Gold: Is Another Big ‘Smackdown’ Being Orchestrated

Posted by Mark Leibovit - VRTrader

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Gold moved lower Friday as traders are still nervous about the large sell orders that materialized during Wednesday’s sharp decline (‘smackdown’) which was likely government induced. Spot gold fell 10.60 to settle at 1715.20 after hitting an intra-day high of 1727.20. Silver fell .83 to settle at 33.44 on Friday.

Do you subscribe to the Leibovit VR Gold Letter? I hope so. Here is the link:

Most Survey Participants See Higher Gold Prices Next Week – Friday November 30, 2012 12:01 PM

A vast majority of survey participants in the weekly Kitco News Gold Survey see higher prices for the yellow metal, based on the likelihood that the debate over the “fiscal cliff” in the U.S. will drag on.

In the Kitco News Gold Survey, out of 33 participants, 25 responded this week. Of those 25 participants, 18 see prices up, while two see prices down, and five are neutral or see prices moving sideways. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts. The “fiscal cliff,” which is the term given to the package of automatic spending cuts and tax hikes that will occur in January unless U.S. lawmakers agree to prevent it, has occupied headlines and is likely to do so until either a compromise is made or 2012 comes to an end. “The main risk would be of Washington suddenly coming to their senses and coming up with a comprehensive plan to cut runaway government spending and entitlement programs in order to balance the budget. On second thoughts, that’s not much of a risk. No doubt there will be soothing words as the problem is pushed further into the future, and gold could react negatively in the short term t o that, but fundamentally things are still positive for gold,” said Adrian Day, chairman and chief executive officer of Adrian Day Asset Management. Others suggested seasonal trends remain in gold’s favor. Those who see prices unchanged or are neutral on gold all said they expect the market to be range-bound, with the $1,700 area acting as strong support and the $1,735 to $1,750 area as resistance. “The breakout was a fake-out. Whoever bought gold last Friday as the market pushed to a five-week high realized they had a problem when there was no follow to start this week and liquidated those positions as the market started to move against them. Most markets are now hostage to the fiscal cliff debate as it is now risk on or risk off at any moment and no one really knows how the situation will turn out. There is also some end-of-year profit taking and tax selling going on, but until there is more clarity on this issue, I expect gold to chop around in a range, so look for prices to be steady,” said Frank Lesh, broker and futures analyst at FuturePath Trading. The participant who sees lower gold prices said gold’s inability to take out $1,750, combined with Wednesday’s break to $1,700 suggests that the market might try to test the downside further.

Ed Note: Mark has changed his short term position on Gold, but I cannot include that change as it would be unfair to his paying subscribers
If all contract purchases and sales had to be backed by the physical metal (proven and documented), believe me you wouldn’t see these type of ‘out of the blue’ bear raids. Basically, the CFTC and the CME continue to host a live ponzi scheme. How can a market be legitimatewhen in one day trades represent more than a full year’s production in the metal? It’s paper chasing paper and, folks, that is NOT the reason the futures markets were created. It’s not too late to close or severely restrict the ability of the CME and other futures exchanges from doing business. One bright spot, however, is the fact Asian and Indian markets are out there taking physical delivery of their gold which will ultimately spoil the paper chasing game. Some sovereigns are also now beginning to question the legitimacy of where their gold is being stored and whether it is truly there as represented. The tide is slowly turning and the financial press will be soon thrown into the fray when it becomes app arent they cannot continue to provide cover for the U.S. government illicit activities. .

Theoretically, a seasonal low should have formed and with volume coming back into the upside. Typically we should see a decent rally into December with potential into February. The caveat is that if we cannot take out the 1796.70 high (35.32 in silver) during this period, watch out below! MORE IMPORTANTLY! The first warning of a ‘problem’ comes with spot silver under 30.73 and spot gold under 1673.80. I would likely than switch to a SELL signal for gold and silver.

My ‘gut’ feeling is that another big ‘smackdown’ is being orchestrated, so personally I’m keeping my power dry just in case.

Taking a bigger picture view, if you don’t own the precious metals, anytime is a good time to buy them. Dollar-cost-average! The expression goes: ‘Don’t wait to buy gold – buy gold and wait’!