Thursday, December 17, 2009
DAN NORCINI'S COMMENTS
FROM JSMINESET.COM
Hourly Action In Gold From Trader Dan Posted: Dec 17 2009 By: Dan Norcini Post Edited: December 17, 2009 at 3:08 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
With the Dollar continuing to strengthen, gold is facing strong headwinds as carry trades are being unwound today. Chatter out of Europe about Greece’s dire straits (their credit rating was downgraded by Standard and Poors) has traders shunning the Euro and moving into the "safety" (please pause here for a moment and allow me to stop laughing long enough to finish writing this) of the US Dollar and away from leveraged risk trades. That is bringing selling into the entire commodity complex and gold is not escaping it.
I have mentioned in previous posts that the selling in gold did not appear to be carry trade unwinding but rather the usual price retracement tied to long liquidation in a bull market. The reason was that many commodities were actually moving higher even as gold was moving lower. That has changed with today’s intense selling as can be seen by the near unanimous wave of selling that is washing over the entire commodity complex. Only a few markets have been exempt from that deleveraging, notably Natural Gas and to a certain extent, sugar and cattle, which are holding reasonably well all things considered.
Some of these hedge funds and managed money accounts have huge profits on their books from playing this carry trade, especially over the last few months, and are now apparently deciding to book those profits before year end. That is a reasonable thing to do considering the fact that they want to show their clients some nice gains for the year. The fear is that if they wait they lose more of those paper profits and thus we get a general stampede in one direction and that is down with commodities and up with the Dollar.
The Dollar’s picture has turned friendly from a technical perspective on the weekly chart as it is now firmly above the 10 week and 20 week moving averages, both of which have turned higher and are moving up. The longer term 40 week average, which is closely watched by the fund community is still moving lower and comes in near the 79.50 level. A weekly close above that level would give the Dollar room to move to as far as 82.00 – 82.50 before encountering serious technical opposition. Keep in mind that I am not advocating a bullish fundamental viewpoint for the Dollar; I am only relaying what the price chart is saying technically. We have seen these periodic moves higher in the Dollar over and over again even as it continues its long term decline. It is just part of the markets and there is really not much more to say about it other than every time it has rallied, it has been met with strong selling that sent it plummeting back to earth as those nations with huge Dollar holdings use the strength in the Dollar to diversify out and move towards other assets or bonds of different nations.
With the US following political policies designed to turn it into a third world banana republic, the Dollar’s days are numbered and its decline is inevitable unless it is linked to some sort of gold backing which of course would require a substantially higher gold price due to the gargantuan sums of US indebtedness; indebtedness I might add that NECESSITATES a dollar devaluation since it has now become mathematically impossible to ever clear that debt. While traders have to take a somewhat myoptic view of things because of the damn hedgies, long-term oriented INVESTORS have to keep their eye on the ball of macroeconomics and make their decisions for wealth allocation accordingly. Personally, you could not PAY ME to hold US Treasuries – they will end up being nothing but scraps of paper without value by the time the government’s printing presses run out of ink in conjuring them up to pay for all the crap they are throwing money at (now we have the brainless “cash for caulkers” program). I am still waiting for my government purchased and supplied 4 wheeler. I really do need one of those things and want the feds to buy me one. After all, I deserve one.
Look for Central Banks to become more active on the sly in acquiring the yellow metal as they take advantage of the lower price to secure it. We have to remember that Central Banks out of Asia are not hedge funds and do not manage their assets like momentum traders. They do not chase prices higher, ever. They are like the old fashioned traders (we are a dying breed) who used to try to buy low and sell high. When the hedgies got their fancy algorithms cooked up, that went out the window for the “investing” community but there remains those who look to buy gold on weakness and not strength. Also, India will become more active in general in the physical market as gold priced near current levels begins to look like a bargain considering we are now nearly $110 lower than we were a mere two weeks ago.
It will therefore be interesting to see how much lower gold might drop before it shrugs off the rally in the Dollar and trades on its own merits as a safe haven instrument. That brings me to the bond market which is seeing a safe haven flow today.
If you will note, bonds are sharply higher reflecting the panic back into the “security” of US debt. Once again, for the umpteenth time, the bonds bounced right off the bottom of their 5 month long trading range. Quite simply, a surging economy is not compatible with a bond market that is moving higher and falling long term interest rates. Again, at the risk of being redundant, what we are seeing is leveraged trades being unwound; nothing more, nothing less. Try not to read too much into it. It is just a cacophony of market noise. One thing is certain however, bonds do not get a bid when traders and investors are feeling upbeat about the prospects of the economy. That is a rather stubborn fact, protestations and rose colored glasses comments by the FOMC notwithstanding. After all, what did people expect them to say in their comments – that we are going to hell in a handbasket and losing our economic clout to the far Eastern rising powerhouses? Bernanke and company want to keep their jobs.
It looks like some of us gold folks are not going to be able to buy our kids that GI Joe with the Kung Fu grip after today. Then again, the ZHU-ZHU hamsters or rats, whatever they are, are now the in thing, so maybe we can get those instead. At their current price they are equivalent to 1/24 of an ounce of gold so maybe we can shave some of that off a bullion coin and take it to Ebay and keep the kids happy after all.
There is nothing that I see on the horizon with our current Administration, political leadership or Federal Reserve officials that inspires the least bit of confidence in their ability to do the right thing for the long term prosperity of the nation. That makes me quite comfortable with gold for if I had to choose between trusting the current crop of bozos and the yellow metal, right now there is no competition whatsoever.
Hourly Action In Gold From Trader Dan Posted: Dec 17 2009 By: Dan Norcini Post Edited: December 17, 2009 at 3:08 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
With the Dollar continuing to strengthen, gold is facing strong headwinds as carry trades are being unwound today. Chatter out of Europe about Greece’s dire straits (their credit rating was downgraded by Standard and Poors) has traders shunning the Euro and moving into the "safety" (please pause here for a moment and allow me to stop laughing long enough to finish writing this) of the US Dollar and away from leveraged risk trades. That is bringing selling into the entire commodity complex and gold is not escaping it.
I have mentioned in previous posts that the selling in gold did not appear to be carry trade unwinding but rather the usual price retracement tied to long liquidation in a bull market. The reason was that many commodities were actually moving higher even as gold was moving lower. That has changed with today’s intense selling as can be seen by the near unanimous wave of selling that is washing over the entire commodity complex. Only a few markets have been exempt from that deleveraging, notably Natural Gas and to a certain extent, sugar and cattle, which are holding reasonably well all things considered.
Some of these hedge funds and managed money accounts have huge profits on their books from playing this carry trade, especially over the last few months, and are now apparently deciding to book those profits before year end. That is a reasonable thing to do considering the fact that they want to show their clients some nice gains for the year. The fear is that if they wait they lose more of those paper profits and thus we get a general stampede in one direction and that is down with commodities and up with the Dollar.
The Dollar’s picture has turned friendly from a technical perspective on the weekly chart as it is now firmly above the 10 week and 20 week moving averages, both of which have turned higher and are moving up. The longer term 40 week average, which is closely watched by the fund community is still moving lower and comes in near the 79.50 level. A weekly close above that level would give the Dollar room to move to as far as 82.00 – 82.50 before encountering serious technical opposition. Keep in mind that I am not advocating a bullish fundamental viewpoint for the Dollar; I am only relaying what the price chart is saying technically. We have seen these periodic moves higher in the Dollar over and over again even as it continues its long term decline. It is just part of the markets and there is really not much more to say about it other than every time it has rallied, it has been met with strong selling that sent it plummeting back to earth as those nations with huge Dollar holdings use the strength in the Dollar to diversify out and move towards other assets or bonds of different nations.
With the US following political policies designed to turn it into a third world banana republic, the Dollar’s days are numbered and its decline is inevitable unless it is linked to some sort of gold backing which of course would require a substantially higher gold price due to the gargantuan sums of US indebtedness; indebtedness I might add that NECESSITATES a dollar devaluation since it has now become mathematically impossible to ever clear that debt. While traders have to take a somewhat myoptic view of things because of the damn hedgies, long-term oriented INVESTORS have to keep their eye on the ball of macroeconomics and make their decisions for wealth allocation accordingly. Personally, you could not PAY ME to hold US Treasuries – they will end up being nothing but scraps of paper without value by the time the government’s printing presses run out of ink in conjuring them up to pay for all the crap they are throwing money at (now we have the brainless “cash for caulkers” program). I am still waiting for my government purchased and supplied 4 wheeler. I really do need one of those things and want the feds to buy me one. After all, I deserve one.
Look for Central Banks to become more active on the sly in acquiring the yellow metal as they take advantage of the lower price to secure it. We have to remember that Central Banks out of Asia are not hedge funds and do not manage their assets like momentum traders. They do not chase prices higher, ever. They are like the old fashioned traders (we are a dying breed) who used to try to buy low and sell high. When the hedgies got their fancy algorithms cooked up, that went out the window for the “investing” community but there remains those who look to buy gold on weakness and not strength. Also, India will become more active in general in the physical market as gold priced near current levels begins to look like a bargain considering we are now nearly $110 lower than we were a mere two weeks ago.
It will therefore be interesting to see how much lower gold might drop before it shrugs off the rally in the Dollar and trades on its own merits as a safe haven instrument. That brings me to the bond market which is seeing a safe haven flow today.
If you will note, bonds are sharply higher reflecting the panic back into the “security” of US debt. Once again, for the umpteenth time, the bonds bounced right off the bottom of their 5 month long trading range. Quite simply, a surging economy is not compatible with a bond market that is moving higher and falling long term interest rates. Again, at the risk of being redundant, what we are seeing is leveraged trades being unwound; nothing more, nothing less. Try not to read too much into it. It is just a cacophony of market noise. One thing is certain however, bonds do not get a bid when traders and investors are feeling upbeat about the prospects of the economy. That is a rather stubborn fact, protestations and rose colored glasses comments by the FOMC notwithstanding. After all, what did people expect them to say in their comments – that we are going to hell in a handbasket and losing our economic clout to the far Eastern rising powerhouses? Bernanke and company want to keep their jobs.
It looks like some of us gold folks are not going to be able to buy our kids that GI Joe with the Kung Fu grip after today. Then again, the ZHU-ZHU hamsters or rats, whatever they are, are now the in thing, so maybe we can get those instead. At their current price they are equivalent to 1/24 of an ounce of gold so maybe we can shave some of that off a bullion coin and take it to Ebay and keep the kids happy after all.
There is nothing that I see on the horizon with our current Administration, political leadership or Federal Reserve officials that inspires the least bit of confidence in their ability to do the right thing for the long term prosperity of the nation. That makes me quite comfortable with gold for if I had to choose between trusting the current crop of bozos and the yellow metal, right now there is no competition whatsoever.
JIM SINCLAIR COMMENTS ON RECENT DOLLAR ACTION AND OTHER ELEMENTS OF THE MANIPULATION NOW OCCURRING
FROM JSMINESET.COM THURSDAY 12/17/09
This morning when the opposing members of the Chairman of the Federal Reserve confirmation committee were speaking, their faces were shown with lips moving but no sound. There were over-spoken by the F-TV so the net result is you did not hear one word.
Well that should go some distance to tell you the smoke and mirrors that underlies the dollar rally that money managers and F-TV have talked themselves into. Once the gossip gang had decided that the unknowable Carry Trade had become as the professor said, the Mother of All Carry Trades, luncheon discussions turned to when and how high the New Year’s rally in the US dollar is going be.
The euro has been talked down from the $1.52 level by those that had established very large shorts in the same manner that we are all used to. The employment figures changed a statistically insignificant amount and the MOPE machine went to work.
Gold of course came down inversely to the stronger dollar.
The question now that the USDX has appreciated above the .77 level is what fundamental legs are left after the weak hands are ejected? You need to know that FOREX houses have come on to that focus on Gamma’s account at 500 to 1 leverage.
The rub in the conclusion that there are little to modest legs in this short squeeze is because the Fed is dedicated to maintaining low short terms rates as they definitely understand the Peanut Brittle recovery. The highly professional and well financed money managers will not abandon the utilization of the dollar as a carry currency, having once again gotten the Fed’s green light.
Fundamentally 10% unemployment would delight the markets, but what a hell of weak basis upon which to anticipate any major recovery in a consumer driven Western economy.
If you can stand the heat in the gold kitchen it will protect you from the madness of monetary mismanagement, rulership of the banksters and capitulation of FASB. The alternative is to buy the dollar and get a spiritual experience without the need for a guru in the not too distant future.
This morning when the opposing members of the Chairman of the Federal Reserve confirmation committee were speaking, their faces were shown with lips moving but no sound. There were over-spoken by the F-TV so the net result is you did not hear one word.
Well that should go some distance to tell you the smoke and mirrors that underlies the dollar rally that money managers and F-TV have talked themselves into. Once the gossip gang had decided that the unknowable Carry Trade had become as the professor said, the Mother of All Carry Trades, luncheon discussions turned to when and how high the New Year’s rally in the US dollar is going be.
The euro has been talked down from the $1.52 level by those that had established very large shorts in the same manner that we are all used to. The employment figures changed a statistically insignificant amount and the MOPE machine went to work.
Gold of course came down inversely to the stronger dollar.
The question now that the USDX has appreciated above the .77 level is what fundamental legs are left after the weak hands are ejected? You need to know that FOREX houses have come on to that focus on Gamma’s account at 500 to 1 leverage.
The rub in the conclusion that there are little to modest legs in this short squeeze is because the Fed is dedicated to maintaining low short terms rates as they definitely understand the Peanut Brittle recovery. The highly professional and well financed money managers will not abandon the utilization of the dollar as a carry currency, having once again gotten the Fed’s green light.
Fundamentally 10% unemployment would delight the markets, but what a hell of weak basis upon which to anticipate any major recovery in a consumer driven Western economy.
If you can stand the heat in the gold kitchen it will protect you from the madness of monetary mismanagement, rulership of the banksters and capitulation of FASB. The alternative is to buy the dollar and get a spiritual experience without the need for a guru in the not too distant future.
DAILY CHART OF THE EURO
THE MANIPULATORS HAVE TO DRIVE DOWN THE
EURO WHILE THEY GOOSE THE DOLLAR AT YEAR
END SO ALL THE FINANCIAL CROOKS CAN SHOW
SOME FRAUDULENT PROFITS ON THEIR BOOKS
GOLD MOVING UP IN EARLY EVENING TRADING
IT WILL BE INTERESTING SEEING WHAT GOLD DOES
FROM HERE THROUGH THE CLOSE ON FRIDAY AHEAD
OF THE XMAS WEEK WHICH USUALLY HAS THIN
VOLUME. THIS YEAR XMAS WEEK TRADING COULD BE
VERY VOLATILE AHEAD OF THE END OF THE YEAR.
I EXPECT GOLD TO SOAR IN THE FINAL WEEK ESPECIALLY
WITH THE GOLD PRICE AT SUCH DEPRESSED LEVELS.
THIS YEAR END BLOWOUT HAS HAPPENED EVERY YEAR
FOR AT LEAST THE PAST FIVE YEARS AND THEN RALLIES
STRONGLY UNTIL MARCH
ANOTHER NEW LOW IN EARLY AFTERNOON ELECTRONIC TRADING
LESS THAN ONE HALF HOUR TO GO BEFORE THE
AFTERNOON CLOSE AT 2:15PM PST AS GOLD RISES
FROM THE NEW LOW JUST MADE AT 12:57PM PST
AT 1095.7
ANOTHER NEW LOW ON STRONG VOLUME
EVEN IF THIS ISN'T THE LOWEST LOW, BUYERS
DOWN HERE ARE GOING TO BE VERY HAPPY NOT
TOO LONG FROM NOW
THE LARGER PICTURE
GOLD HAS PULLED BACK TO THE 61.8% RETRACE POINT
AND IS BUILDING A BASE HERE TO MOVE BACK UP
GOLD MOVES LOWER ON THE CRIMEX OPEN BELOW THE YELLOW LOWER UPTREND CHANNEL LINE TO THE THIN BLUE LOWER DOWNTREND CHANNEL LOWER LINE
GOLD STARTING TO RALLY HERE ON GOOD VOLUME
GOLD DROPS MORE AHEAD OF THE CRIMEX OPEN
THE YELLOW UPTREND CHANNEL LOWER LINE
IS THE NEXT SUPPORT AREA, AFTER THAT, IT'S THE
LOW AT 1110
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