I don't like the looks of this. Sharp evening (U.S.) drops always get my attention. Sharp drops that occur on Tuesday evenings (after the weekly CoT survey) always raise my suspicion.
About two hours ago, gold on the Globex began to tank. It fell about $10 in an hour. That's a lot for 8:00 pm NY time but, in fairness, stock futures and crude fell, too. Then, at around 9:00 pm, The Pig started to rally. Not much, really, only about 25 cents (basis points). Of course, some algos then clicked in and trimmed another 7-8 dollars off of the gold price. Once again, gold rallies on a somewhat neutral field (Comex) only to have the gains clawed back on the easily-manipulated Globex.
So, now, we've got to be careful. The only green I have on my screen at present is the POSX. Euro down. Stocks down. Crude down. Grains down. And, of course, PMs down. ZH offers this explanation:
The problem is that both metals, but in particular silver, are very close to some important trendlines. If those lines fail, we will see considerable further weakness. Silver must be watched very closely as a strong move down through $34 could mean that a drop toward 32 or even 30 might be around the corner. Gold isn't quite as precarious as it could move to 1750 and even 1700 without completely disrupting the trends from the September lows.
Lastly, just for fun, I wanted to pass along this video clip that was emailed to me over the weekend. Apparently, it is an editorial from an Aussie television network. Too bad honesty and forthrightness have completely evaporated from American media. At least it can be found down under.
More in the morning. TF
p.s. I spoke with Jim Comiskey this evening. He and everyone else at MFing Global was summarily dismissed last Friday. He's landed on his feet and is ready to lash out. And he's pissed. We hope to record a special podcast soon so that he can get a few things off his chest. I'll keep you posted.
9:45 a.m. EST UPDATE:
You could probably sense in the tone of the post above that I had a bad feeling about today and...here we go.
After rebounding overnight, gold just got crushed for about $15 in five minutes. Silver puked, too. Again and to reiterate, it is very important that silver stay near or above $34. A convincing move down through and close below 34 would indicate 32 or even 30. Gold needs to hold 1750 but only a drop below 1705 would be cause for serious concern.
Lots of bad stuff bubbling below the surface this morning. Gonzalo Lira just sent me his latest and I urge you to take 2 minutes to read it right now.
Hang in there and be cautious. TF