Tuesday, September 22, 2009

The Beat Goes On

Gold AND Silver bounced hard overnight Monday into Tuesday as the US Dollar was given a thrashing in the Asian markets. Shorts in the markets covered quickly and furiously as the Dollar fell towards new lows on it's move down towards the abyss.

The fact that the sudden rise in both markets was curtailed as the Precious Metals went on the clock in New York was somewhat telling. Where are the "real buyers"? Short covering is the only buying Gold has really seen up here above $1000. These markets need "real buying" from investors up here to push Gold over the hump. Real buying in volume would force a major short squeeze in these markets. Absent that, bullish sentiment may evaporate quickly, and allow the shorts to press their advantage here.

The Reason Why Gold Hasn’t Skyrocketed.(new video)
By Adam Hewison, President, INO.com
With the printing presses in full printing mode, many people are questioning why gold prices haven’t gone higher - much higher.

In my new video, I explain some of the subtle market cycles that are at play right now in this market. These short-term cycles have been the dominant force in gold all year and appear to be still in control of price action.

I believe the longer-term upward trend in gold is very much intact; short-term we could see more of a trading range that has a downward bias. I think when you watch this video you will get a much better understanding about the rhythm of this market.

If I am correct, you will see some amazing opportunities that I believe will be presented to traders in Q4. In fact, if everything goes according to plan are we could all be looking at some very nice Christmas/holiday profits.


This an EXCELLENT video chart presentation. Adam builds a solid case for a near-term reaction in Gold and a move to new highs by Christmas. I encourage you to watch it in its entirety.

Got Gold Report: Gold, silver stage at new heights
ATLANTA – Gold spent almost the entire week above the psychologically important $1,000 level. Up to now trips above that benchmark had been fleeting. A quick look at the two-year gold graph still paints a bullish technical picture, but some of the indicators we follow can’t confirm that story … at least not just yet.

Breakout attempts are always dicey, always a little scary and they rarely launch higher without a significant retest of the breakout at least once shortly after the event. Trouble is, speaking on a very short-term level, that breakouts above important, long-established, historic resistance fail about as often as or even more often than they succeed.

Even more trouble is that bearish technical interests love failed breakouts even more than bulls love the originals. Jack Schwager, pro futures trader, technical analyst and author of several books on technical analysis says, “A failed signal is more reliable than the original signal.”

Just as bullish interests now await gold to print something above $1,033 in order to press the upside, an entire boatload of other actors are watching the action ready at a moment’s notice to pounce on the metal should the current breakout above $1,000 “give it up.”

In order for the yellow metal to continue higher it will take buying, new buying and lots of it in order to overcome the intense amount of selling by the largest of the largest gold futures actors. Instead of blasting higher on massive short covering once it cleared the four-digit barrier, gold has set up a “high flag” and the most visible short side players are adding to their net short positioning in record amounts as if convinced that gold has more downside than the opposite. (Much more about that in the Gold COT section.)

Gold is acting like everyone is waiting for the new buying to occur. Waiting for “something” to happen. Gold is waiting for the “trigger event,” … the “switch to be thrown,” … “the next wave of buying.”

The most bullish of analysts are giddy and cocksure, certain that we have embarked on the next leg much higher. The usual cadre of veteran bearish market watchers are just as convinced that gold has reached stratospheric nosebleed territory and claim the short-dollar trade has too many people on one side of the trading boat.

Meanwhile, most of the indicators we follow are acting the same way, as if they all now hail from Missouri and will wait to be shown that this is the “Big One.”

Technically speaking, both the gold and silver charts remain bullish, but unless the large numbers of new buyers show up soon, bullishness will very quickly morph into nervousness in the hottest of hot money that have joined the party in the wee hours of this breakout attempt.

Silver Investigation Update
By: Theodore Butler
Yesterday, I received a number of emails from readers who had been communicating with Commissioner Bart Chilton of the Commodity Futures Trading Commission. Obviously, Commissioner Chilton intended this to be made public and I do so here. My comments will follow.

Statement of

Commissioner Bart Chilton

Regarding the

CFTC Investigation of Silver Markets

September 21, 2009

It has now been one year since the Commodity Futures Trading Commission initiated its investigation of the silver markets. In that time, it has invested over 2,318 staff hours in this investigation, 32 individual interviews have been conducted, and approximately 40,000 documents have been reviewed. We have worked with our colleague regulators in the United States and in other nations. In addition, the agency has taken the extra step of engaging an eminent outside expert to assist in its analytical review of this matter. In sum, we’ve put an incredible amount of energy and resources into this effort.

While there are some who I’m sure wish these things could be accomplished faster, let me assure them that we are far from over in our aggressive investigation of this market. Our Division of Enforcement is leaving no stone unturned to ensure that, if there is any illegal activity going in silver, we will find it and we will prosecute it to the fullest extent of our authority under the law.

In the meantime, we have moved in a new direction with regard to assertive and uncompromising oversight of commodity markets in furtherance of the Agency’s mission to protect consumers and markets. In that vein, we have recently completed three days of hearings regarding positions limits and hedge exemptions. In those hearings, we heard from academics, exchanges, end users, commercials, and non-commercials. After hearing their testimonies, it is clear that new authorities in this area, combined with legislative changes to enhance the agency’s oversight in the OTC arena, could significantly increase market transparency and our ability to protect against fraud, abuse and manipulative activity. Accordingly, I am hopeful that, should new authorities be promulgated in these areas, that they would also extend to the metals markets as appropriate, and I will continue to work toward that objective.

I think the intent of Commissioner Chilton’s statement may be different than first assumed. I don’t think it was solely intended to provide an update to those who had been inquiring about the investigation. I think it was intended as a warning to the shorts. Intention aside, the message to the big shorts is that the Commission is taking allegations of a silver manipulation seriously. That’s because the evidence is compelling. Taken together with the no-nonsense approach and pragmatism of the new chairman, Gary Gensler, the message is clear. Be short silver at your own risk.
International Forecaster
By: Bob Chapman, The International Forecaster
To borrow from an old joke about politicians, we ask our subscribers if they know how to tell when Helicopter Ben Bernanke, the current Fed Head, is lying. Answer: Whenever his lips are moving. Now we hear from the Dollar-Destroyer that our recession has technically ended (heaven forbid that we should call our current Fed-caused calamity a depression, which is what it has been since Obama took office). So we guess that we should take his word for it, seeing that every call he has made during his short tenure as Chairman of the Federal Reserve Board has been 100% wrong.
Surely you're joking, Mr. Bernanke!!! Apparently, we are just supposed to ignore our tanking dollar, rising unemployment, ever-weakening consumer spending (which only accounts for 70% of our GDP), a moribund real estate market, trillions in losses lying dormant in the zombie bank mark-to-model scam, not to mention all the off-the-books losses in derivatives pawned off on bank customers after Glass-Steagall was repealed as well as a glowing, smoking Quadrillion Dollar Derivative Death Star waiting to go supernova to the tune of tens of trillions in losses that will vaporize the entire world banking system thanks to the total deregulation of OTC derivatives courtesy of the Commodities Futures Modernization Act. Then there are the ongoing multi-trillion dollar money siphons in Iraq and Afghanistan, thousands of banks, including all the "anointed" legacy banks, that are buried in derivatives and about to fail, a bankrupt Social Security System, a totally naked FDIC, a Fed printing trillions of dollars out of thin air, in secret, without any accountability, and future multi-trillion dollar budget deficits being incurred to keep a totally comatose economy on artificial, taxpayer-sponsored life support. If that sounds like the end of a recession to the people on planet earth, then beam us up Scotty, we're on a planet full of psychopaths suffering from hallucinations and delusions of grandeur. Oh, and Scotty, make sure you remember to beam our gold and silver up with us. We're certainly going to need it the next time we come back to Planet Earth for an exploratory visit to see if the collective, ongoing phantasmagoric, mushroom-induced hallucinations of its inhabitants have finally run their course.

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