PM Daily Market Commentary - 1/28/2015

davefairtex
By davefairtex on Thu, Jan 29, 2015 - 2:46am

Gold fell -9.20 on heavy volume, while silver dropped -0.07 to 17.99 on light volume.  Gold more or less slowly sold off all day long, with some volatility around the "nothing has changed" FOMC announcement at 1400 EST.  Silver looked much stronger, as it mostly just traded sideways.

Although today it lost some ground, gold has been chopping sideways supported by the EMA-9 for the past three days.  That looks reasonably strong to me.

The USD rebounded today, closing up +0.50 to 94.76.  The buck's good-sized move started right after the FOMC statement, and it continued climbing right into the close.  When the Fed changes nothing, and yet some things make a relatively large move immediately afterwards, it's always a bit of a head-scratcher as to why.  Were they expecting the Fed to say something different?  If so, what?

Mining shares had a bad day, and it started immediately after the FOMC statement.  Miners sold off steadily with only a modest rebound at end of day, with GDX off -3.98% on heavy volume, while GDXJ lost -6.08% on heavy volume as well.  Given gold only dropped less than 1%, the move in the miners looked bearish.  Perhaps it was the rising dollar that caused the problem.  While miners closed right at the EMA-9, they don't look quite as healthy as gold does - miners remain below their 200 MA, and the sell off today had some relatively high volume attached.

SPX also didn't like the FOMC release, losing 25 points from the moment of the announcement at 1400 EST through to the close.  SPX dropped -27.39 to 2002.16.  VIX climbed a big +3.22 to 20.44. 

Long bond ETF TLT rose sharply following the announcement, breaking out to new highs and closing up +1.63%.  20 year rates are now 2.05%.  Bonds remain in a very strong uptrend.

The overall commodity index ($CRB) dropped, losing -1.34% making a new low once again.  WTIC dropped as well, falling a big -1.40 [-3.06%] to close at 44.38, which is a new closing low for oil.  The fall in oil caused oil equities to sell off hard.  After all this time, oil still hasn't managed to find a bottom, and this clearly demoralized the traders who bought oil equities hoping that mid-40s was "the low" for oil.

So, FOMC results: equities down, dollar up, bonds up, and miners down (the FOMC did not seem to affect oil as it was already dropping prior to the announcement).  I'm hoping the miners find support on the EMA-9, but often effects from FOMC meetings last for several days.

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25 Comments

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PM sell off

PM is selling off starting in Asia and continuing into the London session.  If we don't get a bounce in NY, it looks like we're headed for the 200 MA support line at 1255.

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About that "Asian Sell Off"
davefairtex wrote:

PM is selling off starting in Asia and continuing into the London session.  If we don't get a bounce in NY, it looks like we're headed for the 200 MA support line at 1255.

Put me down as someone who trusts nothing about "markets" these days, knowing that they are all subject to manipulation and speculator control.

While we might be tempted to watch the action in gold and say 'the Asians were selling it' the data suggests that conclusion may not be the most appropriate one.

Recall this interesting tidbit from last November?

Unusual gold moves in Asian hours puzzle jittery traders

SINGAPORE (Reuters) - Some of the biggest price moves in gold since late October have, unusually, occurred in Asian hours and traders more accustomed to following the lead of their Western counterparts suspect a big increase in algorithmic trading may be to blame.

Sensitivity to the dollar-yen exchange rate may also help explain the moves, although some traders speculated that the timing looked suspiciously like attempts to catch Chinese traders off-guard during their lunch break.

Liquidity in Asia tends to be thin until Europe wakes up but recent weeks have been different: COMEX gold futures, the busiest gold contract in the world, have suffered sharp sell-offs in Asia, sometimes sparked by the news flow or currency moves but often for no identifiable reason.

"It is unusual for Asia to be seeing these busy trading sessions," said David Govett, head of precious metals at broker Marex Spectron in London.

"I have spoken to a lot of people about it and the general consensus seems to be that there is a big increase in algorithmic and high-frequency trading in this time zone nowadays as it can be quite easy to push about," he said.

The trend began on Oct. 31, when U.S. gold futures fell through a major technical level of $1,180 an ounce at around 3 p.m. Singapore time (0700 GMT).

They fell $11 in a minute and nearly 9,000 lots were traded in five minutes, compared with just 535 lots in the five minutes preceding the drop.

Some of the dips in price have tracked dollar-yen movements, including that one on Oct. 31, when the Bank of Japan announced a surprise increase in monetary stimulus and the yen tumbled.

The price lurches that took the market lower often happened when traders in top gold consumer China, which usually provides support for the metal, were out for lunch.

"Someone is utilising these thin trading volumes to get a turbo steroid move," said a precious metals trader in Hong Kong.

We can speculate about who that "someone" is, but it's pretty clear that "trading" in gold now involves someone stepping into thin markets with heavy paper assaults.

And those assaults are timed for minimum Asian participation.

So all I am tempted to say when gold falls in any trading session is that the algos are playing their usual games, and the regulators could not care less because as long as the alogs are forcing gold lower, this fits the plan and therefore it will be overlooked.

But it is obvious price manipulation designed to engineer lower prices for profit and gain - things that in theory are illegal.

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Jim H
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Well stated Chris...

Everything is fair game when it comes to downside moves.....

So all I am tempted to say when gold falls in any trading session is that the algos are playing their usual games, and the regulators could not care less because as long as the alogs are forcing gold lower, this fits the plan and therefore it will be overlooked.

But we have new collars that will limit the upside moves...

The implication of the new CME rule, some say, is the fear that has long haunted the so-called “paper gold” market: that there might not be enough deliverable gold if someone (Who? China? A central bank?) calls in their chips. Or, otherwise, some big market-moving event is expected in the near future that could cause massive price fluctuations – more than likely higher.

https://www.blanchardgold.com/investment-news/the-longview/gold-price-ci...

There are lots of analysts who accept based on what their own eyes see that there are manipulative forces in the market... today, for another perspective on the manipulation,  I will offer some words from Jesse;

And you might wonder that gold did not participate in the safe haven move.  And unless you have been listening to what I have been saying here, you will not understand it.  The Western central banks are loathe to allow gold and silver to run free, because it would hamper their fiat financial engineering.
 
That they will collapse on their own is probably a good bet.  But they are more than willing to expend their energies on hiding their mistakes, rather than fixing the real problems.
 
No wonder the vast portion of the world that is not an 'attendant nation' to the New American Century is recoiling in disgust from the antics that the Fed and its Banks have been playing with the dollar.
 
In summary, to paraphrase Samuel Johnson, 'The Fed is an ass.' 
 
But like most of their financial sector, I do not think it to be a benign influence on the real economy.  The Fed, and the banking corporations that have risen up around it, are like a cankerous sore, an abscess that needs to be lanced.
 
Like the privileged class has learned from their earliest days, when you have screwed a good thing up royally through your own greed, pride, and serial stupidity, the thing to do is lie, cheat, and steal and above all, lawyer up, sow confusion, and then deny knowing anything about everything.  As a matter of fact, you are not sure that you were even there, or what words mean anymore.
http://jessescrossroadscafe.blogspot.com/2015/01/gold-daily-and-siklver-weekly-charts.html

 

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asian session

Chris-

So all I am tempted to say when gold falls in any trading session is that the algos are playing their usual games, and the regulators could not care less because as long as the alogs are forcing gold lower, this fits the plan and therefore it will be overlooked.

I suggest you resist the temptation.  Moves down in gold should not automatically result in a conclusion that it's "algos playing their usual games."

How is it that I predicted likely weakness ahead for PM - a correction in gold?  Am I plugged into the goldbug algo RSS feed?   Am I a part of the Big Manipulation Effort?

No.  It doesn't take a genius.

This sort of thing just happens to most instruments after a relatively long run up.  They go up, and then they retrace.  They run out of buyers willing to bid prices higher, and so they correct.  It is depressingly ordinary.

Look at the Euro.  It is rallying.  Does this signal "scared people looking for safety?"  No.  Right now, we've reached temporary peak Euro-stress.  There is no reason for Mr Occam to suffer the added complexity of "algos playing their usual games" - the only explanation we need is that buyers just dried up at gold 1300 after a long run higher.

So I suggest, rather than blaming those outta-control manipulo-computers for gold's move lower, how about we just wait for the signs of buyers showing up, and then consider buying the dip right alongside them?

If this weren't about gold, nobody here would even blink an eye.  Somehow, when gold undergoes a normal correction, it turns into something far more sinister.  No doubt you'll all jump down my throat telling me I'm some tool of the establishment, but - think about it for a moment.  If I can predict it based on my general market experience, either I'm super good at spotting manipulation or - just maybe - it isn't a conspiracy after all.

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Comex contract expiration

This is all about Comex contract expiration.. it has nothing to do with Gold taking a "rest" after a price run up.  The analysts who understand manipulation expected this as well. 

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Printfest

You'd think that toner would eventually become scarce.  What happens when the Limits To Growth and Limits To Print converge?

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contract expiration

JimH-

This is all about Comex contract expiration.. it has nothing to do with Gold taking a "rest" after a price run up.  The analysts who understand manipulation expected this as well.

Please do us all a favor then and - the very next time your analysts who understand manipulation are predicting a gold drop - don't leave us in the dark!  I beg you, post!  Let us all know!

Me, I'm still feeling burned by the whole Harvey Organ "silver market will fall apart in December 2014" thing.

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Not How I See It
davefairtex wrote:

I suggest you resist the temptation.  Moves down in gold should not automatically result in a conclusion that it's "algos playing their usual games."

Dave,

just pull up chart of the Yen/USD and you'll see it that it's pretty much indistinguishable from the $GOLD chart.

Now why would that be?  Did the Yen run out of buyers at these levels and it's just a coincidence that gold follows the yes tick for tick or is it more reasonable to propose that some big algos have a sell Yen/sell Gold trade on?

I see this as solid evidence that the price of gold has nothing more and nothing less to do with anything but how the big speculators are playing the game.  

With that view I next ask myself "how do the big speculators play their game(s)?"  

The answer is that they quite often play it unfairly and use price manipulation as one of their main weapons.  Why?  Because it works.

Far from being a conspiratorially minded view, this describes the world around me with more explanatory power than 'market forces' which sounds like the even outcome of millions of individual bets.  I see it as millions of tiny bets and a relatively few colossal bets...those of the major speculators who step in and dump thousands of contracts in millisecond bursts.

 

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Anyone can subscribe to TF Metals for $10/month

From today, behind the pay wall,

Additionally, today is contract expiration for the Feb15 gold. This means that anyone still holding a Feb15 tomorrow on First Notice Day will have to provide 100% margin in their account in order to show intent and the ability to take delivery. As you know, the delivery process on the Comex is a complete sham and nearly every open contract gets closed out and then rolled into the next front, delivery month...in this case the April15.

As positions are taken off, the system is gamed as large traders DUMP contracts en masse, hoping to create some additional, follow-on selling into which they can re-establish a new position at lower prices. (Huh? Let me state that another way.) If you've got a 1,000 contract long position in Feb15 gold and you need to roll it into the Apr15 gold, perhaps you summarily dump all of it at once. In doing so, your average sale price is $1280. This helps create an atmosphere of selling where other large and small traders rush to sell and roll their positions before price falls even further. Suddenly, you've gotten price down to $1270 and now you go to put all or part of your position back on...but at $10 less than when you started! Sound crazy? It's not! You must always keep in mind how very tiny the pool of traders is in Comex gold. There are maybe 60 large hedge funds trading against 6-8 large banks. That's it! All of the other small stuff...day traders, small specs, small funds...it's all largely insignificant.

Anyway, here at the end of January it's a perfect storm of selling. You've got the obvious Cartel capping exercise AND contract expirations. The result was predictable and, therefore, we've been predicting it all week. (Did you listen to last Friday's podcast?) And now we just have to let things settle out.

http://www.tfmetalsreport.com/blog/6570/playing-out-inevitable

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USD/JPY drives gold

Chris-

...just pull up chart of the Yen/USD and you'll see it that it's pretty much indistinguishable from the $GOLD chart.

Ok, I pulled up the chart.  I don't see the same thing you see.

I see periods of significant divergence, periods of sympathy, and periods of close match.

Mostly, I see a rough directional correlation, but no more than that.  If I were running my neural network to try and look for an explanatory force behind gold price movements, the error on JPY.USD vs COMEX Gold would be too high for my comfort.

Here, I zoomed into the last 6 months.  You tell me - smoking gun or "sometimes linked, sometimes not."  No way would I ever call the lines on the lower chart "pretty much indistinguishable."  Specifically, gold's rally since November diverges dramatically from JPY.USD.  And its not just for a day or two - its for three months.

 

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please post going forward

JimH-

That's awesome.

I want to hear each and every time he predicts such an event that you feel will actually happen.  If he's as accurate as you say, we should all be much richer by end of year.  I can go short a GC contract for only $6k, and at this rate, I can probably make $3000 per contract each time a dump like this takes place.

Jim, since you know the guy and have evaluated his track record, I'm relying on you to only post predictions that are very likely to work out for us.

And one more thing.  Its somewhat important.

Please post predictions prior to the event taking place.  Its substantially less interesting to have a prediction for an event that has already occurred.

But please do not post predictions that are really lame and fizzle out and never happen.  Like Harvey Organ's prediction about the silver market seizing up in December 2014.  Don't post stuff like that, its just confusing, and gets everyone all worked up over nothing.

:-)

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For what its worth....I was

For what its worth....I was surprised by the size of the drop.  I had been worried this might be the start of a significant run up....and...well...now the buying opportunity remains there.  The percentage drop is unreal in silver....I would imagine well beyond the boundaries of supply and demand. 

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No, not for three months...
davefairtex wrote:

Here, I zoomed into the last 6 months.  You tell me - smoking gun or "sometimes linked, sometimes not."  No way would I ever call the lines on the lower chart "pretty much indistinguishable."  Specifically, gold's rally since November diverges dramatically from JPY.USD.  And its not just for a day or two - its for three months.

Not how I track it...I noted the nearly one month divergence in the Yen/gold from mid November to the first week of December.  Got me excited. I talked about it being a potential change in the game... But then it returned.

Rebase the chart to Dec 7, or thereabouts, and the tracking returns...you can even see it if you don't look at the gap between the lines, but the movement of the lines (they correlate extremely well for ~ 5 weeks there in your second box), then there was a short period of gold seeming to again track away from the Yen for a bit over a week in mid January...but...the tracking has recently returned.

I don't have any great explanation for this besides this is a pair trade for someone.  Most likely it is a multi-way trade involving the Nikkei and US equities too.

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original claim

Chris - your original claim was that the lines were virtually indistinguishable, and it was on this point that your whole case of "bots causing the drop" seemed to be based.  Yet when I looked at the chart, I saw clearly they were NOT virtually indistinguishable.  I went back to various periods of recent history.  Some periods they tracked, some periods they didn't.

I'm perfectly cool with saying "sometimes they track, sometimes they don't" because that's what the facts seem to be.  But that's clearly distinct from your claim of "virtually indistinguishable" that would then provide the basis for an argument that every drop in gold was therefore connected to some algo bot doing its thing for reasons unconnected to gold.

Like you, I've followed these markets intraday for quite a while.  Sometimes I see close tracking like that in the commodity index & gold.  Sometimes I see that tracking diverge.  This sort of stuff comes and goes.  For a while, the dollar and gold were almost perfect inverse mirrors.  But then one day, that just stopped working.

I'm always on the lookout for a holy grail.  I would love it if JPY.USD was such a thing.  Its just not.

Let me give you some examples.

We can quantify how tight the correlation between two items by examining the movement in the ratio.  Periods of big movements in the ratio or strong trends say that the correlation is not there.  However, areas with small changes in the ratio proves that the correlation during that time period is strong.

That's why I like to report on oil, CRB, and the miners during my gold report.  In the past, those ratios have helped to give me clues as to where gold might be headed next.

To my mind, all these charts seem to have reasonably similar correlations to gold, with probably Gold:$WTIC looking closest - right up until the correlation snapped in October.

I honestly don't see that the $gold:yen is any better than any of these other charts.

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TF Metals / CoT

Dave-

I always appreciate your analysis and your 'PM Daily Commentary' is part of my daily routine, but I've never understood how you (and TraderDan) interpret JPM and the other "comemrcial" banks piling on short positions and "specs" piling on longs as bullish.

The last 2 CoT's were red warning flags for me that a big down day was coming, since these banks tend to not lose, especially when it comes to the metals.  To your credit, your more conventional TA also foresaw this correction.  I use both to formulate my own forecast, taking all valid information into account.

I appreciate the good, well-informed, respectful debate in these forums and also look forward to hearing Chris on the TF Metals podcast later this afternoon.  It's well worth the $10/mo.

Steve

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COT report

Steve-

The last 2 CoT's were red warning flags for me that a big down day was coming, since these banks tend to not lose, especially when it comes to the metals.

That's a really interesting perspective; over time, you've observed that big spikes in short interest by the producers tends to indicate near term tops?  Well that would be awesome, if true.

I think I'll run that analysis and see what turns up!  I love finding new indicators.

As for why managed money needs to buy for things to move higher - that seems to be the correlation over the longer haul.  For me, COT reports are intermediate term indicators.  Bottoms happen when MM is dreadfully short.  See chart below.  When the short interest dies away, sometimes that marks a top.

In the middle, they seem to create the trend through their buying and/or selling.

Here's the MM short interest chart.  Peaks in short interest correspond well to lows in gold.  They are all on the short side of the boat right at the lows.

And here's the "MM Net" chart.  Notice how peaks and valleys correspond pretty well to highs and lows of the MM net position (i.e. longs - shorts).  These guys do really seem to determine the trend, so buying from them (and/or covering short) is critical to get those prices moving higher.

And once the shorts run low, buying becomes critical.

Now then.  Think I should have mentioned that high level in the net position of MM during the last Weekly update of mine?  Yeah, I should have.    Spanking for me.

Now I'm gonna go run off and see about spikes in Producer short interest and see if they correspond with tops.  :-)

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Off the Cuff

Chris-

I would love to hear you and Dave discuss your differing perspectives on an ''Off The Cuff'" sometime...

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COT producer spikes

Steve-

Here's the chart.  Looks like a decent indicator.

Chart below is a 3 week MA on the net change w/w in the COT short position of the producer class.  Maybe if we combined with a daily RSI, the two together could come up with a more reliable answer.

What else might you suggest?

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CME Hikes Silver Margins 11%

Dave,

Your analysis & explanations sometimes make me think of someone interpreting Rorschach ink blots in the price charts, and other times it makes me think you are trying to baffle people with BS for unclear (nefarious?) motivations.  If I had the ability to consistently predict changes in any of the "markets" I definitely wouldn't be exposing my tricks of the trade on the web.  Instead, I'd be sitting at home watching the cash come rolling in.

Silver is down 7% on the day without any real driving force, and then it comes out that the CME hikes margins 11%.  No, it's not rocket science with what's going on.

 

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Dave- Thanks for the

Dave-

 

Thanks for the feedback.  I would certainly still put myself in the camp of being a "novice" but my observation has been the following:

 

Every significant price rally over the last couple of years has been marked by the big banks, led by JPM, adding significant short positions as the speculators go increasingly long.  When "they" determine that the time is right and there's enough momentum chasing longs (I suspect using many of the traditional TA tools you would use) they (big Banks/JPM) get the ball rolling downhill by dropping large sell orders at times of low volume.  This creates enough downward momentum for the "Specs" to start dumping longs/adding shorts and JPM&co to cover at significantly lower prices after the selling has run its course.  

 

Then, Wash/RInse/Repeat!  This process is obviously beneficial for the banks (profitable) and beneficial to the central planners, as it avoids setting off the alarm system for fiat currencies (RAPIDLY rising PM prices) and it prevents a rush into physical metal, which could expose that their vaults aren't quite as full as they claim.

 

I'll be looking for the "big move" up when and only when these banks are forced to cover there shorts into a RISING price, as happened in 2011 from $19 to $48.  I believe that will only happen when a real supply shortage develops.

 

Below is a chart that I snagged from Clive Maund's site, illustrating what I'm clumsily trying to say. A picture is worth a thousand words!  Note how low the Commercial short position was at the lows of this past Nov, Jun and last Jan...

 

Thx Again!

Steve

 

 

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Chart

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One more thing..

Sorry for the barrage of posts, but note the chart above only goes through 1/13.  The commercials added even more shorts last week and the specs added even more longs.... Thus, the warning flag to go in conjunction w/ the standard indicators in Dave's daily analysis.

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ink blots

dryam-

Your analysis & explanations sometimes make me think of someone interpreting Rorschach ink blots in the price charts, and other times it makes me think you are trying to baffle people with BS for unclear (nefarious?) motivations.

Ah the old inkblot test.  I used that example just last week.

Here's the actual truth.  Ready?  Warning: you probably won't accept it, since it doesn't fit your model of who I am.  Yet still I try.  "You can't handle the truth."  Its too straightforward.

Ok, here goes.

I am just trying to figure out where the price of gold is going to go the best I can.  To that end, I utilize all the tools I've learned over the years.  And, I'm trying to develop new tools of my own.

So, when someone talks about a possible new indicator, I get excited.  Today was a good example.  Steve gave me feedback on a COT report interpretation, and it looked pretty interesting.  Regardless what the motivations/backstory/interpretation of the behavior of the Commercials might be, when they start to build up a short position rapidly, it does seem to be a clue that a top may not be far away.  Backtested, it seems to be a decent indicator.  Once I refine it properly, it will be in the weekly report.

I am also using a learning algorithm to analyse various markets which uses a fair number of simple TA tools to "come up with a conclusion" as to whether or not a near-term high or low has been reached.  I'm not exactly sure how well it works, since I've only been using it for a few months, but it predicted a top this week in gold.  Then again, it also predicted a low in oil last week.  Doh.  If it ends up working, that would be a whole lot of fun.

I'm not sure what I'd do with the tool, if it works.  I'd have to have a lot of faith that it worked.  And nothing ever really works forever, or 100%.  (See "low in oil marked last week.")  Since I like to write software for fun, this is just a fun project of mine.  It might turn into something someday.  I've had random long term software projects like this my whole life, its just what I do.

I do think the big guys have tools like mine (likely, much better than mine) that actually do work.  There is a pony in there somewhere, I'm convinced of it.

This tool development is why I like finding new indicators.  Just the other month, I got one from one of Martin Armstrong's posts.  It was a really helpful indicator, called "intraday volatility", which helps to point out highs and lows.  Nothing ever works 100%, but taken together, the amalgamation of tools can provide direction and/or helpful signals with a certain amount of confidence.

I have another tool I wrote back in April 2013 to try and detect intraday manipulation.  I've come to conclude that when the tool detects a cluster of events, it does suggest a certain enthusiasm to drive prices either higher, or lower that it is best to pay close attention to when they happen.  These days I can eyeball an intraday chart and recognize those intraday patterns when they happen.  Sometimes I'll post a note when I see it happening.

Problem for the mainstream goldbugs view-of-the-world is, they don't appear all that often.  (i.e. manipulation is NOT the explanation for every single downside move in gold).  What's more, they happen in both directions.  Lastly, when attempts are made to drive prices lower and the buyers show up, that often marks a low and/or reversal in trend.  That's why I always talk about this phenomenon - because it often (but not all the time) marks a reversal.

I still am not sure if what my tool detects is manipulation or not.  It may be.  My tool is also why I talk about things happening both to the upside as well as the downside.  It detects both, so I see both, and this hard-to-ignore evidence makes me question the analytical skills and intellectual honesty of the  cheerleader-goldbug-newsletter-writers who just look at one side and not the other.

Just FYI, after running my analysis today after the market closed, my tool detected a pattern of events similar to what happened back in April 2013, although much less intense.  Was it manipulation?  Well as long as you are ok with saying that manipulation happens to the upside too, I'm happy to call it manipulation.  A similar pattern happened two weeks ago but to the upside.  Today's action was more violent, however, especially in silver.

Lastly, I write in order to get my thinking on paper.  It helps me put a stake in the ground.  I re-read what I write, and then I do my best to follow my own thinking, because otherwise emotions tend to drive me away from good decision-making.  When its down on (digital) paper, its really helpful to me as an anchor.    Sometimes I get too caught up in the day-to-day.  I might do better if I just wrote the weekly reports and kept those in mind while making my decision to increase or reduce exposure.

So there.  Its probably too simple for you.  There's no nefarious conspiracy.  Every single time you guys talk about me imagining I'm trying to trick you, I look at my surroundings and I chuckle.  I'm just a guy in a room, not some big bank employee.  I'm really just trying to help - both myself in developing my software trading toolkit (and remaining on a more even emotional keel while looking at the market), as well as the rest of you in understanding where things might be headed in the relatively near term.

There are a lot of hype-filled newsletter writers out there.  I'm trying really hard not to be one of them.  Perhaps this difference is why you think I'm trying to trick you.  I'm not enough of a cheerleader.

Problem is, if I were a cheerleader, I'd end up hurting myself because I'd convince myself to do something based on emotion - because I'd get carried away by my own enthusiasm.  This past week was an example.  I had two signs of the high, and I was still too optimistic.  In addition, that COT report was flashing a danger signal, and I should have waved the flag a bit more strongly.  I need to be more disciplined and put that COT chart into the weekly post without fail, which I haven't been doing.

There is always something to improve on.

 

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stormalina
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Stormalina is the name of a filly thoroughbred, btw. I am horseplayer by trade, and this can be a dirty business, namely with trainers using illegal performance-enhancing substances that are hard to detect, which can make an entrant jump up and run huge figures, inexplicably. All I can tell you is that it actually used to be a lot more rampant than it is today. A lot of trainers who won routinely at high percentages are now 10-14% trainers instead of 24-32%, it is a remarkable thing to witness. The sport has made a much more concerted effort to crack down (both preventively and punitively) and a lot of trainers (at the major venues, NY, CA, KY, and FL) have stopped cheating. Regardless of their reasons, I am glad to see it because the cleaner it is the better I am going to do.

 

I mention this because of the financial markets. I actually had a reputable investment firm in CA refuse to accept me (and my 300k) as a client because I am a horse player. In some ways, I actually respect that they have standards and will actually turn away someone with cash money. But on the other, bigger hand, I find it more than ironic that people who make their living in the financial markets with its fiat currencies and fractional-reserve banking, and its money printing carnivals, have the audacity to judge me as a poor risk when what I do is undoubtedly more ethical and dare I say more rewarding (in the multifaceted sense).

I was in the market for a while through a major financial institution, where I also do my daily banking. And I did not enjoy one second of it. At one point my 300k investment was down to 260k and if not for the run-up in late fall I would have been in a quandry as to what to do. I took it out soon after I broke even. I just don't trust the market. It doesn't help that I consider myself an enlightened individual with regard to the financial system. I don't want to support such a system, let alone profit from it. But I definitely don't want to sit on worthless dollars either.

I had purchased about 40k worth of silver during its recent lows, but today I decided to put in another 100k after seeing the drop in metals. I bought 6 monster boxes of silver eagles (9700.00/unit) and 30 ounce rounds of gold maple leafs (1297.00 w/premium). Everything  have seen the last several months tells me this is a correction and that we're going to see the metals move upward strongly in the foreseeable future. I am no expert in the financial market nor the metals markets, but I want my money in real money, number one, and two, when I saw silver resist at 16.00 like a lion several times over the past 2-3 months - in spite of record dow numbers, record dollar strength, etc - it convinced me that I am not alone in the belief about what real money is.

As for where silver should be (relative to gold and to itself) in an honest market, I will leave to others, but I know when I handle a 1 oz silver round, when I feel its intrinsic value in my hand, I know it's worth a lot more than a breakfast ($20). In fact, I have silver dimes (I love them), which are 1/10th an ounce dime-size rounds (not the junk silver), and to me, I could see one of those paying a for a very nice, filling, breakfast. That's gut feel. So if 1/10th of 1 oz is worth what we think of as 20 bucks, than to me an ounce of silver should be no less than $200 american dollars.

The only person I have been consistently reading over the past few years when it comes to precious metals is Franklin Sanders, The Moneychanger. He is definitely a contrarian. He fought the US Govt and lived to tell about it (a great read on his site, btw). Here is his daily blog link: http://the-moneychanger.com/commentary

 

 

 

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stormalina
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Posts: 2
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