Summer Gold Rally

While we sit and watch gold and silver trade rangebound, I thought today would be a good day to look around for clues as to future trend.

So, let's start with gold and silver. On these hourly charts, you can see where the metals have now been stuck for over 8 trading days. The snapback rally from The Washout lows of 4/15 has stalled. What happens next will likely determine whether we see a continued rally into the summer or a fallback and retest of the lows.

Let's look first at the currencies. The 2-month rotation from the euro to The Pig has stopped but now what? Euro 1.32 would be the first thing to watch. A few closes above there would confirm that a move back toward 1.36 is coming instead of a fallback toward 1.28. Of course, additional euro strength would translate into POSX weakness and a drop below 81.

And in The Race To Debase, it's fun to keep tabs on the yen. Though there has clearly been a reluctance to drive price through "par", that's seemingly just a temporary phenomenon. And, once 100 decisively gives way, look out below!

Continuing our search for clues, let's now look at Copper and Platinum. Old DrC is more important in assisting the short-term direction of gold and silver so let's start there. Note the clear double bottom on this daily chart and then the bounce which has carried copper UP and through the trendline from the major selloff that began back in February. Now what? As long as copper stays above 3.30, it looks to continue to bounce back.

And platinum isn't anything to "write home about"...I mean, look at the 3.5 year range. Ick! However, note that it once again bounced off of $1400 support. This is encouraging and further suggests that the coordinated raids that drove gold through $1525 and silver through $26 were overdone and contrived. A rally now, back up through $1520 in platinum will portend higher prices for the PMs.

And, finally, look at crude. Note that, besides being stuck in a $15 price range for over a year now, since QE∞ was confirmed back in December, crude is UP over $10 or nearly 15%. Hmmmm. The massive, gigantic, global energy market for crude oil (difficult to manipulate)...which is (at least for today) priced in dollars....has rallied since December. At the same time, the comparatively tiny paper gold market (easy to manipulate) has declined by 15% from $1700 to $1450. <sigh> At any rate, IF crude can extend here and move back into triple digits, it will make it nearly impossible for gold to trade to new lows.

Conclusion: The Pig looks weak while the euro is trending higher. The Yen is about to drop sharply again. Copper and crude are rallying and look like they might be ready to extend gains. Regardless of the nonsense, computer-based, momo-chasing shenanigans, the metals look poised for a summer rally, not a further selloff.

OK, what else is there to talk about on this fine, spring morning? Let's start with this from ZH. Well, whaddayaknow? Chinese physical demand is on fire? You don't say?! Look, either this reverses or eventually this demand must be reflected in the paper price. http://www.zerohedge.com/news/2013-05-08/chinese-gold-imports-soar-monthly-record-insatiable-demand. Here's the most important chart from the story. And note that this is for MARCH. How high will the orange bar on this chart for April reach when it's updated?

Then, of course, there's this, too: http://www.bloomberg.com/news/2013-05-08/gold-imports-by-india-seen-topping-100-tons-for-a-second-month.html. And don't forget about Turkey and Russia and South Korea and Vietnam and...

And remember, all of the paper momos have neither the intention nor the ability to deliver. Therefore, at some point, they must cover. Throw in the fact that total Comex registered gold now sits at just 57 tonnes and the stage is certainly set for a significant squeeze/rally.

Echoing this idea is one of my two, favorite technical analysts, Citi's Tom Fitzpatrick. Read this immediately: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/7_Gold_%26_Silver_Setting_Up_For_Spectacular_%26_Massive_Surges.html

And the GLD continues to be drained. It has lost another 7.82 tonnes just this week. That's another 3+ pallets. You're led to believe that this is normal and logical. "Investors" are "reallocating" away from precious metals and the gold is simply being returned to AP vaults. But if that's the case, tell me again why the SLV inventory is up on the year while GLD is now down 21.6%. What if that's not the case? What if part of these "reallocations" are actually redemptions of paper for physical? Hmmm. When, eventually, "investors" come rushing back in, from where will the APs get physical gold to replenish the fund? (Maybe they can borrow some from the Chinese? They seem to have a lot.)

So, there you have it. You can get all freaked out and fall head-over-heals for the disinformation and SPIN regarding an "end to the gold bull market". But I ain't buying it! My story has been and continues to be that this is all a contrived selloff, initiated by The Gold Cartel when QE∞ was announced last September and confirmed last December. The goal was to shift as much as possible the paper burden and risk from the banks to the private sector (hedge funds, etc). And it's worked! Check this out. QE∞ was announced on 9/13/12. On 9/11/12, the CoT for gold looked like this:

  • The Gold Cartel was net short 237,091 contracts. That's 23,709,100 troy ounces or a whopping 737 metric tonnes of paper gold.
  • The Large Specs were net long 182,016 contracts and the Small Specs were net long 55,075.

As of last Tuesday the 30th of April, look at the difference:

  • The Gold Cartel is now net short 95,563 contracts, a reduction of nearly 60%! And they've reduced their potential delivery obligation by 440 metric tonnes to 297!
  • The Large Spec net long position has been cut in half to 97,052 and the Small Specs are actually net short 1,489 contracts.
  • And if anybody doesn't have gold to deliver, it's the Small Specs. And they're short 148,900 ounces. That's over four and a half tonnes! That's 372 London bars or two of these:

The final move to all of this was the harvest of all the remaining sell-stops below $1525. This in turn led to additional Spec shorting into which The Cartel has been buying. And now it looks to be over.

Could I be wrong? Of course. Could the hammer fall again and prices make new lows? Sure. But it truly doesn't matter. Any further price weakness will only strengthen the banks' position and lead to an even sharper rally when The Specs are finally forced to cover.

So be diligent. Keep your wits about you and continue to stack. A summer rally from the April lows looks likely and imminent.

TF

387 Comments

Turd Ferguson's picture

Just for fun

MODERATOR

I wanted to include this is the post but couldn't figure out how to do it without disrupting the flow.

All of the Chinese gold import stuff reminded me of this earlier today. Rarely has SNL been this frank and honest. Rarer still has it been this funny!

 

 

murphy's picture

uno?

Now to post something intelligent... hmmmm

We’ve had lots of traditions like the market would look after itself. People wouldn`t be crooks because economic theory assumes that they`re not. But they often were crooks, and greedy and short-term oriented and willing to dance until the music stopped.

http://www.zerohedge.com/news/2013-05-07/jeremy-grantham-we-have-been-conned

And for you #1 haters

Mr. Fix's picture

The summer gold rally…

Sounds suspiciously similar to HEH.

This should be interesting.

(Dos)

indosil's picture

tres

tres

silver66's picture

take a break for lunch and get 3rd

sweet

Silver66

indosil's picture

Spike

wow....what caused that??

erewenguy's picture

kersploosh

kersploosh - everyone is showing off their legs in the old thread, I guess I got a running start into the pool.

Gold is looking a bit feisty, but it remains to be seen if this is topping off a bear flag. Really, I think it still all depend on equities.

Dr Jerome's picture

Life in China?

My wife has always wanted to go to China. Perhaps we should move there. ZH just posted an article about the insatiable demand for gold in china. Hmmmm... I wonder why the Chinese government thinks they need so much gold (sarcasm--gotta be careful after yesterday). Perhaps they see the flaws in their own capitalist-like system with printed money (not sarcasm)? Sounds to me like they see our flaws, want to avoid a similar collapse, and are taking care of themselves.

But why move to China? Why would I want to live under a repressive system where everything is centrally controlled? Perhaps the change would be less radical than I suspect (understatement)? Maybe I could buy some gold there, work for a university teaching how the evil MSM fools people into submission, grow organic vegetables and trade with other farmer/gardeners at the local market. Maybe my kids can find a job there?

I used to believe I could never live under a communist government, but perhaps that is all relative. Marx was right about the evils of Capitalism. His communist system hasn't worked that well, but what form of government has except for an uncorrupted republic? Hard to hold onto that one, so I guess republicanism hasn't worked that well either. But I might rather live in a communist country than a Fascist one. At age 53, I have learned how to keep my mouth shut and how to speak out without getting in trouble, when the need arises.

I better not let my wife read this. She will say "Don't say it unless you mean it."

Perhaps I do mean it. I am not sure yet. I work through my questions by writing and making arguments, weeding out the flawed ones and leaving what I feel is solid in "position statements" like I post here all the time. Thanks for reading, by the way. And I always appreciate feedback of any kind. I just don't know enough about life in China, or in South America to make a decision yet. But after listening to Jim Willie this morning, who actually said in that interview "...lets get back to economics" as he showed self-discipline and abandoned a potential long digression, after listening to Jim, I am less sure of my family's security in the US, even living in a small town in Arizona.

Nana's picture

Hellywood's Latest

Repost from end of last thread

DeaconBenjamin's picture

China’s Gold Purchases From Hong Kong Expand to Record

Gold imports by China from Hong Kong more than doubled to an all-time high in March as buyers in the biggest consumer after India boosted purchases, underscoring increased bullion demand in the world’s second-largest economy.

Mainland buyers purchased 223,519 kilograms (223.52 metric tons), including scrap, compared with 97,106 kilograms in February, according to Hong Kong government data yesterday. Net imports by the mainland, after deducting flows from China into Hong Kong, were 130,038 kilograms compared with 60,947 kilograms a month earlier, according to Bloomberg calculations.

The shipments preceded gold’s plunge into a bear market last month, with prices tumbling 14 percent in the two days through April 15 in the worst drop in three decades. The slump led to a surge in demand for jewelry, coins and bars from India and the U.S to China. Separate data yesterday showed China’s gold usage rose 26 percent in the first quarter as prices fell.

“This is quite out of expectation as all these imports were done before the market slump in April,” said Qu Mingyu, a trader at Bank of China, one of the country’s three largest bullion banks. “Judging from the explosive growth of trading volume on the Shanghai Gold Exchange in the second half of April, and anecdotes that many jewelry shops are sold out throughout the country, imports might be even more substantial in April.”

Price Slumps

Gold for immediate delivery in London dropped 4.6 percent in the first three months of the year as investment demand slumped, then plunged 7.6 percent in April. Bullion traded at $1,448.29 an ounce at 8:08 a.m. in Shanghai. Gold of 99.99 percent purity on the Shanghai Gold Exchange dropped 1.2 percent in March, and was at 293.5 yuan a gram ($1,483 an ounce).

The purchases in March were more than three times higher than the 62,913 kilograms in the same month last year, according to the data from Hong Kong’s Census and Statistics Department. Mainland China doesn’t publish such data.

Exports of gold to Hong Kong from China were 93,481 kilograms in March, according to a separate Statistics Department statement, up from 36,159 kilograms in February, and compared with 32,484 kilograms in March 2012.

Volumes for the spot contract on the Shanghai exchange, China’s biggest cash bullion market, topped 323 tons between April 16 and May 3, according to data compiled by Bloomberg. Volumes reached a record 43,272 kilograms on April 22.

‘Physical Demand’

“The trading volume of the spot gold contract on the exchange basically reflected physical demand as the contract is used by fabricators to take delivery of their raw materials,” said Bank of China’s Qu.

Retail gold sales tripled across China on April 15-16 after the rout, according to the China Gold Association. Zhang Bingnan, deputy head of the association, said on May 2 that there’s a shortage of gold jewelry inventory in the country after consumers bought up supplies and the industry is increasing raw- material purchases to ramp up production.

China’s gold consumption jumped 26 percent to 320.54 tons in the first three months from a year earlier, the association said yesterday. Consumption totaled 776.1 tons in 2012, down from 779.8 tons the previous year, according to the producer- funded World Gold Council. China and India account for more than half of global demand.

achmachat's picture

SNL

I'm sure it's a funny clip... but unfortunately it's VERBOTEN for European turdites...

Turd Ferguson's picture

Does this work?

MODERATOR

Response to: SNL
achmachat's picture

sadly..

hulu, for the same reason, doesn't work in Europe either.

they don't want to use up their bandwidth to the rest of the world when they don't get advertising money for it.

AlexCojones's picture

Wow! Me Numba One Hat Tipper fo de Turdman's Main Post!

Never had (Hat?) that happen before.

TF Wrote: "Here's the most important chart from the story. And note that this is for MARCH. How high will the orange bar on this chart for April reach when it's updated?

I smell a Orange-Bar-Yellow-Hat prediction contest. I'll guess 369 tons. 

Whoever hits the closest to the exact number of tons receives one silver round from Gold Dog.

Bollocks's picture

Ok, seeing it's a legs AND hitlery day today...

Here are 3 of my favourite hitlery pics

~

 

SIlverbee's picture

Turd said...

"And remember, all of the paper momos have neither the intention nor the ability to deliver. Therefore, at some point, they must cover."

but why not keep shorting, money is no object and no one is gonna stop them?

Also 2nd vid is  a non starter as well. Oh well.

AlexCojones's picture

Dr. Jerome - Gold & Possible China Trip

I live with a couple of roommates who are young, adventurous and love to travel. recently they -guy and his girl- went to Hong Kong and then mainland China for two weeks. He said that the one oz gold Pandas sold there for $2,800 each! Yes, you read that correctly. He also said that the next time he goes to HK or China he might first buy a couple of Pandas here and resell them there and pay for his trip.

Just an idea.

SIlverbee's picture

Apparently...

Hillary eats furry burger.

Cononish1314's picture

Pining 4 Xty #117

Lady Xty's tastes can be so fein

And her remarks have a touch of the Eiswein

But on a cruise of the fjords

She's dispensed with her cords

And the pleasure is yours, mine and Tord's

achmachat's picture

AlexCojones

that's the price in retail gold shops...

Buying 1-ounce gold coins in a Hong Kong bank might be the closest to up-to-the-minute spot you will ever be able to buy.

edit: this is, of course, IF they have some left in stock. Two weeks ago a very good friend of mine had to run from bank to bank to bank to secure a couple of one-ouncers.

erewenguy's picture

The hulu clip works. Nice

The hulu clip works. Nice stroll down memory lane.

Gold Dog's picture

Hey Legs!

I grew up sailing and have never seen a winch like that....what brand is it?

Rag Bagger Dog

PS- In fairness, it took me a while to notice it!

PPS- Old Benetau?

SIlverbee's picture

Bilderberg 2013

FWIW I have contacts inside the Grove Hotel, Watford, UK. I am getting it checked if it is there this year.

Orange's picture

silverdoctors.com

I get this message when trying to get into silverdoctors. Can anybody else get access?

Edit, it now lets me on for whatever reason. Thanks.

Forbidden

You don't have permission to access / on this server.

Additionally, a 403 Forbidden error was encountered while trying to use an ErrorDocument to handle the request.

Harald's picture

dgstage

As the PGA commissioner said to Henrik Stenson after he stripped to his underwear to hit a shot out of a water hazard:  "Don't do that again."  Asked what his wife said to him Stenson replied, "Don't do that again."

Stenson
Henrik Stenson of Sweden plays his second shot from deep mud at the third hole during the first round of the WGC-CA Championship. Photograph: Kyle Auclair/Getty Images

The Swedish world No7, Henrik Stenson, stripped down to his boxer shorts to play a shot out of mud at a water hazard yesterday, during the opening round of the WGC-CA Championship at Doral in Florida. Stenson hit a wayward drive at the 3rd hole and decided to play the lie, but still only managed a bogey on the way to an opening round of 69, four strokes behind the clubhouse lead.

"Because of the mud I couldn't really afford to play in any of my clothes as they would have been a real mess down the last six or so holes so I had no option," Stenson said. "I was only wearing two things when I hit the shot: my jocks and my golf glove – that is the only thing that will appear in the picture aside from the golf club – just the way God created me. Shirt, trousers, socks, shoes, hat, the lot was off.

"I just remembered I didn't have my rain gear so I didn't have any choice," he said. "I felt like I was definitely going to save a shot by actually playing the ball so that was the only decision I had to make. If you are saving a shot, that has to be worth taking off your shirt and trousers.

"I'm sure I'll hear a few comments and once the pictures get out, I'll hear a few more no doubt. I'll probably take that to my grave with me. I don't think I scared too many spectators off the course, hopefully."

Stenson also believes he might have opened up a new avenue for sponsorships following his impromptu strip. "Absolutely, you never know, after this I might have a new endorsement with Playgirl or something like that."

  • Print this
Stock_Canines's picture

Zerohedge

The article just prior to the one that contains the gold import chart states that,  "Following the last three months of far stronger than expected Chinese trade data, the fact that China's data is openly manipulated is no longer disputed by anyone - either the press, or the analyst community. Case in point, last night's surging Chinese imports and exports. On the surface: great news. Below the surface: fabricated mumbo jumbo, like virtually everything else derived from the goalseek function in China_Econ.xls, or US_seasonal_adjustments.123"

I find it odd that in the very next article, China's gold import data is accepted without question.

Just A Regular Guy's picture

@Bollocks

Genius!

Zoltan's picture

Hillary Pics

Not saying anything.  Just sayin'.

christina-hillary.jpg

Z

Nana's picture

Orange

Took 2 tries but Silverdoctors page finely loaded.

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