Daily Updates
Gold – COT Data Warns it is Time to be Wary
The Commitment of Traders data (COT) is compiled each Tuesday for release on Friday. It reports the total number of long and short positions of futures contracts held by commercials, non-commercials and the percentages held by the largest 4 & 8 traders. For the past ten years the commitments of speculators (non-commercials) have been in a rising trend together with the price while the commercials have made a long series of new lows (i.e. net short). This week made all-time extreme reading in each. The data series is only available back to 1986 so we are precluded from analyzing the two biggest bull markets; 1971 to 1974, $35 to $196 and 1976 to 1980, $103 to $875. However, the findings of this study suggest that whatever upside action occurs in the next few weeks should be followed by a test of the breakout.
…..read more HERE.
Click HERE to watch or Click on the Image.
Gold going to $1500/oz, the opening statement as BNN talks gold with John Embry, chief investment strategist, Sprott Asset Management and in our humble opinion it is well worth your time to watch this clip, click here.
In Johns commentary he says that the silver fundamentals are better then those of gold and he expects silver to do better then gold despite being an avid gold bug. He also expresses some surprise at the amount of time Barrick Gold Corporation have taken to close their hedge book of nine million ounces of gold.
G20 are due to meet shortly so its not in their interest to have gold (link to analysis) making extraordinary gains before the meeting as they will be telling the world that they have everything under control. Should gold move sharply higher then this could be embarrassing for them. It will be interesting to observe golds performance before the meeting and its performance after the meeting.
The meeting of the Group of 20 (G20) is planned to take place in the US city of Pittsburgh, which is scheduled for 24th and 25th September 2009.
As we write gold has just closed in New York at $1007.20 and silver (link to analysis) has closed at $17.01, with green on the screens everywhere and the HUI up 12.67 to 432.34 you have good reason to smile so make it a big one!
The second half of this clip is an interview with Yale Simpson, executive chairman, Exeter Resource Corporation who have recently announced an incredibly large gold discovery, which you may also find interesting.
Have a sparkling day.
Your thoughts are of course most welcome, so please fire them in.
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In Today’s Currency Currents….
Quotable
“It’s only hubris if I fail,” – Julius Caesar
FX Trading – Ode to the Outlaw Goldbug
My father in-law, the family gold bug, makes sure I know that gold is going up, in case I haven’t noticed. He’s loaded to the gunnels with gold and silver…..
He, being the type that once literally hid buckets of silver coins in his walls, is loving life with the move higher in gold and silver prices. He should. He was right. I was wrong. I kept telling him that so many TV commercials about gold must indicate there is a major top shaping up; it must. But onward gold marches. Every $10 higher it goes and my father-in-law seems to forget he mentioned to me it was going higher $10 ago. I guess that’s why they call them outlaws.
Oh well, I owe him that pleasure at least, especially given he allowed me to marry his wonderful daughter 29 years ago; yes, that was just about the time those buckets of silver in his walls soared to $50 per ounce thanks to the Hunt brothers cornering of the silver market—near and dear, as we all lived in Dallas at the time. Of course the New York Metals Exchange (in their infinite self-interest and interest of their always self- interested Northeast banking “elite” friends decided to change the rules on the Hunt brothers in the middle of the game). It ended badly for the Hunts, silver, and those buckets in my father-in-law’s walls. Payback is a bi*&^ as they say.
So here we sit, gold looking very good. And many now believe on the way to $1,500, $2,000, and beyond. In the world of global finance and potential for all types of unforeseen events to rear an ugly head at any moment, it seems we’ve reached a stage where almost anything can happen.
Who would have thunk the most powerful institutions in the world, at least if we believed their press clippings, could have literally disappeared overnight—a la Merrill, Lehman, Bear… Gone, the entire “investment” banking industry of the US in a blink! Of course, the Government of Goldman (morphing quickly to bank status like the chameleons they are) is still here to see us through these tough times; we bow down in thanks I am sure.
So is it outlandish to say gold goes to $2,000? Not if you consider that markets can
overshoot in such huge fashion. And with gold climbing tremendously in a world of
improving optimism, what happens if all things hit the fan again? $2,000 sure won’t
look like an overshoot.
But a battle seems to be shaping up, with speculators very long and commercials
seemingly very short. And of course also in the game is the lowly dollar, the gold mirror
image.
We hate to keep falling back on intermarket correlations as an excuse for thinking, but
they are still seemingly in play despite the relative normalization of interest rates among
the major central banks. As you noticed in the key news above, global confidence is
rising. As you may have noticed global stocks are doing the same. Oil is back over $70.
Emerging markets seemingly looked right past the mini-break in Chinese stocks, which
now seem to be recovering. China has made it clear they will do all it takes to keep
hope alive. Analysts say their growth is accelerating. It seems we are still in the midst of
some powerful self-reinforcing trends.
Marty Zweig made the saying famous, “Don’t fight the Fed. And don’t fight the tape.”
Worry we can about statistics and positioning and key technical levels, but sometimes
it’s best to just bury the stuff in the wall somewhere and forget about it. Yet another of
the endless lessons I learn and re-learn about investing.
Jack Crooks
Black Swan Capital LLC
www.blackswantrading.com
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WHILE YOU WERE SLEEPING IN THIS ISSUE – read the whole 7 pages HERE.
• Equity markets are rallying again, but the data could cooperate more
• When you have the Fed Chairman and a CEO of a bank saying the same thing, one of them can’t possibly be right
• U.S. dollar is clearly in decline; good for commodities, terrible news anyone earning U.S. dollars
• The greatest non- confirmation of the rally in the equity market is the near-zero yield on the U.S. 3-month Treasury bill
• Japan’s Nikkei index has become a confirming barometer for the S&P 500
• Canadian existing home sales — what housing collapse?
• U.S. retail sales very strong in August …
• … And so was the PPI and NY Empire manufacturing index
Equity markets are rallying again (the MSCI Emerging Market index just hit its best level in over a year) but the data could certainly cooperate more. German retail sales were reported down 1.7% through the first seven months of 2009. U.K. data on employment was weaker than expected too — wages slowing to +1.7% YoY in July from 2.5% in June (+1.9% was expected) and August unemployment jumped 24,400 (and all this prompted a further move down in the U.K. 2-year Gilt yield to a 17-year low of 0.74%).
As for yesterday’s data, the reason retail sales in the U.S.A. exceeded expectations was the use of very aggressive seasonal factors, which made the raw data seem stronger than they may have been. In fact, we estimate that it made the difference between the 2.7% gain we saw and the 2.0% gain (and flat core number) we would have likely seen with the application of a more normal seasonal adjustment factor. The market wants to believe that the American consumer is poised for a sustainable recovery, but there are far too many roadblocks and in due course, investors will be back pricing in the new frugality that is customary after a credit collapse and asset deflation of the magnitude that households endured over the last two years. As an aside, you know that when you have Ben Bernanke and Ken Lewis both saying the same thing — the recession is over — one of them can’t possibly be telling the truth (though Greenspan sounded optimistic for the next six months yesterday and the Oracle is a buyer — 55% and 8 multiple points later (isn’t a value investor supposed to buying low and selling high?). And, the ballyhooed call for a renewed inventory cycle just isn’t happening — U.S. business inventories actually declined 1.0% in July, the 12th decline in a row.
The U.S. dollar is clearly slipping to new lows for the year and with the DXY at 76.291, we are a hair’s breadth away from breaking below the September 22, 2008 nearby low of 75.89 and once that figure is taken out, there is nothing but air down to the 70 level. Great news for commodities or anything else “priced in” U.S. dollars; terrible news for anyone earning dollars (though most pundits are mercantilists and think this is a great reason to buy equities) and it means that the Loonie is going to very likely break back above par sooner rather than later. Canadian importers, such as retailers and wholesalers, will benefit; manufacturers and tourist operators will bear the brunt of the adjustment. Resource producers will be cushioned by the secular growth in Asia and the concomitant positive implications for underlying commodity prices. Gold, as an aside, just made a fresh 18-month high above $1,020/oz.
….read pages 2-7 HERE.
Ed Note: The above is a small excerpt from Mark Leibovit’s Daily VR Trader. The VR Gold Letter is published WEEKLY. This excerpt from 8/24/09.
The stock market did it again. Despite a weak start, the bulls kept the buying pressure on all session long and it resulted in another up day for the market. For the session, the Dow was up 56.61 at 9683.41, the S&P 500 was up 3.29 at 1052.63, and the Nasdaq Composite was up 10.86 at 2102.64. Volume increased over Monday and breadth was positive.
The question for traders is whether exiting profitable long trades here makes sense in view of several upcoming cyclical and religious events which could possibly negatively impact the market. I emphasize possibly.
The conventional wisdom calling for a market rout in September/October could well be vindicated, but when? After the Dow Industials sees 10,300. One month from now around the notorious third week of October? Or, possibly after October into the end of the year – a scenario that turns everyone upside down?
So long as the market tracks in a steady ‘up channel’, volume is positive and fear rules, we may continue to climb that ‘Wall of Worry’ a bit longer. Inevitably we’re going to see a correction. Whether it’s a rout or crash, I cannot say. Sure, if the Dow Industrials pushes its way to 10,300, what prevents the market correcting a 1000 to 1500 points afterwards? The answer is nothing!
With Rosh Hashanah, Options Expiration, the Autumnal Equinox and Yom Kippur all ahead, part of me wishes to go to cash and simply stand aside. I haven’t pulled the trigger, but the finger is there ready to pull.
The truth is that the market has been rallying and correcting in a fairly orderly manner and there is nothing to fear but fear itself. I don’t think the market is simply going to turn on a dime and head south, barring some super-dramatic geo-political or ‘cosmic’ event. We should get some warning and should broad-based Negative Volume Reversals ™ materialize, then we have something to latch on to.
Yesterday was a potential ‘Turnaround Tuesday’, but the bears had little resolve and the bulls were never really threatened. Yes the indices pushed into the red early on, but once again selling pressure was very weak, and the bulls soon took control, engineering a steady move higher for the remainder of the session. Fed Chairman Bernanke declaring the recession over provided yesterday’s catalyst to bring more buyers into the market.
Longer term, I remain worried. You and I both know that the good sales and manufacturing numbers we’ve been getting have been boosted by the cash for clunkers program. But what will happen in September and going forward? All these people who were looking to buy cars in the near future, have now done so. Auto sales will likely fall off a cliff now and the economic number may look weak as a result.
Marks VRTrader Silver Newletter covers Stock, TSE Stocks, Bonds, Gold, Base Metals, Uranium, Oil and the US Dollar.
More kudos – Mark Leibovit was named the #1 Intermediate Market Timer for the 10 year period ending in 2007; the #1 Intermediate Market Timer for the 3 year period ending in 2007; the #1 Intermediate Market Timer for the 8 year period ending in 2007; and the #8 Intermediate Market Timer for the 5 year period ending in 2007. NO OTHER ANALYST SURVEYED APPEARED IN ALL FOUR CATEGORIES FOR INTERMEDIATE MARKET TIMING AS PUBLISHED IN TIMER DIGEST JANUARY 28, 2008!
For a trial Subscription of The VR Silver Newsletter covering Stocks, Bonds, Gold, US Dollar, Oil CLICK HERE
The VR Gold Letter is available to Platinum subscribers for only an additional $20 per month, while for Silver subscribers the price is only an additional $70.00 per month. Prices are going up very shortl, so act now! Separately, the VR Gold Letter retails for $1500 a year! The VR Gold Letter is published WEEKLY. It is 10 to 16 pages jam-packed with commentary and charts. Please call or email us right away. Tel: 928-282-1275. Email: mark.vrtrader@gmail.com .
Marks VRTrader Silver Newletter covers Stock, TSE Stocks, Bonds, Gold, Base Metals, Uranium, Oil and the US Dollar.
More kudos – Mark Leibovit was named the #1 Intermediate Market Timer for the 10 year period ending in 2007; the #1 Intermediate Market Timer for the 3 year period ending in 2007; the #1 Intermediate Market Timer for the 8 year period ending in 2007; and the #8 Intermediate Market Timer for the 5 year period ending in 2007. NO OTHER ANALYST SURVEYED APPEARED IN ALL FOUR CATEGORIES FOR INTERMEDIATE MARKET TIMING AS PUBLISHED IN TIMER DIGEST JANUARY 28, 2008!
For a trial Subscription of The VR Silver Newsletter covering Stocks, Bonds, Gold, US Dollar, Oil CLICK HERE
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