Gatesy

Excellent, thanks Steve.

Would anyone like to comment on this perspective on current status of gold trading from Dan Norcini from JSmineset? I'm not hugely familiar with the Commitments of Traders stats but maybe they are something worth keeping a close eye on to gauge short term status of gold/silver markets? I'm sure there's more info on GEI somewhere so I'll have a dig around. Happy to hear of anyone's views on COT usefulness though. JS mineset "Open interest in gold is down nearly 140,000 contracts from its peak near 593,000. That is one huge cleanout that has occurred. Actually based on the severity of this drop, I am tempted to say that the worst is over in gold. It is hard for me to conceive of anyone calling the gold market “filled with speculative longs” after a drop in open interest of this magnitude. I still want to see Friday’s COT report as that will provide a much better insight as to what is taking place internally in this market. My main question is how much of this drawdown is related to spreaders dropping their positions as measured against the spec and commercial outrights. The funds tend to add on shorts into weakness so we might have the situation where fund long liquidation is being met with fresh fund selling. That might be serving to mask the severity of the decline in the open interest readings so we will need to see the data on Friday to get a good perspective"

This link provides some very interesting food for thought for potetntial or existing traders. Certainly worth a look IMO. How to Trade Futures

"An appearance of stability" is a good description for the current state of things... I'd rather a smackdown didn't happen; I'd prefer a bit of a meander for a couple of weeks if anything to build strength for the next push up, but that probably reflects my own circumstances than anything else!

Yes, I don't disagree with this, but what I mean is a wholsesale agreement to buy out all debts in one fell swoop seems unrealistic, especially as they'd have to identify who had what liabilities first, a procedural nightmare; and this move would obviously not be without consequence to the organsation admitting that their assets are trashed leading to a buyout of said organisation for about 6% of their stock market valuation the previous week (a la Bear Stearns). Due to the above I cannot see that this could be put in place overnight as a short cut. Wishful thinking maybe as I think it would take months, probably no quicker than the market process currently underway.

I'm not sure this isn't just more propaganda / rhetoric. I really don't think the ECB could coordinate agreement from all European countires on this even if the ECB itself wanted to.

My concern here is how many other positions are there going to be to unwind / cover for these reasons, and thus how long will this downward pressure on gold and silver last?

I heard the CEO of Bath BS interviewed on Radio 4 yesterday. His explanation for the 'temporary' (2 to 3 weeks) withdrawl of mortgage products was that they had been overwhelmed with applications in recent weeks, from people looking to re-mortgage, which they couldn't keep on top of administratively. ..

This was my line of thinking also. Fed/BoE/ECB swap fresh high level money for junk mortgage debt, mainlined straight into the banks. With freshly capitalised balance sheets they buy PM's and commodities (as earnings into retail/luxuries corps collapses) to hold tight (and make a tidy profit in the next bubble) Cracking debate from all by the way.

They are nearly always closely correlated

Quality from the FT. FSA/ Darling are really looking like complete lemons.

Will silver hold at 18.50 ...? Daily chart looks a lot healthier (sustainable) for it, as long as today doesn't close out much below this.

Famous last words?

I got over exuberent a couple of weeks ago buying silver "on strength" and got a little stung. This time around I'm keeping a keener eye on those moving averages. Silver hasn't closed more than 4% less than the 20DMA since Sep last year and more often than not bounces off of it. Right now the 20DMA is c.1986. The 20DMA is has given strong support in the last few months. I am looking for the price to close out on the moving average in the very near future. Of course the 20DMA is increasing c.11-12c per day at the moment..

Smackdown now in play?

I've just finished reading JR's Hot Commodities. He is referring to a Yale study called "Facts and Fantasies About Commodity Futures" which found that between 1962 and 2003 " the cumulative performance of futures has been triple the cumulative performance of 'matching' equities". He basically uses this to support his idea that trading the futures themselves rather than commodity related equities is less risky and higher return .ie. by not being exposed to the 1000's of variable risks related to companies own trading and financial positions you get better returns. You'd certainly have to dig out the original study to assess whether you believed they had an appropriate basket of equities I suppose.

Merryn Somerset Webbs recent editorial in Money Week revealed an interesting stat last week. The FTSE 100 last week was trading at the same level as in 1998... Compare this then over the water. On 11 March 1998 the DOW JIA closed at 8706....

IMO spreadbetting as a vehicle has its advantages and disadvantages. In a market you are expecting to move positively over the medium term (a la gold and silver) for me the advantages so far have outweighed the disadvantages. Tight stops are obviously tricky in a failry volatile instrument but for me there are other ways to play it. I have been meaning to try and explore this in more depth on the forums for a little while, but i'll post over on one of the spreadbetting forums shortly and post a link back here if anyone is interested.

G0ldfinger, I get the jist of the charts which I could certainly buy into. Could you expand on this Commercial Signal Failure idea for the uninformed please. Thanks

Anyone think Silver will now sustain around the $20 level without further short term falls..?

Hi What a 24hrs in silver! Very interesting to see Sooo much commentary form you all on here. I've been swapping some rudimetary comments here for a few weeks, but like many others feel my knowledge is also reasonably rudimentary when compared with some of the levels of analysis on GEI. However, as someone who's been doing a lot of reading for the last 3 months I get the jist of lost of the macro (and micro) issues seemingly at play in gold and silver right now. I've had a degree of success with spreadbetting silver and gold futures in the last 2 months and had built a significantly leveraged position by yesterday afternoon before silver tanked yesterday pm (GMT). Due to my level of leverage the tanking made me very nervous (as Jim Rogers says "you don't want to be that man". Thankfully I was able to keep my positions open until the price rebound THIS pm to around $20.20 and then closed half my positions to minimise risk (and avoid the next haart attack!) in the belief we were seeing a "see-sawing" downwards correction; only for the price to then motor onwards to the $20.89! I've now had a chance to try and digest the masses of info on this post from the last 48 hours. Question is how real do people here believe any "commercial signal failure" to be and have I sold out too much of my position too soon? Will there be pullbacks to in the very short term to re-enter...? Also, any likemind spreadbetters out there feel free to PM me to swap thoughts, share concerns...! Opinions greatly appreciated.

Yeah, just looking at the shape of the april 06 up spike compared to the last week (The last 18 hours have been quite something). I appreciate today is obviously a whole different scenario though. I think the fall between May 06 and Jun 06 had something to do with unsustainable prices caused by the Silver ETF buying in Apr 06.

Anyone think we're in for some sort of horrible correction today/this week?