Monday, 29 December 2014


2014 - A Breakthrough Year for Technology Metals

It is impossible to create a connected, mobile and sustainable society without technology metals (precious metals, specialty metals and rare earth elements) enabling it. Lithium stores energy in our rechargeable batteries; neodymium's magnetic properties run electric motors of which there are many in our lives; silver helps collect sunlight and turn it into renewable energy. Tech Metals Insider reported about these and many other applications throughout the year.

Volatile Blahs

Equities were up a small amount today amid cautious holiday trading, but the U.S. dollar continued its climb to supremacy, helping push gold lower. But the dollar doesn’t tell the whole story today for gold.
The chief outside market influence, crude oil, was down severely again, by around 2%. Gold was dragged down on that ride.
Thin trading also did not help gold, as a few major sales going into year’s end forced prices down. Investors are squaring up their books, taking their losses (or gains if the case might be), and exiting positions all over the place, except for equities, which, of course are much less volatile than commodities markets, trading, as they do, in factors rather than simple dollar gain and loss like stocks.
The news of Greek’s renewed shakiness wasn’t enough to goose gold upward. Most analysts, including us at the Gold Forecast, feel that Greece is a lost cause and it is already factored in to prices of various financial instruments. Greece may continue to harm the euro, which doesn’t seem to need any help with that currently. A sinking euro lowers gold prices in dollars.
Some support was seen in physical gold as we approach the Chinese Lunar New Year, a favorite time for buying in the huge country. Other than that, consumption of the actual metal is soft.
While technical support was threatened today, the decline in gold didn’t crash through our previously delineated levels - more on that in Market Forecast.
As might be expected at this time of year, international news is slow so there were no big new factors that might lend support to gold as a haven play.
Wishing you as always, good trading,

Gary Wagner

Gold Ends Lower As Dollar Continues To Strengthen




WASHINGTON ( Alliance News ) - Gold futures ended lower on Monday, tracking rising equity markets with the dollar trending higher against a select band of currencies. There was little or no significant economic releases for cues, with investors upbeat over an improving US economy.
Nevertheless, trading volumes are expected to remain thin during the week, ahead of the New Year.
After some strong data recently, including a report showing US gross domestic product to have grown much more than expected in the third quarter, the prospects of a rate hike next year seem to get more definite with the greenback continuing to gain consistently against most major currencies. A higher interest rate supports the dollar and is a drag on gold.
Greece was once again pushed into a political crisis on Monday after the parliament failed to elect presidential candidate, Stavros Dimas , paving the way for a snap general election early 2015. Prime Minister Antonis Samaras' candidate, Dimas - a former European Commissioner and the only candidate in the fray, was rejected by a vote of 162 in favor and 132 against, but woefully short of the required 180 votes in the 300 member house.
This could mean a snap general election for the economically beleaguered country, which analysts feel could go in favor of the leftist Syriza party that is extremely opposed to the austerity measures suggested by the EU and the International Monetary Fund .
Gold for February delivery, the most actively traded contract, dropped USD13.40 or about 1.1% to settle at USD1,181.90 an ounce on the Comex division of the New York Mercantile Exchange on Monday.
Gold for February delivery scaled an intraday high of USD1,197.50 and a low of USD1,178.60 an ounce.
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, edged lower to 712.30 tons on Monday, from its previous close of 712.90 tons .
The dollar index, which tracks the US unit against six major currencies, traded at 90.20 on Monday, up from its previous close of 90.05 late Friday in North American trade. The dollar scaled a high of 90.22 intraday and a low of 89.79.
The euro trended lower against the dollar at USD1.2157 on Monday, as compared to its previous close of USD1.2181 late Friday in North American trade. The euro scaled a high of USD1.2220 intraday and a low of USD1.2144.
In economic news, Switzerland's consumption indicator dropped slightly in November as fewer car sales weighed on spending, data from UBS showed Monday. The Swiss consumption index dropped to 1.29 in November from 1.32 in October. Although weak car sales were a drag on consumption, Christmas retail business has apparently made a good start.
Among data due this week are the consumer confidence index for December from the Conference Board, the weekly jobless claims, the National Association of Realtors' pending home sales index for November and the results of the Institute for Supply Management's national and MNI Indicators' regional manufacturing surveys.
The S&P Case-Shiller house price index for October, Markit's final US manufacturing index for December and the Commerce Department's construction spending data for November will also be out during the course of the week.

Quiet For Now, But EU Clouds Forming

Gold continues to meander into the last trading days of 2014, as both the dollar and oil appear to have stabilized into year-end. Greece will once again be on everyone’s radar, as the Greeks failed to elect a new President. This opens the door for a snap election where the outcome could result in Greek voters picking a leader who may abandon the current austerity program and raise doubts about Greece’s membership in the EU. This could turn into a significant story for early 2015, which may create some safe-haven flows into the metals from the EU investor block. Although the market remains thin on participation, we have three full trading days in front of us and volatility may increase into year-end positioning.

By Peter Hug
Global Trading Director

This past week in gold

Jack Chan


GLD – on sell signal.

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SLV – on sell signal.
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GDX – on sell signal.
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XGD.TO – on sell signal.
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CEF – on sell signal.
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Divergences between gold and gold stocks often lead to trend changes.

“Gold's Mega-Move Days Have Turned Bullish”


In bidding adieu (or if you prefer, a not-so-Golden good riddance) to 2014, 'tis said that those who've "manipulated" the price of Gold lower shall be the same entities which shall "manipulate" it back up. To the extent that the price of Gold is or is not "manipulated", (as long as we can engage fairly and equitably in a like trading platform and have enough size ourselves to shove price about manually and/or algorithmically), we've got some very heartening news to share in closing out what has not so much been a down year for the yellow metal, (as 'tis on target to finish just either side of the 1205 "break-even "level), but instead a year that has been perpetually annoying. With only three trading days remaining in 2014, 'tis at this juncture incidental as to whether Gold nets out an up or down year: for far more material either way is the above scoreboard's telling us just how alarmingly low price is relative to the growth in our money supply these last 30 years.
However, here's the heartening bit: be they "manipulators" and/or legitimate trading forces sufficiently capitalized to hoover away hundreds of bids or offers in an electronic heartbeat, we've ferreted out data which is indicative of them having changed their tune from selling/shorting Gold to now buying it, or if you'd prefer, that the upside "manipulative" rumblings are at last underway. To the naked eye, such activity is sufficiently stealth so as not to notice it: but to a measurable degree, we've sussed it out, or at the very least, found evidence of Gold's price now being protectively supported. And as odd, indeed sparse or incomplete as the following chart may at first glance appear, 'tis showing us the market moving powers that be are shifting back into buy mode:

"Uh, mmb, like Ricky said, Lucy you got some 'splainin' to do..."
Absolutely, Squire. What you're looking at above are Gold's intra-day price movements for the 250 trading days now in the books for 2014: except visibly there are only six bars across the entirety of the chart. Why? Because we've eliminated every day which traced a trading range of less than 40 points between its session's high and low so as to only cite Gold's "mega-move" days. And more importantly, here's the best part: the colour of those six robust bars describes the directional thrust of those mega-moves: Red for down-thrust, and Gold for up-thrust.
To be sure, 'twould be beyond the extremes of arrogance to believe that which we pen influences market direction; we likely more oft are considered a contrary indicator. But with respect to the above chart and its cluster of three up mega-moves just in these last two months, they curiously occurred with our introducing The Gold Update Scoreboard which now opens these weekly missives. Coincidence?
"Absolutely, mmb."
Squire's brutal honesty notwithstanding, let us press on to the graphic of Gold's weekly bars, wherein we see the parabolic trend having survived its fourth week to the LongSide, as indicated by the ascending blue dots. The descending dashed trendline across the chart belies just how near Gold is to actually closing out 2014 as a "break-even" year, 2013 settling at 1204.8 and now yesterday (Friday) at 1196.1, again with but three remaining trading days in the balance. Further note that despite the absence of a rare "mega-day" this past week, price still scampered up to close near its bar's high:

Of course, Sister Silver, below in her own weekly bars chart, shan't be closing out 2014 anywhere near her 2013 settling price of 19.425, for in finishing the week yesterday at 16.085, the descending dashed trendline truly tells her tale of woe:

Don't take it too hard, Sis. You may be -17% year-to-date, but so identically is Cousin Copper, whilst your distant Uncle Oil is -44%! (Next week's missive in opening 2015 will present the final "BEGOS Markets Standings" for 2014).
Then there's the stock market, which in conveniently ignoring global asset price shrinkage, continues to bound merrily along, the S&P 500 setting all-time highs on a daily basis as 'tis complacently assumed 'twill do in perpetuity. We however, as you well know by now per our being seemingly forever on "crash-watch", see it quite differently. As our calculation of the S&P's price/earnings ratio closes in on 30x, (the current "live" reading being 29.4x), please excuse our implementation of even more common sense in pointing out that the S&P's MoneyFlow is hardly keeping pace with price's perennial rise. Here is their relationship regressed to an S&P-points basis over the past 63 trading days (one quarter) to date, indicative of price ascending sans volume, quite in contrary to the past week's in-depth ChiTrib piece entitled "Dow, S&P power to new records". Quite frankly, and rightly in tune with this 1977 hit by Jackson Browne, we see the S&P as "Running On Empty...":

And therefore from the stock market's standpoint as having participated in this December to Remember we're fully anticipating that 'twill be a capitulative January to Forget. And as goes January... Besides, let's face it: when you've the S&P trading at double the support of its earnings base, and the price of Gold valued at half its natural level given Dollar debasement alone, something soon will give, and I suspect for the markets 'twill be massive.
As for the chest-pounding "Dollar strength" crowd out there -- and yes the beloved Greenback's Index now for the first time since April 2006 is just above 90 (90.315) -- the Buck is currently up 3% from Gold's closing low day of the year (1140 on 05 November), whilst the yellow metal itself is nevertheless up 5% from same:

Still, StateSide we've the percentage of adults in their prime working years with full-time jobs near the lowest levels ever recorded, (per the Bureau of Labor Statistics as far back as 1986). In the Middle East, veteran Saudi Arabian Oil minister Ali "fake it on the give-and-go" al-Naimi stated that Oil's price is irrelevant to output decisions, the Saudi Finance Ministry then pledging to curb wages and sally forth with investments next year toward lessening the blow of the halved price of petroleum. Meanwhile over in Japan, for the first time with records having been collected since 1955, their savings rate has turned negative as the populous draw on their nest-eggs, despite inflation just having slipped to a 14-month low. Westward across the sea from there, China's industrial profits for November just fell by the largest amount in two years. And not to be outdone by such economically foundationless follies, Greece’s Parliament still has yet to elect a new President, which were the anti-austerity opposition to instead become empowered, could again bury Hellenic paper. All-in-all, a fairly good year-ending basket of Gold positives, non?
Which in turn gives us hope that 2015 shall be far better for Gold than this Year of Annoyance. With just the three trading days left, we close out 2014 with this final two-panel technical graphic. On the left we've Gold's daily bars for the past three months with the ever-attendant "Baby Blues" depicting 21-day linear regression trend consistency, which admittedly is waning, (and for those of you who read the daily Prescient Commentary, you've likely noted an open signal for Gold to trade down to 1164.1 per its daily Price Oscillator study having gone negative). On the right is Gold's 10-day Market Profile showing price just a point below trading resistance at 1197, with underlying, less participative support at 1178.

This ensuing holiday-shortened, boundless football bowls week is not without some key incoming economic data, including December's Chicago PMI reading on New Year's Eve and then in turn on Friday, the first trading day of 2015, the ISM Index. In the interim, please be safe out there: we want all of our great and valued readers riding along with us in the Great Gold Machine of 2015!
A Happy and Golden New Year to Us All!

Cheers!