LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek.com to Launch New Website
By: GoldSeek.com

Is Gold Price Action Warning Of Imminent Monetary Collapse Part 2?
By: Hubert Moolman

Gold and Silver Are Just Getting Started
By: Frank Holmes, US Funds

Silver Makes High Wave Candle at Target – Here’s What to Expect…
By: Clive Maund

Gold Blows Through Upside Resistance - The Chase Is On
By: Avi Gilburt

U.S. Mint To Reduce Gold & Silver Eagle Production Over The Next 12-18 Months
By: Steve St. Angelo, SRSrocco Report

Gold's sharp rise throws Financial Times into an erroneous sulk
By: Chris Powell, GATA

Precious Metals Update Video: Gold's unusual strength
By: Ira Epstein

Asian Metals Market Update: July-29-2020
By: Chintan Karnani, Insignia Consultants

Gold's rise is a 'mystery' because journalism always fails to pursue it
By: Chris Powell, GATA

 
Search

GoldSeek Web

 
Gold at a Crossroads

By: Dan Norcini

 -- Published: Thursday, 13 August 2015 | Print  | Disqus 

Gold has had a nice run off the Chinese yuan devaluation news with short covering the dominant reason behind the buying.

Markets that have a decent sized speculative short position are always subject to bouts of sharp price rises as shorts scurry for cover. The question is not whether or not shorts are covering – they are. The question is, “Are there large numbers of specs who are willing and eager to assume NEW LONG positions?”

For without that, the rally has no staying power but will fizzle out once the weaker-handed shorts are run out.

Typically, when looking over a market that is experiencing a bout of short covering, one can see it show up in the VOLUME. Volume speaks to emotion and nothing moves markets like FEAR ( if there is any doubt about that, you should look at the volume of trade done in the corn and the beans today as the USDA report touched off a PANIC among longs).

Chart_15-08-12_15-57-57

In looking over the hourly chart, we can see that the volume is beginning to fade as the price moves higher. This does not mean the potential to move further is done; but what it does mean is the some of the urgency among the shorts is fading.

Price movement higher hit a temporary stall near $1125. It will now take a strong push through these highs to spark some further short covering. If that were to occur, I am going to be extremely interested in seeing the volume that might accompany such an occurrence.

The problem for gold remains the same as before – will it thrive off of currency debasement issues as it is currently doing or will it go back to suffering from deflationary pressures?

I do not know the answer to that. The market does however so our best bet is to keep a close eye on these price charts and let them inform us.

We can also keep an eye on the GLD reported holdings to see if they are getting a SUBSTANTIAL increase. So far the increase we have seen over the last couple of days was a mere 4 tons. While that is positive it is a long way from being anything substantial especially when one considers that reported holdings remain DOWN from the start of the year 37 tons! It was just last week that holdings had fallen to 667 tons, a near SEVEN YEAR LOW.

Chart_15-08-12_16-09-14

Aiding the bullish cause is the recent performance of the mining shares. The HUI has created an ISLAND BOTTOM on its daily chart. Bulls will NOT WANT to see that gap that was formed today closed. There is yet an overhead gap that needs to be filled. The bottom of that gap lies about 3 points above today’s high.

Chart_15-08-12_16-11-49

In looking at the ADX/DMI, the ADX turn lower confirms that interruption of the strong downtrend that has held gold for a while now. Also, the upside crossover of the +DMI ( BLUE) above the -DMI ( RED) is the first buy signal since May. That particular signal did not last long.

The MACD is also now in a buy mode.

Chart_15-08-12_16-12-45

The HUI has been beaten so badly that it can actually run a long way just to reach the BROKEN SUPPORT LEVEL that collapsed in early July.

Chart_15-08-12_16-14-51

In my view, this is a short term phenomenon rather than the beginning of a major bull run in gold. How far these rallies can go is unclear and no wise trader should make predictions especially in this novel environment in which we see currency devaluations become more and more commonplace.

We are still dealing with a deflationary environment, one that has not favored gold nor any other commodity for that matter. Whether or not a currency devaluation in China can turn that around remains to be seen.

So far, a weakening of the Yen, and the Euro, and the British Pound, and the Canadian Dollar, etc. has not done the job. That is why I do not expect a Chinese Yuan to do anything either.

We are dealing with the excess of credit, cheap money, overbuilding, etc,. in China. How a weaker currency can permanently deal with that escapes me. The problem as I see it – and the best way I know how to describe it is to use an analogy – is that everyone wants to party hearty and have a great time but then want to avoid the hangover the next morning.

We all know from experience, if you do not want the hangover, practice some discipline and self-control the evening before.

That course of action is unknown to our modern generation of leaders  – in ALL COUNTRIES. Every political leader wants the benefits of a growing economy and good times under their watch. That is where their political fortunes are made or lost. The Chinese authorities are no strangers to this view either.

No one wants the aftereffects of a credit binge taking place during their tenure and thus, they will pull out all the stops to avoid dealing with “the hangover”.

The problem is, none of these stop gap methods do a single thing to address the ROOT CAUSE of the economic slump. All they do is to delay the day of reckoning.

Sometimes to actually cure a disease, a foul tasting medicine needs to be administered if you really want to kill that invading bacteria or virus.

http://traderdan.com/

 


| Digg This Article
 -- Published: Thursday, 13 August 2015 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.