Wednesday, February 1, 2012


                                Let’s Shed Tears For The Dealers

How can you tell trading in gold has become so bad that even the dealers are losing money?

“Please everyone; hang on a sec while I wipe a tear from the side of my eye. OK, I’m better now.”

“You mean in spite of the fact that ranges are tight, volatility low, and prices spike and drop dollars/oz. at the drop of a hat?”


Take a close look at the spread between “bid” and “offer” in the spot market and what you will see is a market “being made” not at $0.25 - $0.35 but at $0.60 - $1.00.

This will tell you 3 major things:
1)      The dealers are getting “picked off” by the bigger players in size and can’t recover the cost of providing the necessary liquidity so they have to take any measure they can to continue to make money. Therefore more space in the spread,
2)      There isn’t enough volatility in the market to make up for getting “picked off”. What we are seeing is price action within tight daily ranges, with moves coming quickly between the high and low, but not breaking out to expand the range so they can make money on exposed positions, and finally
3)      You’re retail and won’t notice.

                                          Listen Up Dealers

“If any of you dealers out there who read my posts care to send me your whining details at I will send the obligatory roses and a cheese log roll [at my expense of course] to your prop trading desks to help ease the pain.”

For the rest of the world, just realize the money “games” these vultures play when trading. As I have said repeatedly, the single most important element of trading that will make you money is “volatility”.

And when the dealers get like this, it reminds me of chop-chop floor trading amongst “locals” [exchange floor traders] who would stick a sharp knife in their own mother’s back to make $10. Noise levels increase, tempers go north quickly, fights break out, and commercials and dealers sit and are LMAO while enjoying the show.

Trading day details later today at PAMM website:

Have a good day everyone.


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