September 11, 2011
October 6, 2010
December 2, 2008
“Comex gold was taken sharply lower beginning at 4:00 AM CST and then at the usual shellacking time of 7:00 AM, CST in New York. The reason given for the sell off was “risk aversion” as the US equities were sharply lower which once again saw further foreign currency selling and repatriation into the Dollar. There was the usual chatter of “long liquidation” but that has been ongoing for nearly 4 months now as open interest has continued to plummet since July and so is not particularly enlightening. One look at the Japanese Yen and that is all we need to know about why gold is down. Not to fear friends – this same kind of mindless selling was being seen across the spectrum of the commodity futures markets this morning. Every single commodity market that I track was showing red in its line on my quote screens this morning, regardless of its current fundamentals. That is the tipoff that the selling is indiscriminate and is originating mainly from the index funds and from some of the hedgies. Give them a dose of stock market friendly news and the same dopes will be all buying everything in sight once again. Unless you are a short term trader, and by that I mean a trader whose long term horizon is a 60 minute bar chart, all you can do is to simply laugh at the foolishness that passes for “sophisticated trading strategies” these days. If you think gold is acting irrationally, you should try trading cattle. Yes indeed, Microsoft stock and Amarillo, Texas have lots in common these days.
Having watched these markets nearly tic by tic for as many years as I have now been doing, I have to laugh at those who keep telling me about the “efficient price discovery mechanism” that our glorious financial markets are. Ask any bona fide commercial end user or producer who has to employ the futures markets to hedge their risk whether the futures markets are the least bit “efficient”. If you are not careful, you are liable to get whacked across the knees with a 2 by 4. As far as many of us are concerned, the futures markets have been completely ruined by the index funds. I for one wish they would all simply go away as that would make a wonderful Christmas present. Come to think of it, a few more hedge fund failures would also suit me just fine. Think about what these guys do. For “risk aversion” they run into a paper currency known as the Yen and run out of “risky” gold during a time of financial chaos and uncertainty. The guys who write economic textbooks in the future years from now will have to go back and proof read their texts to make sure that they actually got this right as it will be so bewildering to them that they will suspect that the printer typeset the words incorrectly.
Meanwhile, yields on some Treasuries are now at 50 year lows! Before long you will have to pay the government to buy their debt at this rate! And to think we have people who are throwing away gold in order to stash their life’s savings into US debt paying these kinds of yields. My suggestion is to buy brass, gunpowder and reloading equipment instead. You get to own something tangible and at the same time can keep the idiot who stuck all his money into worthless US debt from trying to steal your tangibles that are actually worth something.
I mentioned last week that many traders wrap up their trading year around the Thanksgiving holiday and take off the rest of the year. The result is that liquidity begins to dry up considerably with the spread between bids and offers widening out and smaller orders moving the market much further than such an order would move the market under more normal trading conditions. We are already seeing the effect of this combining with the plummet in open interest (it dropped yet again to 271,000). I see no reason whatsoever for this to change anytime soon. It will work the same way when the market moves higher. The perverse effect will be that so many traders will be getting whipsawed that more and more of them will have had enough of the madness and they too will move to the sidelines further compounding the already out-of-control volatility.
It does seem to me, however,that given the rather minor extent of the Dollar’s rally this morning along with the corresponding weakness in the Euro-Yen cross, the sell-off in gold is way overdone. I mention that only to emphasize the effect of the falling liquidity and how it is acting to exaggerate any moves either up or down. Those who like to play games with market prices LOVE conditions such as this as it amplifies their ability to push the market in the desired direction, namely DOWN. All you need to do is place a few strategically large sell orders to get the ball rolling and then step back and let the lemmings do the rest of your work for you as you pick their pockets. Even though I personally despise what the bullion banks do with the Comex, in some sense the longs who refuse to change tactics deserve what they get. If they will not adapt to what their enemy is doing, they should not expect to obtain a different outcome. Take the metal and end the charade. Play the paper game and lose. It is that simple.
Those of you wishing to secure some more physical gold from the Comex warehouses so that you may deprive the shorts of their only line of defense, just received a discount of nearly $5,000 on your purchase price for 100 ounces compliments of that same crowd. Each time one of these bear raids occurs and the weak longs rush out of the exits, those who want the real metal can easily step in and lock in a better purchase price for the physical. The more metal that flows out of the warehouses the more the shorts are being set up for a religious experience. The key is not to let up the pressure from the physical side of things. It bears repeating: the paper shorts have NO DEFENSE against determined longs who are taking possession of the actual metal at an increasing rate. Have you had enough of this phony paper market yet? Are you tired of the cart leading the horse around? Then take the metal away from the warehouses and the Comex will cease being the corrupt den of thieves that it is. Do not forget how the Hunt brothers handled the silver shorts in the late 70’s before the Feds stepped in to bail out their pals who were short the metal. The problem the Hunts had was that there were just two of them – an easy target – but in the case of thousands and thousands of investors who take physical delivery of the gold out of the Comex warehouses what is the claim going to be from the Feds? That the Comex market should not be a place where buyers can go and obtain gold? If not, then shut the damn thing down. If so, then buzz off.
Today we had another 2,566 deliveries that were taken, or stopped, against the December gold contract. That brings the monthly total to 11,166 ounces in just two days worth of deliveries. The entire month of October had only 11,554 to give you an idea how heavy the buying of the actual metal has been so far. Once again the stopper of size has been Bank of Nova Scotia. We are off to a very good start but cannot relax.
Meanwhile, back over in the HUI and XAU worlds, the indices were taken back down below the 50 day moving average after having successfully managed two consecutive closes above that important technical level. Generally, such a performance would be a confirmation that the lows are in especially with the shorter dated 10 and 20 day moving averages turning higher and threatening an upside crossover of the 40 day. What we will want to watch then will be at what level the dip buyers will perhaps make their presence felt. It looks to me from the HUI chart that the region near the 208-210 level should provide us some buying support. Below that is support near the 198 level although I would prefer to see the former level hold to keep the bearish chatter to a minimum. The shares had been managing to begin separating themselves somewhat from the broader US equity markets until today tripped them up so let’s see if they can regain their footing sooner rather than later.”
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August 8, 2008
…lest we forget where we stand vis-a-vis the Gold Bull Market.
Some elementary T.A. compliments of Trader Dan (JSmineset.com):
Click on graph for some great analysis in pdf format.
April 23, 2008
Click chart to enlarge the latest action in gold in PDF format as of April 23, 12:30 pm CST with commentary from Trader Dan Norcini…
February 26, 2008
That is why the noise about gold sales by the International Monetary Fund is just that for those who understand the game that is being played with the yellow metal by the Western monetary authorities. Wrap your mind around what is happening on the inflation front and then ask yourself: How much longer do they think that by attempting to drive the price of gold lower they can convince the public that inflation is under control?
The simple truth is that gold has either broken into all-time highs when measured in terms of every major currency or is threatening to do so. To reverse this inexorable trend, these haters of gold will have to work their alchemy on wheat, soybeans, rice, corn, sugar, cocoa, coffee, etc. In other words, they will have to wave their magic wands and reduce food prices. And from what hidden stockpiles of agricultural goods do they intend to do so? Good luck, fellas. You are going to need it.
Meanwhile, those rising economic powerhouse Eastern nations with burgeoning reserves consisting predominantly of less-than-desirable U.S. dollars will be more than happy to take all the gold that the hapless dolts at the IMF are willing to part with. With the staggering sums contained in their sovereign wealth funds, these countries can gobble up any and all gold the IMF wants to get rid of, and they will welcome the opportunity to buy gold in size at a set price.
Once again, the West is shown to think in terms of a checker game while the East is playing chess.
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November 18, 2007
…stay focused with this series of superb charts (in pdf) drawn by Trader Dan (Norcini) from J.S. Minest: HERE
July 28, 2007
Dear CIGAs,
I mentioned last week that the commercial shorts (aka the perma gold shorts or the bullion banks) would have to absorb a tremendous amount of buying to keep gold from surging to $700 since the fund net long position was comparatively small by recent historical standards. Well guess what? They did exactly that.
As you all know by now, the COT data only includes the action from Wednesday of the previous week thru Tuesday of the current week. If you recall, on Friday of last week and Tuesday of this week, gold had strong upside price action in which it ran to $687.50 on Friday and $688.40 on Tuesday. In both cases it was pushed down by the close just shy of $4.00 from the intraday high by aggressive selling which literally ate through the huge influx of incoming bids. Friday alone witnessed a massive increase in open interest of nearly 17,000 contracts – an almost unheard of number for one day with Tuesday’s surge higher being met with an additional increase of nearly 7,000 contracts. Clearly, some powerful entity was opposing the price rise with a vehemence that has not been seen for some time.
Those of us who have seen this drill for the last 6 years know exactly who that entity is and it was again confirmed today as the COT data was released. Once again, the INCREASE in the new shorts came from the commercial category, which by and large are dominated by the bullion banks. That group alone added a whopping 29,327 new short positions. Folks – this is the LARGEST WEEKLY INCREASE IN THE NUMBER OF NEW SHORTS IN ONE WEEK’S TIME since June 2005!
In other words, this same group, which was determined to hold the gold price under $450 two years ago and threw everything but the kitchen sink at it back then, apparently felt the need to ensure that the gold price did not reach the magical $700 level this past week. Even last year’s surge in May which saw the price of gold blast through the $730 level did not engender the amount of new selling by the bullion banks and their friends. Clearly someone is extremely concerned about a rising gold price given the current economic environment and the implications that such a price rise would raise.
One thing that I might mention to provide some solace for the friends of gold – yesterday’s collapse in the gold price come on the heels of the largest volume traded for a single day on the Comex that my records going back 6 years indicate. Nymex reported a mind-numbing 257,914 contracts traded hands yesterday during the rout that hit the gold market from the fallout of the rush into liquidity. That is humungous! The good news for gold’s friends is that such huge volume days that occur either on the way up or the way down typically tend to portend exhaustion waves when it comes to the futures markets. During such times, blind panicked buying or selling is the order of the day. People want out at any and all costs and simply do not care about anything else except to “GET ME OUT!” In the case of yesterday, it was terrified longs bailing out in droves. The result was a SHARP DROP in the open interest of nearly 20,000 contracts. The previous day’s down leg was marked by a drop of 15,000 contracts. In just two day’s time, we have cleaned nearly TWO MONTH’s worth of buyers since that is the last time open interest was near the current levels.
Again, while I hate to be prematurely optimistic given the current climate of fear and confusion, it is difficult for me to see how much more downside is left in the gold market especially seeing how well it held up today after yesterday’s exhaustion day. Even as stocks continued tanking later this afternoon, gold held rock steady. Just as what happened yesterday, its price descent down into the lower nether regions of the mid $650’s brought out strong buying which took the market back up into the plus column at one time during the day. Not too bad all in all considering how the currency crosses were getting whacked today and how the dollar was experiencing another dead cat bounce.
While the gold shares did not fare as well being caught up in the general market downdraft, the bullion price appears to be making an attempt at stabilizing here. I repeat from yesterday – I am of the opinion that the metal will lead the shares out of the bear’s woodshed.
Stay tuned as we all watch history unfold. What stories we will have to share with our children and grandchildren about these days!
Dan
Click HERE for charts (in pdf) with commentary by Trader Dan Norcini
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July 11, 2007
Today was one of the most blatant capping efforts I have seen in gold in some time, and that is saying something. With the dollar breaking through major support and with crude oil moving up along with the CRB index, to see gold struggle to keep its head above water would have been almost comical if it wasn’t so obvious as to what is going on.
You have to wonder what it is about the number “666” that the enemies of gold are so obsessed to hold gold below that price. We could not make this stuff up!
The official sector is so terrified of letting the gold price get away from them that they are making fools of themselves, since even the most obtuse are beginning to realize that something stinks to high heaven in the gold market.
My own view of this is that anyone — and I do not care how well-respected or how well known he is — who denies that there is official-sector intervention to keep the price of gold down is willfully blind and has forfeited any right to be listened to.
I have been a trader for nearly 20 years now and have seen all manner of markets trade and all manner of price action and will state categorically that no other market on the planet trades like the gold market. The price action in gold cannot be explained in any other way than by official-sector intervention.
Market commentary from the usual nitwits to explain gold’s weak price action was encapsulated in the view that gold traders were waiting to see what Fed Chairman Bernanke would be saying in his speech at 1 p.m. ET. Oh, sure, I get it: Traders are concerned about the dollar’s reaction to any talk of Fed action on the interest rate front. Meanwhile the dollar falls into a black hole! And to think that some people actually get paid to produce this sort of swill.
The friends of gold can rest assured that those who are vainly expending energy and resources in suppressing it are spitting into a hurricane. They should give it up since they are no longer fooling anyone. Once a ploy becomes widely known, it no longer serves any useful purpose. Screwing around with a yardstick does not mean that one can alter the fact that there are 36 inches in that yard.
In the same manner, attempts to alter the barometer of gold have zero affect on the conditions that are calling for its inexorable rise higher.
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Oikonomika Blog 