Possible Summer Set Up by the EE

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#1 Wed, Jun 22, 2011 - 9:31pm
humbleprofits
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Possible Summer Set Up by the EE

I originally posted this in the comments thread following TF's blog. Thought it might get lost there so posted it here as well. Looking to see if I am crazy or not.

This came to mind today as gold crossed 1550. Is the EE purposely letting gold climb? All day today I read about how gold now looks technically good. Here is my conspiracy:

Margins on gold lowered, shifts people away from silver

Gold crosses 1555 (lower now) and everyone gets excited. This causes TA guys to start buying. Also causes miners to strengthen some more and investors start piling in.

Everyone gets involved, then BOOM, the EE slams the door right in investor's face. Firsts day a drop of $15 is orchestrated to get the attention of the media, then $25-30 the following day.

Shorts pile on, investors who just got in flee and you get a further drop the next few days. Before you know it, gold is down say $75, maybe $100. Silver plunges out of sympathy.

Bill Gross is forecasting that some type of QE3 will be introduced at the Jackson Hole meeting in August. If Uncle Ben can say that the economy is still slowing and a recent, significant drop in gold points to deflation, than QE3 is pushed as the savior.

Am I crazy, or is this more plausible than I might think. If so, maybe we should save some dry powder until the Jackass Hole meeting in August. Still a noob in the PM space, so any thoughts appreciated.

Edited by: humbleprofits on Nov 8, 2014 - 5:31am
Wed, Jun 22, 2011 - 10:00pm
pailin
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DCA

humbleprofits wrote:

Firsts day a drop of $15 is orchestrated to get the attention of the media, then $25-30 the following day.

Shorts pile on, investors who just got in flee and you get a further drop the next few days. Before you know it, gold is down say $75, maybe $100. Silver plunges out of sympathy.

From the standpoints of seasonal trend and daily/weekly Bollinger Band bottoms, there's no reason to think that gold can't lose $100-$150 in the next 3-6 wks. If you're inclined to buy gold, you should, but maybe you ease in with dollar cost averaging instead of going all in or staying completely out until QE3? That's what I'm doing, beginning to ease into gold. Not yet for silver.

To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey
Wed, Jun 22, 2011 - 10:25pm (Reply to #2)
CK
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Gold can certainly take a

Gold can certainly take a hit, but for me the interesting thing to see is how it was going up with the dollar recently vs the euro. Still doesn't change the fact that gold can fall down toward 1505-1515. If it falls under 1505 I'd be careful in paper. Physical you shouldn't worry a drop.

I'd think to continue buying after massive sell offs would be very profitable. Sell near the high resistance points such as 1551 right now. I personally took today as a non-confirmation. If gold doesn't get back above 1549 and stay there, It has to go down toward 1530-1535 in my eyes. Then if it doesn't hold there we go back to 1515-1520 and see how that goes. I think the next coming weeks will be very volatile. Gold will grind it's way up, but until we break above 1550 and stay there 1515-1550 range stays.

We're not trading against the market, we're trading against ourselves.
Wed, Jun 22, 2011 - 10:33pm (Reply to #3)
TheGoodDoctor
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CK there are eager hands

CK there are eager hands waiting to buy around the globe. And BOS Buyers of Size. It's only a matter of time. This is the summer of discontent. TSHTF.

“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.” Norm Franz
Wed, Jun 22, 2011 - 11:08pm
SilverFocker
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I agree

I agree with the OP, the TSHTF, but not this summer, to many things going on........QE2 ends, a couple weeks later markets start to teeter, by July they are falling steadily.........WS, and everyone else on knees in front of big ben willing to kiss his ring to fire up the presses.........Mid to late Aug, the presses get fired up.........all is well again..........PM's start the rise as the dollar goes back to being just a piece of cotton over the next 14 months.

Wed, Jun 22, 2011 - 11:31pm
Zoltan
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Get out the calendar

humbleprofits wrote:

Everyone gets involved, then BOOM, the EE slams the door right in investor's face. Firsts day a drop of $15 is orchestrated to get the attention of the media, then $25-30 the following day.

Shorts pile on, investors who just got in flee and you get a further drop the next few days. Before you know it, gold is down say $75, maybe $100. Silver plunges out of sympathy.

Relax,

Look at the ten year chart.

Down $100 is so "mehhhhhh" to so many people the sound of the backup beepers would be deafening. (as in back up the truck)

This ship has sailed IMHO

The end of the great Keynesian experiment is truly upon us.

Z

Wed, Jun 22, 2011 - 11:39pm
tmosley
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Could be.  The EE starts

Could be. The EE starts covering shorts to precipitate a short squeeze, then re-establishes a position just as the price starts to go apeshit. Sort of like silver.

Maybe, maybe not. Like I said earlier, I am starting to like gold a bit more. Might up my position to 10% or so at the end of July. Higher if an industrial panic gets into full swing and I am starting to liquidate silver. That seems premature at that point though--EoY seems like a good time frame for that.

Thu, Jun 23, 2011 - 5:48am
Jimux
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June 2010

I'm thinking we might have a re-run of the end of June 2010 drop. However there is Greece to consider this time around. The euro/gold will probably get a bid up as the Greek austerity vote nears mid July.

Now I'm pretty new to the money game, and somebody please correct me if i'm wrong, but from what I figure the recent bid up in the Euro before the vote of confidence was possibly a hedge against the government failing rather than confidence in the vote passing. If the government failed, leading to greece to default, it would be paradoxically bullish for the Euro in the short term...default = contraction of the money supply, with the addition of banks stopping inter bank lending pushing the borrowing rate up. If Greece leaves the Euro, possibly bringing some of the other PIIGS with it then that would be a massive contraction of the money supply and just leave the stronger northern european countries. This would be very bullish for the Euro?

So I guess I'm looking for a short sharp drop at the end of June to maybe 1500, but then a rebound as the austerity vote nears. If the vote passes, then the Euro will drop as the money supply increases, ECB stuffs more euros into the can being kicked down the road...dollar rises and gold drops to the end of July. However if it the vote fails gold goes to the moon as the TBTF have a second heart attack.

Then we wait to see what comes out of the hole.

Thu, Jun 23, 2011 - 12:34pm (Reply to #8)
SilverWealth
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gold high

In Gold I have learned to always sell into its closing highs or relative strength. It is then that I expect the cartel to attack. They need to keep gold capped so that it appears there is only moderate inflation across the land. I could count a dozen times over the last year when Gold was savagely attacked overnight and the next day after exhibiting 'relative strength' or a 'breakout'. I often think that the banks write the TA textbooks. They love marks that come rushing in chasing momentum and buying like the textbooks all dictate at relative strength. They make zillions fading that trade every year I think.

Fri, Jun 24, 2011 - 9:16am
humbleprofits
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Well, drop came a little

Well, drop came a little sooner than I thought. Figured they may keep it elevated a few more days to trap as many as possible.

I will probably start scaling into the miners. 25% increments every $50-75 drop. With the drop in oil, I figure miners will find added strength. But what I think and what happens are often quite different.