The Free Daily Blog

The News
The thing on most traders' minds appears to be expectations that the era of global easy money is ending.
The Spin
Recent improvements in US economic data have supported ideas that the US Fed will begin tapering soon.

The Reality
Normal signals after the financial crisis have not reset. GROWTH has not returned, sluggish and debt deleverage is not as easy as expected. The current FED policy has focused only on central banks. Going forward now we are turning into a HIGHER VOLITILE front as Europe has already turned down and Emerging Markets and USA are giving signs of turning down. Japan is trying to massively avoid an implosion by printing THREE TIMES FASTER THAN USA.

ALL REPORTS coming out for USA are now skewed to make things look much better than they are. Each time things get worse, things change. The Jobs report when dissected showed a birth/death model of PLUS 205K. Without it, job contraction not growth would have been reported. All the job gains were in LOW PAYING WAGE jobs that people who have run out of benefits are being forced to take.

The Reaction
Smart money beginning to exit the bond and stock markets for one simple reason and that is that central bank policy has put prices so far away from actual fundamentals that the smart money know it’s time to take profits and get into some “cash” for the moment.

The biggest clue that the stock market may have peaked is the chart below that Kimball Charting Solutions published this week. The chart below shows the % of volume that’s going for Penny Stocks. I recall the last time this signal occurred. It was right at the NASDAQ dot com bubble top. The bull market in stocks may not be over, but odds do favor at least the smart money is realizing that the stock prices are way overvalued in relation to the economic fundamentals and the move has been a liquidity driven event. Should the situation get worse in Europe it is possible to see money flows continue into USA, but odds favor that the smart money that left the bond market a year ago and moved to stocks is now going much more into cash and thus stocks are becoming much more of a speculative situation more so than any time in the past year. In other words, the “dumb” money is still there. This in itself doesn't mean we won’t see another slight new high but it is suggestive that the RISK in stocks is shifting and a correction is much more plausible and the GAINS and MOMENTUM we've seen is probably complete for at least the next few months and a correction is most likely underway.

What does it mean for Gold and Silver?
When we look at the cast of characters in the metals market, those who produce gold and those who consume it are considered the smart money because they are usually the first to spot the changing trends. This chart by Got Gold Report Website (Gene Arensberg) shows their current positions. Note how they have now moved to their lowest net short position since the 2008 crash. That last major correction went from approximately 1000 to 700 and this current correction from approximately 1900 to 1300. In other words, just about the same in percentage terms. This is coming at a time when gold and silver often put the lows in for the year. The average seasonal turn when we factor in the past 13 years has been around July 12th. We'veseen turns as late as Mid August and the 2008 crash didn't make the low for the year until October. We’ve seen as early as February/March in some years. For the most part, the June/August time period is where most of the lows for the year take place. Suffice to say that at the current time, the “smart” money feels that the current prices are reflecting gold as fairly valued if not a bit cheap. For what it’s worth, they have COVERED a majority of their short positions.



Gold Weekly Chart and Long Term Support
The long term support lines for gold reside in the 1189-1320 area for gold. The red trend line is from 1993 and is a very strong line. We have yet to have a weekly or monthly close below this line. The dotted line represents the 38% Fibonacci retracement of the entire bull market at 1283 and is the ideal place where a low would be based on historical bull market corrections. Finally the green line is taken from the last time gold visited the 400 dollar price area in 2005 and is currently near the 1190 area in gold. Thus the circle is where gold is likely to form its correction low. The only exception is if the global markets go into a major liquidity squeeze as in 2008 and we have another implosion as we did then, but this time on a global scale, then the potential for gold to go to the lower chart points cannot be eliminated. If the central banks are successful in reflation and there is no DEBT default from a sovereign nation, then gold should find support in the circled region.

ilver Chart
The long term silver chart shows the 20-22 area as major support. A drop to 18.50-19.50 on a flush out is possible and the one interesting thing about silver is that the massive open interest in futures has not been reduced like it has in gold. That is the one thing that is fishy about silver. There is one final trend line at the 15 dollar area that would be activated if we were to close below 18.50 in silver. Right now silver hit 21.35 THREE TIMES THIS WEEK. That was the 2008 high and is a MAJOR SUPPORT FACTOR FOR SILVER. A monthly close below that number in silver would leave open the potential for it to drop further. For now, this current area is a major support point for silver. As long as we don’t close the month of June below 21.35, this market too has the potential for major low point.

The key is that any rally in silver back to the 26-28 area is really where the rubber meets the road if silver is to re-establish the long term uptrend. Perhaps the most interesting factor is that silver has retraced a Fibonacci 61% of the entire move. Watch the 21.35 area as a major support point for silver. If do have a monthly close below that number, it will suggest that silver could do a final test below 20.

In summary, the metals look like they are putting in a MEDIUM TERM LOW (June 21st - plus or minus 2.5 weeks) from where a move back up to test resistance in gold at 1480-1540 and silver 25.50-28.00 should take place. From there, we’ll have to see.

Since that time the Yen is now undergoing its first big counter trend move since its great fall from Abenomics. For the moment, I suspect that it’s just that, a counter trend move and the overall trend of a lower Yen will return this summer.

I certainly don’t portend to understand ALL things going on but the but both major long term lows in the Yen (the chart is inverted and going down shows Yen strength against the US dollar) but I published this chart on the website the weekend after the G-7 meeting with my speculation that the control boyz had this meeting to conspire to get a hold of the Yen as the exodus from the Japan bond market had caused a massive % move up in rates and there had been two LIMIT day moves in that market. If the Yen is going to undergo a continuation of its counter trend move, perhaps gold is also close to making a medium term low and potentially beginning a counter trend move back up as well. The Yen/Gold scenario is perhaps something that should be watched over the next few months.



Getting back to this morning and perhaps reinforcing the above discussion, was the news that the Bank of Japan had decided not to extend any additional stimulus is being SPUN in the media and trade news that this is perhaps yet another indicator that the era of ultra-easy money was coming to an end. The spin to go along with it of course is the reason given for gold’s weakness today.

To further the “SPIN” today was the news that yesterday’s decision by S&P to raise the US credit outlook to stable from negative added to the argument that the Fed could begin tapering it bond buying program and the suggestion that gold is pulling back due to that concern and that the icing on the cake was the supposed good Jobs Report that came out last Friday.

We discussed yesterday on the update that in our view the Jobs Report was anything but good and gave reasons why.

This leads us to our own view that we’ve espoused is that gold’s weakness is not because the economy is improving but rather that it’s not improving and that the global stimulus is NOT working. Gold is and has been sending a message that it wants and needs GLOBAL expansion in order to get out of this 21 month bear market that it has been in and the real concern right now is the potential of LIQUIDITY drying up as the debt crisis has NOT been fixed anywhere and all it would take for a liquidity squeeze would be for an “event” that could spook the market into another 2008 scenario where a series of “margin” calls would put an “immediate” demand for cash and thus force liquidation of assets in order to raise that cash as was the case in 2008.

As far as gold, when there is bad economic news gold rallies for a day or two (just long enough to keep the SPIN going that bad news is good for gold) but it turns back down after that and it has been doing so for the last 8 months. In my opinion gold is telling us that the “reflation situation” that the central banks are trying so hard to emit is not working.

And how can it since none of that money is going into any of the world economies but rather is being put up in order to support bad debt, & to keep a last resort buyer of Bonds and Real Estate mortgages. From that perspective, up until recently the zero interest rate scenario has been maintained and another great “SPIN” we are being told is the Real Estate Market is not only in recovery but prices are moving up. We agree that prices have moved up from the lows and in some regions have actually returned to pre crash price levels. However, we’ll be very surprised if they will continue much past this year.

Until someone other than governments starts borrowing money and putting it to work in the economies and there is some type of wage increase and some sort of purchasing power gain to the majority of workers (wages) where some disposable income returns to spur demand from other than the essentials (food, clothing, shelter and energy) then the view of a global recovery which brings about a spur in DEMAND where REAL price increases can be sustained to get the ball rolling again----until that time the real concern the markets are feeling is one that has deflationary forces behind it. And while I’m certainly in the “gold intervention” camp by the Feds, the underlying word that gold is giving us is that the REFLATION situation is NOT WORKING at the moment and the GLOBAL ISSUE of too much debt, and not enough solid employment and wage increases to the population is little by little hacking away at real demand and governments move to now TAX anything that moves, breathes, or stimulates activity is in itself deflationary as it takes more and more money away from spending on what’s really needed and that is the non-essentials that we all used to be able to afford.

Until we see an increase in the velocity of money changing hands by non-governement sources and money that is hard earned and not doled out and business looking to expand manufacturing due to real demand from consumers who can afford it, the global community is in danger of another downturn and another liquidity squeeze.

Here’s a great example of what I mean and how they spin things to look good.

U.S. chain-store sales posted a gain of 2.7 percent for the fiscal month of April on a year-over-year basis, according to a tally of comparable-store sales compiled by the International Council of Shopping Centers (ICSC). This tally is preliminary and will be updated when Gap reports.
"April's pickup in sales is encouraging,” said Michael P. Niemira, vice president of research and chief economist for ICSC. “It is most likely being boosted by a stronger household wealth effect from higher home and stock market prices. Although it was an improvement of recent months, the pace was still dampened by adverse seasonal weather. However, it is encouraging that sales still performed well despite this weather drag,” Niemira added.
Take note that the story is telling you that the boost is due to “stronger household wealth from higher home and stock market prices.”
Consider what that suggests. That people say to themselves, “well, since my house didn’t lose any resale value last month and I had a good month in stocks, I think I’ll go out and buy something. And consider also that HOUSING AND STOCKS valuation is a direct result of the FED PRINTING MACHINE suggesting that what they are doing is “WORKING.”

Perhaps the most hilarious thing about this report was that this was really good news that there was buying in such bad weather!!! Hello --- its 2 weeks from summer. Ask yourself how many times in life have you said, I’m not going to buy what I want and need because the weather is not nice enough.

About the only bullish thing that can be said about gold on the short term horizon at this point is that the recent Commitments of Traders reports showed large and small spec net long positioning was still hovering around its lowest levels since 2008 and 2005, which means the threat of mass liquidation is lightened. The last time they held a net short position was in 2001. The recent price break apparently brought in some spec interest, as GLD daily holdings rose by 2.8 tons to 1,010, the first daily increase since May 29th.

The same cannot be said for silver as the open interest remains stubbornly high and from a contract standpoint, the longs have yet to be flushed out, even with a 10% drop in four minutes a few weeks ago.

Finally the other pressure on the metals markets is that Chinese equity markets remain closed for a holiday through Wednesday.

Gold Chart
Gold came within 6 dollars of reaching then next support zone of 1350-1360 at the purple uptrend channel lines. It’s fighting like mad to hold the yellow downtrend line and actually slipped below 1370 today for quite a while but so far has not yielded an hourly close below 1366. At the moment gold it trying to get back above that white channel line which defines the ONLY UPTREND channel that gold has on ANY time frame as all trends have been and remain down. Gold has not even been able to get above its first daily (never mind weekly) resistance level of 1387-1394 so far. Additional resistance is the 1399-1404 area where the green 200 hour moving average resides and the next channel line resistance. Support is the 1350-1360 area and then 1337-1343. It’s possible for gold to hold here and bounce into Wednesday before resuming the downtrend but it’s also possible that gold will tank into 1350-1360 and make its low for the week tomorrow. It can go either way at the moment. But the message remains the same for the moment. No matter how much BULLISH news is thrown out the only thing that matters is price and at the moment it continues to NOT respond to any of it. Until it does, the trend is down.

If gold can get above the 1383-1388 area then a rally to Wednesday/Thursday at 1394-1399 could be in play, but other than that a close below 1366 would favor 1350-1360 as the next support point.




SILVER CHART
We can think of no other market other than silver that would tank 10% in price to bring a total 2 year drop in total price to a 60% drop and drop below prices from 5 years prior and not have it be a major reversal point from which a rally where at least a bullish bounce in price and pattern would take place. But that is exactly what is going on. Silver has done exactly NOTHING since the drop three weeks ago other that go sideways in a choppy, sloppy, sideways bearish looking pattern. Perhaps if we would have seen an open interest drop and liquidation in the futures trade, we could view this as accumulation going on but we’re not even seeing that. Perhaps the only good thing that can be said is the situation is so ugly and bearish looking on the short term charts and the sentiment is so gloomy that perhaps we are near a bottom.

Support is at the 2008 price level of 21.35 and note how we keep bouncing off of there as bulls try and hold off the onslaught of defeated selling that is taking place as well as bears adding to positions. Resistance is everywhere at the moment and begins at 21.98 to 22.40 today. Until silver closes above 23.30-23.50 all trends remain down. A weekly close below 21.35 would activate another potential test of 19.50-20.25 in silver. In summary, the metals remain down on all levels at the moment. There is a medium term cycle due to bottom around the 21st of this month and would be doing so in a time frame where last year’s counter trend rally began (at the end of June).

In summary, its possible that the double bottom here in silver at 21.35 will prompt a rally into Wednesday/Thursday to 21.90-22.30.  Otherwise any close below 21.30 favors a move to 19.50-20.50.

The report came in at 177K with a huge birth/death model of 200k to pad the number and stave off the stock market selloff. Interestingly our short term cycle was due today (june 7th – plus or minus 72 hours).

India's Central Bank has added further restrictions against retail gold purchases by limiting advance against gold sales to 50 grams per customer and extending those restrictions to co-op banks as well as commercial banks.

Chinese equity markets were lower again overnight, as a tight money supply situation weighed on financial stocks. The Nikkei ended close to unchanged after being down as much as 2.8% earlier in the session. The Yen's surge yesterday and overnight weighed on the outlook for Japanese exports. European stock indices were posting mixed results this morning, with the French CAC-40 and Italian MIB showing modest gains and the German DAX finding mild pressure but that was before the jobs number. Germany's trade surplus during April was higher than expected, fueled by a 2.3% rise in imports and a 1.9% jump in exports.

In summary, the control boys have done what they always do and that’s crush gold on the NFP report. The low at 1377 and on the trend line should be the extent of today’s damage.

GOLD CYCLES
The short term cycle turn was due today (June 7th – plus or minus 72 hours) and has a 70% chance of favoring a pullback into the 21st of the month. Today’s drop suggests that the new cycle is underway. It would take a close above 1440 to neutralize the cycle.



GOLD CHART
The zoom in on the gold chart shows the choppy and overlapping action, and as we've discussed, is usually a bearish sign. The lower support line has been hit on the hourly chart and while a bounce can develop , odds are with today’s being the ideal day (June 7th) for the short term cycles to turn, the odds are high that another pullback in gold is underway. At least that’s what the cycles favor and and close below this channel line will favor the 1350-1360 area as the next target. Any bounce back toward s 1395-1405 should find resistance.  



SYSTEM TRADER CHART

The OBJECTIVE TRADER system chart for the medium term trend has been on the bearish/short side of the trade now since just under 1700 and until price closes above the resistance area defined on the chart as “FIRING RANGE” the medium term trend remains down. It would take a daily close above the 1465-1470 area to finally neutralize the bearish condition.  The trends remain down.

SILVER CHART
SILVER broke down from its support area also as you can see by the purple line giving way. Here too we’ve discussed the choppy and overlap condition price pattern that usually resolves this way. Next support is the 21.00 dollar area. Resistance is now the 22.50 – 23.00 dollar area.

The media has the full “FED TAPERING SPIN” going and they are using it to justify the stock market corrections we’re seeing globally since the last week of May. It has really affected bonds also and commodities as well. And the “Spin” is metals also worried about it.

At the website we've been discussing for a while that the media and spin is that gold rallies on bad economic news. While that was true in the past, it really doesn't do it now but for a day or two. It happened again on Monday. We've been watching this character change for a while now and it suggests to us that Gold is telling us that it wants to SEE good economic news and that stimulus no longer working. Of course gold drops for a day or two on good news---just enough to keep us off guard. This has been going on since February in gold.

IF the MEDIA is “spinning” that GOOD ECONOMIC news is BAD for gold then how come gold rallied from 680 to 1900 when initial injections of trillions of dollars picked up the economy from crash levels and there was an improvement ? And why has gold been selling off for a year? Well besides intervention, we’ve maintained at the website as early as FEBRUARY that the stock patterns in the HUI and then gold and silver were warning us that a potential LIQUIDITY SQUEEZE was coming again. This all came to pass and by time gold was under 1400 the global control boyz had to drop interest rates worldwide and began talking deflation as a problem. WHEN YOU HEAR THEM SAY DEFLATION what they really mean is a major liquidity squeeze (like 2008) could be developing again. Thus the SPIN that gold sells of on good economic news is a pile of bull they are giving us to keep us off guard. 

Gold wants GOOD NEWS because if things don’t turn around we are going to have another “EVENT” folks.

I suspect the stock market is now catching on as well. The FED experimented for a few months with just putting in note on “TAPERING” in Fed minutes and would reverse the next day with statements and that was enough to keep the market soothed. The next experiment was Ben saying it at last congressional meeting and hedging himself. But this time the “demo” stuck and the market has displayed what everyone has known all along and that is without the propping up of housing and interest rates with current QE programs, the deflationary air that has been growing due to the massive debt, tax increases, global slowdown & most recent JAP YEN FUEL where they export their deflation, is now working on markets. Understand when I say deflation I don’t mean food & essentials. While we are all paying HIGHER costs for everything, a lot of it is increased CORPORATE prices and not the underlying commodity.

As you can see the commodity chart shows an overall downtrend is still in play but has really been just sideways over the last quarter. So yes, inflation we feel but not really in the commodity sense over the past 3 years. They do look like they are trying to put a bottom in but I think you get my point. This talk of “tapering” spooked the market so much because in a sense that is all that is holding up the potential for the downturn to increase substantially and while gold has been worked like a currency (interventions) and outright manipulation, this deflationary wind has helped the control boyz in their takedown as has the HOT MONEY exit of Money Managers who headed to “YEN LAND” when they saw what the FEDS were allowing. The fact is the FED CANNOT PULLBACK the “HOPIUM” addiction it has caused with paper infusion.



Gold continues to see somewhat negative investment news from GLD sales also but that is probably another “SPIN” factor. It dropped another 2.7 tons to the lowest levels since Feb 2009. Yes, the money managers have sold and momentum money, but there are deeper implications here also that is helping (we and other believe) supply gold to the TIGHT PHYSICAL situation.

In conclusion, the ebb and flow of expectations for the Friday morning US payroll report are likely to become an all encompassing focus for the gold trade ahead as well as most markets.

The Dow was off another 200 points at the lows today. Chinese equity markets were lower again overnight as Chinese investors are also concerned about the GLOBAL slowdown. The SPIN here is also about “tapering” is the issue.

The SPIN of course is done so it will be acceptable for them to continue and keep the FED’s as the savior’s in the mind of many. The fact is that they have cornered the entire world with this grand experiment and have failed to do anything but possibly set up another “event” in the near future.

The Nikkei also posted a decline overnight, as investors think the latest Japanese policy moves might have fallen short of some expectations. Website readers will recall that we speculated that the emergency G-7 MEETING OF MAY was to try and slow down the YEN collapse as they were losing control of the Japan bond market. Now the Nikkei has two huge drops in a week as rates in Japan are up basically 100% since their massive printing (equal to the FED printing 250 BILLION A MONTH) began. This also is creating massive de-stabilizing global factors.

European equities were undermined by the weakness in Japanese stocks, but weak Euro zone Business activity readings and a negative 1st quarter Euro zone GDP result left the markets facing mostly negative macro economic conditions as Europe is in a deep recession that threatens to spread.

GOLD CHART
Today’s chart is the MINI gold as it has a slightly different set of channel lines that are working sharper at the moment. That yellow line connects the Dec 2012 and Feb 2013 lows and is currently an important short to intermediate term TREND line resistance. If gold can make it support then the 1420-1460 area could open up for test. There’s a purple line at 1420 so 1410-1420 is 1st line resistance in gold. IF we fail this area the only other support is the green 200 hour moving average nearby. If that lets go then gold should return to the lower support points of which 1355 area would be next.

In addition recall yesterday’s update displayed the short term cycles and they are due to peak this week and potentially usher in a pullback into the 21st of this month. With the CHOPPY AND OVERLAPPING price pattern it makes for a situation where gold has a lot of bearish overtones building up in the short term. The pattern is not short term bullish. Yes, it could rally to the 1440 area but this choppy price pattern is most often a clue that the main trend is still not up in gold and odds do favor another pullback is coming. Support is 1384-1390. An hourly close below 1388-1392 on our “Objective Trade System” is also suggesting that the short term trend would turn down if price breaks and that is in line with what we see on the chart below as well. In summary, gold is on the verge of a short term peak and another pullback towards the 21st is coming in play. IT TAKES A CLOSE ABOVE 1420-1425 to avoid its beginning as the short term cycle window favors a pullback to be in play ideally by June 7th (plus or minus 72 hours). In summary, it’s time to get cautious and be very careful for short term gold bulls.

SIlver chart

It's the same story in silver.  Need a close above 23.30 to get further upside.  A close below 21.85 favors lower.

  
With a bit of tightening evidence seen from the PBOC overnight, adverse currency market action and a somewhat overbought short term technical condition from the compacted rally in gold yesterday, the bears feel like they have a slight edge on the Tuesday US trade. 

On the DEMAND SIDE OF THINGS, the World Gold Council thinks that Indian gold demand for the 3 months ending in June, will post a very significant gain relative to year ago levels and that could underpin gold prices against a return to the mid May lows ahead but the trade also continues to fear proactive action from Indian officials to discourage gold imports and gold investments. Ideas that the Indian government will raise gold import fees and make financing gold bar purchases more complicated and expensive, has probably prompted some Indian buyers to rush forward and beat the new fees and regs. 

Going back to economic news, it could be difficult for the trade to come away from the US trade balance results with a definitive read on US Fed policy as the reports have been so rigged that we get one bad report (PMI) then we get awesome housing report --- it’s just all over the place. Who in their right mind believes that consumer confidence is at 6 year highs? Who are they asking Bill Gates and Warren Buffet and the president’s economic team? If yes, then I can understand the numbers,

Some bulls still want to see a pattern of builds in GLD holdings to signal a solid low, off renewed gold investment interest, while others think the track of gold prices will remain locked onto the ebb and flow of tapering views for the next few weeks. The COT reports show wildly bullish readings for gold but is that report having games played with it also? This is the problem as Darth has pointed out to me is the Govt started with a little bit of meddling with the economy and reports. Then some more. Then more and more and more and now everything has been worked over so much it looks like a go cart with a Hemi engine on it but nothing has been done to the drive train so that if you floor it just rips apart all the other parts of the cart that have not been souped up. It’s a total mess.

Chinese equity markets were lower overnight in the wake of what might have been minor tightening hints by the PBOC. The Nikkei posted an impressive gain overnight, as additional Japanese policy moves sparked a fresh wave of investor confidence in Japan. At least that was the SPIN. To us it looked like a cover move from the drubbing the market took the previous day.

European equities were mostly higher to start today, as reduced fears of US tapering provided foreign stocks with the most of their early lift today. NOTICE how they’ve made the “tapering” the main news in which everything revolves around. Of course that’s so they can jack the markets up and down in a “beat the beehive” fashion to shake off anything that isn’t tied down and extract money from the traders.

US stocks were waffling around both sides of unchanged early on today as the trade remains on pins and needles ahead of the week ending US payroll report, which could renew fears of Fed tapering all over again. (There’s that tapering again). And this is probably what is up with gold to some extent as the JOB data always gives the control boyz permission to swing things.

The US economic report slate today kicks off with a Trade Balance reading that is generally expected to show a noted deepening deficit but the trade will also see some private chain store sales results and Fed speeches every other hour. This is what it has become a total control game where there’s a Fed speech before the bell, during lunch hours and before the close and a televised meeting every other week along with campaign tours of colleges, minutes released from past meetings with SENTENCES stuffed in there that totally contradicts what they’ve been saying that spins markets 360 degrees and then they come out the next morning and say –oh don’t worry about that. We’ll only do that if things look good (which they never do because things never look good.) And thus another day in Fantasy land.

Gold Chart 

Let’s see, since Friday we've gone from 1420 to 1384 and back to 1417 and down to 1388. That’s just for Friday and Monday. Instead of having a nice trend where gold moves in one direction for a week or two we have markets that move 50 dollars per session for one or two sessions and get a week’s worth of gains and then within 24 hours the market completely retraces the entire gain and just as that trend gets ready to develop it reverses and goes right back to the previous high of the last day which of course is 50 dollars higher and then someone yells (TAPERING) and it comes back down or we read MARKETS RALLY HARD ON VERY BAD ECONOMIC NEWS which suggests (NO TAPERING) and the next day it sells of with the read MARKETS DOWN HARD ON GOOD ECONOMIC NEWS and it just goes on and on until it’s a blur.

What’s the end goal? Well I don’t know them all but one is to surely make it impossible for any gold investors, or traders and anyone one else except the 4 banks who hold all the shorts.

The chart below shows the situation. Look to the left of the chart. In a market where almost no physical gold exists and the lines at shops look like Wal-Mart on those nut job days where 20,000 people camp out for a week because there’s going to be a sale on I-Phones as part of the Xmas promotional where for every phone you buy for your family members you’ll get unlimited texting for a few hundred dollars a month and all the Ring-Tones combo’s you want thrown in. Yet at the left of the chart prices trend down in what is non volatile 100-150 dollar drops over 4 or 5 days of trading. 

  
But even though every coin shop in Dubai and India wants lunatic premiums we have an upside that looks like this??????? Wild swings of 50 dollars on either side where about 400 dollars of price travel takes place in 10 days and at the end of the 10 days gold is about 40 dollars higher. And then it’s time for another downtrend cycle. Yes we live in a world that gold is not money but Central Banks are the biggest buyers and where Capitalist nations sell a few hundred tons a year to so called or previously called communist nations who are buying hand and fist. I think you get the point. Resistance today is 1414-1420 and support 1380-1390 and everything in between is choppy and overlapping and able to change direction every hour or so. Unfortunately the last sentence is not satire. The 1420-1430 area is very strong daily, weekly and to some extent monthly resistance. On the downside the two main area’s this week are the 1377-1388 support zone. If broken then the next lower lines at 1343-1360 could come into play. 
The activity should get interesting by time we arrive at Thursday and the jobs reports with short term cycles due to turn. Overall it still calls for a potential high in gold this week on the short term with a pullback into the 21st of the month. Gold is swinging between 1385 and 1420 and after this morning’s back to 1385, it could once again make a move to 1420 as we approach Thursday and the reports. In summary, we’re in wide trading ranges of 30-40 dollars with the 1400 area in the middle of them. 


Gold Cycles
Short term gold cycles are due to peak on the 7th (plus or minus 72 hours). Thus a short term pullback should develop this week and at the moment it favors a pullback or sideways action into the 21st of the month.




SILVER CHART
Silver has been fighting to overcome the 23 dollar area ever since the 10% drop in four minutes on May 19th where someone sold 2000 contracts (each with 5000 ounces) in a market that was just opening up on a Sunday night. After wiping out all the stops price miraculously move 3 dollars higher from the low in the next 24 hours for a 15% move. And that folks has been the high price. In a 25% move (10 % down and 15% up) in 24 hours silver does nothing for the next 15 days and goes sideways in a less that ONE DOLLAR price range. (22.10-23.07). 
Support is the lower purple channel line that price is holding and under 21.90 there is nothing until the 21.30 and then the lowest line on the chart at 20.25-20.60. Resistance is the 22.90-23.30 and up to 23.50 area. Until we get above there or close below 22 the chart will continue looking the same. We suspect an important low was put in place on that spike and this portion is the consolidation after such a wipe out event. Here too odds favor silver to peak this week and begin a pullback into the 21st of the month. It could remain an sideways affair and doesn’t mean new lows will be achieved. Support today is 22.20 and resistance 22.60-22.75

Just 48 hours after options expiration in gold, the market has jumped and held above 1400 for the first time in almost two weeks. 

Money flowing out of global equity markets is also  finding its way into gold, as June gold overnight reached up to the highest level in four days.

In other news,  The India Finance Minister has suggested the government wanted to see a complete month of import data to "see if more measures are necessary" as fear of higher gold import taxes ahead could be spurring Indian gold dealers and investors to beat the hike, with stepped up purchases.