PM Daily Market Commentary - 5/22/2014

davefairtex
By davefairtex on Thu, May 22, 2014 - 10:52pm

Gold closed up +2.10 to 1294.10 on moderately heavy volume, while silver was up +0.09 to 19.49 also on moderately heavy volume.  Gold moved steadily higher for most of Asia and London trading, and spiked up at 0820 EDT - not sure why, but it hit 1304 ten minutes later as the day high.  But gold could not hold its gains, and retreated for the rest of the day, back to almost flat.  Given the volume on both silver and gold today, the resulting good-volume hammer candle on the daily chart looks distinctly bearish.  (Failed rallies on decent volume are generally bad signs).

It looks like the bullish reaction from the FOMC minutes release lasted about a day.  Silver seems to be gradually rising in spite of today's hammer, while gold seems trapped in a narrowing trading range - those "wedge" formations tend to break sharply in one direction or another.  I suppose it depends on which signal you trust most - GDX:$GOLD is pointing lower, silver looks like it really wants to recover, and gold is neutral at the moment.

The buck traded higher today, closing up +0.17 to 80.29.  The dollar appears to be setting up for a move higher, but once again, the buck does not seem to be affecting gold at all.

GDX opened up higher and then chopped lower during the day, closing down -0.26% on light volume.  GDXJ did slightly better, up +0.36% on very light volume.  Light volume = lack of interest, in either buying or selling.  Perhaps GDX is waiting to see what gold will do, and while it is waiting, it seems to be dropping.  If GDX is leading anywhere, it is leading gold lower, at least for the last five weeks or so.

SPX closed up +4 to 1892, chewing higher on relatively light volume, steadily moving up towards another all time high.  Nasdaq is actually starting to look stronger, IBB (biotech) broke out of its month-long consolidation - now some other things are starting to look a bit more bullish as well.   VIX remains quite low, at 12.03.

I get the sense sometimes that when money pours into equities, it flows out of PM - so SPX's gain is sometimes gold's loss.  Not entirely - the linkage isn't explicit or anything - but there does seem to be a rough relationship.  Traders do have a choice where to put their money, and with no monetary inflation and commodities seemingly at a standstill, what's the motivation for them to buy COMEX contracts?

So rallies get sold as traders take their short term profits and gold trades in a tight range, with perhaps ever so slight of a downward bias.

6 Comments

Dkieke's picture
Dkieke
Status: Member (Offline)
Joined: Apr 4 2013
Posts: 19
Gold Price Manipulation

I know it's not mentioned or debated in this specific daily update, and I'm sure most folks here have already seen this on Zerohedge, but here is a great story about the recent Barclays gold manipulation fines, http://www.zerohedge.com/news/2014-05-23/barclays-fined-manipulating-price-gold-decade-sending-bursts-sell-orders

I really like how the exact same charts Chris often uses to identify the gold smashes to the bid stack are used in the article, and especially the part about the scapegoat having left Barclays in 2012 while the fines describe manipulation into 2013...  

David

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5570
Gold price manipulation
Dkieke wrote:

I know it's not mentioned or debated in this specific daily update, and I'm sure most folks here have already seen this on Zerohedge, but here is a great story about the recent Barclays gold manipulation fines, http://www.zerohedge.com/news/2014-05-23/barclays-fined-manipulating-price-gold-decade-sending-bursts-sell-orders

I really like how the exact same charts Chris often uses to identify the gold smashes to the bid stack are used in the article, and especially the part about the scapegoat having left Barclays in 2012 while the fines describe manipulation into 2013...  

David

David,

i truly believe that anything bankers can loot, thieve, swipe, or defraud someone out of is considered fair game by them.

Gold and other commodities certainly fit the bill because there's effectively zero regulatory oversight in these markets.  The CFTC has never investigated a major complaint of manipulation and found any even though, daily, there are examples of bid stacks being destroyed.

That's not price discovery, that's price manipulation.

Time move another conspiracy theory over to the conspiracy fact side of the ledger.

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5071
confirmed gold price manipulation

I am completely unsurprised by this too.  While I do not believe that the banks are able to manipulate the long term trend (the gold market is larger than any one participant), I do believe they play with the market quite routinely in order to skim profits, in this case from their customers.  And in London especially near the fix, the direction is always down.  No doubt that's because it is the profitable direction for the banks.

Just this past week there have been any number of high volume spikes for no particular reason, some up, and some more down.  This should be illegal, but of course it isn't.

So yes: it is now a fact that gold is manipulated by various commercial banks, and that those gold "raids" one sees every morning usually around the time of the London fix aren't accidental at all but are entirely designed to reprice the market, but how deeper does the rabbit hole go?

And I've seen through my analysis all that very regular selling that happens immediately before the AM and PM fix that can't be "normal market forces."  Any customer who makes a deal with these guys should really consider carefully what they are doing, since it is clear that the banks only play cards when they can mark the cards and stack the deck for good measure.  Who wants to take actual risk when you can rig the market and make your bonus that way?

However, my goal is not to serve as a constant reminder of these manipulations (OMG the market was wildly manipulated today!  Again!!!  Woe is me as a holder of gold!!) mainly because I don't see that as either useful or productive.  I see my value add as analyzing the trends of the market.  As a trend analyst, I believe that the clever analyst can use the manipulation to better understand how the underlying real market is doing.  How do I do that?

There's an old trader adage: "its never the news that matters, it is always the market's reaction to the news that counts."  I have the same view of these spike moves.  They are like active tests of the market, constant probes to see if there is support or resistance at various levels.  That's not the intent of course, but that ends up being the effect.

So if a spike down takes place, and it gets bought, I treat that as a "bullish response" by the market to a bear raid, and of course the reverse is true.  If the market sells off after a bear raid, then that shows weakness and that's good to know as well.  One never really knows if support is good until it is tested.  And these spikes are constant tests that provide a wealth of evidence to someone looking for it.

Right now, there have been a larger than normal number of bear raids these past few weeks, but all of them have ended up being bought.  I take this as a bullish sign.

 

 

Cornelius999's picture
Cornelius999
Status: Gold Member (Offline)
Joined: Oct 17 2008
Posts: 373
If anybody is looking for

If anybody is looking for another juicy conspiracy to look into, "The Hidden History of the JFK Assassination by Lamar Waldron, 2013, untangles 99% of the plot in a mammoth feat of research and investigation. Compelling.

 

Wildlife Tracker's picture
Wildlife Tracker
Status: Gold Member (Offline)
Joined: Jan 14 2012
Posts: 403
Getting closer...

 

RichardSJohnson's picture
RichardSJohnson
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Joined: May 23 2014
Posts: 1
This poster blocked

Admin note:  This poster is an individual who has been blocked and banned repeatedly for violating community guidelines on a wide number of fronts.  He keeps signing up under different aliases, three so far this week, and we keep banning him, which wastes everybody's time.  

We wish him all the best in finding something useful to do with his time, but he's absolutely not welcome or wanted here. 

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