Tops and Bottoms are often made through wild volatility. While the jury is still out regarding a Bottom, the volatility sure is impressive. In fact, with just a few more ticks to the upside today, both gold and silver will paint TMOAORDs onto their respective charts.
So what was last night? Was the steep selloff just an over-reaction to the SGI rejection? I just don't think so. The decisive 77-23 loss was too great for it to be surprising for anyone in the know...AND...the selloff was too sharp and sudden. It was all during New York Globex hours and it was essentially over 45 minutes into trading. Here's another example of complete BS and misinformation from Kitco: http://www.kitco.com/news/2014-12-01/Gold-Rebounds-from-Sharp-Sell-Off-in-Asian-Trading.html
As noted above, the selloff wasn't in "Asian trading", the "Asian" markets weren't even open yet. The selloff occurred in the first 45 minutes of NEW YORK Globex trading. This leads me to think that it was primarily related to this headline:
Either the Brevan Howard fund itself dumped a bunch of positions OR the steep selloff across ALL commodities was simple fear and front-running ahead of the Brevan Howard liquidations. We'll never know for sure and it really doesn't matter much, given what has happened since.
We first noted the oddity of trading last evening when, suddenly, the gold market went dead quiet. After the steep initial drop, gold then traded in a $2 range for over four hours! See the blue rectangle on the chart below:
It then surged higher, only to appear as if it was simply filling the gap left on the chart from the lower open (blue arrow). Then, just as most folks likely thought the bottom was ready to fall out again, it surged higher still (black arrow).
And now, as I type, gold is $1193 and more than $50 off of the lows. Madness.
Of course, what is most encouraging about all of this is the rebound. We've been pinpointing the action around November 5-7 as pivotal and the lows from those days held again last evening. Is the area between $1130 and $1150 the physical breaking point? Is that the price level at which The Bullion Banks are simply unable to source physical metal for immediate delivery? Have we found the spot where the long-awaited break of the paper--physical connection finally occurs? The action last evening certainly reinforces this opinion.
Take a look at the chart below. Note that, since the GOFO break of 11/6, paper price simply has been unable to stay below the $1150 level. Is this due to The Bullion Banks thwarting the Specs by putting down a floor? If so, we would expect to see sharp rebounds from the $1150 area and that is exactly what we have seen...especially last night and into today!
And GOFO continues to "worsen". See below and note that the 12-month rate is on the verge of flipping negative for the second time EVER, the only other occurrence being September 29, 1999 at the height of the Washington Agreement panic. http://www.usagold.com/newgoldmarket.html
And silver played right along, at one point being down well over 10%, only to rebound sharply as well. I have an overnight low in the March15 silver of $14.43, just barely overshooting my $14.65 bottom target and certainly close enough to call it a successful test of that level. Silver is now back to $16.22 as I type, a full 12+% UP from the lows. WOW! And now it, too, is looking for TMOAORDs.
OK, I'll put you out of your misery...
The intraday highs from Friday were $1199.30 and $16.51. A close above there, after last nights drop, would constitute an Outside Reversal Day.
We'll see, I guess. For now, I'm just glad we're at $1193 and not $1093...
OK, I'd better get this posted but, before you go, please be sure you read these three links. First, this ZH link from Charles Hugh Smith that eloquently states what I was warning you about back on Saturday. Specifically,
"Every sustained action has more than one consequence. Some consequences will appear positive for a time before revealing their destructive nature. Some will be foreseeable, some will not. Some will be controllable, some will not. Those that are unforeseen and uncontrollable will trigger waves of other unforeseen and uncontrollable consequences." http://www.zerohedge.com/news/2014-12-01/oil-drenched-black-swan-part-1
Then there's this. I'm not sure about the guy's math and we certainly have no way of know if Mr. Putin is taking ALL of his oil revenue and plowing it into physical gold. Regardless, this is worth reading: http://www.gold-eagle.com/article/grandmaster-putins-golden-trap
And, finally, our pal Jim Quinn chimes in with this succinct post that is so simple, even the anti-gold blockheads should be able to understand it: http://www.theburningplatform.com/2014/11/30/what-happened-to-the-correlation/
As I close, I've got $1197 and $16.25. Very nice. Let's see what the rest of the day brings then summarize it all, complete with a CoT recap, with a full podcast review later this afternoon.