PM Daily Market Commentary - 12/05/2013

davefairtex
By davefairtex on Fri, Dec 6, 2013 - 12:25am

Gold closed down -18.20 to 1224.30 on moderately heavy volume, and silver closed down -0.28 to 19.39 also on moderately heavy volume.  The gold silver ratio dropped -0.01, basically unchanged.  From gold's peak yesterday at 1248, the buyers more or less vanished, and gold sold off steadily (with one test of the low to 1216 in NY) through the close, losing the entire gain from yesterday.

Percentage-wise silver did substantially better - losing only 50% of yesterday's move.  In a rebound, its silver we are more concerned about, and its chart is looking marginally better than gold.

The dollar finally made up its mind, breaking below 80.50 support, closing down -0.39 [-0.48%] to 80.28, breaking through its 50 day MA and appearing to be headed for another test of 79.  The buck initially spiked higher concurrent with the revised release of 3Q GDP & the Jobless Claims report today at 0830, but fell soon after.  My guess: the headline number for GDP looked good (3.6%), but the details did not.  Clearly, moves in the buck are not affecting gold at the moment.

GDX was down -2.59% on moderately heavy volume.  By the time NY opened, gold was already off $24 from yesterday's high so GDX opened down, tried to rally, failed, and closed about where it opened.  GDX avoided making a new low, but not by much.  GDXJ dropped by -3.51% on moderately heavy volume.  Both miner indices gave up all the gains from yesterday.

Although many things seem to be in place for a reversal, gold and the miners still can't seem to rally for longer than a day at this point in the cycle.  Perhaps that's tax loss season, lack of a catalyst, the trend that's in place that tends to continue - or maybe its something else.  Patience, waiting for that 8 EMA crossing is probably best.

For the non-traders out there - now might be a decent time to consider buying some physical, if you don't have enough lying around, and for some reason you don't feel like stocking up on Bitcoin.  Especially silver at $19 when all-in costs for many producers are in the low 20s suggests we can't stay at these levels for too long absent a major deflationary event.

I don't mean to sound like KWN but - the low price, the long downtrend, plus current technical indications are suggesting to me that this is a reasonable buying opportunity.  I'm implicitly betting on the June lows to hold.

But if PM drops further, don't shoot me!  This sort of analysis is all about probability, not about certainty.

4 Comments

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5072
tactical manipulation

So this morning prior to market open, I saw one of the finest examples of tactical manipulation in a while.  Coming into the Nonfarm Payrolls report, the low for gold was 1210.80 set a few days back.

So, right at the release at 0830, there is a massive - truly massive $25 spike down, that stops out all the new longs since 1210 low, 7500 contracts worth, a huge amount.  The spike down gets bought, rebounds back, up, up, and stops out all the new shorts, making a high of 1245 not 30 minutes later.  Then that high gets sold, bringing the market back to flat prior to the open.  Nothing to see here.  Move along.

Was there any particular excitement from the NFP report?  It didn't look like it to me.

This wasn't about "setting prices" or "changing trends" it was just about stop-gunning, and more the longs than the shorts.  You can tell that by the size of the volume spikes.

If I had to call this, I'd say someone was clearing out the longs prior to a move up, but also making sure the shorts didn't get too frisky as well.  If someone is long, but then is stopped out, they will be forced to buy again, at higher prices, helping to fuel the move up.

I interpret this as bullish.  The fact that the miners have been bid up today helps cement this opinion.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5570
About that Gold Takedown

Dave,

as always, great commentary,

To it I will add that the actual direction of the gold takedown was pre-scripted and actually initiated a full 7 seconds before the release of the """embargoed""" jobs report.  I used plenty of """ marks because one just didn't seem sufficient for the task.

(Source

Two things to note.  The first is that 'someone' is moving these markets in advance of the released data.  I remain completely confident that the SEC will not investigate or, if they do, will not release any information about who is doing this blatantly market scandalous activity.  Trust in the markets?  No thanks.

Second there was huge volume in the stop clearing runs but note that a significant portion of it happened during the first blast down at the t minus 7 second mark.  Of course you have to look at these things with millisecond time resolution to see such things now...

The paper gold market sure looks like someone's private playground these days...this ain't your daddy's market.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5072
jobs report takedown

Its great to have that millisecond look at the market!  My granularity is limited to one-minute, and I wasn't watching at the moment of the report release.

My feeling is, the jobs report was irrelevant for the bi-directional takedown.  The takedown was pre-scripted, the jobs report was just the excuse - the fig-leaf.

From my observations, we haven't seen this sort of power unleashed on the gold market in a while, but in a directionless way.  My opinion is, it is not the shorts trying to pound things lower, I feel it is something else.

It is possible this particular low (assuming this area is the low) will be one of those back-and-forth deals, where we chop along the bottom for a while, both long and short stops being run daily, making sure that nobody is on board before it takes off.  And anyone who might be impelled to sell during tax loss season could be shaken out here, with the shares falling into the hands of the banks who (presumably) have plans to eventually buy a bunch more COMEX futures along with the miners they're accumulating.

Its a theory anyway.  And if gold closes below that 1210 low, my theory will be proven wrong!

[It would be awfully nice if some friendly regulator would come along and put position limits on these guys, or better yet, tell the bankers they should stick to just making loans.  They still make loans these days, don't they?  If we only had friendly regulators...]

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1429
cmartenson wrote: Dave, as
cmartenson wrote:

Dave,

as always, great commentary,

To it I will add that the actual direction of the gold takedown was pre-scripted and actually initiated a full 7 seconds before the release of the """embargoed""" jobs report.  I used plenty of """ marks because one just didn't seem sufficient for the task.

(Source

Two things to note.  The first is that 'someone' is moving these markets in advance of the released data.  I remain completely confident that the SEC will not investigate or, if they do, will not release any information about who is doing this blatantly market scandalous activity.  Trust in the markets?  No thanks.

Second there was huge volume in the stop clearing runs but note that a significant portion of it happened during the first blast down at the t minus 7 second mark.  Of course you have to look at these things with millisecond time resolution to see such things now...

The paper gold market sure looks like someone's private playground these days...this ain't your daddy's market.

What market are these graphs for? The physical or the paper GLD?  If I am understanding correctly, this was not the paper slam that central banks have been doing previously in the year.  What was actually sold in that millisec to trigger the stops to fire?

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