PM Daily Market Commentary - 7/23/2013

davefairtex
By davefairtex on Tue, Jul 23, 2013 - 12:47am

Gold finished the day up $39 to 1334, silver up $1.07 to 20.48.  Gold/silver ratio moved down to 65.14.  Notably, CEF's discount to NAV dropped to -2.4%, up from almost -7% on June 24.   Everyone and their brother was talking about 1300 resistance, yet the sneaky bullion banks struck in the dead of night (well, at 0714 JST - which makes it morning if you're Japanese) making sure that the move through 1300 would be as cheap as possible.  More than 3400 contracts (or 10 tons of gold) were bought in two minutes between 0714 and 0716.

Make no mistake, a big player buying "paper gold" caused this move up through 1300 using those same tactics this time on the buy-side that were so reviled by the goldbugs all during the move down.  By 0716 JST gold was trading at 1319, with resistance in tatters and the NY/London shorts stopped out while they were at home eating their Sunday night dinner.

Yet do we hear dark comments about sneaky tactics, the clearly evil motivations of the "paper longs"?  Not so much.  No, what caused this move is the End of the Comex, the Inevitable Default of the LBMA, the return of Truth and Justice to the World - a market controlled only by Blessed Emancipated Physical Buying which will allow us to reach $30,000 or even $50,000/oz!  Isn't it interesting that the story from the goldbugs is all about "paper" on the way down, while it's "physical" on the way up?

But I digress.

Gold ran all the way up to a resistance zone - a combination of the amber line (a place where gold bounced several times back in April/May - support on the way down turns into resistance on the way back up) and the 50 day moving average (the blue line).  Volume was pretty good, but not spectacular.

Silver was dragged up by gold - gold's initial move through 1300 pulled silver up to 19.95, but it took almost until the NY open before silver broke 20.  Once it did, however, it moved up to 20.60 before it ran out of steam.

The move up in Japan's AM made sure that by NY open, the gold mining stocks would "gap up" - namely, their open prices Monday morning would be vastly higher than the closing prices of Friday night, without any ability of the gold shorts to cover their positions without a big loss - and making it difficult for new buyers of the miners to get in cheap.  This no doubt was the point of the tactic.  "Someone" bought a bunch of gold mining stock over the past few weeks, ran gold up during Japan market hours Sunday night, and hosed the gold miner shorts in pretty much the same style that the gold mining longs had experienced for the past 5 months.  That's all part of how prices move, and its why I say the market is evil.

Looking once again at the chart of Goldcorp, we see what a gap-up looks like.  Many miners have a similar chart.  GG closed Friday at 27.33 and opened at 28.39, gaining a full point overnight solely from gold's blast through 1300.  That's gotta hurt if you're short GG.  Big volume on the day as well, and with GG price clearly above its 50 DMA (blue line) things are looking like the reversal process is under way.

Before while gold was going down, we lived in fear of losing everything in the gold crash, our gold going to $700, our goldminers losing 50% (ok, that part really did happen).  Now, we're starting to see another type of fear come up - the fear of missing out of the rally.  This tends to motivate us to buy at high risk times, only to see our new buy turn red as the stock falls back.

The market is not a kindly place.  It plays with your emotions, on the way down, and on the way up in order to relieve you of as much money as possible.  As Jim pointed out, the market doesn't move in a straight line; usually a lower risk time to "get on board" is to wait for a consolidation (move sideways) or a drop back to support (a dip) and buy at that point.  Usually markets let you do that, and sometimes they don't.  Gap-up moves are the market's evil way of making it hard for you to get on the train as it leaves the station.

Given gold is right up against 1350 resistance and its 50 MA, I would anticipate some period of consolidation prior to it attempting to break through.  I see the following scenarios along with my "gut feel" percentage chances:

1) 10% - gold powers through 1350 after a one or two day consolidation at its current level.  If this happens, its an extremely powerful move;  that would indicate there may be real substance to those claims of impending doom at the COMEX and/or LBMA.

2) 60% - gold is rejected at 1350, and trades in a range from 1310-1350 for a time prior to making its next move.

3) 30% - gold is rejected at 1350 and falls below 1300 as the shorts resume control.

Gold Trend: Short term UP, Medium term DOWN, Long term DOWN

Silver Trend: Short term UP, Medium term DOWN, Long term DOWN

25 Comments

thc0655's picture
thc0655
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I wonder...

So, Dave, in the paper markets there can be gyrations/manipulations up OR down. The big, clever players are able to use their size to make paper profits when the prices go up OR down. How would this all be different if there was NO leverage allowed and it was a purely physical market? How would that effect the ups and downs. In that scenario, what would cause big ups and downs, and who would benefit?

sand_puppy's picture
sand_puppy
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Gold will move $100 / day--Jim Sinclair

From outside the realm of the technical analysis there are forces promising big discontinuities:  "Black Swans."  This is perhaps one of the main messages of The Crash Course--that there will be discontinuities in how things work.  

I'm reminded of the summary conclusions Chris listed in a recent article:

1.  Trust yourself.

2.  Invest in the resilience of your homestead.

3.  Get some gold.

----------------------

Gold will move in hundreds of dollars a day on Comex soon says Jim Sinclair
Posted on 23 July 2013

World famous gold guru Jim Sinclair is telling his followers that the gold price will soon move in ‘hundreds of dollars a day’ when the Comex changes its settlement rules as it must because the exchange is running out of physical gold.

‘The cause of today’s spectacular rise in the gold price is the reality that with Friday continue large drop in Comex warehouse gold inventory,’ he writes. ‘No cogent argument can be formed against the reality that because of the continue fall in gold inventory that within in 90 days or sooner the Comex must change its delivery mechanism.

Cash settlement

‘The highest probability is that Comex will have to move to cash settlement rather than gold. Part of that settlement could be lots of 100,000 GLD (gold exchange traded fund) that represents the ability to exchange for gold.

‘Their problem is that if GLD is part of the settlement mechanism for the spot Comex contract that GLD will be destroyed by the convertibility. It is a truism in gold that which is convertible into gold will in fact be converted over time.

‘Gold rose today because those knowledgeable know the inevitability of the changing of the Comex contract, as it is today which calls for settlement in gold between contracting parties. There is no question this is the emancipation of physical gold from the fraud of no gold, paper gold.

‘The emancipation will cause physical gold exchanges to take birth and to be the discovery mechanism for the price of gold. This is the end of the ability to use paper gold future contracts as a mechanism to make the gold price sing and dance at the will of the manipulators.

True value

With manipulation coming to an end the true value of gold will be discovered by the cash exchanges that are now taking birth. The advent of the cash spot exchanges around the world is the natural demise of the Comex set up as convertible and now being converted.

‘As long as one can buy spot, pay insurance, transportation and re-casted by Rand Refinery to Asian products sold profitably, the demands for real gold are ending the hay days or even existence of the futures exchanges.

‘Gold is headed back to be traded as it was before 1973. Gold will trade well above $3,500 and those who have lived in the gold market like me for now 53 years know it. A price of $50,000 for gold is not out of the question as a result of its emancipation from fraudulent paper, no gold, paper gold.’

Gold running out

He continues: ‘The warehouse inventory of every futures gold exchanger is screaming this. The fact that there is no meaningful above ground supply of gold is screaming this. The fact that most of the central banks supply of gold is leased is screaming this.

‘There is no reason why gold cannot move up hundreds of dollars a day when the Comex changes their spot contract settlement, as they must, as they will, very soon.

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Jim H
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Beware of DaveF.. he will try to take your eye off fundamentals

For whatever reason, this seems to be Dave's raison d'etre... to convince you that the technical trading details are all that count, while simultaneously denigrating the discussion of fundamentals with statements like this, from above;

Yet do we hear dark comments about sneaky tactics, the clearly evil motivations of the "paper longs"?  Not so much.  No, what caused this move is the End of the Comex, the Inevitable Default of the LBMA, the return of Truth and Justice to the World - a market controlled only by Blessed Emancipated Physical Buying which will allow us to reach $30,000 or even $50,000/oz!  Isn't it interesting that the story from the goldbugs is all about "paper" on the way down, while it's "physical" on the way up?

Technical trading details are interesting..  I actually do appreciate Dave's insights in that realm.  I just don't understand why he feels the need to not just show disinterest, but rather to attempt to dissuade the reader from placing any import at all on them, even when they are very quantifiable attributes like the GOFO rate, or the Comex inventory level.  

Dave makes fun of the potential for the end of the Comex, as if it's some internet meme - but it is not.  It is simple, quantitative reality;

      

But this deal is serious business. Serious, indeed. Much has been made of the tremendous drawdown of the Comex gold vaults. From a high of nearly 12MM ounces in early 2012, total (registered and eligible) gold in the vaults has plunged to just 7MM ounces tonight. And registered gold (that which is in good delivery form) has dropped from 3MM ounces earlier this year to just 950,000 ounces Friday. 

link:  http://www.tfmetalsreport.com/blog/4856/whats-deal

I am not arguing that some longs did not rush into the market and buy at an opportune time for max effect... Dave shows this.  I AM saying that this is happening now because the ability of the bullion banks (or any entity) to wrestle price down with naked shorting is coming to at least a temporary end, because the world is out of deliverable stores of Gold.    

Here is 2 minutes of Kyle Bass explaining why DaveF is a troll for trying to convince you that a Comex default is some kind of wild pipe dream;

I stand by my call that DaveF is a troll.  He has fooled my favorite folks, Adam and Chris, into thinking that he is a legitimate trader with no other agenda... and I don't believe this for a second.  Chris and Adam have unfortunately not done enough due diligence before giving DaveF this platform, and I am sorry for that, but I will keep pounding away at his hypocrisy until I either neutralize his attempts at becoming the propaganda thought leader here at PP.com, or I get moderated out of existence, which I am willing to do.   

Again, here are the simple facts;

Tonight, the Comex registered or dealer inventory of gold  remains below the 1 million oz mark at 950,441.152 oz or 29.56 tonnes.  This is dangerously low especially when we are coming up to the August delivery month.
Remember in June we had almost 31 tonnes of gold stand for delivery.

link:  http://harveyorgan.blogspot.com/2013/07/gld-loses-another-15-tonnes-of-goldgold.html

Dave will never directly address these facts.. he will only ask you to look over here, at his other hand.   

davefairtex's picture
davefairtex
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turning exciting stories into something useful

Jim -

I think rather than simply presenting the stories and saying they are really really really important, if you were to conduct some analysis with more rigor, it would be much more useful.  A lot of these stories do sound exciting, but if we don't have a sense of how likely they are to occur, and in what timeframe, how can we make use of them in our decision making?

I.e. if a COMEX default is a 1% chance over the next 10 years, nobody cares.  If its a 90% chance over the next 3 months, then we all care a great deal.  But since we aren't the expert in fundamentals that you are, how can we make this assessment?

Thought experiment.  A NASA scientist goes to the President and says "An Asteroid will hit the earth causing an extinction level event!"  What are the President's next logical questions?  "What is the TIMEFRAME that this will happen in, and what is the LIKELIHOOD it will occur."  The impact is clear, of course.  Without those two extra bits of information, the President can't make a decision as to whether or not to embark on a crash project to destroy asteroids, or boot this idiot out of his office.

Here's a helpful template.

Over the next [XX] Months:

1) [XX%] COMEX runs out of gold.  There is no gold in GLD to help.  Futures contracts become cash-traded, or settled in shares of GLD.  [Impact?]

2) [XX%] Gold still exists inside of GLD, so JPM liquidates GLD positions and refills their COMEX vault.  COMEX default averted.  [Impact?]

3) [XX%] Gold price increase of [XXX] results in reduced demand for physical gold.  COMEX default averted.  [Impact?]

4) [XX%] Gold physical buying slows down on its own, because people have enough gold at this price.  COMEX default doesn't happen.  [Impact?]

We're the President, and you are the scientist.  Give us TIMEFRAME, LIKELIHOOD, and IMPACT for each one so we can figure out whether to embark on a crash project, or focus our attention on other matters.

 

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davefairtex and jim h

I want to hear both the fundamental and technical views on gold.  They serve different purposes in my world, and now is a critical time to hear both views.

Fundamental analysis is what allows me to hold on to my PM position during this rough patch.  I have huge respect for Kyle Bass and 'know' that in the long term he will be proven correct.  In previous posts Jim does a nice job on cost of production and provides clear evidence on many levels that gold will eventually go up.

Technical analysis provides me with potential entry points for new PM purchases.  We all want to purchase PM's at the lowest possible point without missing the bottom, and IMHO technical analysis provides the best tool to do this.

At heart I'm a fundamental analysis guy but I want both pieces of information to stay informed.  Chris and Adam haven't been fooled - they are allowing each of us to trust ourselves.

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davefairtex
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purely physical market

thc0655 -

There are several aspects to your question - which I think is a good one.  However I don't think a "purely physical" market is best, and I'll explain why.

There are three issues; use of leverage, position sizing, and speculation.

Leverage means you can control a large amount of product for a small amount of money.  This is useful for the different actors in the marketplace - farmers with crops, gold miners with gold production, gold shop owners with inventory, etc - who want to hedge forward their production, their consumption, or their inventory - locking in prices today so they can make sure to have a known profit.  If this were a cash-only (i.e. leverage-free) market, a farmer with a million-dollar crop of soybeans or a gold-shop owner with a 5 million dollar gold inventory would have to put up the full cash value until the contract expired.  That would drastically increase the costs of hedging.  In some sense, leverage is required to hedge cost-effectively.

Position sizing has to do with the ability of any one player to take a large position that tends to influence prices, such as selling (or buying!) 500 tons of gold in a 5-minute timeframe.  As Chris has suggested, whether that is on the buy side OR the sell side, the intent is to move prices.  The larger position any one player can have, the less the market becomes about price discovery and providing a useful function to society.  I'm in favor of much more significant limits on big player positions.  That and a return of Glass-Stegall, eliminating the ability of JPM and the other players to trade commodities using grandma's deposits.  JPM should not be in this business and still retain FDIC insurance or the ability to have a banking charter.

Speculation (i.e. someone with no intent to either deliver or take delivery) is a critical part of setting prices.  Without speculators, market liquidity drops dramatically, and that means bid/ask spreads get very wide, so the costs for both consumers and producers increase.  Also, well-informed speculators help set prices accurately - they're motivated to really understand the markets they speculate in, and their informed buying and selling is the way they provide this information.  Its a form of crowdsourcing!

So to answer the question, if we had a purely physical market - would price movement be less volatile?  I'd say prices due to big players wanging the market around would vanish, pretty clearly!  But you'd still need to worry about big players controlling the market by buying up all of a given commodity.  We've been reading articles about how Goldman now owns warehouses full of aluminum and how they restrict delivery so as to control prices AND make huge storage fees at the same time.  Physical-only wouldn't solve this problem.  And of course speculators - even ones who could never hope to affect market prices on their own - could no longer contribute to liquidity.

I think we can get the effect we want through real, effective position limits (including ownership of warehouses!) on participants - especially those engaged in speculation - as well as the reinstatement of Glass-Stegall.  We keep the good bits of speculation, and remove the stuff that actively harms society.

 

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sand_puppy
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Kyle Bass clip VERY GOOD

And in just 2 minutes.

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like to hear both or a synthesis

Well, I trade PM stocks and also have some for the long haul too.   I get tired of the mainstream analysis which doesn't factor in what we are loosely referring to as "fundamentals" here.  By that I mean everything from Comex inventory to China's accumulation to the economics of the mining companies and more. 

But the other thing of which I am very weary is King World News and others who don't seem to grasp any subtleties in the markets.  All they seem to be able to say is variations on "it's going up". This includes Jim Sinclair.  At some point these people will be right, but even a broken clock is accurate twice a day - or, you know, even a blind squirrel finds an acorn once in a while. None of this helps in making daily decisions. In fact, you'd probably be broke at this point, exclusively listening to these people.

I am somewhat skeptical these days of technical analysis, though I still pay quite of attention to it.  I say this because I believe the markets are manipulated to one degree or another. Nevertheless markets do have patterns.

What I would really like is for someone to bring it all together - the facts as best we know them and a cautious technical analysis - all presented in a level headed, reality based format.

I don't see Dave doing that, but I don't think he's a "troll" either.

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davefairtex and jim h
Nate wrote:

I want to hear both the fundamental and technical views on gold.  They serve different purposes in my world, and now is a critical time to hear both views.......

Technical analysis provides me with potential entry points for new PM purchases.  We all want to purchase PM's at the lowest possible point without missing the bottom, and IMHO technical analysis provides the best tool to do this.

At heart I'm a fundamental analysis guy but I want both pieces of information to stay informed.  Chris and Adam haven't been fooled - they are allowing each of us to trust ourselves.

Well said Nate, the two views are not mutually exclusive, though Dave seems to be considerably more tolerant of the other.

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maybe

Maybe Dave and Jim H could do whatever they need to do to overcome this impasse, and then work together here?? What a novel idea.

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May the debate continue

All this is really great and VERY enlightening!  Can't thank Dave and Jim, and others, enough for my

financial education about gold/silver and their relation to the market.  Keep it up--just no name-calling and

judging the motives of others.

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davefairtex
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bringing it together

Rob P (and others) -

Part of what drives me is this line from Rob P:

...the other thing of which I am very weary is King World News and others who don't seem to grasp any subtleties in the markets.  All they seem to be able to say is variations on "it's going up". This includes Jim Sinclair.  At some point these people will be right, but even a broken clock is accurate twice a day - or, you know, even a blind squirrel finds an acorn once in a while...

What he said.  Sometimes my level of annoyance at them exceeds my good sense.  Markets go down as well as up, who listening to KWN would have imagined such a thing?

At the same time, I'm drawn to gold because in a world where Peak Everything meets exponential population growth, the logical (and most likely inevitable outcome) is a declining slice of pie per capita, most likely resulting in some form of inflationary outcome at the end of the ... decade, and gold especially the physical kind is such a concentrated way to store wealth - portable, internationally accepted, and not able to be fabricated by governments bent on keeping power.

And then Rob asked:

What I would really like is for someone to bring it all together - the facts as best we know them and a cautious technical analysis - all presented in a level headed, reality based format.

A bunch of others said pretty much the same thing.  I'll see what I can do!  After some thought, perhaps this weekend, I'll try and paint a coherent picture of the set of factors I see influencing the gold market.  Any holes in my picture, I hope you guys can help me fill in.  Perhaps that post can stick around and we can update it as members help to fill in holes here and there.  Its almost like we need a set of wiki pages; one master page with a bunch of sub-pages.

From the standpoint of trading the market, however, if it comes down to a struggle between what the market is saying through price action and "the facts as we know them" its important to realize, its safest not to fight the market until it begins to show signs of following your facts.  For instance its my opinion (based on the facts as I know them - Hussman, etc) that the overbullish, overbought equity market needs to correct, but until it shows signs of sputtering and wheezing, it is probably best for my portfolio and my strong aversion to the color red that I don't just jump in there short until the market gives me some sort of signal!  As much as I would dearly love to, I know I just shouldn't.

The market is the sum total of all the participants.  Not all of them follow or agree with "the facts as we know them" and some participants act to try and trick us in one way or another, either inside the market or outside via news - and so in some sense our job is to read the (technical) tea leaves until we get a sign that things have most likely lined up in the way we expected them to, or we do more research and find out that our facts were missing some important bits.

 

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Just for the record

Dave, also, don't misunderstand me (just in case you do).  I really appreciate your technical take on these markets.  I have my own views, but I'm always ready to listen to someone elses and LEARN ALL I CAN.

If there is a chance this market has another leg down (and there is in my opinion, but it's diminishing as we speak), I surely want to be hedged or even better, make some serious money shorting it on the way down.  Some people made a pile of money shorting gold in various ways during the last 3 months - BUT they weren't KWN listeners.

I've learned over many years: I want to hear views that are contrary to my beliefs.  I want to hear the views that emotionally disrupt me. You have to do that if you're going to survive these markets - especially if you trade. So, I'd ask you to never say it any way other than how you see it - but then explain it  - the facts - , how you interpret them, and what they mean to you. You did all of this - not a compalint in any way. 

But yes, let's get some of that other material into the discussion too - those comex inventories, etc. That's all I meant by the facts - I know your anaylsis is grounded in facts too.  

 

 

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Reasonable at face value....

This statement made by DaveF above appears to be reasonably aligned with Chris' teachings;

At the same time, I'm drawn to gold because in a world where Peak Everything meets exponential population growth, the logical (and most likely inevitable outcome) is a declining slice of pie per capita, most likely resulting in some form of inflationary outcome at the end of the ... decade, and gold especially the physical kind is such a concentrated way to store wealth - portable, internationally accepted, and not able to be fabricated by governments bent on keeping power.

I will be glad to back-off on the troll rhetoric, though I will remain vigilant for future glitches in the matrix as DaveF will have plenty of time before the, "end of the.. decade" to convince us once again of the coming strong dollar/weak Gold play in the interim.    

So back to fundamentals we go... nice post by Richterc above that summarizes much of the action.  One story that is not getting enough airplay that is really a genius play by the banking cabal is the implementation of capital controls, in the form of Gold import restrictions, in one of the world's biggest demand markets for physical Gold - India.  Remember that capital controls are the last refuge of Governments and their banker enablers in trying to use force to stop people from obtaining the things they feel they need to survive, be it dollars (or toilet paper) in Argentina, or trading Rupees for Gold in India ;

         http://timesofindia.indiatimes.com/business/india-business/India-moves-c...

MUMBAI/SINGAPORE: India has upped the ante in its drive to restrict gold imports into the world's biggest consumer, introducing regulations that stop just shy of imposing quotas as it tries to stifle demand ahead of a key buying season and narrow a yawning trade deficit.

By tying gold imports directly to export volumes, India is effectively trying to cap how much bullion can be brought into the country, tightening supplies and driving up local prices.

Twenty per cent of all gold imports must be used for overseas sales, the Reserve Bank of India said on Monday. India, which has an insatiable appetite for the yellow metal, currently exports less than 10 per cent.

 

 

 

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davefairtex

Your analysis always gives me the impression you have some hidden agenda.  Baffling people with BS seems to be the way the world works these days.  Your writings imply you have special insight on the PM markets.  No one has special insights on the PM markets, with the notable exceptions of the huge players (large banks & governments). 

Daily, weekly, monthly, and yearly fluctuations in the metal markets are not very meaingful.  It's very apparent (proven) that the financial markets from top to bottom are manipulated/corrupt in one way or another.  If the price of money, the most fundamental asset class, is being manipulated, then why wouldn't the metals markets also be manipulated?  Last week Ben Bernanke played dumb (lied) when ask about gold.  He said he didn't understand gold & that nobody understands the price of gold.  He has always minimized, marginalized, and dismissed it away anytime it's ever brought up.  Why is there so much secrecy and security over Fort Knox and the amount of gold the U.S.& central banks own around the world if gold isn't very important?  By Bernanke's comments the U.S. should sell all of it's gold because how valuable could "tradition" be anyway?  We should invest that "tradition" into a tangible asset. 

Gold is manipulated because the masses look to it as a barometer on money printing, inflation, and monetary stability.  The U.S. government is doing everything they can possibly do to eliminate all of the canaries in their inflationary coal mine.  The price of oil is another canary, but it's a little more difficult to manipulate than precious metals.  The price continues to go up even the demand for oil has gone down.  Another example would be the U.S. post office.  They created the Forever Stamp to shows postal prices won't be going up.  Prices continue to go up.  So what are they doing now?  They are eliminating Saturday service.  I predict they eliminate other days as well.  They are also talking about delivering mail to a centralized area and eliminating delivery to individual mailboxes.  Bernanke always says he sees no signs of inflation.  I guess he hasn't gone to a grocery store & purchased various types of meat, eggs, milk, bread, fruits, and vegetables over the past couple of years.  Look how the "Big Mac" index has been climbing.  It doesn't take rocket scientists or a bunch of highly trained economists to figure out the canaries in the inflationary coal mine are quite sick.

The price of silver is less than the cost of mining it.  The production cost will not go much lower, and most likely continue to go much higher as oil is the biggest input expense.  What better deal than being able to mine your own silver without having to own a mine?  Silver has many important industrial uses, as opposed to gold.  Much of the silver that has been mined throughout the history of the world has been disposed of, so new production is the main way to meet ongoing demand.  In contradistinction, most of the gold that has been mined since the beginning of time is still around & owned by governments.

To be sure, there will be a lot of volatility & manipulation in the PM markets.  PM's should only be purchased by investors with very long time horizons.  Gold may not be the best PM to buy because governments around the world (most notably the U.S. which has by the far the largest amount of gold, but even India & possibly even China someday) can play the most games with the pricing (at least until there is a new reserve currency).   As stated in the post above, India is already trying to play games with gold.  No one is going to get rich buying PM's, but they do provide one area of diversification. Diversification is the most important thing one can do when everything is being manipulated and no one knows what the central planners are planning.

The biggest thing that has drawn me to this website is that the premises are based on big fundamental concepts that can not be skewed and solid predictions & advice are based.  Your writings seem to be inconsistent with this way of thinking. 

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Be careful thinking moves in price are imminent

Ignore my comment.  I just looked again and the comment about Jim Sinclair I was commenting on was dated 2011.  I'm new to these forums and still figuring out how to comment.  It seems I just can't delete the comment.

 

I would exercise caution taking Jim Sinclair's prediction on price movements.

I've been following him for 3 years now and he is almost always wrong on timing.

I think his analysis is interesting (mostly helpful, sometimes extreme).

I remember about a 1.5 years ago reading one of his pieces when he said gold was heading

up to $100 in the next month.  

When the price discovery mechanism is broken in the market for various reasons (fed manipulation, JP Morgan monopoly/comex manipulation, HFT, etc), I think it is impossible to predict and will probably be similar to Jim Rickards snowflake analogy that it will be some small event that finally triggers a cascading effect like an avalanche but the timing and which snowflake (financial event like MF Global, etc) is impossible to know that will start in the next financial crises and run in the metals.   

My advice is dollar cost average and invest (hold) for the next few years at least for gold and silver.

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yogiismyhero
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Dave and Jim, My Brothers, please, please teach us...

...but please, please refrain from the other pointed (personal) statements. I like a good rumble myself but as a Judge once told me: Yogi, "I put a lot of people just like yourself, who are normally well intentioned away (behind bars) for well reasoned screw ups that went terribly bad". The dude went after my 16 year old son so I whooped him (he was bigger so it was fair) but thankfully not so bad that I went to prison. No one is a troll James, delusional, crack pot (?), knucklehead, etc...I think are better. Or as Granny used to say: "If you can't say anything nice then say nothing at all".

I am guilty as well but have found religion. Yogi-ism! :-)

OK, Gold....I don't care, up or down it doesn't matter really. Just an insurance policy for me so no emotional attachment. I will say though that I do expect Gold to be relevant as it will buy for me in the future what I can buy with it today. So what's the big deal with owning some heavy stuff.

Peace

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jerryr
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Long term DOWN?

Davefairtex wrote:

At the same time, I'm drawn to gold because in a world where Peak Everything meets exponential population growth, the logical (and most likely inevitable outcome) is a declining slice of pie per capita, most likely resulting in some form of inflationary outcome at the end of the ... decade, and gold especially the physical kind is such a concentrated way to store wealth - portable, internationally accepted, and not able to be fabricated by governments bent on keeping power.

Doesn't that contradict Dave's long term DOWN trend prediction? Unless by "long term" he means something other than what I might mean by "long term".

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davefairtex
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long term = 200 day moving avg

jerryr-

Doesn't that contradict Dave's long term DOWN trend prediction? Unless by "long term" he means something other than what I might mean by "long term".

You make a good point!  Its a definitional thing.  Since I'm trying to read the tea leaves of the futures market, I use tools that are more popularly used by traders in that arena.  Their timeframes tend to be a lot shorter than the "decade" timeframe - it tends to focus more on quarters.  So for the futures markets (only) I define "long term" as the slope of the 200 day moving average.  It is currently heading down, so - long term, the trend is down.  But "really long term" (say, the 200 week moving average) the trend is still up.  But nobody I know trades that, so I don't use it in examining futures market movement.

Again, my daily analysis is meant to focus on the futures markets view on gold; since the futures market currently sets the price, if we can decipher what it is thinking (and this includes the futures market's idea of what the trends are, because this trend influences buy/sell decisions by major futures markets players) then we can hopefully have more insight into where prices are likely to go.

FWIW, the "long term" 200 day moving average started down right around beginning of April 2013.

I'll clarify my terms in my next post, but for now:

Long term: 200 day (simple) moving avg

Medium term: 50 day (simple) moving avg

Short term: 20 day (exponential) moving avg

 

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Arthur Robey
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Gold has no Value (To Capital)

No one shouts from on top a soapbox that the sun will rise in the morning.

We only get hot and bothered about things we are not sure of.

In which case I should be hollering my lungs out. But my ignorance is so deep that I am mute.

How about this? People are no longer the base unit of the economy, companies are. Why? Automation and cheap energy. And we buy everything from companies. (Even Food)

Therefore it does not matter that People value or do not value gold; if companies do not value gold then gold is valueless.

What do companies value? Profits. If companies can make more profits by selling things to other companies than selling to people, we get the crumbs from the table, so to speak.

We don't have any disposable income. Why should companies have any interest in us or our fascination with Gold?

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yogiismyhero
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Posts: 173
Dave, I have looked into the future and seen the coming...

...train wreck. Long term is in fact 200 dma but if the Fed keeps buying or stops buying then this market is toast. Gold then is indeed a safe bet against paper so a terrific store of wealth, correct? It is why I own it, the physical that is as the math screams me too. Plus it won't go to zero and will most likely buy the stuff I will need, Food, Clothing, Sheltor and Heat. This is peace of mind, Yes? As we all understand Gold is money in every corner of the globe and can be negotiated on. I just find a great sence of relief having it. I like Gold jewelry too (my largest holding) as you can get the physical, wear it and cut it up into small pieces. Plus, it is a lot easier to get than Gold bars and coins. Additionally it is less noticable so not nearly the violent risk as the coin and bars are. 

OT: Brax (Braxton) my grandson made his first par yesterday on a par 3, 91 yard dog leg right at the tender age of 6. He is a South Paw, took driver and crushed it within 8 yards. Then deftly nailed his sand wedge within 3 feet. Steadied himself, took aim, outside right edge of hole and putted. To hear that ball hit the bottom of the hole: PRICELESS!!! An investment on a lifetime of joy for all concerned. The card is now framed and placed on "My Wall of Fame" here in my office. Nice.

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Rob P
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Posts: 85
best discussion of backwardation

This is the best presentation of backwardation I've seen so far. I'm just taking it in and thinking about it.  It's definitely worth a look:

http://www.zerohedge.com/contributed/2013-07-25/what-drives-negative-gof...

It's a very interesting perpective - somewhat speculative - that links Backwardation and GOFO to the movement of physical to China. 

Yesterday's downturn in spot maintained rough  inverse correlation to the dollar (DXY) movements.  One thing I'm looking for is a day-to-day breakdown in that. That would be  a really big moment.

Dave, thanks for clarifying: short, medium, long.  I thought that's what you meant, but those terms are used in defferent ways in different contexts. 

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Rob P
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Posts: 85
PS

Your call on short term movement - the 60% prediction of a range between 1310 and 1350 seems to be playing out, though it is a bit early to say for certain.  We just bounced off of 1310. 

I tend to think that there really are shortages of physical inventories and that this may eventually blow up, but who knows how long that might take?  They'll proabably pull together gold from out of the wood work, and make 7 year delivery deals etc etc for quite a while.  That's the problem - and it plays out in all sorts of arenas from peak oil to peak debt to physical gold - things take longer to come to a head than most people think, and the powers that be can keep it all going, the status quo, longer than one would think possible. Meanwhile, better pay at least some attention to trends, moving averages, etc - especially if you trade.

Yogi: just my opinion, but I think the Fed stopping its bond buying etc, could just as easily result in a general deleveraging and   asset melt down that would include, at least temporarily, gold. Something like this happened back in 08-09, with the previous big pull back.  No one knows how it will play out, but PMs are not necessarily a certain winner at any given moment - relative to the dollar.  Although I've come to believe that scenerio the less likely outcome, I think it best to be holding some dollars to take adavantage of gold prices - just in case they do go back to $400.00.  I think that really could happen.

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davefairtex
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Posts: 5418
my calls

RobP -

Well now, I always like using percentages and making lots of calls.  That way they're all right.  :-)  Seriously though, my thinking is, I need to be prepared for all eventualities.  Breakout - what do I do.  Retracement - what then?  Then I let the market reveal itself.  That's the theory anyway.

Usually moves bounce off resistance at least once.  But I was tricked by price movement and the close on Tuesday.  Note to self: first time into resistance always seems to be tough sledding, and the medium term downtrend is still in place, and must be respected.

Today's bounce off 1310 is neatly coincident with the dollar peaking this AM at 82.50, and the resulting rally in PM coincident with the buck falling all day long to 82.10.  For now it looks like we're back to dollar-down-gold-up.  Ratio isn't 1:1 but the influence does seem to be there.  If we get a strong dollar rally, it will be trouble.  Likewise, some dollar weakness might just get us to punch through 1350.

I think if the physical buying in asia continues at its current pace, in time, it will move the futures markets.  I'm still working out the details of how it all might fall out.

 

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