$1300 Rejects Gold

Gold was stopped cold in its tracks today at the psychological round number resistance level of $1300. It had initially reacted to Ben Bernanke‘s comments, (which most market analysts and players viewed as dovish) by moving smartly higher. During the Q&A session which followed, gold was slammed lower by a wave of very strong selling.

In watching the price action it occurred to me that just as we suspected in our notes from yesterday, nothing new or fresh proceeded from the Chairman. In other words, there was NO FODDER for the bull. Gold had already run higher last Wednesday when Bernanke first reversed himself from his comments in June. At this point in the game however, that is now old news. What gold needed to propel through $1300 was something far more definitive than what Mr. Bernanke gave the markets today.

Think about it this way – the QE will continue as long as the economy needs it. Okay – what is new about that? We have seen this QE going on for some time now and to the minds of most market participants, there is still no real inflation threat looming on the horizon. What is there to make them waver the least in their convictions that inflation is benign? Answer – there isn’t anything… YET.

Now, if crude oil and unleaded gasoline do not soon set back then that might change. But with a large grain harvest expected, food prices look to be moving lower. As stated previously in another piece I wrote – energy prices may be high and moving higher but food prices are going the other way. Just look at a chart of new crop corn or wheat, or sugar, or cattle, etc.

Both of these need to be moving up simultaneously to impact the consumer (and business to a certain extent although that segment is more impacted by higher fuel and energy costs) and to generate the all-important headlines needed to derail an entrenched, “there is no inflation” psyche.

Technically, two things happened today: Gold failed to extend past an obvious chart resistance level while simultaneously, the HUI FAILED TO CLOSE THAT IMPORTANT CHART GAP I noted in yesterday’s missive.

Both occurrences are viewed as technical failures and will bring in additional selling by the shorter-term oriented trader. What will be key for gold is whether or not it can generate enough buying to keep it above the “former resistance zone now turned support” that can be seen on the chart. Let’s call that the zone between $1270 – $1260. If it can hold here, it will bounce back and set up yet another try to best $1300. If not, down towards $1240 it will go.

I should also note that volume in today’s rejection at the $1300 level is very strong. I view that as a bearish sign that a lot of bulls threw in the towel and gave up on a breakout above $1300. Also, guys who have been playing gold from the short side were emboldened to come back in.

I am unclear just yet as to how much of this jump in volume is associated with rollovers as those are occurring in increasing frequency as we move deeper into July. Most traders will be moving out of the soon-to-be-in-delivery August contract and heading into the more active December. That might have distorted the volume somewhat and thus take what I say here about it with a grain of salt but nonetheless, volume was strong regardless.

Silver? What more can you say about it other than the fact that it too failed to push past tough overhead resistance at $20. The level is now reinforced with significance on the technical price chart. For this metal to start any fireworks whatsoever, that barrier MUST BE BREACHED. If not, it ain’t going nowhere. Poor English grammar but solid trading analysis.

Silver bulls simply must prove their mettle or the bears will grab control of that market and take it down for another test of $18.

One more thing I want to note was that the yield on the Ten Year note closed the day just below the 2.5% mark ( 2.491 to be exact). Interest rates have set back ever since Bernanke made those comments last Wednesday. Here we are now a week later and they have yet to exceed their recent peak. That being said, it might not be too much longer before they try sneaking up again. Everything will depend now on the content of each piece of economic data that gets released.

Source: http://traderdannorcini.blogspot.in/2013/07/1300-rejects-gold.html

Commodities Dealer Accepting Bitcoin for Gold

The revelations by Edward Snowden about the illegal wiretapping being carried out by the U.S government have made it clear that privacy is becoming a rare commodity. One company is taking that “commodity” notion literally. Agora Commodities is the first gold, silver, platinum, and palladium dealer accepting Bitcoin for bullion. We already know that you can buy Reddit Gold with it. This is the real thing.

Bitcoin, if you recall, is an untraceable digital “currency” based on increasingly complex mathematical formulas. The currency is extremely volatile, subject to even daily wild swings in value. It is not regulated by any official government organization. And can be used for all manner of illicit trafficking, especially on underground site like the Silk Road, a popular place to score illegal goods.

By taking Bitcoin as payment for a physical commodity, Agora is giving high-risk speculative traders one more way to play the market. And the added bonus is that the transaction can be 100% anonymous. The risk of using such a currency, especially now that it can be transferred to precious metals, raises all sorts of questions about money laundering, organized crime, theft by hackers, and whether terrorists will see this opportunity before regulators get their hands on it.

But the company is going even deeper into anti-spying territory than that. They are offering their customers encrypted service for all their digital correspondence.

Joseph Castillo, President of Agora Commodities commented, “In today’s world, privacy is quickly turning into one of the people’s most precious commodities. I was inspired by an ISP provider in Utah that refused to give his customers data over to authorities when it was not properly requested with a warrant. Agora Commodities first and foremost respects its customers’ privacy. This was the best way to show that respect”.

Questions about Bitcoin are already being asked in earnest in the halls of government around the world. But for now, we find ourselves in one of those heady days where something is loose in the world that has not yet been clamped down on and regulated. There are millions to be made, and someone sitting in a basement somewhere is hacking out the way to do it.

Source: http://www.webpronews.com/commodities-dealer-accepting-bitcoin-for-gold-2013-07

Financial Meltdown, Back-To-Back “Stick Saves” & Gold

On the heels of more turbulence in key global markets, today 40-year veteran, Robert Fitzwilson, put together another extraordinary piece. Fitzwilson, who is founder of The Portola Group, discussed financial meltdown, back-to-back “stick saves,” and what this all means for battered traders and investors in the gold market. Below is Fitzwilson’s outstanding and exclusive piece for KWN.

Fitzwilson: “There is a term in ice hockey called a stick save. Instead of using the curved end of the hockey stick, the player uses the handle end to move the puck. It has been described as having no points for style, and often fails, but sometimes saves the day for the player and his or her team.

Below is a chart of the Dow Jones Industrial Average from 1970 to the present. You can clearly see two stick saves early last decade and the second during the 2008 meltdown.

The first stick save was engineered largely by the policy of driving rates to zero. While it saved the stock market and thrust the real estate markets to new heights, it sowed the seeds for the horrendous crash in 2008….

“A larger stick save was required in the 2008 debacle, requiring the completion of the zero interest rate objective as well as the creation of massive amounts of money on a global and historic scale.

It is no wonder that many people are terrified of equities when one looks at this chart. The volatility has been incredible. You can barely see the Crash of 1987 on the chart, although that was a stomach churning decline on the order of 23%.

The chart below is for gold during the same period.

While the Dow Jones has increased by roughly 14 times since 1980, the price of gold has merely doubled from the peak. Despite that disparity, most people look favorably at the chart for stocks, and are adamant that gold is overvalued.

For stocks, valuation metrics are used such as price-to-earnings ratios. For gold, there is no attempt to relate the price to the forces that drives the metal’s price. What drives gold is the excessive, massive creation of fiat currency. Since 1980, the amount of debt-based money has exploded. If that simple valuation metric of comparing the price of gold to the amount of money is applied, gold is drastically undervalued.

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/3_Financial_Meltdown,_Back-To-Back_Stick_Saves_%26_Gold.html