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Friday, April 3, 2009

Gold: One More Push...

Gold (GLD) broke the rising trend after making a lower high even as Bernanke started monetizing debt. GLD is now sitting on support. One more push down, to about $890, should unleash serious selling...

Sensing a vulnerable market, the powers that be have already started moving to push Gold down. Rumors of significant IMF Gold sales have started hitting the wires.

Gold Drops Most in a Week as Equity Rally Dulls Haven Demand:Gold fell the most in more than a week on speculation that the world economy will improve, eroding the appeal of the precious metal as a haven. Silver gained.

Global equity indexes rallied as Group of 20 leaders met to discuss economic stimulus plans amid mounting evidence the worst of the recession may be over. Manufacturing in China increased last month and home prices in the U.K. rose. Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, has been unchanged since March 27.

“The fear is coming down, and so is gold,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. “If gold is an indicator of fear and trepidation, as fear diminishes, people will sell gold.”

Gold futures for June delivery fell $18.80, or 2 percent, to $908.90 an ounce on the Comex division of the New York Mercantile Exchange, the biggest drop for a most-active contract since March 24.

The Standard & Poor’s 500 Index of equities jumped as much as 4.3 percent and the MSCI World Index climbed for a third straight day.

National leaders at the G-20 meeting agreed to a regulatory crackdown to rein in excesses and pledged more than $1 trillion in emergency aid to help ease the global recession. The summit produced a call for stricter rules governing hedge funds, executive pay, credit ratings and risks taken by banks.

IMF Gold Sale

Gold’s losses accelerated after a U.K. official said the International Monetary Fund should consider selling its gold reserves to raise cash. International Development Secretary Douglas Alexander said there has been discussion with South Africa about the market effects of a “phased and appropriate sale” of some IMF bullion reserves.

In April 2008, the Washington-based lender’s executive board approved a plan to sell 403.3 metric tons of bullion to help close an annual budget deficit. President Barack Obama’s administration soon will push Congress for legislation that allows the IMF to “mobilize” its stockpile of gold to boost its funds, Treasury Secretary Timothy Geithner said on March 11.

A move to sell gold must be supported by 85 percent of the lender’s executive board, and will require legislative action in most member countries, the IMF said in April 2008. The board representative from the U.S. needs congressional approval to vote in favor of any sales, the IMF said.

The mere mention of the possibility of IMF gold sales making the rounds at the G-20 today is pressuring gold prices,” said Ralph Preston, a commodity analyst at Heritage West Futures Inc. in San Diego. A drop below $890 may trigger more selling, he said.

17 comments:

DiverCity said...
This comment has been removed by the author.
The Wolf said...

"One more push down, to about $890, should unleash serious selling..."


What a load of bullshit. Do you really think a secular bullmarket turns to a bearmarket when all nations in the world are printing money like crazy?
Time to unsubsribe your blogg, you´re obviously a complete fool.
Good luck shorting gold..:-))

Anonymous said...

Don´t read this guy´s blogg, it´s just another mcDumb american.
Been eating yourself dumb as dust on McDonalds like all fucking americans, have you?
The reason gold is going down is becuse of the fascists in USA and their tools JPM, Goldman and Citi. They must be destroyed and wiped out, first then can the rest of the world move along, hopefully without the US.

The Trooper said...

Wolf: Nowhere in the post does he claim that gold is turning to a bear market. All that was stated is that one should expect some aggressive selling if/when technical support at $890 is breached. IMO, the "secular bull market" is a longer term position. I believe Ben is looking at shorter term trading.

Anonymous: I'm pretty sure he's Canadian. If you have nothing intelligent to say, please don't say anything. "The reason gold is going down is because of the fascists in USA and their tools JPM, Goldman, and Citi" - maybe you can explain that reason, because I see no explanation there. And don't kid yourself, the world will not move along without the USA. They will always be there. Their role may be diminished to a certain degree depending on a variety of factors, but count on them remaining a significant presence, if for no other reason than their military strength.

Ben Bittrolff said...

@ The Trooper,

While appreciated, don't waste your time and effort defending me to these clowns.

They obviously haven't read more than a post or two on this blog and they don't actually understand what it is they're ready.

I've learned that arguing with a die hard gold bug is like arguing with a retarded donkey... it's noisy and violent, but they don't understand a word coming outta your mouth. Don't even bother.

scott said...

it would be nice to see another leg back down to the 850 area or at least back into the 880's. bring on the selling!!

i worry for the gold bulls with the above attitude. price loves to bob and weave.

also, one should be made aware of the fact that the game played by the author differs from the games played by other participants. I don't have confidence in my ability to speculate successfully on a shorter time horizon, but do on a longer term basis. there are many different ways to participate successfully. buy-and-holders need patience. remember what Old Turkey said for those who feel uncomfortable with shorter term strategies...

from the bull pen,

Josh said...

It's a pity to see a slanging match going on, but you do bring it on a bit yourself by referring to gold bugs as tin foil hats etc maybe implying that they are kinda mentally deficient. Actually I notice mostly they have a desire to have an honest financial system, and none of them are on welfare or are getting any kind of government hand outs. Just because someone is on the opposite side of a trade to you is no reason to be disrespectful

Josh said...

Anyway, back to your blog. Gold ALWAYS goes down around a jobs report. Kicking myself for not trading it accordingly ! The G20 meeting made it a gimme too. There is always a next time (sigh) !
The 200dma around 850 could now be the target. Then IMO it will take out 1000.

Anonymous said...

I wouldn't call them fascists, etc., but the reality is that JPM is sitting on somethng in the range of $250 billion in silver short positions on the Comex, silver derivatives and silver shares. Their short in gold is almost as big. Its also now sectorwide knowledge that the
ECB's "sale" of gold in the last couple of weeks went directly to satisfying demands for delivery on some of the gold short contracts held by JPM and the other three banks controlling gold prices.

Charts are terrific, until they are used against you. We've got manipulated markets in gold and silver >>>> something our "regulators" know, our government knows and apparently sponsors, and that anyone trading there knows. Similar to Ben's assertion that talking with gold bugs is useless, I feel that talking with those who still want to pretend that the gold & silver markets are free, fair and transparent are hopelessly naive. Given the situation with the USD, it would be extremely odd if our government weren't in there trying desperately to keep these two canaries singing their little hearts out in the coal mine.

So, to my mind, we've got an interesting situation here. You've got the passers-by like everyone here more or less, looking at the charts, not really terribly well-informed about the mechanics or depth of what's going on, buying into the the slide. You've got the gold bugs dug in on the other....

and this should lead to a very dramatic slide in gold as in the past. So why, with all this "good news", the IMF sales, hasn't this happened yet?

Three reasons....

1) The IMF is not going to sell gold. Every time gold threatens to spike, this is threatened. But selling gold -- mechanical detail -- requires the approval of the US Congress (IMF charter). Good luck with that.

2) More mechanics....The gold, if it does get sold, will more than likely go directly to the Chinese who have announced that they are in the market to increase their gold holdings from about 400 tons to something over 3K.....seems they are extremely nervous now about the USD. The Russians have also expressed interest. So, this gold, if a miracle happens and Congress agrees to the sale, will never hit the open market.

3) The international press is not quite as compromised as our own, and is reporting on the corruption in our markets and manipulation of gold and silver prices. Moreover, there is serious, serious international rage about the financial meltdown & our banks activities. This is providing a base of buyers....who are now actively seeking alternatives to the USD> While gold won't be that alternative, the current suggestions being floated all include a gold component along with an oil peg......

Not that we're going to hear anything about this in our media....they are too busy writing today about how Jim Cramer has declared the depression over and a new bull market beginning.

Bottomline, banking on a dramatic slide in gold/silver now is as lunatic as predicting 2K gold next month. Either way, you're taking a huge risk.

The thing is, you're not going to hear any of this from our media -- which is contemptible, because when the dollar is replaced as the reserve currency (and it will be), this is going to completely blindside anyone who has relied on our financial talking heads, or charts alone.

In other words, this is not something where you can literally rely on charts and charts alone. You'll get killed like the guys were the other day when gold spiked 50 bucks in under four hours.

And by the way, Ben, you believe that breaking 890 will trigger serious gold selling. Maybe, maybe not....with the increase in temperature in the international markets on our banks...it is now believed by those actively trading the markets that 880 is going to start the massive move into gold....850 it is believed will move the Asians in in a very big way, and they have more or less laid it on the line and apparently told JPM this......in others, the theft has gone on, long enough, cover.

Finally, one last thing about this all, and that is, to pretend that we don't have four of our banks up to their necks in massive shorts in gold and silver is nuts. Forget making profits, this has now reached a point where it is almost a national security situation. One very angry well-financed entity -- from wherever, take your pick, the Arabs, the Chinese, that Asians or even the Russian mob, they lost a bundle over the past year with the blowups -- could walk into the Comex markets now, and literally take down some of our biggest banks......

and our "fragile" economy as Ben has called it. Pretending this isn't the case is just as bad as Bush ignoring the August memo about Al Qaida.

GG said...

Throughout this bull market so far we have been hearing the same bullshit over and over and over and over again. Gold has been rising and will keep rising. Period. I have bought a s*tload of Gold and am already up like 300-400%. Wake me in 2-3 years and I am sure we'll still be hearing of attempts to push it "down" to $3000 and scrap supply coming to market and, oh, IMF Gold sales. Riiight.

GG said...

And Anon is right about the 850 level, cuz I am an Asian sitting in Asia. I can tell you that there is freakin' HUGE pent up demand for the real PHYSICAL metal here (not fradulent ETF's like US). People will go bonkers if and when it slides below 850. There is going to be a manic stampede. That whole IMF sale will be consumed in like an hour or so. Especially, now that many non believers (including members of my family) have seen what it can do (when it set records in some Asian currencies recently). We all have a boatload of cash lined up and are just waiting, literally chomping at the bits, hoping, praying that the Central Bankers are really stupid and give us back our Gold at a discount.

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