-- Posted Monday, 21 June 2010 | | Source: GoldSeek.com
By Gene Arensberg Esse quam videri – To be rather than to seem.
Usual “suspects” not aggressively selling up to now.
HOUSTON – Gold and silver are both poised to make history this coming week, but will they? We suspect that the Big Sellers (BS) of both will certainly attempt vigorous opposition. They already have. The question is whether the buying pressure will overwhelm the “hedgers,” … the question is if the numbers of buyers and the volume they wield will overrun the BS as it did in October of 2005, as it did in July of 2007, in December of 2008, in December of 2009 and again in April, earlier this year.
Or, if the BS will prevail at gold’s new resistance, sending us into a summer correction.
The Big Sellers (BS) are the commercial futures traders the Commodities Futures Trading Commission (CFTC) favors with massive position size and accountability exemptions for what the sell side and the CFTC calls “hedging,” while restricting any one trader on the long side to a tiny fraction each of the BS’ firepower. More about that below.
With short-term interest rates “near zero for an extended period,” with the effects of over a trillion dollars of direct artificial stimulus waning, can the U.S. economy now stand on its own feet despite much higher taxes on the near horizon and while burdened by the most punitive, anti-business and taxpayer-hostile administration and Congress in anyone’s lifetime?
That is hard to know in advance. Let’s look at what some of the indicators are telling us about those issues. First, here’s this week’s closing table:
June 18, 2010 | | | | |
Got Gold Report Indicator Comparison | This Week | Prior Week | Change | w/w Chg % |
Gold Weekly Close (USD) | $1,256.62 | $1,226.30 | $30.32 | 2.5% |
Silver Weekly Close (USD) | $19.17 | $18.23 | $0.94 | 5.2% |
GLD Metal Holdings (Tonnes) | 1,307.96 | 1,306.14 | 1.83 | 0.1% |
SLV Metal Holdings (Tonnes) | 9,208.83 | 9,208.83 | 0.00 | 0.0% |
Gold Close COT Date | $1,234.43 | $1,236.82 | ($2.39) | -0.2% |
Silver Close COT Date | $18.57 | $18.29 | $0.28 | 1.5% |
Gold LCNS (Contracts Net Short) | 278,944 | 273,577 | 5,367 | 2.0% |
Silver LCNS (Contracts Net Short) | 53,781 | 52,044 | 1,737 | 3.3% |
HUI EOW Close | 493.72 | 462.19 | 31.53 | 6.8% |
US Dollar Index Weekly Close | 85.57 | 87.39 | (1.82) | -2.1% |
ICE Commercial Net $ Pos. (Contracts) | (24,676) | (23,567) | (1,109) | 4.7% |
Gold:Silver Ratio Weekly Close | 65.53 | 67.27 | (1.74) | -2.6% |
Gold Intra-week High | $1,262.30 | $1,252.10 | $10.20 | 0.8% |
Gold Intra-week Low | $1,216.72 | $1,210.97 | $5.75 | 0.5% |
Silver Intra-week High | $19.27 | $18.53 | $0.74 | 4.0% |
Silver Intra-week Low | $18.19 | $17.22 | $0.97 | 5.6% |
Gold High/Low Spread | $45.58 | $41.13 | $4.45 | 10.8% |
Silver High/Low Spread | $1.08 | $1.31 | ($0.23) | -17.6% |
With gold literally challenging its resistance in the $1,260s having cut a marginally higher high this past week with an ascending triangle breakout attempt underway, and with silver not all that far below its resistance in the $19.50s to the $19.80s, this coming week certainly has the potential for some early fireworks!
To paraphrase Forest Gump, potential is as potential does! Short term, most of the indicators we track are either outright bullish or neutral, but we do discuss in some detail one particular area of concern below.
Longer term we still see nothing which undermines the secular bull market thesis for gold metal, but short term we think traders should consider tightening stops for gold, silver and larger mining shares.
Boiling it all down, we would not be surprised by a major thrust higher for both gold and silver, but arguing against that is this week’s big jump higher in COMEX gold and silver futures open interest (detailed below). Because of the apparent strong opposition coming in late week, we would also not be all that surprised by a sudden, seemingly out-of-the-blue pullback – a BS smack down. (Continued below in the Bottom Line section.)
This Week’s Radar Screen
The Got Gold Report – the full report – is published biweekly at least 24 times per year. Between reports we communicate more regularly on the GGR web log, so it pays to stop by once in a while to catch the latest offerings.
The purpose of the Radar Screen is to briefly summarize our positioning for the gold and silver markets, and also to highlight a few of the dozens of indicators, ratios and graphs we keep in constant touch with at Got Gold Report. Long-time readers know we update most of the Got Gold Report linked charts each week, even the weekends when we don’t publish the full report.
For a little while longer, readers need only pull up the last full report (even this one) and click on the chart links on “off weeks” to see any updated comments. Changes are almost always completed by 6:00 pm EDT on Sunday evening (except when Monday is a holiday) and occasionally during the week itself as events unfold. The chart links are always at or near the bottom of the reports.
Pretty soon now, however, all of the chart links will have to change as we have transitioned to our new permanent web home, which we are proud to say is up, functioning and gaining lots of new readership at www.GotGoldReport.com.
In the near future Got Gold Report will transition to a subscription-based model. The biweekly full GGR, COT analysis, our linkable charts, support and our Vulture Bargain Hunter commentary will require a paid subscription to view. Look for all the details of that change shortly.
Now back to this week’s Radar Screen.
Gold
We plan to stay opportunistic for gold, waiting like patient Vultures for a juicy opportunity to redeploy our short-term trading ammo, glad that we hold long-term physical metal in our arsenal. We will have more about our positioning in the linked charts below and likely on the web log later this coming week. As we like to say, we are like a bird dog on point waiting for a re-entry sign. Please see additional commentary in the actual linked charts at the end of this report.
Here is this week’s short-term trading chart for gold:
In May gold bounced at the very top of the zone we thought might be former resistance morphing into current support, but it has so far not managed to get into our “wheelhouse” (the purple box target). Demand has been relentlessly strong in U.S. dollar terms - even stronger in terms of Euros.
We will continue to tentatively mark the high $1,150s as potential support for gold with resistance now near $1,264 – until proven otherwise on both counts. We suspect that if gold is able to “prove” a breakout here, upper resistance could have a “13-handle.”
Our preferred area of reentry remains well below the current trading, but with the gold/silver ratio coming back in from near 70 two weeks ago to a 65-handle this week, we may be forced to raise our short-term trading entry targets after options expiration and end of month and end of quarter trading has settled out.
Interestingly, gold could suffer a fast $100 pullback from this level and not even threaten its very bullish uptrend technically. With one class of COMEX commercial futures traders record net short, global worries about sovereign debt, weakening confidence in all fiat currencies and downright disdain for the current cast and crew in Washington - we find it easy to imagine that gold will be well-supported on most any significant pullback.
Therefore we believe that significant to strong dips for gold may be bought with confidence, but we do not think significant advances should be sold. We cannot conceive of an acceptable reason to short gold metal, except to hedge.
The above is an excerpt of the full Got Gold Report update. To continue reading as Gene turns next to the silver market, small resource company indexes and the gold and silver COT reports please click on this link:
And thank you for doing so.
A land developer, professional numismatist, self-taught bullion trader and investor since 1980, Gene Arensberg analyzes technical and fundamental developments in the precious metals markets. In 2000 Gene started sharing his own market research with fellow traders and fund managers. Those email reports evolved into his popular Got Gold Report, a biweekly look at important indicators for gold and silver published on the web. Gene’s more in-depth market reports, insights and trading ideas are available at www.GotGoldReport.com.
-- Posted Monday, 21 June 2010 | Digg This Article
| Source: GoldSeek.com
