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Trying to trade around lower highs will require perfect timing.
Use $BPGDM as your timing tool.
Why do you think this will be just another counter trend rally that will be capped and then taken down sub $1000? Why would this not be the final low and why would the next smash to below $1000 be the final low?
There is a possibility that we are getting the final bear market low here. Gold did retrace to the 50% Fibonacci level. I covered what i thought would need to happen to get a final bottom in the weekend report. It has alot to do with the stock market cycle and when it hits the 7 YCL.
Gary – ever the manipulation-conspiracy theorist ..
from Bill Fleckenstein on the oft-asked manipulation question –
Fleck: Let me try to be as clear as possible about what I believe on the subject of gold manipulation.
Does the gold price get manipulated? Yes, it does, in BOTH directions! Why? Because they can. Many commodities get manipulated all the time, whether because the regulators don’t really care enough or it is just easy to do and not get caught in commodity markets, I can’t say, but it seems to be the nature of non-financial assets (though they too get manipulated from time to time).
Who does this? Unscrupulous players trying to get the prices to move more than prices otherwise would, so the manipulators can make more money. In other words, the guys doing the manipulation are motivated by greed and NOT some ulterior motive to suppress whatever signal a rising gold market might send!
After having a long discussion with Fred Hickey on Friday, I decided to revisit the subject with a friend who has not only been a very successful commodity trader for over 30 years. He used to manage a large proprietary trading book inside the “giant vampire squid” for a number of years, after having managed the silver and gold book at one of the main metals dealers for years before that (he now runs his own money).
I bring up his background because he has seen it all and knows everybody. In any case, I asked him who he thought was behind the big metals short, which in his words, is OUT OF CONTROL. He says it is basically two groups: systems (algo) traders, a.k.a., black boxes who trade purely technically and “don’t even know what it is they are trading.” They are all short. Also, the proliferation and mechanical nature of more algo systems has led to more of the huge moves in a matter of minutes — “line jobs” is what he calls them — than in the old days.
Then there are the macro guys who are dollar bulls. They are short a “whole package of different things”, i.e., oil, metals, etc., because they think a rising dollar will drive prices lower.
Let it be known – I prefer muffin tops myself as well as a good conspiracy as long as they have some basis in the reality and its truth not simply in the brain of excuse-seeking humans when the reality doesn’t conform to their ideology.
Excellent post, MuffinTop.
1st time I’ve heard that the sharp drop in gold on NY’s Sunday night might be algo’s – makes perfect sense to me. 85% or more of all trading is done by algo’s now. Since the market is so thin to begin w/ (isn’t the entire maket cap of all gold stocks smaller than GOOGL?), it makes really good sense that this is the primary reason. And not some CB trying to suppress gold to save the dollar.
Anyways, a good post. Thanks.
I can’t take credit for MuffinBottom but thank you nonetheless 🙂
The one flaw with that reasoning is that no one would program a computer to sell that heavy in the middle of the night where there is no liquidity. The only way this is computers is if someone is specifically programming the computers to trade illegally. This will only stop when position limits start being enforced.
I don’t agree – just like in chess, many (most?) moves are played way in advance of the actual intent. And, again like in chess, many moves are false flags to create an illusion, hiding the true intent.
So applied here, since HFT machines can look into the queue in advance, and see where positions are, and where unexecuted positions want to be, using statistical analysis they can figure out the highest probability *proactive* move, followed up by reactive moves once the NYSE is open. I’m not saying they are doing this, just that Bill’s article shows that HF’s using comp systems is a very possible reason why prices jump so much – w/their primary motive being greed. Again as opposed to CB’s using naked shorts for a reason other than raw greed (to protect the US$).
I don’t know – just I play a lot of chess, and my background is math and IT, so I can definitely see this as a real possibility.
looks like Bill Fleckenstein is gold & silver bull himself
Silver 2010 to 20111 crazy run is proof of manipulation
For those who think about algos and manipulation and such, here’s a great article on gaming the markets. It’s about CIS, Japan’s #1 day trader who got an office job to fund his account, traded secretly while on the clock, then became a full time trader. He likens trading to video games and poker — winning is the objective.
Not sure if anybody saw the link I posted early Saturday, so here it is again:
Took GDX as it corssed 14.
GDX now struggling to stay above $14
I could be crazy, but my chart tells me we are going to 20
Most people scoff when hearing that gold is going to the moon. Well, it only makes sense that when algos are turned loose on the coming uptrend lookout!
I am just wondering what’s the odds that TPTB are looking at the rise in gold and silver today and are not liking it one bit… and are, even as I type, planning on smacking it down later this week.
Just thinking out loud.
I’m pretty sure the bottom is in. They through over a billion dollars worth of shorts at the market on Friday and it wasn’t enough to take gold down. Now they need to let the intermediate rally play out before they try again. I’ve explained what to look for at the top in this chart.
It would have to be an enormous attack I think to get us back down to 1070 now so I think you have played a blinder here. Well done.
Although we haven’t broken out yet, today’s action was very positive.
I myself hope for a pullback here (1 day is fine), and then a continued launch upward, before I take a position.
One fact that Gary and I agree on is, remember that Gold is … money? No – it’s just a rock.
Money is an idea in the minds of people. It doesn’t actually exist. We can call dollars money, or gold, or toilet paper if one is stranded in the mountains. Money does not exist in the physical world.
Um, that is a bit metaphysical Bill… but does it have any relevance in this regard? I would say not. Plenty of people appear happy to think it is money and are happy to buy and sell it.
I think it’s relevant, but I also agree it’s metaphysical.
Gold creates a mania in people. Me too – I feel it – are we a the bottom – will the dollar collapse from here – should I hunker down and buy gold bars, a gun and buy 10 yrs worth of canned food.
Reminds me of the tulip bubble. From Wiki: “Tulip mania reached its peak during the winter of 1636–37, when some bulbs were reportedly changing hands ten times in a day. No deliveries were ever made to fulfil any of these contracts, because in February 1637, tulip bulb contract prices collapsed abruptly and the trade of tulips ground to a halt.”
I just find the emotions of trading very interesting is all.
Bill did you get your hands on a good bottle of sake or something?