eagles and stick them under your bed. Bury your gold stuff in Ammo boxes .

 

 

Mon, 08/13/2012 - 00:08 | 2700106 Oldballplayer
Oldballplayer's picture

Multiple protein shakes throughout the day.

Does no one read anymore?

Mon, 08/13/2012 - 02:20 | 2700243 Pareto
Pareto's picture

I think the move is real and immanent.  Gold stocks have been front running the anticpated move in the metal for a few days now having been batttered down pretty good over the last 4 months.  IMO, it seems that since there is little in the way of price inflation, the move in gold won't likely be an inflation phenomenon as much as a crisis of confidence; the latter haing significantly greater deleterious effects on general economic welfare.

Mon, 08/13/2012 - 04:05 | 2700286 cynicalskeptic
cynicalskeptic's picture

'Little in the way of price inflation"...........WTF!!?!?!   guess you haven'tbought groceries lately.....  and prices are going higher with crop yields tanking because of drought conditions.....   even highly manipulated CPI numbers can't keep hiding the uptick in food prices 

 

and btw - the 'Arab Spring' was more about unemployment and increasing food prices than any sudden embrace of democracy.

Mon, 08/13/2012 - 09:23 | 2700590 Pareto
Pareto's picture

yeah cynical i get that.  prices have been rising for stuff that we "need", but not because of growth in (M), or to the degree of growth in (M).  Personal consumption debt and the delveraging process has crimped production on the top line.  In order for prices to rapidly rise, as you emphatically suggest, too much money has to chase too few goods.  But, this is not the happening.  Any price inflation we are experiencing (and by the way, I can construct a basket of shit where prices have tanked), is a result of firms cutting back supply because there is no demand). If you agree that gold is a currency hedge, it clearly has not responded to the growth in M because its not being employed.  Nobody is borrowing, and nobody is buying, relatively speaking.  The deleveraging process has kept a lid on price inflation and by extension, the price of gold.  IMO, a breakout in the price of gold, will haqve more to do with a crisis in confidence than it will with accelerating prices as a result of too much money chasing too few goods.  cheers.

Mon, 08/13/2012 - 11:12 | 2700839 Jungle Jim
Jungle Jim's picture

Meanwhile, gold and silver plummeted simultaneously today, right on schedule, just like clockwork. Sooo predictable. You could set your watch by it. Yeah, yeah, I know, my stack's still shiny. Whoopee-doopee!

Sun, 08/12/2012 - 22:46 | 2699977 Precious
Precious's picture

24k QE3

Sun, 08/12/2012 - 23:06 | 2700006 Muppet of the U...
Muppet of the Universe's picture

Anyone else wondering if we are just catching up to previous highs in the market?  Or has Benji just stopped announcing QE's to prevent Gold from Spiking...

Sun, 08/12/2012 - 23:09 | 2700015 Precious
Precious's picture

Bernanke is a deluded monetary paedophile.  He thinks we're children and we want it.

Mon, 08/13/2012 - 01:59 | 2700231 Peter Pan
Peter Pan's picture

All I know is that Bernanke, Geithner and all the acronyms known as QE, LTRO etc etc etc will one day be banished to the history books while gold will still win out with its golden silence.

The monetary fools running the show have been lucky to extend the game for this long but as they say, luck cannot protect you from stupidity forever.

In an imperfect world and imperfect financial system, gold is still the best no brainer bet you can make in terms of value and insurance over any extended time frame.

Mon, 08/13/2012 - 08:21 | 2700459 HungrySeagull
HungrySeagull's picture

All bennie boy needs to do is salt every single checking account with several zeros and pay off VISA, Mastercard and the Govt Student Loans too.

 

Yea, a little bit of money for the kiddies.

Mon, 08/13/2012 - 03:11 | 2700263 El Oregonian
El Oregonian's picture

Ah, time for the "Golen Pickle" or "Silver Shaft" to emerge and blow these patterns to the FRIGG'N MOON!!!

Sun, 08/12/2012 - 22:50 | 2699985 vast-dom
vast-dom's picture

GSR = silver $50ish!

Sun, 08/12/2012 - 23:13 | 2700021 savagegoose
savagegoose's picture

RATIO IS EXPRESSED LIKE 50:1 50, TO 1, 50/1 

but yeah silver is still cheap, but then so is platinum. guess the industrial use is still predominant, like copper, nickel etc.

Mon, 08/13/2012 - 00:59 | 2700163 flacon
flacon's picture

57.8

Mon, 08/13/2012 - 09:28 | 2700606 oddjob
oddjob's picture

copper at $3.30+/lb.  ain't cheap.

Mon, 08/13/2012 - 02:04 | 2700238 Newager23
Newager23's picture

Gold is getting close to a breakout. There are no guarantees that gold will not go lower before this breakout occurs, but it seems like a good time to buy some gold and silver mining stocks. Check out this website (www.goldsilverdata.com) if you like mining stocks. The mining stocks have been hammered the past year, and there are a lot of opportunities.

 

Mon, 08/13/2012 - 08:29 | 2700343 tocointhephrase
tocointhephrase's picture

I hold pretty much 100% physical Gold & Silver (with the larger portion in favor of Silver) and feel that I would like to take on more (Double Edit: SOME) risk. I know most will junk me but any thoughts on the following names would be great. EDIT: Looking to hold for 12 months.....

CEY

ABG

FRES

AQP

Thanks

 

Mon, 08/13/2012 - 09:53 | 2700642 Karlus
Karlus's picture

People here will tell you paper gold is not really gold at all, and I would agree. That said, there are some nice double and triple long vehicles out there to spice up your moves.

DGP comes to mind

 

I am also considering putting some newly aquired paper into a oil vehicle. Problem there is contango kills you over time, but I am guessing a nice spike up in oil if 'Bama hits Iran

Mon, 08/13/2012 - 08:20 | 2700455 HungrySeagull
HungrySeagull's picture

Take your mining stocks and shove it.

 

Disclosure, a bit of canadian paper that has been pennies for decades.

Sun, 08/12/2012 - 22:41 | 2699966 Jim in MN
Jim in MN's picture

Commodity complex very strongly positioned to start the week.  Wholesale US gasoline back above $3.00, Brent crude straining at $115, gold hanging back up at $1620...but in the short term so much has to do with the USD/Euro 'contest of idiots' and the direction of greater weakness in currencies. 

But with no major geopolitical flare-ups, it still looks like a coiled spring....and you just know SOMETHING will flare up.  Besides US and Euro politicians stupidity of course (that's a given and largely priced in).

Mon, 08/13/2012 - 03:14 | 2700258 slewie the pi-rat
slewie the pi-rat's picture

speaking of flare-ups and coiled springs:>

The Soup Race <: documents the daily end of the ramadan fast as people who haven't had any food all day are in their cars trying to get home for the soup at exactly the right time, religiously, after not having had a cigarette all day too!

some pretty aggressive driving or what?  Hahaha!

Mon, 08/13/2012 - 09:21 | 2700585 gmrpeabody
gmrpeabody's picture

ROFLMAO.... no soup for you!

Sun, 08/12/2012 - 22:44 | 2699967 “Rebellion to t...
“Rebellion to tyranny is obedience to God.”-ThomasJefferson's picture

Play the futures, options, and ETF's at your own peril.  The manipulation by central banks and the exchanges margin requirements make the barbarous metal a tricky way to make this trade profitable. Buy the physical and do not put it in any bank or trading firm's vault.  It is no longer yours if and when you really need it.

Sun, 08/12/2012 - 23:10 | 2700016 jeff montanye
jeff montanye's picture

or, as an intermediate between bullion and futures, options and gld etf, consider the miners.  they are currently priced very cheaply to the bullion (and some pay dividends).  talking my book.

http://blogs.stockcharts.com/chartwatchers/2011/10/gold-mining-stocks-ve...

Sun, 08/12/2012 - 23:51 | 2700083 Tirpitz
Tirpitz's picture

Jeff, the (interesting, albeit bearish) article you link to was published nearly a year ago. Charts have changed since then, and GDXJ may as well have formed a double bottom (May low a tad under 18, July lows in the same range, and now heading for the 20-week moving average on the weekly chart, while the Slow Stochastic is already strongly overbought).

Barron's runs an article in the current issue dealing with management plunders at silver miners, and the dangers for us investors and speculators.

Seems nothing beats that feeling of holding one's goodies very much within reach, and far from any counterparty risk.

Mon, 08/13/2012 - 00:06 | 2700104 Dr. Engali
Dr. Engali's picture

"Seems nothing beats that feeling of holding one's goodies very much within reach, and far from any counterparty risk."

Sometimes I like to take out a couple stacks of eagles just to look at them. Sure beats looking at a statement.

Mon, 08/13/2012 - 00:09 | 2700108 Tirpitz
Tirpitz's picture

And even more so it beats looking at a MF Global or PFG statement of late.

Sun, 08/12/2012 - 22:42 | 2699970 erg
erg's picture

Goled. Sounds soccerish.

Sun, 08/12/2012 - 23:07 | 2700011 francis_sawyer
francis_sawyer's picture

Gooooooooooooooool -D

~~~

http://www.youtube.com/watch?v=CPzzGtEa6-U

Sun, 08/12/2012 - 22:45 | 2699973 tempo
tempo's picture

David Cruise (hispanic), host of the large KFI640 radio station in LA, just commented that the Republicans just lost all hope of the hispanic vote because Ryan proposed work in the welfare program. Amazing... work should be optional.

Sun, 08/12/2012 - 23:00 | 2699997 CrockettAlmanac.com
CrockettAlmanac.com's picture

Work should be optional as should eating.

Sun, 08/12/2012 - 23:06 | 2700007 FeralSerf
FeralSerf's picture

Homo sapiens is naturally a hunter gatherer species.

Mon, 08/13/2012 - 00:01 | 2700096 Monedas
Monedas's picture

I like the hunt for the gatherers !

Sun, 08/12/2012 - 23:54 | 2700088 Tirpitz
Tirpitz's picture

"Ryan proposed work in the welfare program"

He couldn't have talked about the bank welfare program, which Obama so strongly supports...

Free money from Ryan for his buddies:

http://dailybail.com/home/busted-watch-tarp-republican-paul-ryan-begging...

Mon, 08/13/2012 - 01:00 | 2700165 savagegoose
savagegoose's picture

work for the dole,. but then how would people keep their , real jobs?

Sun, 08/12/2012 - 22:45 | 2699974 proLiberty
proLiberty's picture

The money printing continues, so the money unit price of PMs must trend up, eventually.  Central banks can try to sequester, isolate, swap, and spin, but if any of the money they create enables anyone, under and circumstances to bid up the price of goods, services, wages, commodities, etc., then the result is clear.

 

Sun, 08/12/2012 - 22:46 | 2699978 canardo
canardo's picture

I was just wondering, if 2012 is 2011, are we going to see another crazy jump in gold like a year ago?

Sun, 08/12/2012 - 22:49 | 2699984 Mr. Fix
Mr. Fix's picture

Yes, we are going to see another crazy jump in gold, just like the year ago.

 Now you can stop just wondering. 

  That means, buy it now, or never.

Sun, 08/12/2012 - 22:47 | 2699979 scatterbrains
scatterbrains's picture

On the other hand copper chart looks set for low 2's.  I'm still thinking there's one more flush lower in gold before it doubles off the lows.

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