August 28 2011
After rising to a record high of 1917.9, gold slumped on profit-taking and a temporary ease in global economic concerns. Losing -2.96% on weekly basis, the benchmark Comex contract declined for the first time in 8 weeks and recorded the biggest drop since May. Concerning volatility, the yellow metal had probably not experienced the same level of choppy trading since 2008. For a second time in a month, CME raised margin requirements of trading gold last week. The initially margin will increase to 9450/100 oz from 7425, up +27%, while the maintenance margin will also rise by the same percentage to 7000 from 5000. While gold's slump might have been partly driven by the margin increase, CME's move do not always dampen gold prices. When the exchange increased margins by +25% in 1Q20, gold price jumped +3.54% on the effective date of February 12 2010 and the rise carried on for a week. The metal merely dipped -1.79% after the CME raised margins by +20% on December 15, 2009.
Gold's selloff found supports above 1700 and rebounded. Closing at 1794.1, the metal remained at elevated levels. A lot of buying interests over the past few weeks were driven by speculations that Fed Chairman Ben Bernanke would hint QE3 at the Jackson Hole symposium. We were indeed amazed that the metal managed to rebound although there was nothing announced in the end. Gold's resilience indicated that the market remained concerned about the global economic outlook. We retain our view that the low rate environment should continue to support gold and recent correction can be treated as a buying opportunity.
Gold's selloff found supports above 1700 and rebounded. Closing at 1794.1, the metal remained at elevated levels. A lot of buying interests over the past few weeks were driven by speculations that Fed Chairman Ben Bernanke would hint QE3 at the Jackson Hole symposium. We were indeed amazed that the metal managed to rebound although there was nothing announced in the end. Gold's resilience indicated that the market remained concerned about the global economic outlook. We retain our view that the low rate environment should continue to support gold and recent correction can be treated as a buying opportunity.
August 27 2011
The 21st Century Gold Bull Market
Gold -- what happened last week ?
The long term upper gold channel line has been on our weekly chart since the breakout in 2010 above the Red Channel line. Once price broke above the middle green line it only took two weeks to reach the upper level. A major sell off resulted in a 200 dollar drop right before a major options expiration. Coincidence ? NO.
How can the markets have the ability to do this ? BECAUSE THERE ARE NO LONGER ANY TRADING PITS LIKE THE OLD DAYS. So computer bot programs have the ability to control the markets when ever they really need to. The major move in gold the last 8 week only happens once every 5 or so on average. The option writers on Tuesday morning were down 1.3 an estimated billion dollars. By Thursday morning ---- that number was more like 300 million.
The bot programs take over when ever it is needed --- as the human intervention of the trading pits are no longer with us. Why don't they drop the price to 1000 on gold and hold it there ? Because they cannot control the PHYSICAL market ----- and more and more ---- the electronic markets are diverging away from PHYSICAL. Thus they must maintain at least some semblance otherwise the paper markets would become obsolete. ANY WAY YOU LOOK AT THIS ---- it is hard to believe it was not some criminal event. There are reports that there was major physical buying of the metals and that the supply is now becoming exhausted on many fronts.
Because this event happened at the exact high point in the channel -- it makes the analysis difficult from a medium term perspective. In other words --- usually this would be evidence that the market has put in a top that could last anywhere from 3 to 5 months. In the old days on non manipulated markets --- that would be the expectation. After seeing what I saw last week -- it is very hard to not think the entire thing was a complete bailout of the option writers ---- who were bailed out on the final day before expiration. Any new high from this point will be a major signal that the markets are about to move much higher.
August 26 2011
Gold received major haircuts on Tuesday and Wednesday as Margins were increased in China Gold Markets. The 150 dollar swing in gold just happens to arrive JUST before options expiration for gold and silver on the 25th of the month where option writers stood to lose BILLIONS because of the major move in gold. I don't have the data but was told that Adrian Douglas had done the research and they stood to lose big.
The long term upper gold channel line has been on our weekly chart since the breakout in 2010 above the Red Channel line. Once price broke above the middle green line it only took two weeks to reach the upper level. A major sell off has resulted in the midst of a major options expiration due this Friday. Coincidence ?
