PM Daily Market Commentary - 11/21/2013

davefairtex
By davefairtex on Fri, Nov 22, 2013 - 12:20pm

Gold closed down -0.30 to 1241.70 on very heavy volume, while silver closed up +0.11 to 19.95 also on very heavy volume.  The gold silver ratio dropped -0.38 to 62.23.  Price action and volume today screams accumulation to me.

That's a sign of a possible reversal.

If you read me frequently you know I keep harping on the need for buyers to show up at the COMEX in order to bring about a reversal of this downtrend, or else the shorts will continue to do their tricks such as dropping large numbers of contracts on the market, forcing prices lower and stopping out the longs again, and again.   Today, there was a 5-point two-minute selloff intraday on a sale of 5000 contracts, an attempted market slam that ended up being bought.  It is clear to me our long lost (COMEX) buyers showed up, however we still wait for them to chase prices higher, so confirmation is required - a close above today's high of 1250.

Again, its price AND volume together that gives me the signal.  In a downtrend, a day with massive volume and unchanging price means only one thing to me - a whole bunch of buyers showing up, picking up every contract sold by the shorts at the current price.

The dollar rose +0.06 [+0.08%] to 81.12, a mild move within the recent trading range that provides no real information.  Buck needs to either break above 81.60 to be bullish, or below 80.50 to resume its downtrend.

GDX closed down -1.3% on moderately heavy volume, trading within a hair of the June 25th low and then rebounding.  GDXJ dropped -0.7% on moderately heavy volume, but it broke below its June 2013 low before bouncing back.  If the metal doesn't bottom here, it seems clear GDX will drop below its June lows, which would likely result in a further bunch of miner selling.

 

10 Comments

Rob P's picture
Rob P
Status: Bronze Member (Offline)
Joined: Oct 8 2008
Posts: 85
Appreciation

I had vowed to stay out of commenting on this site because of how contentious things tend to become around Dave's posts.  But I'm just going to say that I trade Gold stocks daily (also the PM ETFs) and that I really appreciate Dave's making the effort to give his analysis which I do use in my thinking. It's a great fact based analysis that is an important part of my thinking about the markets.

I'm a long time holder of PMs and PM stocks, and I trade the equities.  Here's the deal: you just can't trade on the same analysis and terms that you long-term-hold physical or stocks.  Also, it's extremely difficult, but you always want to try to get the best price, and Dave's sort of analysis is the best sort of thing we've got for this (though it's not perfect.)

Just a little point:  The physical markets may eventually prevail and that will undoubtedly be quite a day for my long term holdings, but for now and probably for quite a while yet, the paper market will set the price for the physical, so I for one feel that I better understand it; That's really all there is to it.

Keep up the good work Dave - although I am not posting, know that I appreciate it.  I'll bet there are others like me who also don't post.

troof's picture
troof
Status: Bronze Member (Offline)
Joined: Sep 14 2013
Posts: 39
Wherefore cometh this all?

Dave,

These statements raise some questions for me.  Are you implying that those who are not in agreement with you about purchase decisions are not keeping a clear head?  I don't think you mean that but that's the converse implication of your statements.  Certainly, it strikes me as a bit of hubris to assume that those on one side of a trade have a clear head and those on another side do not.  If it were that simple, we'd all be trading geniuses, which of course we're not, especially in these markets.

Also, is it your feeling that gold, trading in the 1240 range, is at a top?  Or is it simply at an elevated price compared to where you think it may fall?  What makes you think it is at a top and will fall further?  Also, are you confident in being able to lay your hands on a sizeable source of physical gold if the paper price falls farther?

Are you tapped into a source of omniscience that we're not aware of?  You seem extremely confident of your forecasts.  Could you give us some insight into your educational and occupational background, trading track record, information sources, financial wherewithal, etc. that gives you the confidence to make these forecasts with such certainty?

I appreciate the information you provide but the source seems somewhat misty and murky and before committing to any path of action based on your information, I'd like to know more.  Thanks.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 5459
troof and my source of omniscience

Troof-

It sounds like you are reading more into my commentary than I put there.  Could you help me out by including a quote of what I said - along with your question about it - and I'll be happy to clarify any misunderstandings you have with my intent.

In the meantime:

Am I implying that those who are not in agreement with me about purchase decisions are not keeping a clear head?  No.  I'm specifically stating that people who make buy/sell decisions driven primarily by emotion are probably not going to experience a happy outcome.  Clear head = not emotionally involved.  I believe the reference was Hrunner's rant about corruption & the like.  Its fine to be upset about those things, I am upset too when I think about it, but I can't let that affect my read on the market or I will end up doing foolish things and losing money.

Do I think gold 1240 is a top?  No.  Gold 1900 was a top.

Am I tapped into a source of omniscience?  No.

Am I confident of my forecasts?  Well, I'm confident of this if-then case: if gold drops to 1200, then GDX and the miners will get sold hard and make new lows.  Ask me about one of my forecasts specifically (quote me) and then request me to explain how confident I am and why.

Will gold drop below 1240?  That I don't know.  There's a downtrend in place.  Trends tend to stay in motion, that's just what they do.  Shorts continue doing what works - in this case, shorting gold & miners - until that stops working.  Buyers have to appear to make the shorts stop.  When will the buyers appear?  I don't know that either, nobody does.  I watch for signs in price & volume data, that's the limit of my omniscience.

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 5459
thanks rob

Thanks for your kind words Rob - and the others too whom I haven't specifically acknowledged.

I have this feeling that if I were to rant more, and analyse less, those who have a problem with my posts would find them more appealing.  If in every post I were to bash a bank or two, or yell about manipulation every time gold dropped in price, or engage in some other appeal to emotion, a lot more people would find this reassuring and it would prove I'm not some tool of the establishment.

The problem is, I trade off my own posts, they really are a reflection of my current thinking.  Writing them really helps me to clarify how I view the current situation.  Somehow, writing it in a post makes it clearer in my head.  So if I let myself go nuts in a post, it affects my own decision making.  And I really don't want to lose money, so I try and keep my emotions from affecting my decision making, and that's why my stuff doesn't include the appeals to emotion that many other gold market posters choose to include in theirs.

 

 

troof's picture
troof
Status: Bronze Member (Offline)
Joined: Sep 14 2013
Posts: 39
Thanks
davefairtex wrote:

Troof-

It sounds like you are reading more into my commentary than I put there.  Could you help me out by including a quote of what I said - along with your question about it - and I'll be happy to clarify any misunderstandings you have with my intent.

In the meantime:

Am I implying that those who are not in agreement with me about purchase decisions are not keeping a clear head?  No.  I'm specifically stating that people who make buy/sell decisions driven primarily by emotion are probably not going to experience a happy outcome.  Clear head = not emotionally involved.  I believe the reference was Hrunner's rant about corruption & the like.  Its fine to be upset about those things, I am upset too when I think about it, but I can't let that affect my read on the market or I will end up doing foolish things and losing money.

Do I think gold 1240 is a top?  No.  Gold 1900 was a top.

Am I tapped into a source of omniscience?  No.

Am I confident of my forecasts?  Well, I'm confident of this if-then case: if gold drops to 1200, then GDX and the miners will get sold hard and make new lows.  Ask me about one of my forecasts specifically (quote me) and then request me to explain how confident I am and why.

Will gold drop below 1240?  That I don't know.  There's a downtrend in place.  Trends tend to stay in motion, that's just what they do.  Shorts continue doing what works - in this case, shorting gold & miners - until that stops working.  Buyers have to appear to make the shorts stop.  When will the buyers appear?  I don't know that either, nobody does.  I watch for signs in price & volume data, that's the limit of my omniscience.

Dave,

Thanks for your reply.  I'm not sure what you mean by reading more into your commentary than you put there.  Can you give me a quote as to what makes you think this?  I'm more interested in what you feel qualifies you for commentary.  Thus, asking again but rephrasing the question, can you give us some idea as to your background?  You've assumed a higher level of responsibility than the average poster here with your daily commentaries (and not just posting other news stories like sax player does) and, as a consequence, I for one would appreciate a higher level of transparency and accountability.  If you're offering advice on these matters, some history would be helpful and lend credibility to your commentary.  We know Chris's story, Adam's story, and the story of virtually all the other writers of regular commentary here but you come across as a mystery man in comparison.  Any possibility you could clear that up?  Thanks.

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 5459
reading more than is there

Ok, here's what led me to the conclusion you were reading more into my posts than I put there:

Are you implying that those who are not in agreement with you about purchase decisions are not keeping a clear head?  [I never implied that]

Certainly, it strikes me as a bit of hubris to assume that those on one side of a trade have a clear head and those on another side do not.  [I never implied that either]

Also, is it your feeling that gold, trading in the 1240 range, is at a top?  [I never had such a feeling]

What makes you think it is at a top and will fall further?  [I did not feel gold was at a top at 1240]

Are you tapped into a source of omniscience that we're not aware of?  [My only source of extra information is - perhaps - not assuming maniupulators are behind every single drop in the price of gold]

You seem extremely confident of your forecasts.  [I (generally speaking) don't make forecasts; can you point out something that looks like an extremely confident forecast to you?]

As for my background, first I spent ten years as an economic analyst for the CIA, and then another 7 years working for Goldman Sachs metals trading desk, and now I'm working for the Special Information Services at the LBMA, but right now I'm TDY at Peak Prosperity.

All right none of the last paragraph is true, but wasn't it fun to read?

My only qualification for writing about the movements of the gold market is, I trade it.  I buy gold and silver futures contracts, mining shares, and sometimes I write (and buy) options as well.  [I've said this elsewhere]  As for my record - it has been lamentable the last few years.  I have managed to avoid perhaps half of the downdraft, but I got back in too early, and I didn't respect my own stops, so while I'm not 65% down, my position isn't as happy as it would have been had I exercised appropriate discipline.  My futures record is substantially better (I'm up on the year), as for whatever reason I'm better at respecting stops there, and I generally avoid buying into a downtrend because - well it just seems a whole lot harder to make money being long in a downtrend.

For whatever reason, its hard for me to short gold, so I just focus on long entry points, which there haven't been many recently, so I haven't been trading as much.  For what its worth, I'm currently long one gold futures contract (stop below Thursday's low), I have a bunch of put-writes on some miners, some of which are underwater, and I have a number of miners and CEF in my core position that are unpleasantly underwater (between 20-50% red).

troof's picture
troof
Status: Bronze Member (Offline)
Joined: Sep 14 2013
Posts: 39
davefairtex wrote: Ok, here's
davefairtex wrote:

Ok, here's what led me to the conclusion you were reading more into my posts than I put there:

Are you implying that those who are not in agreement with you about purchase decisions are not keeping a clear head?  [I never implied that]

Certainly, it strikes me as a bit of hubris to assume that those on one side of a trade have a clear head and those on another side do not.  [I never implied that either]

Also, is it your feeling that gold, trading in the 1240 range, is at a top?  [I never had such a feeling]

What makes you think it is at a top and will fall further?  [I did not feel gold was at a top at 1240]

Are you tapped into a source of omniscience that we're not aware of?  [My only source of extra information is - perhaps - not assuming maniupulators are behind every single drop in the price of gold]

You seem extremely confident of your forecasts.  [I (generally speaking) don't make forecasts; can you point out something that looks like an extremely confident forecast to you?]

Dave,

I appreciate you taking the time to make the clarifications noted above.

But is there any particular reason you remain evasive about your background?  

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 5459
backgrounds

So I prefer not posting too much information about myself on the Internet; the more information I post, the more vulnerable I am.  [That's true for everyone, I think]  Chris and Adam have access to my linked in - I felt they had a need to know.

If you were my friend and I felt you would protect my privacy, I'd be happy to tell you.  Are you my friend?  Will you protect my privacy?

troof's picture
troof
Status: Bronze Member (Offline)
Joined: Sep 14 2013
Posts: 39
davefairtex wrote: So I
davefairtex wrote:

So I prefer not posting too much information about myself on the Internet; the more information I post, the more vulnerable I am.  [That's true for everyone, I think]  Chris and Adam have access to my linked in - I felt they had a need to know.

If you were my friend and I felt you would protect my privacy, I'd be happy to tell you.  Are you my friend?  Will you protect my privacy?

Dave,

Your concerns are understandable but as I said previously, virtually everyone who writes regular articles reveals something of themselves.  You don't have to post the transfer numbers to your Czech bank account or tell us about the identifying birthmark on your butt cheek or your mother's maiden name but just a little background without revealing critical, readily traceable, personal information would be informative.  If you're on LinkedIn, what's the big secret?  Isn't LinkedIn about networking?  Given that information, I guess I don't understand the paranoia, especially since the most threatening element you're likely to encounter would have little trouble tracking you down, if so inclined. 

As far as me being your friend, it's pretty obvious that I don't know you so it makes it hard to be friends with someone you don't know.  If you'd ask for privacy, I'd grant it and keep it private it but obviously, you have only my word to go on with that.  Also, I think the interest in your background goes beyond just me.

It's clear that you're uncomfortable with the situation in a way that has some affective import.  That surprises me since you've talked repeatedly about controlling one's emotions when trading.  It comes across as a curious contradiction of sorts.  That being said, I understand if you don't want to reveal anything more and I thank you for your responses and your contribution here.

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 5459
thanks

Troof said-

Your concerns are understandable...

And thanks for your understanding.  :-)

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments