Tuesday, 19 August 2008

Kitco shortage and bear commentaries! 2008-08-19

Tuesday 19th August 2008, 11:00 am: Kitco shortage and bear commentaries!

At the sametime as Kitco announces a shortage of all bullion products on their website, there goes their mouthpiece John Nadler again, talking gold down. This guy has to have an agenda. Is he short gold?

Gold is down a long way BUT it is still 20% up on a year ago. Nowhere does he mention this; he just pounds the bearish case as always.

As the Kitco front page says as of now,
"1yearchg +137.40 +20.94%"

They should get another gold analyst. I am sick of this guy. Why buy any gold when dealers have this kind of guy as an “analyst.” He is acting against the interests of those who buy gold from his company.

He has also totally failed to mention the shortage that has been announced on their site. There have been corrections before but not a shortage like this. However he mentions only the correction - it suits his bear case and not the shortage, which is a far rarer and more newsworthy event.

Friday, 15 August 2008

Proof of manipulation? 2008-08-16

Friday 16th August 2008, 11.01 pm: Proof of manipulation?

Some advocates of gold and silver investment have made much of the alleged lack of silver supply. Some bullion dealers ran out of finished product (1oz coins and small bars) but John Nadler of Kitco repeatedly stated that you could trip over piles of 1000-ounce bars in the vaults around the world.

Now tonight, this notice appeared on http://www.kitco.com/ - in red 'ink':

"IMPORTANT NEW NOTICE: Due to market volatility and higher demand in the entire industry, we are anticipating delays in supply of all bullion products. Please note that you can continue to place orders and prices will be guaranteed; however, cancellation fees will still be applicable regardless of the length of the delay. Consequently once inventory is received there may also be delays in processing and shipping by our vaults."

This clearly states that there are shortages of ALL BULLION PRODUCTS with respect to real demand. (Or does it?) So why is the price of gold down 8% for the week at $786 and silver down a great big chunk at $12.70 at the end of this week?

Only one answer is possible: The price is set by the paper markets only. Nadler may have been correct when he previously stated that the 'clearing price' for real physical gold was $740 or not too far from there. Maybe the clearing price for physical gold is where we are now, at about $780: when reached, the vaults clear. Maybe they have? Or maybe not? Who knows in this world of fraud and illusion?

It also implies that the run up from $730 to $1020 was all paper speculation and 'froth' - including the buying of ETFs, futures, options, swaptions and all that nonsense. Perhaps the ETFs have little or nothing to do with the physical market after all? I'm sure that futures and options have little or nothing to do with the physical market. Does anyone ever take delivery? Can anyone ever take delivery?

Well, maybe today people have started to take delivery of these 'contracts' or maybe someone has just placed a real order for real metal.

The paper markets seem to be just a means for governments and finance houses to 'earn' commissions and/or short the market using someone else's property.

Imagine if you were short gold at $920 a couple of months ago and then saw it jump to $980 in a matter of days. Maybe you bailed out with a huge bankrupting loss, thinking that the price is going to $1200, only then to see the 'market plummet to $786 and your original (now closed) position hugely profitable. What irony. What a joke! Jim Sinclair of http://www.jsmineset.com/ has often said that using margin in gold is dangerous.

The question is, at $786, should I sell any real gold that I bought at $300, before it might go back to $300?

Answers on a postcard please.

Monday, 11 August 2008

Targets met! What now, 1974? $550? 2008-08-11

Monday 11th August 2008. Targets met! What now? 1974? $550?

It's 9 years since the total eclipse of the Sun in England (where it rained, of course) on 11 August 1999. Today gold is being eclipsed and rained on in no uncertain terms, together with most of the commodities.

Did you read anywhere else of downside targets in the $840s from a Head and Shoulders pattern? Or were most or all the 'tout' commentators talking their books, telling you to buy at $880 despite this most obvious chart pattern, as obvious as it gets.

My downside target(s) of $861 and $844 have both been met and exceeded. In fact, the $844 target even allowed for more or less holding around the old all-time high of $850. However, the price plummeted from the $860s and sliced through this lower $844 target all the way to $820, without any pause around $850 at all. Even I didn't really expect that, although $844 is below the previous recent lows (the lowest at $846.40) and below the 21/1/1980 all time high ($850), which might suggest further breakdown(s). It might however also have indicated a possibility to abort the H&S in the $850s, but no such luck!

If we get a bounce at around $800, the chart will form a downtrend channel with two tops and two bottoms (see below).

I had thought the Point and Figure chart (see stockcharts link below) was looking a bit weak and stuttering in the uptrend. I see now that there is a descending triple bottom breakdown from 5 August 2008.

Note also the magnificent double top in the Gold:S&P500 ratio at the bottom of this weekly chart:

James Turk was on Jim Puplava's show some weeks ago, saying that 2008 resembles 1974 in many ways. He then came up with his targets for gold at $1500 spike in 2008 and ending the year at $1100-$1200. What he didn't mention was that 1974 was the start of an intermediate term 18+ month bear market when gold fell from $195 to $103 (not far off -50%). If this is 1974 again, get your flares out, put on the last Peter Gabriel Genesis double concept album from that year and wait for $550 gold!

Now, consider if the gold:S&P500 double top formation were to break down:.

The above is a log graph so I shall do the calculation geometrically (with ratios) and arithmetically (by differences) and use today's close of the S&P500 of 1305.32 to convert the gold:SPX ratio into a gold price target:

0.784/0.598=1.311 (measured move ratio)
0.598/1.311=0.456 gold:SPX target.
0.456*1305.32=$595.22 gold target
0.784-0.598=.0.186 (measured move amount)
0.598-0.186=0.412 gold:SPX target.
0.412*1305.32=$537.79 gold target -
WOW! That's the 45+% retracement like 1974-1976!


"And I'm hovering like a fly, waiting for the windshield on the freeway ... "

Friday, 1 August 2008

Head & Shoulders breakdown for gold? 2008-08-01

Friday 1st August 2008: Head & Shoulders breakdown for gold?

Well, it sure looks like a Head and Shoulders pattern breakdown to me! Either that or so-called 'Technical Analysis' ('TA') is just aload of waving your hands about psychobabble nonsense, so that 'technicians' can sell subscriptions for worthless investment advice that is denied as being investment advice, (i.e. the kind that often comes with the typical disclaimer saying, "In no way is this investment advice ... we are not liable for any trading losses as a result of this advice that isn't advice ... BUY! No, SELL, SELL! No, BUY! Buy my newsletter! That will be $500 a year, thank you. Cheque, PayPal, Credit card or Bankwire are fine.")

See the excellent and free gold futures charts submitted by Dan Norcini (better than many of those from people who charge loads) at http://www.jsmineset.com/ - downloadable as Acrobat Reader .pdf files on most days. (The bigger writing on the snapshots below was added by me.)

A couple of days ago, prepare for swan dive:

One day ago, swan dive duly arriveth:

The daily spot gold '$GOLD' stockcharts chart looks slightly less alarming but is a neckline breakdown by any standards, on an intraday and closing basis:

If that ain't a head & shoulders, then there ain't no such thing as a Head and Shoulders, except for the shampoo of a similar name.

Of course, then the 'debate' will be: 'By how much?' 'When is a breakdown not a breakdown?' and all that similar nonsense that we always here when 'Technical Analysis' doesn't work and the expensive hired tealeaf readers get it wrong.

It's interesting that the $844 and $861 possible targets are near to two recent lows (support areas) in the above chart.

For development of this, see the current chart, constantly updated at http://stockcharts.com/charts/gallery.html?%24gold!

It will be interesting to see if this formation gets negated next week or if we do get a continuation of the breakdown to the $844-861 target and another chance for any interested buyers to purchase the yellow metal in the $850 area.