PM Daily Market Commentary – 1/23/2014
Gold closed up +27.70 to 1264.10 on extremely heavy volume, while silver was up +0.21 closing at 20.00 on heavy volume. Gold/silver ratio rose +0.71 to 63.19. Gold was assaulted by the shorts early in asia, dropping gold to 1230 but then the buyers showed up, first reversing the losses, and then pushing gold higher on repeated short-covering spikes. Gold closed quite near its high, but silver did not – silver losing half of the day's gains when copper took a big hit in morning trading in NY.
Trader Dan Norcini had this tongue-in-cheek post pointing out that "this REVERSE FLASH CRASH is CLEAR PROOF that gold prices are being manipulated higher. After all, who would buy in such a fashion?" http://traderdannorcini.blogspot.com/2014/01/upward-rigging-of-gold-price-continues.html
Indeed. If one were looking to buy gold at the best price, one would NOT spike the price higher, but rather buy slowly in measured quantities. Right?
Dan's continued irreverence in the face of the orthodox goldbug storyline (gold is only ever manipulated downwards, and spikes down are the prime evidence for this manipulation) has possibly resulted in him being excommunicated from Church of Gold over at KWN. The "Weekly Metals Wrap" has now been "on vacation" for three solid weeks, while Dan has been busy posting commentary at his site most every day.
The USD was crushed today, down -0.78 [-0.96%] to 80.51. The massive move was due to a big rally in the euro that started in the morning in Europe, and just kept on going all day long through the close in NY. The move caused the buck to plunge below its 50 day MA in one massive move, and definitely aided gold in its move higher. Prior to the euro's big move up, gold had already recovered its losses in Asia from the morning's short assault (that's the "dark of night" for you in America), but after seeing the strong euro move, gold was off to the races. Continued moves down like this in the dollar would probably result in gold breaking out to the upside.
GDX closed up +2.73% on heavy volume, while GDXJ was up +2.34% on a fourth straight day of massive (3x normal) volume. Miners opened up and rallied quickly to new cycle highs, but were unable to hold on to the highs, selling off to end the day mostly where they opened. Today's price/volume action in the mining shares (and especially the GDXJ) looked quite a bit like distribution – i.e. selling by the big guys, especially given gold's big move up. Distribution doesn't generally lead to anything good. Once the big guys sell, prices usually decline.
Gold has moved up right to that magical 1265 level – the actual price level to close above and cause another wave of massive short covering is the previous high reached Dec 11 of 1267.50. It almost got there today. Another move down in the buck might just propel gold over edge. And if it does, technical traders will mark that move as the end of the gold downtrend.
So on the one hand, we have the massive rally in gold, with the dollar basically getting crushed, with gold hovering right below a really important breakout/resistance level. Commodities overall are also rallying, which tends to be PM supportive. On the other hand, silver is behaving badly, led lower by copper, and the miners look like they are being sold at what could be a cycle top.
Gold and the buck will likely have the deciding vote. What will it vote to do? The ratios are still positive, if you ignore the gold/silver ratio which is starting to look a bit bearish. Perhaps its all about the buck. If 80.50 support doesn't hold, it will probably propel gold right up over the edge.
There's also the upcoming Fed meeting next Wednesday, just to add some more uncertainty into the mix.
Thanks for the commentary, Dave.
I also wondered about the disappearance of the weekly metals wrap from KWN. Considering that Trader Dan's comments there comprised the only week-by-week technical analysis of the gold market on that site, it's surprising that they got rid of it. Without Trader Dan, KWN is mostly left with owners of various types of gold-based businesses doing the commentary.
Buck continues to be hammered today, dropping through support to 80.27. Concurrent with that move, gold moved from 1260 through resistance to 1273 on one of those massive 4000 contract/1 minute moves clearing out a bunch of short stops. The kind of moves that when they happen to the downside, are the goldbug prima facie cases of market manipulations but to the upside they are…well…we're not sure what they are. Goodness and Light Triumphant, perhaps.
"Who in their right mind buys 4000 contracts in one minute?"
"Its just paper longs distorting the market." [oops, I mean paper shorts]
How the mining shares respond to this event will be key, I think. That, and whether or not gold can retain 1270 into the close.
Yeah, that about says it.
Posted: 23 Jan 2014 04:07 PM PST
The citizens of the U.S. & world are headed into a future that few are prepared. It will also turn out to be much worse than most realize as it will be unlike anything we have witnessed in the past.
Part of the reason why we are in such a dire predicament has to do with the compartmentalization and specialization of our modern educational and economic system. There’s a great deal of really intelligent people out there doing a lot of very smart things, however they have no clue as to what the hell is going on in other industries or professions.
For example, there are many precious metal analysts that I have a great deal of respect for, but who fail to understand the energy industry. Now, I would imagine there are a percentage of analysts in the precious metal Biz that do understand the ramifications of Peak Oil, but it’s more rewarding for them (financially) to keep their trap shut. Nobody likes a party pooper…. you know what I am saying?
And then we have those individuals who specialize in “Technical Analysis.” Many who have read my posts and articles realize that I am of the opinion that technical analysis is worthless in a rigged market. Furthermore, I believe the big price moves in the gold and silver are more fundamental in nature than technical.
I explained this in detail in several recent articles by comparing the movement of the price of oil to that of gold and silver. I have republished two charts below that show how the price of gold and silver moved in parallel with the price of oil in the 1971-1980 time period:
Here we can see that both silver & gold moved up in tandem with the price of oil. Many investors still regurgitate the notion that the Hunt Brothers were solely responsible for pushing the price to record highs in 1979.
If that was true, then who was pushing up the price of gold? Or, how about oil… who was responsible for pushing the price of oil up 10-fold from $3.29 in 1973 to $36.83 in 1980? If I were to ask these questions to someone who blurts out the Hunt Brothers cornered the silver market… they would have a blank stare, because they have no clue.
My articles tend to get around the internet. Someone on another blog made a comment,”comparing the price of silver to oil was silly”. They replied by saying it makes just as much sense to compare the price of silver to the price of potatoes.
Of course, everyone is free to have their own opinion, but energy is the key factor that drives the global economy and allows silver to be mined, refined, transported, minted, traded and consumed. I happen to believe the price of energy is directly related to the price of silver, and other commodities for that matter.
Let me see if I can provide another example that may win over the worst skeptics. If we look at the movement of the price of copper from 1971-1980, we will see a very interesting relationship to the price of oil:
Well… look at that. In just another amazing coincidence, the price of copper had a similar trend to the price of oil. As the price of oil shut up in 1979… so did the price of copper. Hell, the 1979 & 1980 copper-oil price lines are almost identical.
Now, copper didn’t enjoy the same kind of percentage gains as did gold or silver (it isn’t a highly sought after monetary metal), but I wonder who was trying to corner the copper market in 1979-80 to push it up to new record highs. Do you ever hear anyone asking that question?
The reason why I bring this subject up again is to try to provide data that might help investors to realize that the big price moves of gold and silver have been related to the action of the price of oil… and not technical analysis.
The long-term technical analysis chart of silver below is suggesting that cycles and waves may predict the future price of silver. I say throw-away the damn chart and follow the price of oil… that’s a much better indicator.
Why? Because, if you were to overlay the price of oil on this chart, you would find a similar trend-line. That being said, the price of oil is only a basic guideline to gauge the market price of gold and silver.
Due to the financialization of the market by the manufacturing of $100′s of trillions worth of derivatives, fiat currency has been siphoned away from the physical market and into worthless paper garbage. We have no idea of what the prices and costs of goods, services and commodities would be if the majority of fiat currency was invested directly into the physical markets rather than the $trillions in leveraged paper claims.
I would like to touch on one more subject as it pertains to technical analysis before I get into the wonderful subject of economic collapse.
In a recent article, “Silver – The Power of Thought Will Ultimately Prevail” the author Michael Noonan stated the following:
We keep moving away from discussing fundamentals because the fundamentals have not been reliable indicators in the supply/demand equation that normally determines price. Yet, almost every single article focuses on the record sales of numbers of coins offered to the public, charts showing overwhelmingly favorable statistics that favor higher silver prices, cost factors for mine production, decreasing supply relative to increasing demand.
How many times, and in how many ways can the same information be presented over the past year, and yet the price of silver languishes near recent lows? People have an appetite for this kind of information. It serves as a crutch to bolster flagging belief that silver and gold will rally any time soon.
Fundamentals are real. We are not being dismissive of their importance. Instead, we see the perception of their impact as being misplaced, for now. Ultimately, they will prevail, but the greater area of focus of a failed fiat financial system deserves center stage.
I disagree with Mr. Noonan on his current assessment on the fundamentals. While I don’t want to get in a TIT for TAT debate with Mr. Noonan on why I disagree, I believe its important to understand the difference between the two ideologies.
Mr. Noonan doesn’t “Focus” on the fundamentals due to the fact that they are according to his analysis… “unreliable indicators.” Instead, he produces technical charts that offer a better indicator. Now, I may be guilty of putting words in his mouth as he did not directly say that, but if you read his articles, you will see technical charts.
I believe the fundamentals are everything in a rigged market…. even though the paper price doesn’t reflect it. It is more important to understand the energy fundamentals than it is to focus on technical charts on silver. As I explained above, oil has been the major indicator in driving the price of gold & silver (and yes… copper).
Furthermore, I also believe when investors understand the fundamentals of the energy-cost structure of the precious metal industry, they will be able to see that there is a floor for the price of gold and silver. I still get investors emailing me stating that silver can go to $5.00 because it’s so cheap to mine.
In addition, technical analysis in a rigged market is unable to grasp the serious problems looming in the energy industry. I just got off the phone with energy analyst, Bill Powers… and I have to say the information he discussed about the U.S. Shale gas industry is quite alarming. I will be putting out an article on this next week.
Let’s just say the price of natural gas in the United States is headed much higher… and this will not be due to technical analysis, but rather in response to very important fundamental factors, forces and data.
For those individuals who still believe the garbage forecasts put out by the Large Bloated & Worthless Banks and Brokerage Houses claiming 20 years of growing natural gas production and low prices of $4.00 here in the U.S., get ready for a rude awakening.
This is the very reason why Mr. Noonan’s opinion on the fundamentals are incorrect. While I agree with him that the “Failed Fiat System” deserves attention… the peaking of global oil production is the fundamental reason why the Fiat Monetary System is en route for certain death.
Again… technical analysis is worthless in understanding the ramifications of peak oil and its impact on the United States and World going forward.
The Coming Economic Collapse Will Be Much Worse Than Most Realize
From the information and data that I am coming across, the U.S. and World are totally unprepared for severe changes that are drawing near. These changes and disruptions will be much worse than the typical analysts’ concerns of deflation, hyperinflation or currency collapse.
A few days ago I listened to Coast-to-Coast Am with George Noory. His guest that night was none other than Harry S Dent Jr. Harry told George that there was going to be a huge stock market crash and the place to put ones money was not gold or silver… but rather the U.S. Dollar.
Dent believes the Dollar will be the safe-haven because we have 20 Air-craft carriers roaming the oceans of the world . Dent attributes the strength of the Dollar to the strength of our military.
Dent makes his forecasts on what he calls the “Demographic Cliff”, which by the way, is the title of another one of his endless supply of books. Dent believes the changing demographics of countries is the key to investing.
While Dent has been a successful financial publisher, many of his forecasts have been complete failures. According to CBS Money Watch article, “Harry Dent and the Chamber of Poor Returns”:
In October 1999, Dent wrote the bestseller “The Roaring 2000s.” The following is from the Library Journal’s review: “Dent’s previous book “The Great Boom Ahead” accurately predicted the stock market boom of the 1990s. In this one, he looks ahead to the new millennium and claims that the Dow may reach as high as 35,000 within the next decade, due in large part to the changing demographics of baby boom investors.”
Dent could not have been more wrong. The next decade saw the S&P lose 1 percent a year, producing a cumulative loss of 9 percent.
Despite this failure, which might have humbled someone else, Dent persisted. In January 2006 he published “The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010.” Again, Dent was wrong. Not long after publication, we experienced the worst bear market since the 1930s. And for the full five-year period the S&P 500 Index returned just 2.3 percent per year, well below the return on safe bonds. This seems like less of a bubble boom, more of a bubble burst.
Dent makes his money on the market realization that there will always a new Group of POOR UNWORTHY SLOBS ripe for the picking. The market has a very short attention span — and memory.
I was completely surprised when George Noory stated that Dent made a lot of good predictions and it was a good idea to follow his forecasts. I don’t know what happened to Coast-to-Coast Am. Ever since Art Bell retired years ago…. the show just isn’t the same.
Everything that Art Bell believed in such as Peak Oil & Climate change seem to be a BIG JOKE to Noory. He he continues to bring back the same typical guests on the show who always provide supposed evidence that suggests the earth not only has a creamy nugget center of oil… we are also headed into a New Ice Age.
As I have mentioned, I am working on my first paid report called The U.S. & World Collapse Report. There will be information in the report that you will not find in one place anywhere else on the internet. I hope to have the new Report Page with Free & Paid Reports out by the first few weeks in February.
The reason why Dent and many of the other analysts who focus on “Deflation” will be proved wrong is due to ramifications shown in the chart below:
When the U.S. and World were suffering from the Great Depression in the 1930′s, global oil production was still in its infancy. As we can see, global oil production increased from less than 5 mbd (million barrels a day) in the 1930′s to 45 mbd by 1970.
The reason why the U.S. was able to pull itself out of its horrible depression had more to do with a growing oil supply than it did from economic activity gained from World War 2.
Then we had the terrible 1980-2 recession in which Fed Chairman Volcker saved the Dollar by raising interest rates while putting a Kabosh on the precious metals. Even though global oil production declined for a short time-period, we still had another 35 years worth of growing world oil supplies.
It was the increasing oil supply that enabled the U.S. & World economies to grow out of the severe down-turns. However, we have been in a global oil production plateau for the past decade (shown in the small insert graph, highlighted in yellow). We no longer than the capability to increase world oil production as we did in the 1930′s or 1980′s.
Thus, Dent’s Demographic theory of forecasting is completely worthless in a peak oil environment. I could care less on whether on not a truck driver is 21, 41 or 61 years old, if there isn’t the available economic supply of diesel to maintain the transportation industry.
The peaking of oil & energy is putting severe pressure on the Global Fiat Monetary System. Business as usual will not continue for very long as cracks are beginning to appear in the energy industry. I will discussing this in upcoming articles and in more detail in the U.S. & World Collapse Report.
Gold & Silver will become some of the most important stores of wealth and investments in the future. The U.S. Dollar will not be the safe-haven as Dent and many other analysts believe due to the fact that a Fiat Monetary System based on Compound Interest and Fractional Reserve need a growing energy supply to SURVIVE.
Furthermore, the GREAT U.S. SHALE ENERGY BOOM is headed towards a BUST. There is no PLAN B and very few are prepared for what is coming. The debate on Technical Analysis vs Fundamentals will seem very silly when U.S. & World head into the worst economic collapse in history.
As Ex-Assistant Secretary of the U.S. Treasury stated recently… when the price of gold and silver revalue much higher, there won’t be any physical metal to purchase. Trying to time the market for the best price, may be turn out to be a huge mistake.
Thank you to all daily post information on the metals market. At a minimum I find it overwhelming…
What is the significance of the metals to oil graphs ending at 1980? Is there anything that can be gleaned from the post 1980 graphs… like the Ag/oil ratio is way out of whack?
More unwarranted jabs by Davefairtex that must be rebutted.
Dave, you create more false strawmen than Barack Obama reading a campaign stump speech. And that's not good company.
The "goldbug" community pointed to by Don Quixote and Sancho Panza, I mean Dan Norcini and Davefairtex, are windmills that don't need to be tilted at.
The gold community I know believe in gold and silver as an insurance policy against the immoral and corrupt bank-controlled fiat -fractional reserve system, where a select group of individuals, unelected and unaccountable, manipulate the currency, and by extension and similar method, all markets that should be free and fair, and serve the greater human good, not the rapacious greed and psychotic egos of a few.
Gold is manipulated in two fundamental ways- it is devalued relative to the U.S. Dollar and Dollar-denominated assets by those in government and business who are the beneficiaries of the current corrupt system. Where socio paths steal from hard working citizens by transferring wealth to the parasites.
This system is established and propagated in an environment that permits the criminals to wrongly preserve the trust in and value of the dollar where there should be no trust in the dollar and no value in the dollar. For without those two pillars, trust and value, wealth could not be accumulated in an exchange of fake money for real assets such as property and services, and control could not be enforced.
Gold price (as is many other commodities and securities) is secondarily manipulated simply to make money. At root, all "investment" is a bet on what the price of an entity will be in the future. If I know with certainty where the price will be, based on my ability to manipulate price, then it is not a bet, or a guess, it is a fleecing of the suckers who are willing to play the game with me, the suckers who do not have the ability to control price or outcomes and are willing to put hard-earned money on the table in the wrong direction, soon to vacuumed up by the cheaters.
In the current corrupt system, gold price can go up or down by mechanism of creating or destroying paper gold in sufficient size, as long as the cheaters know where it is going in the short term. The only other rule of the game is that gold has to stay in a band dictated by the Fed and powers that be. And that band is much, much lower than the true unmanipulated price of gold that reflects supply and demand, and devaluation risk of fiat currency.
I've said it before and I will say it again, gold price should be multiples higher to reflect, if nothing else, the exponentially growing actual money/ credit supply relative to a finite supply of true money, gold and silver. Price should reflect the even higher exponential of the potential money supply which could be created in the blink of an eye if the trillions of USD sitting on the sidelines due to fear and sluggish growth come off the sidelines and turn into more dollars by the fractional reserve system. Not to mention the additional potential inflation that will be created by the world central banking systems that become desperate in the endgame to keep the Keynesian ponzi going.
You can balance that potential with a firm belief in the Fed and sister central banks to remove all that credit money by the magic of balance sheet reversal and rate hikes (and the execution of all of the above, perfectly timed without crashing the economy). I choose not to place such a firm trust in a handful of flawed individuals.
The stakes are too high and the egos, most especially in the new age of instant global spotlights, are too big just to let the system naturally reset, albeit with severe consequences.
Gold "bugs" you seem to be alluding to are some vague group that wants gold to go up in price simply to get rich. I think you are vastly underestimating the size of the group that wants gold to go up in price to pull back the black curtain created by financial leaders, aided by a stupid and complicit media, and reveal the corruption that exists. To bring fiat currency to its proper valuation and restore a monetary system that enshrines money as the highly useful utility that enables humans to grow and prosper, and to be rewarded according to their true value to the world.
Enjoy your weekend, get outside and get connected to the real world, because like it or not, it is connected to you,
Dave, you create more false strawmen than Barack Obama reading a campaign stump speech. And that's not good company.
So once again Hrunner I don't see you quoting me. With so many apparent strawmen that I've created, it should have been easy pickings to come up with examples of things I said that were wrong, but you couldn't come up with even just one example. Why is that?
Well from my viewpoint, that's lame. So lame, in fact, there's no need for me to respond in detail to your post, since it clearly isn't about me but instead appears to be stuff you made up in your head about me, pretending I support and defend sociopaths and whatnot, when you don't even quote me even once to provide any linkage between what I've said and your content.
Again, that's just lame. 🙂
Does this help us know anything? At least, Steve doesn't keep shouting back and forth at each other.
There seems to be a LOT of ego in many of these discussions!!
Posted: 24 Jan 2014 02:05 PM PST
In a surprising change from its inventory build over the past few months, JP Morgan had the largest one-day withdrawal of gold ever. JP Morgan had 321,500 (exactly 10 metric tons) withdrawn from its Eligible category today.
In just one day, JP Morgan lost 22% over its total gold stocks at the Comex. Total gold inventories at JP Morgan declined from 1,459,027 oz yesterday, to 1,137,527 oz.
Also, there was another 32,150 oz of gold withdrawn from Scotia Mocatta’s Eligible inventories. This is quite interesting as the removals from both JP Morgan & Scotia Mocatta turn out to be exactly 10 metric tons (JP Morgan) and 1 metric ton (Scotia) for a total of 11 metric tons.
Furthermore, there are only 357,139 oz of gold in the Registered Inventories at the Comex. February is going to be a big delivery month and it looks as if there may not be the available metal to satisfy delivery requests.
It seems as if 2014 may be the year that the Financial System finally falls over the cliff.
"Trader Dan Norcini had this tongue-in-cheek post pointing out that "this REVERSE FLASH CRASH is CLEAR PROOF that gold prices are being manipulated higher. After all, who would buy in such a fashion?"
Indeed. If one were looking to buy gold at the best price, one would NOT spike the price higher, but rather buy slowly in measured quantities. Right?"
Maybe we're playing some semantical cat and mouse game, or maybe I'm just the dumb old "goldbug", so let's review what you just said, and implied, and what I just posted and you can set me straight.
Dan Norcini is upset because he gets emails from people he calls names like "gold acolytes" and "GIAMATT crowd" (I need help, I confess I have no idea what GIAMATT is, even though apparently I'm part of this crowd worthy of scorn. Gold is always minutes away from blanky blanky something something….?)
Trader Dan is condescending to these people and belittles them with sarcasm, saying such things as "This REVERSE FLASH CRASH is CLEAR PROOF that gold prices are being manipulated higher."
Maybe I missed something in English 101, but my general understand is that A) sarcasm means that you actually believe the opposite of what is said, and B) the use of sarcasm implies the other party is stupid and clueless, believes in something so dumb that it doesn't deserve a rational and logical response, only a sarcastic poke in the gut that only the other informed, cool people will comprehend.
So to restate, Trader Dan believes that there is a huge goldbug community that believes in a phony manipulation scheme, and are so dumb or so blinded that they only see one side of market movements as manipulation, and completely ignore the fact that there are market movements to the upside of similar size and speed, which every enlightened trader clearly understands as just normal market movement.
"Indeed. If one were looking to buy gold at the best price, one would NOT spike the price higher, but rather buy slowly in measured quantities. Right?"
When you say "Indeed", Dave, again, be patient with a lost goldbug without the benefit of a Ph.D. in English, the interpretation of "Indeed" to me is that you agree with something that was just said. Like if someone said "Hrunner, boy that Peyton Manning really knows how to read a defense and throw pinpoint passes", and I said "Indeed", then that would imply that I agree with the statement "Peyton Manning really knows how to read a defense and throw pinpoint passes"
So we have reconstructed (the obvious, to me at least) these points: 1) Trader Dan believes there is large following of goldbugs that only follow gold to watch for a single direction, meteoric rise in price, and 2) that these people are stupid, completely miss obvious trading moves to the upside that have nothing to do with manipulation, and are deserving of ridicule. And you agreed with him.
Not only did you agree with him, you restated his main theme and pointed out why these so-called "goldbugs" must be stupid:
"If one were looking to buy gold at the best price, one would NOT spike the price higher, but rather buy slowly in measured quantities. Right?"
If you reread my post, you may understand that the point was that you and Trader Dan are complaining about a group of people that, in my experience and in my opinion, are a tiny fraction of the community that follows the precious metals.
I have found the vast majority share my outlook, that the manipulation of the gold market is but a symptom of a far more malevolent financial system, and gold is but one channel for those in power to effect their parasitism. You are creating a strawman in that you and Trader Dan are claiming to be in opposition to these so-called goldbugs, since you and Trader Dan are clever traders unencumbered by this irrational belief that gold is manipulated only in one direction, downward, and that you can read the true signals of the market.
And I am simply telling you that these goldbugs that you rail against do not exist in the character and numbers that you imply. I am saying to you, plainly, in many separate posts, in many different constructs, that the market is manipulated in both directions, to the advantage of the powers that create massive amounts of fake paper gold. And that the system is rigged and directed by the government to control the price of the main competition for fiat money, namely precious metals.
So it is of little bearing to reality and not productive, just as for Don Quixote, to tilt at windmills that don't exist. I sure it's true that a highly vocal minority of people fill Trader Dan's inbox, and that has clearly gotten him emotional about the topic.
And I acknowledge Dave, that you have said you believe the larger players push price around (or similar language), to make profit.
So in truth, I don't think our views are that far apart.
The bridge that you apparently haven't crossed is that the gold market is a key piece to a much bigger chess match, with much higher stakes than the nominal amounts of paper Comex contracts that are bipping and bobbing around daily. That the gold market is actively controlled by the Fed and .gov just like the vast number of markets they openly admitted control over including the money, bond, stock, housing, labor and currency markets. If you want to disagree, that's fine. Of course you are entitled to your opinion, and I welcome a discussion of the data and historical and human behavioral contexts that support it. But don't say something, then say you didn't say it. You'll begin to resemble a certain incompetent executive who said "I didn't lie about healthcare reform, it's just that the things I said about it turned out not to be completely true" H