PM Daily Market Commentary - 12/02/2013

davefairtex
By davefairtex on Mon, Dec 2, 2013 - 10:09pm

Gold closed down -32.90 to 1218.50 on moderately heavy volume, while silver closed down -0.85 to 19.15 also on moderately heavy volume.  The gold silver ratio rose +1.08 to 63.65.  Gold sold off starting from the open in Asia through the close in NY, all day long.  Silver did the same thing, but performed worse. Both metals plunged through support levels, triggering long stops, hitting new cycle lows, and closing quite near those lows.  It was a bad day for PM.

The dollar rose +0.27 [+0.34%] to 80.93.  The dollar climbed all day long, closing quite near the high, moving inversely to gold once again.  If the dollar moves through its resistance level at 81.50, that will be bearish for gold.  With gold at the low 1200s, that's pretty bad to say, but there it is.

GDX was crushed, selling off all day long, closing at the low, on heavy volume down -6.19%, giving us a new low for the year.  If you bought Friday's rally, I hope you had stops.  GDXJ did much the same thing as GDX, dropping -6.89% also on heavy volume, scoring a new year low too.

So, gold/silver ratio up, GDX:$GOLD down, GDXJ:GDX down, dollar rising, new lows made, everything closing at the low - it doesn't get more bearish a picture than this.

If you remember, on Friday I asked, "was this the low?"  Once again, no.  And that's why we use stops.  Because sometimes cheap gets even cheaper, and then it gets really really cheap, and then (astoundingly) it drops some more until it finally bottoms out - after everyone is tired and nobody wants to buy gold ever again.

Once again, the downtrend remains in place.  Bears are in control.  As of this moment, it would appear we're headed for a re-test of the June lows in gold.  We are waiting for those COMEX/GLD buyers to appear.  Someday they will, the only question is when, and at what price.

1 Comment

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 864
SHS

Dave,

When I look at the gold chart from July through now, I see what looks like a well defined head and shoulder pattern. I remember someone saying that it was invalidated (it might have been you who said it.) What would cause it to be invalidated? If the market accepted the validity (erroneously???) what would the price implications be?

Thanks,

Grover

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