Gatesy

I think it's hugely important. I read every word from Jim et al every day

 

The article Frizzers just posted on silver will give you a real good idea why:

 

By: Theodore Butler and Israel Friedman

24 March, 2008

http://news.silverseek.com/TedButler/1206378069.php

 

 

 

IMO we little guys have to be aware of the big players. Like little fish feeding around sharks

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"

Yeah ...... i am keeping it ..... just protecting myself against any big falls - any more smackdowns etc & lock in some profit.

 

Gold is surging now .......... my bet is now up to +£1300

 

UPDATE :

 

OOPs .. I blinked = +£1400

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

How to Trade Futures

The long weekend is perhaps adding to the appearance of stability, but the gold and silver prices look pretty settled at the moment, even after NY waking up.

 

How is everyone feeling about the likelihood and timing of a further smackdown over the coming days?

"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!

Although I don't have any link to hand, I believe the ECB has been supporting Spanish banks for a couple of months.

 

Furthermore, I believe the Bank of England is now permitted to support banks without public disclosure (thanks to the Northern Rock episode).

 

The FED is already accepting mortgage-based collateral.

 

It seems to be all on. They will monetitize.

 

Corporate Socialism. Private profit at public risk.

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.

Sorry if this has been posted elsewhere but I'm shocked . . .

 

Could they actually get away with it ??

 

http://www.ft.com/cms/s/0/a233faa2-f789-11...0077b07658.html

 

"Central banks on both sides of the Atlantic are actively engaged in discussions about the feasibility of mass purchases of mortgage-backed securities as a possible solution to the credit crisis.

 

Such a move would involve the use of public funds to shore up the market in a key financial instrument and restore confidence by ending the current vicious circle of forced sales, falling prices and weakening balance sheets."

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.

Much of the selling in gold was due to a giant macro hedge fund that had to sell positions in order to meet investor redemptions. It is likely that he had to sell gold and commodity positions in this fund to meet redemptions or get off margin.

 

http://www.safehaven.com/article-9737.htm

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?

http://business.timesonline.co.uk/tol/busi...icle3593992.ece

 

Major meltdown in progress. Bottom will fall out of house prices.

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. ..

I am not so sure about this. I think it will be enough if the existing money seeks a new home. Away from triple-A subprime to commodities. However, the bailouts will indeed create new money. The bailouts will make sure that anyone who wants no AAA anymore can get out and into the new bubble.

 

They don't want to, but they will create another bubble. It's going to be (and has been already for while) commodities and precious metals.

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.

Of course, I'm very new to this, but having watched the charts a bit over the last couple of days, I've seen that the drops in gold's price seem to have been matched quite closely to drops in silver.

 

I don't just mean that they've both fallen, but when I notice a particular drop (or recovery) in gold's price, then check the silver chart, that silver just did the same thing.

 

Is gold and silver activity often this closely synchronised, or are they usually more independent? Does their current apparently closely related movements indicate anything?

 

Edited: To take the apostrophe out of 'drop's'... *blushes*

They are nearly always closely correlated

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

Now,about those HBOS rumours

“Absolute fantasy.” How do we know? The Bank of England has told us so. Directly.

 

Late morning on Wednesday, as shares in HBOS dropped below 400p, Bank officials got on the blower to all chief banking and economics correspondents across UK newspapers and newswires. The media had to be told directly and forcibly - rumours of problems at HBOS, accompanied by stories of emergency meetings at the BoE itself, were just not true.

 

The point here is that Britain’s central bank NEVER discusses the heath or otherwise of individual institutions (except the Crock, of course). The idea of it going one step further and making pre-emptive calls is simply unheard of.

 

Clearly fearing a run on HBOS (wholesale, retail, stock market, whatever), the Bank decided the rumour-mongering was just too serious on this occasion.

 

Hence the heavy handed statement from the FSA, saying it was looking to feel the collar of anyone shorting financials and then spreading malicious tales.

 

Which makes us wonder how the FSA’s enquires might go…

 

FSA: Why did you short this bank?

 

Speculator: Because I thought it might have liquidity problems.

 

FSA: Why did you then tell the salesman at X broker that you thought this bank had liquidity problems.

 

Speculator: Because I thought it might have liquidity problems.

 

FSA: But it doesn’t have liquidity problems.

 

Speculator: Really?

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.

No smackdown today. Gold steady at around $1010. Wouldn't surprise me to see it rise all the way up to the FOMC announcement. And then? Well, who knows?

 

Famous last words?

The market at the moment has simply moved down to fill the gap created outside NY trading hours. Personally I can't see much more downside in the current environment, especially with a rate cut looming, and would expect quite a significant bounce. I could be wrong though, so don't bet the farm on it!

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?

Fantastic interview from Jim Rogers. Get this man on the BBC news!

 

Some interesting points that he did and didn't mention..

 

1) One for Bubb here: Jim talks about holding the commodity itself rather than shares. He quoted a figure of 300% better than holding the shares. I always thought that shares give you leverage on the commodity itself, and thus the greater return. This is why the good doctor holds gold shares more than physical gold?

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.

Moves in the dollar today quite baffling. I can only assume that many haven't made the link between increased money supply and inflation, as the rise in the dollar and subdued nature of gold seem so contradictory with the fed, ecb and boe liquidity injections announced this morning.

 

Dollar and equities rebound will be short lived in my opinion.

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....

I've noticed a few posters around who spreadbet on Gold and even Silver. I've got a question that is probably staggeringly daft - surely if you can put in fairly tight stops, you can keep placing bets until the market goes in the right direction and then coin it in? Is there some sort of compensator for when you have a tight stop in place that limits your potential winnings?

 

Not a gambling man myself.

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.

Commercial Signal Failure in silver getting along nicely.

 

 

See also: http://gold.approximity.com/gold-silver_watch.html

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?