Friday, March 2, 2012


                                            Innocence Is Bliss

I got one question for all of you readers who live on the Pacific Rim in Asia. I’m talking to those who live from Japan to Australia.

Why oh why do you have to religiously buy gold every single night taking XAU higher and therefore allowing the Central Bank gold cartel [JPM & HSBC to name just two] the opportunity to sell it [and fade you in the process] in Europe and the U.S.?

Do you guys ever sell?

Hey, here’s an idea: stay up late some night and buy it during European and U.S. trading hours and get it cheaper.

The algorithm continues to struggle under the types of conditions we have seen in the last month. We have either had days where no volume or much activity has taken place, and therefore the data basically “collapses on itself” and it doesn’t take but a buck move to generate a signal, or we have ‘postal volatility” and every stop you put in is going to get “hunted” no matter where you put it.

Until the market resumes under more normal conditions, you have to pick your spots and use the algorithm as a guide. Make your trades count. This may mean you miss some trades, or even not trading for the day. So what? Would you rather have your account down significantly? I didn’t think so.

Today, most of Europe and Asia was a dead affair. In the U.S. session we basically had about an $11 range [1716 – 1705], but we had 21 5M candlesticks $3 or over in range to 1:30 PM, and look where the market is; it’s nowhere, stuck around 1712.

Rumor has it that some Asian hedge fund [via JPM] sold 30 metric tonnes of gold on Wednesday. Next time guys give it to somebody who can sell the gold and get good prices. Why would you use JPM?

The last time the gold market had a big selling debacle [September 2011], it took the market about 21 business days before it recovered. Expect a test of the lows from Wednesday, and maybe even “another shoe to drop” in the upcoming week. This is what I’m looking for, and why today’s prices weren’t good enough to get me long; even for just a trade. I’m pretty sure we get a test of 1700 again and maybe even 1685. After that, 1654 is pivotal. We’ll see what happens.

Have a good weekend everyone.


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