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    Gold (and Precious Metals)

    Gold now in a confirmed long term downtrend - the break of 1520 support (2 year lows) was pretty serious and now see likely decline to at least 1430 and probably 1300 - whcih would be a 50% retrace of '08 - '11 rally.

    To re-store upside above what should now become difficult resitance at 1520 then 1560, a move back above 1630 is needed to negate long term downtrend which could last ~ 4 years.
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    Re: Gold (and Precious Metals)

    Silver - the equivalent level in silver to 1520 in Gold is 26 which is where silver closed on Friday (12/04).
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    Re: Gold (and Precious Metals)

    Yeah major smack down.. At a time when all monetary signs and printing should be making it go nuts..

    The key support levels should bring into play all kinds of stops.. The only thing that will change a paper price driven rout would be physical shortfalls but note they are plundering cypruses go,d.. Portugals etc. they can keep that game going..

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    Re: Gold (and Precious Metals)

    Wonder just how coincidental it is that countries who's central banks with relatively high gold reserves are either becomming embroiled in wars (Arab Spring countries) and EU peripherals. Hummm ....

    I really was expecting PM's to decline as a result of higher bond yields.
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    Re: Gold (and Precious Metals)

    Quote Originally Posted by K2 View Post
    Wonder just how coincidental it is that countries who's central banks with relatively high gold reserves are either becomming embroiled in wars (Arab Spring countries) and EU peripherals. Hummm ....

    I really was expecting PM's to decline as a result of higher bond yields.
    They simply cannot allow higher bond yields.. Government, city, state, housing, household, and everything debt loads are too high.. It would show the lie that us the recovery.

    They will never let up on qe.. It will go until it blows up.


    On the other topic.. Yes funny how technocrat (read Goldman) governments and bank controllers keep being put in place of democratic elected officials and countries gold reserves keep vanishing to 'fund the bailouts' yet the buyer side of the tonnage trades is not being shown ?!?

    See the mass resignations from Cyprus central bank ?? Time for another dragi appointed board then.

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    Re: Gold (and Precious Metals)

    Metals under hard attack in the thinly traded globex session..

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    Re: Gold (and Precious Metals)

    Quote Originally Posted by LivinLOS View Post
    Metals under hard attack in the thinly traded globex session..
    i will be buying 1300, although don't know if will get there

    in all honesty, as much grief as i give LIL on gold.......i think this is nothing but a buying opportunity although i thought gold would get hit a lot earlier than this
    would love to buy at 1300 down to 1000

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    Re: Gold (and Precious Metals)

    Quote Originally Posted by marc26 View Post
    Quote Originally Posted by LivinLOS View Post
    Metals under hard attack in the thinly traded globex session..
    i will be buying 1300, although don't know if will get there

    in all honesty, as much grief as i give LIL on gold.......i think this is nothing but a buying opportunity although i thought gold would get hit a lot earlier than this
    would love to buy at 1300 down to 1000
    I got painfully stopped out of some silver trades on the way down while travelling.. Almost went heavy back at 26 and now seeing 24 handle on silver will let today tick along..

    Anything under 24 is a buy and will be buying heavy along the way if it keeps moving down.

    There is no way monetary expansion can continue at this pace without metals reflecting it.. Has been the way all through human history.

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    Re: Gold (and Precious Metals)

    Quote Originally Posted by LivinLOS View Post
    Quote Originally Posted by marc26 View Post
    Quote Originally Posted by LivinLOS View Post
    Metals under hard attack in the thinly traded globex session..
    i will be buying 1300, although don't know if will get there

    in all honesty, as much grief as i give LIL on gold.......i think this is nothing but a buying opportunity although i thought gold would get hit a lot earlier than this
    would love to buy at 1300 down to 1000

    There is no way monetary expansion can continue at this pace without metals reflecting it.. Has been the way all through human history.
    i fully agree with you and will be buying silver also..

    actually, Ao has had her eye on silver for quite some time, so will open an account for her and let her make her 1st trade from this dip.

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    Re: Gold (and Precious Metals)

    Never fall in love with your position(s) ... a very ugly day indeed ... careful now the bear market will now cause many funds into forced liquidation, so things may get even uglier. Be careful ... money managemnet rather than emotions.

    http://www.smh.com.au/business/billi...414-2htr7.html

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    Re: Gold (and Precious Metals)

    Forced liquidation ....

    The hedge fund community does not have the luxury of running losses willy nilly, despite however famous (or infamous) the fund manager may be. Typically in my experience the value of any fund is marked to market and P&L drawdown from equity peak is watched religiously!!

    Typically a 3% drawdown from equity peak on a single day will start the forced liquidation of a sigle (unhedged) position, then the next cut off is 7% ... after that the 15% is forced close out. If your fund loses >25% you'll quickly find that your investors force liquidation upon you by withdrawing their capital!!
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    Re: Gold (and Precious Metals)

    Quote Originally Posted by ub2yoo View Post
    Quote Originally Posted by K2 View Post
    Forced liquidation ....

    The hedge fund community does not have the luxury of running losses willy nilly, despite however famous (or infamous) the fund manager may be. Typically in my experience the value of any fund is marked to market and P&L drawdown from equity peak is watched religiously!!

    Typically a 3% drawdown from equity peak on a single day will start the forced liquidation of a sigle (unhedged) position, then the next cut off is 7% ... after that the 15% is forced close out. If your fund loses >25% you'll quickly find that your investors force liquidation upon you by withdrawing their capital!!
    Thanks for the explanation. So his investments in the funds are sold off accordingly?
    (When I was reading forced liquidation, I was more thinking margin accounts)

    I can feel a next reply coming from Lil re physicals ... ;-)
    Paulson is slowly but surely giving back a lot of the gains he made on his huge housing bets

    and Kevin would know that side better than me
    but if you have read any sort on hedge funds, you will realize even the best ones can get wiped with a few bad quarters
    it is a tough market

    actually, Cramer is an idiot
    but he explains this in pretty good laymen's terms in Confessions of A Street Addict ( which believe it or not is a halfway decent read. I was away in Seattle for a long weekend and self-imposed no computer, saw the book in the lobby, so picked it up)

    i was pretty close with a few different guys who had their own funds and i can't count how many times they were on the edge of shutting down

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    Re: Gold (and Precious Metals)

    Quote Originally Posted by ub2yoo View Post
    So his investments in the funds are sold off accordingly?
    Yes - as a fund manager, mission #1 is to stay in the game!

    Gold peaked at $1921 Sept '11 - so arguably has been in a 'bear' market since then - in addition - it COSTS money to hold physical precious metals, so when they stop rallying then the allure of investing in them deminishes.

    Whats likely after this liquidation downdraft concludes (perhaps at 1300, or a spike to 1150 if its gets really ugly) then we'll enter a sideways period of consolidation for the next 2-3 years (bear maket after the 12 year rally should last about 4 years). Unless gold moves back above $1630 the bear trend will remain in force.
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    Price of gold



    Any predictions for a bottom ($1,275 level could be tested IMO).

    Some chartists think that there could be a big bounce at some point from these low levels. Could be a buying opportunity at some point in the nearish future. I think gold or gold related stocks should form part of an investment portfolio given these uncertain and unprecedented economic times.

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    Re: Price of gold

    Amazing fall but timing a bottom very dangerous..

    I am surprised to see a 23 handle so fast and almost a 22.. Graduated buys right down to 18 will be the plan for me.. It cant stay down at these levels, thats under the majority of mine costs these days.

    A huge amount of US silver production went offline yesterday also with the landslide... Ultimately silver has an industrial component and the price of obtaining it is no longer cheap.

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    Re: Gold (and Precious Metals)

    Reports suggest that a futures sell order worth $6 billion, equal to 4 million ounces or 124.4 tonnes of gold, by a large investment bank sent prices plummeting and spooked the markets contributing to the decline. The order was believed to have been placed through Merrill Lynch's brokerage team.

    The futures market then saw a further wave of selling of contracts worth some $15 billion, equivalent to 10 million ounces of selling or 300 tonnes, in just 35 minutes.

    Investment banks and hedge fund speculators can manipulate the paper or futures gold price in whichever direction they want in the short term due to the massive 20 to 1 leverage they can utilise and that is what was clearly seen on Friday.

    Gold futures with a value of over 400 tonnes were sold in hours and this is equal to 15% of annual gold mine production. The scale of the selling was massive and again underlines how one or two large banks or hedge funds can completely distort the market by aggressive, concentrated leveraged short positions.
    Those with concentrated short positions may also have been concerned about the significant decline in COMEX gold inventories.

    The plunge in New York Comex’s gold inventories since February is a reflection of increased demand for the physical metal and concerns about counter party risk with some hedge funds and institutions choosing to own gold in less risky allocated accounts.

    Comex gold bullion inventories have slumped 17% already in 2013, falling to just 286.6 metric tons of actual metal on April 11, the lowest since September 2009.

    This means that futures speculators on Friday sold a significant amount of more paper gold, in an hour or two, then the entire COMEX physical gold bullion inventories.

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    Re: Gold (and Precious Metals)

    From Bloomberg Sept 2012 - "Gold producers’ average total cash costs jumped 19 percent to a record $727 an ounce in the first half as output was little changed GFMS reported."

    If gold cost of extraction are now say ~ $750, that going to be a worst case scenario! (Gulp).
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    Re: Gold (and Precious Metals)

    The gold futures markets opened in New York on Friday 12th April to a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract (see below) in what proved to be only an opening shot. The selling took gold to the technically very important level of $1540 which was not only the low of 2012, it was also seen by many as the level which confirmed the ongoing bull run which dates back to 2000. In many traders minds it stood as a formidable support level... the line in the sand.

    Two hours later the initial selling, rumoured to have been routed through Merrill Lynch's floor team, by a rather more significant blast when the floor was hit by a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading. This was clearly not a case of disappointed longs leaving the market - it had the hallmarks of a concerted 'short sale', which by driving prices sharply lower in a display of 'shock & awe' - would seek to gain further momentum by prompting others to also sell as their positions as they hit their maximum acceptable losses or so-called 'stopped-out' in market parlance - probably hidden the unimpeachable (?) $1540 level.

    The selling was timed for optimal impact with New York at its most liquid, while key overseas gold markets including London were open and able feel the impact. The estimated 400 tonne of gold futures selling in total equates to 15% of annual gold mine production - too much for the market to readily absorb, especially with sentiment weak following gold's non performance in the wake of Japanese QE, a nuclear threat from North Korea and weakening US economic data. The assault to the short side was essentially saying "you are long... and wrong".



    Futures trading is performed on a margined basis - that is to say you have to stump up about 5% of the actual cost of the gold itself making futures trades a highly geared 'opportunity' of about 20:1 - easy profit and also loss ! Futures trading is not a product for widows and orphans. The CME's 10% reduction in the required gold margins in November 2012 from $9133/contract to just $7425/contract made the market more accessible to those wishing both to go long or as it transpired, to go short. Soon after we saw the first serious assault to the downside in Dec 2012, followed by further bouts in January 2013 - modest in size compared to the recent shorting but effective - it laid the ground for what was to follow. One fund in particular, based in Stamford Connecticut, was identified as the previous shorter of gold and has a history of being caught on the wrong side of the law on a few occasions. As badies go - they fit the bill nicely.

    The value of the 400 tonnes of gold sold is approximately $20 billion but because it is margined, this short bet would require them to stump up just $1b. The rationale for the trade was clear - excessively bullish forecasts by many banks in Q4 seemed unsupported by follow through buying. The modest short selling in Jan 2013 had prompted little response from the longs - raising questions about their real commitment. By forcing the market lower the Fund sought to prompt a cascade or avalanche of additional selling, proving the lie ; predictably some newswires were premature in announcing the death of the gold bull run doing, in effect, the dirty work of the shorters in driving the market lower still.

    This now leaves the gold market in an interesting conundrum - the shorter is now nursing a large gold position and, like the longs also exposed - that is to say the market is polarised between longs and shorts and they cannot both be right. Either the gold bulls - like in a game of tug-of-war - pull back and prompt the shorters to panic and buy back - or they do nothing, in which case the endless stories about the "end of gold" will see a steady further erosion in prices. At the end of the day it is a question of who has got the biggest guns - the shorts have made their play - let's see if there is any response from the longs to defend their position.

    Ross Norman

    This story is provided by Sharps Pixley, for more information and content please visit: www.SharpsPixley.com

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    Senior Member marc26's Avatar
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    Re: Gold (and Precious Metals)

    Quote Originally Posted by LivinLOS View Post
    The gold futures markets opened in New York on Friday 12th April to a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract (see below) in what proved to be only an opening shot. The selling took gold to the technically very important level of $1540 which was not only the low of 2012, it was also seen by many as the level which confirmed the ongoing bull run which dates back to 2000. In many traders minds it stood as a formidable support level... the line in the sand.

    Two hours later the initial selling, rumoured to have been routed through Merrill Lynch's floor team, by a rather more significant blast when the floor was hit by a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading. This was clearly not a case of disappointed longs leaving the market - it had the hallmarks of a concerted 'short sale', which by driving prices sharply lower in a display of 'shock & awe' - would seek to gain further momentum by prompting others to also sell as their positions as they hit their maximum acceptable losses or so-called 'stopped-out' in market parlance - probably hidden the unimpeachable (?) $1540 level.

    The selling was timed for optimal impact with New York at its most liquid, while key overseas gold markets including London were open and able feel the impact. The estimated 400 tonne of gold futures selling in total equates to 15% of annual gold mine production - too much for the market to readily absorb, especially with sentiment weak following gold's non performance in the wake of Japanese QE, a nuclear threat from North Korea and weakening US economic data. The assault to the short side was essentially saying "you are long... and wrong".



    Futures trading is performed on a margined basis - that is to say you have to stump up about 5% of the actual cost of the gold itself making futures trades a highly geared 'opportunity' of about 20:1 - easy profit and also loss ! Futures trading is not a product for widows and orphans. The CME's 10% reduction in the required gold margins in November 2012 from $9133/contract to just $7425/contract made the market more accessible to those wishing both to go long or as it transpired, to go short. Soon after we saw the first serious assault to the downside in Dec 2012, followed by further bouts in January 2013 - modest in size compared to the recent shorting but effective - it laid the ground for what was to follow. One fund in particular, based in Stamford Connecticut, was identified as the previous shorter of gold and has a history of being caught on the wrong side of the law on a few occasions. As badies go - they fit the bill nicely.

    The value of the 400 tonnes of gold sold is approximately $20 billion but because it is margined, this short bet would require them to stump up just $1b. The rationale for the trade was clear - excessively bullish forecasts by many banks in Q4 seemed unsupported by follow through buying. The modest short selling in Jan 2013 had prompted little response from the longs - raising questions about their real commitment. By forcing the market lower the Fund sought to prompt a cascade or avalanche of additional selling, proving the lie ; predictably some newswires were premature in announcing the death of the gold bull run doing, in effect, the dirty work of the shorters in driving the market lower still.

    This now leaves the gold market in an interesting conundrum - the shorter is now nursing a large gold position and, like the longs also exposed - that is to say the market is polarised between longs and shorts and they cannot both be right. Either the gold bulls - like in a game of tug-of-war - pull back and prompt the shorters to panic and buy back - or they do nothing, in which case the endless stories about the "end of gold" will see a steady further erosion in prices. At the end of the day it is a question of who has got the biggest guns - the shorts have made their play - let's see if there is any response from the longs to defend their position.

    Ross Norman

    This story is provided by Sharps Pixley, for more information and content please visit: www.SharpsPixley.com
    you gold bugs make me laugh
    preach to anyone who will listen that we should let the market play out
    but when it goes against you, there is no way it can be anything but manipulation

    the commodity has had a 12yr run, it was going to end at some point


  20. #20
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    Re: Gold (and Precious Metals)

    The fact of the order is showing up.. Call it manipulation.. Call it what you like.. But Merrel dropped 100 tonnes worth of contracts on friday.. And overall 400 tonnes has been added to the sale side..

    Trades of that size would have federal investigations in other markets.. thats 15% of annual supply.. in a couple of hours. If that happened in the oil market or any other commodity it would be clamped on..

    But the east will buy it.. Chinese retail news is buying..

    Ultimately it will only move from weak to strong hands. gold took a 50% fall in previous bull markets.. then went on to put in 850% in 6 years.

    As for trades I am out totally (holdings I have) when it went under 26 I closed out and it hasnt strongly got down into the 22 range yet to get back in..

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