Perspective and Scale are The Hardest Things In A Short Term Market Environment

Next time is the one according to Adam Hamilton of Zeal Intelligence.

http://www.zealllc.com/2017/gsvoldiv.htm

It's an interesting, if technical, read into the volume of gold stocks traded during the 2016 rally, and worth a few minutes imo. Adam's work usually is, and I like the way he creates what might be called fresh- ways-to-look-at-it charts.

This matches with my long expressed views that we need to see a longer term retest of lows (end 2015) before the long term bear can be assaulted successfully.

So ... was end of 2016 it? I'm not sure about that. A retest needs to be some cyclic period later after the original high or low. If I chose a business cycle (as it remains after coordinated central bank attempts to overcome it) then the retest would be 3-4 years after the first low. If alternatively the dual political cycle (parties dominate propaganda and money so well that they get two terms instead of one before the public wakes up and chucks their asses out) is the dominant one, then a period of eg 8 years may be required after the first low to create the retest and/or possibly divergent second low. There's that eight year period coming up again.

But the attention span of gold trading people is so short that eg a four year rise followed by eg a four year fall will always be designated as a bull market followed by a bear. In fact, the observable tendency is to lose perspective after less than twelve months. Which means that the rally off the 2015 lows gets to be a bull swing. But inside I'm, like, "Hmmmm, that's a nice bear market pullback there".

And so it all goes back to perspective and scale, as it always does. I can't remember who said it but the gist of the old market saying was "When you're in doubt, throw your chart on the floor and get up and stand on your desk. Then look down at the chart to see what you couldn't see before."

Which in my view is bearish for gold for a little longer (for the short of attention span) and bullish then bearish then very bullish for gold (for those who are in my particular timescale or preferred groove in Setup For The Big Trade).  But since we all make mistakes, it's unwise to sell all at the tops in case it takes off (on a bigger scale). For the same reason it's also unwise to decide there will be no more bottoms where good value can be found (in which case we go crazy and sell the house/car/wife/kids to buy gold immediately as the bullion dealers (and their article-writing-podcasting-bull-analysts) perpetually provide motivation for us to do .

So what is "acceptable" perspective? Well, the last big gold bull took 11-13 years depending on which low you count from. And we got two major highs depending upon which currency you prefer to use to value gold. I know 95% of everybody out there uses the dollar only but I think that's myopic. Say we use 2011 for the high. An 11 year bull. Now if we add (only 2/3 of that) eg 7-8 years down, that would take us to 2018-9. So if both a four and an 8 year cycle had been, shall we say "cancelled" by the central bank alliance, when might their battles with reality be expected to next occur? Well our attention might fall upon 2011 + 4 = 2015 (check, gold low visible) and also 2011 + 8 = 2019 (not there yet, be patient and don't panic).

And what we also see is the dollar index playing games with alternate fiat currencies for breakout or not. But that is a see-saw mechanism. - fiat USD one side:fiat other FX other side- I have proposed that the dollar is merely half of the equation vs gold. The other non-dollar USDX currencies are the other half not to be put opposite the dollar, but to be added to the dollar and all fiat together to then be weighed vs gold (and other commodities).

Now the Freegold people say we should look at gold vs oil. That is the gold:oil ratio is persuasive for them. This is implying that oil = all fiat currencies, and in particular the dollar, while they are strong and = gold when FX strength fails. Or it will revert to that every "x" many years. Hmmmmm. Methinks this is dependent upon military might enforcing reserve currency-ness. So it's historical and/but may or may not be presently applicable. I have referenced a few Freegold proponents here at Setup, interviewed BelangP on Youtube for this blog, but I never endorsed the thesis unconditionally, while considering it always worth considering. I watch that ship closely but haven't yet stepped aboard, you might say. I have consideration for it.

You see I never forget that gold is a commodity as well as a currency. Freegold focuses upon the FX side a little too much for my preference, while admittedly not denying the commodity side. I find my thoughts drifting to military strength, territory controlled, territory recently acquired or recently lost, state of empire and such matters at this stage within a Freegold discussion.

But Freegold will assert itself in some newly invented fashion when currency crises arise. Ideas of certain types return to the fore when situation requires it. And Bretton Woods is now 2017-1945 = 72 years ago. What periods matter around that cyclic duration? Seventy two, seventy four, seventy five and seventy six in my view. So: 2017, 2019, 2020, and 2021. OK then.

Back to the gold and the best times to buy some, or not buy some: I posit that these times will be at two year anniversaries of the gold high for the currency you prefer to use, and also at an anniversary at which gold is  observed to be making lows with accompanying low sentiment. End of 2015 followed by end 2016 are only one year apart. As 2011 and 2012 were. A double top followed by a double bottom? There is a kind of symmetry there...

Scale. Fractals. Symmetry. Asymmetry. Perspective. If I throw a gold chart, metaphorically, on the floor and climb, also metaphorically speaking, upon my desk and look down. That's a single top and a single bottom. Where is the retests? There's no big retest of the top (so we may go back up someday to see how high that is) and there's no retest of the 2015 bottom (uh oh, early gold bulls may get spanked by the various market bear factions out there).

So it's back to bottoming pattern construction, upon a big scale. And let's not get overly choosy about which spike downwards must be designated at "THE ONE" . Go back to that 8 year pattern, and never forget the presence of one year cycles (stocks and bonds) while doing it. I posted on the eight year cycles many times, with extended descriptions here already in the AM blog. For example this one: Gold & 2nd Term US Presidents posted 2 1/2 years ago August 2014. It's still worth a look. Look at the average shape it forms. Different every time. But average. Note the tendency for late pullbacks well after the idealized low.

Those proposed paths forwards for the gold price, set out back then, are currently being followed approximately. In particular, multiple lows usually required to see an eight year gold weak price period through. Think in 2, 4, 8 year periods and range trade accordingly. There's more to it than that of course. But it may help to keep a person out of trouble.

For readers enjoying a long weekend this week. Have a nice break. See you all next week.

Argentus Maximus

.

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmAndPrice The author advises that he trades and holds market positions in accordance with his own opinions.

33 Comments

silver66's picture

First

5th first

Now do you buy gold to trade? do you buy it to so additional currency units created out of thin air don't devalue your savings?

Do you time your purchases for the "best" price or because you have the fiat available and it is a good idea to have some?

Many factors go into the decision making process as you point out AM

Silver66

argentus maximus's picture

I think we must acknowledge

I think we must acknowledge that if the printing of extra money units is constant, this is not reflected by a constant gradual and incremental rise in the value of gold in those currency units.

Therefore either the additional monetary units are not created incrementally, but in bursts, or the price of currency units and/or gold adjusts in bursts to take account for the additional units of fiat present.

In other words and speaking for myself here, I acknowledge that there is a wave form structure to the accounting process. That wave form structure can function as a savings turbocharger when I hedge my fiat exposure and prevent long term devaluation by the fiat increases by the other (sovereign-financier) side.

gold slut's picture

Excellent essay Argentus

What with Craig's top notch Friday podcast and your outstanding piece here, TFMR has reached a real high this weekend (pun fully intended).  Thank you both.

goldcom's picture

Perspective of the market?

With all due respect argentus because I do think you are well versed in market knowledge, but current manipulation in PM markets and CB intervention in markets in general is a wild card that makes it difficult to predict anything.

The military strength to underpin the currency is also under stress like never before. The Petro Dollar is losing grip as more oil sales and trade transfers have the option to be traded for other currencies or gold. We will have to see how quickly the erosion of dollar trade instruments become in the months ahead. Military strength is important but I think TPTB know they better get us in a war with Russia or somebody before the dollar no longer can support that military strength.

gold slut's picture

Argentus, I would love to hear

Argentus, I would love to hear your view of the metals manipulation.  Do you think that the  market cycles will eventually overwhelm the banks and any interventions will end up in a King Cnut-like failure holding back the inevitable market tides or can they cause real disruption to the cycles?

Thanks in advance.

lakedweller2's picture

Ditto on the Follow-On Questions

Since I also believe markets are fully manipulated for the PMs, I am curious why technical rules have validity when historic fundamental rules are no longer of value.  

I am more in TFs camp that neither historic fundamentals nor technical analysis have validity in a manipulated market.  What does have validity is trying to technically determine what the new "rules" are under the HFT Algo universe that is fabricated by the Central Bankers with insiders being the only ones privy to this alternate universe.

It is like the Scientific Method where you control all variables but one uncontrolled variable, to determine if there is a correlation with that one uncontrolled variable with the issue you are trying to prove.

Our problem is we are given a market where we do not know any of the variables, either controlled or uncontrolled, and are left to our own devices to determine market direction and/or behavior.

On the other hand, the Central Banks, the Wall Street banks and possibly extensive hedge funds are give the "controlled variables" in advance while the Regulator's perpetuate the myth that there is a level playing field ... and if there is not, they are not going to do their jobs which were created to protect the people rather than the Central Banking system.

argentus maximus's picture

"Since I also believe markets

"Since I also believe markets are fully manipulated for the PMs.."

Fully? Please prove your assertion. 100% please I remind you that you used the word "believe". Why that word. If you had done the work you would not believe anything but know whatever it is. Sources suspect? Or believe until you see further information. I've given that information and don't propose to bother doing it for the nth+1 time. Try reading Setup and seeing what happened after the posts. .

I can prove you're wrong with ease. The misinformation campaigns about the PMs have a cost. Staff, time, salaries, budget to incentivize publication, etc. If control was "full" that cost would be unnecessary and not get paid. Herding by information would be done fully by price if "fully manipulated" were true.

"...why technical rules have validity ..."

Well it stands to reason that a chart compares the activity of a period past, including manipulations and everything else, with a period current, with all the same. Unless you are thinking that the markets are fully manipulated now and were not 100 years ago, 100 months, 100 weeks or 100 days, 100 hours ago, depending on timescale. Maybe you are suggesting that market players of the past were more honest, more innocent? Ever read Reminiscences of A Stock Operator? I recommend it highly. Urgently.

"...we are given a market where we do not know any of the variables..."

We have access to far more information than you have noticed so far.

Look. If manipulation works to a significant extent, then it creates opportunity by pushing prices to a place where somebody wants them. When they no longer want prices there prices will move to a different level. Or they might manipulate prices to make them go to that different level. So, who do you want to trade with and who do you want to trade against? That's all there is. No mission. No Truth. No lies. Just: Force vs force; Direction vs direction. And a chance to watch and decide. Just a decision to play or not - and which way to play if that's your decision.

argentus maximus's picture

@goldslut

When the cycles of which central banks are the constituent parts turn, the central banks will not wish for the prices and rates they used to want. This is a way of saying that they will see that the costs of old targets exceed the benefits. Then they must change.

They know this and it's well discussed in internal and published papers. From our point of view that is academic. All that's required is a good appraisal of the boundaries of their powers and trading strengths, the length of tenure of their officers, and also of the politicians and governments who coordinate with them.

Interest rate cycles are cycles of strength of sovereign ascendency/falls, reserve status of their FX, and of the linked central bank dominance rhythms. We have many past instances of these to look at. They themselves look at them for guidance. Right now they are looking back 37 years for similarity with present day. They also need to look back further imo. A few are.

lakedweller2's picture

@AM

I wrote for 2 hours on the history of the stock market, deregulation and corruption on its face within the last several Administrations.  It disappeared when putting an apostrophe to show John Corsine in the possessive...

The markets are manipulated.  You can believe what you want.  I am not starting over.  Read Turd daily.

Turd Ferguson's picture

AM thank you

MODERATOR

Always such terrific additional contributor content. Thank you, my friend.

lakedweller2's picture

@TF

I will go back in my hole. Much easier.

argentus maximus's picture

@lakedweller2

"...The markets are manipulated.  You can believe what you want. ..."

You can't read apparently. Where did I say that markets are not manipulated?

Actually I helpfully suggested you might read "Reminiscences" which was written by Jesse Livermore (Edwin Lefevre pen name)  a hundred years ago and describes many kinds of manipulation and trickery to separate a fool from his money. Livermore was a giant trader and anybody who trades markets without reading that book is at a huge disadvantage.

But it appears you're not familiar with that investing book yet. If you were, and you saw me recommend that book it would be self evident that I know manipulation has always been a part of markets.

As for beliefs? What has that got to do with making money, or not losing it? If I believed in pink elephants flying around do you think that would make me do even one iota different when trading? There is only me and the market and I must adapt to what it is. I believe what I have tested and proven for myself. All else is theory pending either for possible proof or discard later.

And I was trading copper futures twenty five years ago when the Sumitomo Bank were manipulating that market. They were caught. There was a class action lawsuit which I was offered the opportunity to join. I didn't participate in that lawsuit nor get a cheque for damages. Reason? I had not lost money due to the Sumitomo dealers' manipulations.

But maybe I don't know what I'm talking about. Maybe you are right. There is room for everybody in the market. Winners, breakevens, and losers.

Now let me tell you this loud and clear. Manipulation creates opportunity. Got that? If the winner is manipulating it down, and winning - sell. If he is manipulating it down and losing - buy. It's not your principles that matter, it's being on the correct side.

Sorry about your bad luck with the lengthy post disappearing. It's a real downer when that happens. I've had it too. I try to remember to copy the text of a post to my clipboard before it gets too long. If it vanished when I hit "enter" I get a chance to paste the saved text and try again. Now if only I did that every time ... smiley

lakedweller2's picture

@AM

What is wrong with putting people in jail for manipulation.  What is wrong with having a Constitution. What is wrong with having a legal system.  Why do we have to adapt our investments to correspond to corruption.  Why do we grant the playing field to those that will only play if it's rigged.  How many more so called markets do we surrender.  Are there any left to surrender.  Simultaneously we are surrendering our personal rights as search and seizure, right to property, freedom of speech, sovereignty and then life itself ...To those who feel they have a "right" to manipulate markets as an entitlement.

When does it stop. How does it stop. One paragraph of my lost two hours of typing was how Bill Black help put 2000 savings and loan thief's in jail.  

What's different. Glass Steagall and HFT unregulated freedom and spineless politicians. 

You are an excellent writer of great perception. My only question before your unloading on my superficial abity to understand deep theory was: 

How can traditional technical analysis be of any value in an unregulated HFT environment be of much value.  We did have some regulation in the past.  But with computer advances and outward goverent action to chill regulation it is not Jessie Livermore's world anymore. 

lakedweller2's picture

My Problem

What Algos did they run Friday. What algos are they going to run Tuesday. Which historic fundamental or technical do I use to predict either.  And why would I even think it would have a rational basis for either of their decisions.  Does the SEC care.  The only thing similar to the "old" days is the SEC didn't exist until 1934 or sometime about then.  But neither did unregulated front running algos. At least Glass Steagall existed for part of my life.

brokerk22's picture

@Argentus

I think I have asked this before and received the standard response.  Do you think we will hit new highs in gold above $1923 before the year 2019?  A simple yes or no would be sufficient.   

argentus maximus's picture

B22

I have said that early 2019 or late 2018 have a likelihood to contain a major low for gold.

And I have also said that the "pattern" for gold between now and then would be an expanding trading range, with higher or level highs and a strong selling decline at the end, during 2018? First two swings of the broadening pattern likely already done.

And I should have said at the time that this is all conditional upon gold not departing from a path it is currently on, and has been on for several years. But if gold does depart from that path, this could be a visible has happened within eg 3 to 6 months of doing so. Which has not yet taken place, to my eyes.

I have posted, probably three times by now but maybe more, at The setup for the big trade forum a chart of British Petroleum during the 1950s period. This is analogous to what the gold price might look like in the event the 2018 low should become a higher low than the 2015 low. But I have shown many people an extremely convincing case why that low can be a lower low, and therefore end up being counted as the lowest low of the 2011 bear. The various analysis methods don't agree, and that's nothing new. Scenarios are created which may play, or not, or switch between them.

(No offence intended) Your question is worded somewhat like a soldier in WW1 asking the general where the next bomb will fall. "Will it explode here or there, or where?" But I am more in the position of somebody thinking that if the enemy choose to attack here, that place will be contested and fail this much, and then the problem will cascade onto this other place, no details about exactness or individual cases. But if the enemy attack over there instead this completely different other scenario will play instead. I know there is an overriding constraining or limiting power structure which indicates many things the enemy are incapable of doing so I don't consider those. But if the enemy became rash or desperate and chose to begin doing one of those things I would revise my plan accordingly and not feel bad for being "wrong", because it is actually being realistic and reactive in the face of unknown and seeing unexpected inputs to the system.

And the chart of a commodity price like gold is a battlefield map with all the implied factors of such a similarity.

Cyclically,in my current opinion, and I can be wrong, odds are that 2017 may contain two highs for gold with a low in the middle. If I find a secondary high and can see it for what it is, I would be very careful after that until I see lower prices. If it doesn't work out that way I will get on with living in the world as it is and not be upset that it is not the world I thought it would be.

The great traders and successful investors have certain traits that help them in their job. One is an ability to recognize being wrong faster than the average person. This can be restated as an ability to get out of the way of harm sooner when less damage has been done to their portfolios. The big traders simply start running first, run faster and that leaves them with more funds, and confidence to get in afterwards, earlier than those who got hurt, after the adverse move is done. So they catch more of the "trends". This is well described in a book/ survey called The Futures Game: Who Wins, Who Loses, and Why by Tewles & Jones. It has also been confirmed by "books" of brokers and the fortunes of their clients, a few times, since that book was written.

argentus maximus's picture

Lakedweller2

The big traders dominate in the shortest term. I think it's silly to attempt to compete in the hourly to daily game. Test it for yourself and find out.

Try plotting a chart of eg 5000 price bars of gold.

Then set up a percentage change indicator in the window pane under it.

Set the timeframe for %change for first 1 bar, then 2 bars.

Now choose 10 minute timeframe and see how many isolated spikes there arem vs how they cluster. Isolate spikes will take your money. Clusters are trends of volatility whether up or down and can be traded.

Do it again for eg 1 hour, 2 hour, 4 hour, 1 day, 2 day(2 day price bars), 1 week, 1 month, 3 months.

Choose the game that has "consistency" vs apparent randomness. Because that randomness is not actually random, it's stops of the Noddies getting harvested and their money flowing to the big traders.

Leave leverage out for good until you know how it affects success. Truly understand that. What is your success with or without leverage using the same expertise?

Now look at markets differently after than before. Search for other things and features you haven't noticed before.

YOU are a trading algorithm. Stop complaining about other peoples' algorithms (you can do nothing about it) and make a good one fro yourself. An edge, a real edge is harder to find than you think. If you don't have one and know exactly what it is how can you trade profitably? So, study algos. But why not study them in a timeframe you can actually trade or invest in? Don't worry about market makers front running you in the millisecond frame. You can front run central banks in the monthly frame!

argentus maximus's picture

@B22

" ... I think I have asked this before and received the standard response ..."

The standard response, eh? I wonder what that was? I failed to begin with: "Oh great B22, please let me try to do my best offering you free counselling etc ..."

It's ironic that you have the neck to "ask" and then describe a reply as "The standard response". You are bringing snarkiness to a positive discussion.

Why?

" ... a simple yes or no would be sufficient .." Heh heh. Try it for size yourself and see how it fits. Where exactly are you going to be at 21:15 this day in three years? A simple reply will be sufficient. smiley

argentus maximus's picture

@L2

"... What is wrong with putting people in jail for manipulation.  What is wrong with having a Constitution. What is wrong with having a legal system.  Why do we have to adapt our investments to correspond to corruption.  Why do we grant the playing field to those that will only play if it's rigged.  How many more so called markets do we surrender.  Are there any left to surrender.  Simultaneously we are surrendering our personal rights as search and seizure, right to property, freedom of speech, sovereignty and then life itself ...To those who feel they have a "right" to manipulate markets as an entitlement.

When does it stop. How does it stop. ..."

Here's the reality. You are living in a time and place when empire and state is strong, and the individual is weak. When enough individuals get motivated enough they will demand justice loud enough tha the strong state must respond. That hasn't happened yet. It's not fair. I know. That's power and the lack of it and good vs bad. Hey you could have lived 600 years ago. The christian church with it's sharia system of eccleciastical law was torturing and burning people who disagreed or stood out against the powerful. Sound familiar to what states do today, or alternative churches do in other places? So in 600 years the west became what the middle east used to be and vice versa. The sharia-civil swing, or church-state dominance swing swung to opposite extreme. There are smaller versions of that cycle nesting within the period I mentioned. Go to work and find out where has the political-civil balance you like and move there. Or wait 15-20 years for the short term swing to reverse where you currently are.

You could try to motivate the counter swing. Unfortunately, the pigs currently in control of the trough don't like that. There are case studies. MLK is a good one.

argentus maximus's picture

I think I have addressed most

I think I have addressed most of the questions. (I didn't expect so many but I do push some buttons with a forthright and little unusual way of talking about markets)

Which is too many posts and too much of my input for good effect.

I'll step out now and leave it to you guys.

We have visitors and family coming for Sunday dinner and good times and there's much to do

Have a nice weekend.

lakedweller2's picture

@AM

Thanks.  I appreciate all the summary responses and your willingnesss to clarify.

lakedweller2's picture

@AM

Thanks.  I appreciate all the summary responses and your willingnesss to clarify.

Turd Ferguson's picture

Man, I'm sorry about that

MODERATOR

Did the site do that to you or did your fingers just move too fast? 

Either way, that sucks. We've all been there.

Response to: @AM
brokerk22's picture

@AM

Ill dispense with the snarkiness.  Your willingness to respond to the question attest to your gentlemenship (Is that a word?).   Obviously, you think a big deflationary blow has to happen before we have some sort of hyperinflation.  Much like Mike Maloney and many others.   Sounds logical.  It fits well with your cycles.  Also you leave the possibility for some sort of wild ass event that throws it all off.  Only God knows what that can be.   There are certainly many factors that could do this.  A breaking of the Euro union this year would fit the bill and throw your cycle out of whack and everything happen much sooner.   Does this sound like an accurate synopsis?  Maybe a little easier to understand for the average guy.   Your response is appreciated.  Blessings to you.

lakedweller2's picture

@TF

I had gotten from the Criminal causes of the Great Depression and resulting regulations and was up to MF Global, JP Morgan London and was discussing the need for a criminal investigation of Corsine and Dimon. After writing Dimon I noticed I used an italics instead of an apostrophe as I was using the possessive in regards to both.

I backspaced on Corsine"s and eliminated s..." and added...'...When I hit the apostrophe, the whole screen did like a reverse erase and was gone.  I concluded that it was illegal to use Corsine and Dimon in the same sentence.

Edit: maybe it was the use of the words criminal investigation with those"other two names".

argentus maximus's picture

@B22

Hi, Your summary is spot on.  yes

Cheers, AM

Newager23's picture

My 2 Cents

Cycles (multi-year), technical's (day/weekly/monthly MAs), fundamentals, manipulation.... These four factors all come into play. That's why I am on this site. Turd does a good job informing us of the technical charts and manipulation. I think it's foolish to rely on one of these four factors, and also foolish to ignore one of them.

I think fundamentals (macro and micro economics) are the most important, closely followed by the technical charts. The fundamentals influence the technical's, although manipulation can impact both factors. The cycles are always lurking in the background creating their own influence. 

As Argentus implies, cycles are the beast that won't be denied. To a certain extent this is true, but just like the technical's, they cannot always be relied upon. 

I tend to ignore cycles (perhaps my ignorance), and focus on the fundamentals and technical charts. However, if a cycle reinforces the fundamentals and technical charts, then it gives me much more confidence. 

What I usually do is constantly gather and analyze the fundamental information and then look at the technical charts for confirmation, or vice-versa.

For instance, today many of the technical charts (gold/silver/HUI) are all close to breaking out above the 200 DMA. However, this breakout is not supported by the fundamentals. For this reason, I do not expect a breakout to last very long or be sustained.

Conversely, the fundamentals currently do not support a break down in gold/silver prices. For this reason, we are stuck in a trading range. I think it is too early to predict which way the fundamentals will break in the near term. We will have to wait a few more months to know which way we go. My hunch is the the dollar and the economy will begin to breakdown by early summer. That would support a breakout in gold/silver. 

As for the future price of gold. I firmly believe that once gold crosses $1450, it will trend to a new high without looking back. My belief in this outcome is based on the gold technical chart, which shows very little resistance from $1450 to $1935, and I do not believe we can get to $1450 without weak fundamentals and a failure of manipulation.

lakedweller2's picture

As Long As I am Irritating Everyone

Help me with this one.  Back in the old days when earnings were important, I think they were considered a fundamental in determining their stock value.  Ignoring the change in the rules of accounting and fluff tricks like share buy backs, isn't a key fundamental altered when indiscriminate algos are applied to the price of gold and silver, mainly considering the COT and adjusting PM prices for the purpose of maximizing bank profits and using a paper derivative to determine price. Since the algos are applied across the mining sector without differentiation as to all the variations in mining companies, then indiscriminate Algo pricing is used as a predetermined variable to determine price to all mines without respect to individual differences in production. In other words, GM can determine their list price for a Chevy or a Cadillac, but the price of gold and silver is determined by COT #s and banker profits.

Supply and demand for gold and silver is not a direct player and could even be a factor in downward price manipulation to hypothecate and leverage physical in government or market maker possession.

This relatively unrelated price control predetermines miner success or failure quarterly as miners are not permitted to determine price relative to cost of production.  This problem is compounded by the manipulation of the price of oil which is an essential player in mining cost but also the price of oil can be manipulated for greed, politics, competitive advantage or even supply, demand and seasonality and also involve the banks again.  The fact oil can be manipulated is also not a pricing consideration the miners themselves can add or delete to the current price and therefore earnings.

Analysts establish their earnings estimates on growth and when miners have suffered "price Manipulation directly in gold and silver and indirectly through manipulation of the price of oil", isn't it possible that miners fundamental earnings do not represent performance, but rather a self fullfiling prophesy generated by the unrelated paper price of digitally created paper prices of PMs and oil. 

If it does appear that miner earnings are a result of fabricated digital paper prices, and the markets react in a fundamental way of punishing companies for failing to meet earnings expectations, despite the miners inability to set price based on cost of production and supply and demand, then it negates the use of fundamentals when there is unrelated price manipulation of PMs and oil, with lack of oversight and regulation by government agencies charged under statute to preclude the above situations under statute.

Where have I gone wrong.

billhilly's picture

Great article AM !

Thanks !

And great commentary too from everyone !  Lively debate is always enriching and stimulative.

My 2 pennies...I am very wary of putting too much faith in technical's, and even fundamentals these days.  I mean, how much can we really know about supply/demand when SO MUCH info is kept secret ???  How much Gold is in Ft. Knox ????  How much unencumbered is in GLD ???  How much is China really buying, and how much do they have ???  etc, etc...

We peon's are incapable of making informed decisions because the info just IS NOT THERE !

And for technical's, the sky is dark with all the black swan's flying about so trying to get a grip on the future trends is wrought with danger and uncertainty.  A simple Tweet nowadays and all the technical's can be destroyed.

There are two types here...stackers and traders (or a combination of them). 

The stackers have the edge on odds of being right.  They/we do not worry about time frames, and really shouldn't even worry about price (although of course we do).  If the price goes up, good, if it goes down, even better.  We stack because we KNOW the price is terribly disconnected from what (we believe) it should be.  In the end, we will be right !  ALL MANIPULATIONS COME TO AN END !

Traders on the other hand (of which I also am one) view a shorter time frame so direction is key.  But trading = gambling.  You place your bet and the wheel gets spun.  You can analyze till the sun rises in the West but with all the HFT/Manipulation/ Dark pool influences, it's still a roll of the dice...imho. 

These days and months and years ahead of us are unprecedented in their uncertainty.  I appreciate articles such as this one because it gives me another POV (as a trader mainly) and we can hardly go wrong by giving them some consideration.  Yet, as a stacker, I am not willing to wait around very long and hope that price will go to my advantage because the risk of ending up not being able to get physical at all is too great. 

As a trader I often say "if only I had....". 

As a stacker I NEVER want to have to say that, so this is why, when I have spare fiat I STACK.  Because someday, we will all look back and say one of two things..."Whew, I  sure am glad I stacked when I had the chance" ; or,  " damn, if only I had... "  !!!!!

chrtoo's picture

@AM - SGTReport.

Nice to see this article get cross-posted on another major website, SGTReport.com.  When I came across this, I notice that the authourship was wrong; pointing instead to our illustrious leader.

I dropped Sean a note and pointed out the error. Sean is always good and responsive to communications. Licky-split, this correction is in place and Argentus has his proper credit!  Enjoy.

CHR.

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