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What You Waiting For?
Trend
Long Term ~ Bearish – Need a monthly close above 1560 for neutral trend without bearish potential. The key resistance area’s to regain new bull market leg are 1792 and 1804-1830.
Medium Term ~ Neutral – Resistance 1425-1525 & support 1222 & 1272. Gold held 1272 on a weekly basis and the close in between the moving averages (1288-1295) on May 15 kept gold neutral (barely) If gold can’t mount a rally soon, the downside can give in. We are two weeks away from entering month 34 of the gold bear market. We are arriving at a key and most important time to watch for 2014. June has the highest odds of 2014 for a reversal. Doesn’t mean we get one, but has highest odds. September 2014 is the other month to watch.
Intermediate Term ~ Neutral – The intermediate trend is neutral and it takes a close below 1272 to add to a bearish outlook. A weekly close above 1322-1336 gets us bullish on the intermediate term.
The next short term cycle turn cycle is underway this week. If we close below 1272 gold can get a BIG DUMP to 1222-1240 for starters and we could move lower to month’s end. If the upside is chosen, then we’ll have to see the pattern to determine if it has legs. Under 1322-1331 on a weekly closing basis leaves us Neutral.
Resistance for this week 1303-1312 and 2nd tier 1316-1326
Support for this week 1262-1275 2nd tier 1222-1240
Events
Drum roll please!!!
The FOMC MINUTES from two weeks ago.
Ta Da !!
So why must the minutes now be released?
Metals Overview
For the week, spot gold moved from $1,289.80, to $1293.40, and silver rose from (it’s tying 2014 low and 2nd lowest weekly close since the bear market started) $19.12 an ounce to 19.35 (It’s 3rd lowest weekly close since August 27, 2012.)
The chart below shows that while the flush in gold has decreased the open interest on futures, it is not so in silver. In fact it is rising hard. The last time this happened there were bullish articles on how the silver longs couldn't be shaken. Then it crashed from 30 to 20.
Keith Weiner, Monetary-Metals:
There is a stark difference between the states of the markets for the monetary metals. The number of open futures contracts in gold is low, while in silver it’s high. First, let’s look at the data and then we’ll discuss what it means.
Here is the graph showing the open interest.
The Weiner article goes on to say:
The picture is clear enough. Since the beginning of fall, the number of gold contracts has blipped up and down and now there are somewhat fewer (-3.7%). Meanwhile, the number of silver contracts has gone up substantially (+39%).
There is an unmistakable downward trend since the middle of 2010, almost 4 years ago. Then, there were about five gold contracts for every silver contract. Today, the ratio is down to two.
OK, but what does this mean?
What drives the basis spread?
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&
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What You Waiting For?
Trend
Long Term ~ Bearish – Need a monthly close above 1560 for neutral trend without bearish potential. The key resistance area’s to regain new bull market leg are 1792 and 1804-1830.
Medium Term ~ Neutral – Resistance 1425-1525 & support 1222 & 1272. Gold held 1272 on a weekly basis and the close in between the moving averages (1288-1295) on May 15 kept gold neutral (barely) If gold can’t mount a rally soon, the downside can give in. We are two weeks away from entering month 34 of the gold bear market. We are arriving at a key and most important time to watch for 2014. June has the highest odds of 2014 for a reversal. Doesn’t mean we get one, but has highest odds. September 2014 is the other month to watch.
Intermediate Term ~ Neutral – The intermediate trend is neutral and it takes a close below 1272 to add to a bearish outlook. A weekly close above 1322-1336 gets us bullish on the intermediate term.
The next short term cycle turn cycle is underway this week. If we close below 1272 gold can get a BIG DUMP to 1222-1240 for starters and we could move lower to month’s end. If the upside is chosen, then we’ll have to see the pattern to determine if it has legs. Under 1322-1331 on a weekly closing basis leaves us Neutral.
Resistance for this week 1303-1312 and 2nd tier 1316-1326
Support for this week 1262-1275 2nd tier 1222-1240
Events
How desperate are the Feds getting? We keep asking that question. Here
we go again this week. It begins with Richard Fisher speaking on
Monday, Charles Plosser on Tuesday, and for mid-week Wednesday, it
becomes relentless. Not only will the FOMC minutes be released from the
last meeting of a couple of weeks ago, but check out the Pre-game show.
It begins at 10 am EST when William Dudley speaks, then chief Janet Yellen gives her 2 cents beginning at 11:30, followed by a 12:50 speech from Esther George, a speech by Narayana Kocheriakota at 1:30 PM EST and then the Feature Presentation;
It begins at 10 am EST when William Dudley speaks, then chief Janet Yellen gives her 2 cents beginning at 11:30, followed by a 12:50 speech from Esther George, a speech by Narayana Kocheriakota at 1:30 PM EST and then the Feature Presentation;
Drum roll please!!!
The FOMC MINUTES from two weeks ago.
Ta Da !!
Yes that’s right folks. It’s the minutes from the very same meeting
that was stuffed down our faces just two weeks ago. While some may not
remember, holders of gold sure do. That was when at exactly 10am two
Tuesday’s ago when the Yellen FOMC meeting began and someone rethought
their gold position and voila----700,000 ounces of paper gold sells hit
the COMEX in one minute, and the gold rally from 1272 to 1316 the prior
two trade days got punished back to 1290 BEFORE the Fed Chair begins to
even speak.
So why must the minutes now be released?
Well, there are two important reasons for that. The first is to
confirm whether the markets were correct in their interpretation of the
last Fed Speak. The second reason is reserved for the FED to INCLUDE ANY
STATEMENTS that may not have appeared in the previous meeting they had
behind closed doors. Master Oracles from the blogosphere will carefully
(with magnifying glass in hand) pour over sentence after sentence in
search of any potential words that would equal A CHANGE IN DIRECTION
from the last “FED SPEAK” event.
In other words, should the stock market continue it major downside
reversal from last week, it may be necessary for the FEDS to include
certain language to try and give the markets something to give a short
term recovery in price some hope, and at the same time, it gives the
control boyz yet another event they can time and either clear the stops
or just out and out take out any remaining support that gold may have
tried to establish.
One of these times, the opposite is going to happen. But until it
does, don’t think the control boyz can’t manhandle another trigger lower
(or higher) on any commodity they so choose.
Once the FED gets done with us, Thursday comes in with Jobless claims, Chicago Fed index activity, existing home sales, and the LEADING INDICATORS. Gee, what a coincidence that is eh?
INDIA has elected a new PRO GOLD government leader. Let’s see if that helps things out.
Finally, Russia is set to meet with China this week. THIS COULD BE THE BIGGIE OF THE WEEK.
Once the FED gets done with us, Thursday comes in with Jobless claims, Chicago Fed index activity, existing home sales, and the LEADING INDICATORS. Gee, what a coincidence that is eh?
INDIA has elected a new PRO GOLD government leader. Let’s see if that helps things out.
Finally, Russia is set to meet with China this week. THIS COULD BE THE BIGGIE OF THE WEEK.
Metals Overview
For the week, spot gold moved from $1,289.80, to $1293.40, and silver rose from (it’s tying 2014 low and 2nd lowest weekly close since the bear market started) $19.12 an ounce to 19.35 (It’s 3rd lowest weekly close since August 27, 2012.)
The chart below shows that while the flush in gold has decreased the open interest on futures, it is not so in silver. In fact it is rising hard. The last time this happened there were bullish articles on how the silver longs couldn't be shaken. Then it crashed from 30 to 20.
Keith Weiner, Monetary-Metals:
There is a stark difference between the states of the markets for the monetary metals. The number of open futures contracts in gold is low, while in silver it’s high. First, let’s look at the data and then we’ll discuss what it means.
Here is the graph showing the open interest.
The current buying of physical and selling the futures on silver is
1/2 % return. In a world of negative rates, perhaps there is a lot to be
said here. They control boyz buy the physical and then sell the futures
to gain the premium. It’s Ironic how physical holders are a big
producer of PAPER, but it is also important that the average silver
trader or holder of physical is not part of the mix. We’re talking the
control boyz all the way.
The Weiner article goes on to say:
The picture is clear enough. Since the beginning of fall, the number of gold contracts has blipped up and down and now there are somewhat fewer (-3.7%). Meanwhile, the number of silver contracts has gone up substantially (+39%).
There is an unmistakable downward trend since the middle of 2010, almost 4 years ago. Then, there were about five gold contracts for every silver contract. Today, the ratio is down to two.
OK, but what does this mean?
Open interest is a proxy for speculative interest. This is not simply
because contracts are created by buying, and destroyed by selling. You
can’t assume that contracts are created and destroyed as the price
moves. To see why it doesn’t work that way, look at the stock market.
The price of a stock can move all over the place, but there need not be
any change to the number of shares outstanding.
In the futures market (unlike in the stock market), the number of contracts changes continually. Contracts are added or removed by the computer software that operates the market. When you buy or sell, an existing contract may be transferred from one party to another, or a new one may be created.
It’s complex, but in essence if you want to buy a contract just when else wants to sell, the contract will change hands. It works similarly if you want to sell short, right when someone who is already short wants to buy.
By contrast, if there is no current owner of a contract to sell it to you, when you want to buy, then a new contract must be created. Who sells, who takes the short side of this contract? It can certainly be someone else wants to speculate on a falling price. There are always (well, usually) traders who go short silver. However, I don’t think that this is the full explanation of the data shown in these two graphs.
I favor a theory of arbitrage. If it’s profitable to buy metal in the spot market and sell a future against it, then someone will take this trade. This short seller is a source of unlimited contract creation, if it’s profitable.
It’s called carrying the metal. If you carry, then you make a small spread without price risk. This spread is called the basis the price of the future minus the price of spot metal. Or, more precisely, basis = Future(bid) – Spot(ask), because you must pay the ask when you buy the metal, and accept the bid when you sell the future.
Look at the gold basis and silver basis for the Dec 2014 contract, from early fall through today.
The profit to carry gold has been steadily falling. It began at 0.35% (annualized), when the duration was 15 months. It was hardly the stuff of legends or getting rich quick even last October. That meager margin has been steadily eroding, and is now 0.1% for 8 months. Suffice to say that gold carry has offered little or no opportunity to make money. Therefore the gold carry trade has not been a big source of contract creation.
The profit to carry silver, by contrast, has not much changed. It’s still around 0.5% (annualized) or more. This is far more attractive than gold, and probably more attractive than other opportunities in our zero-interest world. Therefore, the silver carry trade has created many silver contracts.
In the futures market (unlike in the stock market), the number of contracts changes continually. Contracts are added or removed by the computer software that operates the market. When you buy or sell, an existing contract may be transferred from one party to another, or a new one may be created.
It’s complex, but in essence if you want to buy a contract just when else wants to sell, the contract will change hands. It works similarly if you want to sell short, right when someone who is already short wants to buy.
By contrast, if there is no current owner of a contract to sell it to you, when you want to buy, then a new contract must be created. Who sells, who takes the short side of this contract? It can certainly be someone else wants to speculate on a falling price. There are always (well, usually) traders who go short silver. However, I don’t think that this is the full explanation of the data shown in these two graphs.
I favor a theory of arbitrage. If it’s profitable to buy metal in the spot market and sell a future against it, then someone will take this trade. This short seller is a source of unlimited contract creation, if it’s profitable.
It’s called carrying the metal. If you carry, then you make a small spread without price risk. This spread is called the basis the price of the future minus the price of spot metal. Or, more precisely, basis = Future(bid) – Spot(ask), because you must pay the ask when you buy the metal, and accept the bid when you sell the future.
Look at the gold basis and silver basis for the Dec 2014 contract, from early fall through today.
The profit to carry gold has been steadily falling. It began at 0.35% (annualized), when the duration was 15 months. It was hardly the stuff of legends or getting rich quick even last October. That meager margin has been steadily eroding, and is now 0.1% for 8 months. Suffice to say that gold carry has offered little or no opportunity to make money. Therefore the gold carry trade has not been a big source of contract creation.
The profit to carry silver, by contrast, has not much changed. It’s still around 0.5% (annualized) or more. This is far more attractive than gold, and probably more attractive than other opportunities in our zero-interest world. Therefore, the silver carry trade has created many silver contracts.
What drives the basis spread?
Speculators, when they buy a future, drive up its price just a little
bit. This is the inducement to the arbitrager to buy a bar of metal and
sell the future to the speculator. The arbitrager carries metal, to
provide a service to the speculator. He is the one who “converts” (I use
this term carefully, in the full context defined here) metal to paper, a
bar to a contract. He’s ready, willing, and able to deliver that bar
should the speculator have the cash to demand delivery.
The long and short of it (to make a tired cliché into a dreadful pun) is that in gold, there just is not much speculation, and therefore no profit to be made carrying the metal, and therefore when a buyer occasionally comes to the market his demand can be satisfied by a previous buyer who is selling a contract. (note; the old long traders are throwing in the towel and have had enough).
However, in silver buyers are running at a much more torrid pace. They’re too numerous to be satisfied by the occasional seller. They bid up the price of the futures, which makes it attractive for arbitragers to carry silver and sell them the contracts they desire.
Incredible as it may seem, at the low price of $20, speculation in silver is rampant. Market participants are trying to front-run a big price move. Due to rumors or gut feel or for whatever reason, they are expecting not only that silver will outperform gold, but that the silver price will rocket to a much higher price. Their frenetic buying of futures has pulled a lot of silver into carry trades.
Maybe hoarders will all of a sudden increase their appetite for silver metal that they will take off the market and bury. If so, the silver futures speculators will be proven right, and they will make a lot of dollars (money is a different story entirely).
I would not recommend that anyone bet his hard-earned money on a maybe. The data both open interest and basis show that the buying in the silver market is primarily speculators. They cannot sustain a higher price forever. They are merely trying to front run a higher price driven by hoarders. If hoarders don’t come in, the speculators will be forced to capitulate. If that happens, watch out below.
The neutral price of silver is in the $16’s today. If the price overshoots as far to the downside as it is now stretched to the upside, we could see silver with a 12 handle.
The long and short of it (to make a tired cliché into a dreadful pun) is that in gold, there just is not much speculation, and therefore no profit to be made carrying the metal, and therefore when a buyer occasionally comes to the market his demand can be satisfied by a previous buyer who is selling a contract. (note; the old long traders are throwing in the towel and have had enough).
However, in silver buyers are running at a much more torrid pace. They’re too numerous to be satisfied by the occasional seller. They bid up the price of the futures, which makes it attractive for arbitragers to carry silver and sell them the contracts they desire.
Incredible as it may seem, at the low price of $20, speculation in silver is rampant. Market participants are trying to front-run a big price move. Due to rumors or gut feel or for whatever reason, they are expecting not only that silver will outperform gold, but that the silver price will rocket to a much higher price. Their frenetic buying of futures has pulled a lot of silver into carry trades.
Maybe hoarders will all of a sudden increase their appetite for silver metal that they will take off the market and bury. If so, the silver futures speculators will be proven right, and they will make a lot of dollars (money is a different story entirely).
I would not recommend that anyone bet his hard-earned money on a maybe. The data both open interest and basis show that the buying in the silver market is primarily speculators. They cannot sustain a higher price forever. They are merely trying to front run a higher price driven by hoarders. If hoarders don’t come in, the speculators will be forced to capitulate. If that happens, watch out below.
The neutral price of silver is in the $16’s today. If the price overshoots as far to the downside as it is now stretched to the upside, we could see silver with a 12 handle.
_Trade with Winners:
Australian financial service providers, Vantage FX,
have received a multitude of awards over the years including those from IB Times,
Deal Makers, The World Finance Foreign Exchange Awards, Smart Investor and many more.
_Vantage FX have:
Award-winning Execution Speeds
Competitive spreads from 0.0 pips
24/5 Premium Customer Support
_Trade with Choice:
Take your pick. Choose from -->
32 Forex currency pairs
Major indices including SPI200, S&P500, DJ30
Commodities – gold, silver and crude oil
Binary Options – click here to read more about this exciting, new way to trade
_Trade with flexibility:
Choose your leverage amount ranging from 1:1 to 500:1
Choose your lot size - micro, mini or standard lots
Choose your account type – Standard or Pro, Individual or Joint
_Trade Your Way:
Choose the trading solution that matches your trading style:
The popular MetaTrader 4 (MT4)
MT4 for Mac – Exclusive to Vantage FX in Australia
MetaTrader 5
WebTrader
Mobile trading apps for iPhone, iPad and Android
Social trading via FX Copy
_Trade Securely and with Transparency:
No Dealing Desk Execution. No Requotes
100% Straight Through Processing
ASIC Regulated Standards
Funds Secure in Segregated Client Accounts at NAB
_Trade Wisely:
Daily market analysis from our key expert writer and currency strategist, Greg McKenna
Daily Forex Currency Highlights reports
Learn, follow and copy leading successful traders on FX Copy
Free Autochartist tools for live Vantage FX account holders
Free webinars and access to webinar archives
Other educational resources including infographics, glossary and guides
Samer Al Reifae
support5002@vantagefx.com
https://www.facebook.com/LORDOFTRUTH
https://www.facebook.com/FollowTheRaw
https://www.facebook.com/groups/vantagefx/
http://lordoftruth.blogspot.com/
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The Gold Price & Trend Predictions blog made for gold traders to find good news and to provide the traders with daily price predictions and to learn how to trade the Forex Market for free.Just pure learning! It will be of great fun.You can judge by yourself the quality of information that I will be giving you in my blog.
Welcome to my blog where you can learn how to trade the Forex Market for free.The material is all created by myself and not copied from anywhere. There is a lot yet to come since there is a lot that you need to learn, and there is a lot that I need to share with you! So please just be patient – it will be worth it.You can judge by yourself the quality of information that I will be giving you . So just go now and start learning!
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In this section you will find quite a long article of what Forex is all about. If you are a beginner, this is a must read. It explains in detail what is required to start trading, what you should do and not, typical traps to avoid as a beginner and a lot of valuable information which you as a beginner must digest and learn prior opening any Forex account with real money.
In this section you will find your road map on how to become a real successful trader couple of months as from today.
In this section you will know the 3 major areas – Technical Analysis, Fundamental Analysis and Trading Physcology.
In this section you will find a gold mine of information about the technicalities of Forex. We will start from the very basics covering all the Forex jargon words which you will be hearing every day and we will be taking you up to the level required to finally learn to trade like a pro – technical analysis, also found in this section.
In this section you will see the tips that will help you stay away from crap forex products, which unfortunately the Forex market is invaded with.
This section has a very detailed article on how to avoid being scammed in this ruthless world of Forex. I will explain in detail six tips that you need to look for prior purchasing any products. Even though most of the time you may claim your money back,the time wasted is never returned. You should have used that time to learn how to trade! Read it!
YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
Do your own due diligence.
No one knows tomorrow's price or circumstance.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
King Regards
