Tuesday, May 8, 2012


                                     Gold Looks Good Huh?

With the world in the condition it is in, how many more $40 drop [or more] “shoes” are still out there waiting to be liquidated? Mind-numbing boredom in the gold trade day-after-day for weeks; then Boom! All it took was 7 5M candlesticks and it was mission accomplished.

I’m going to repeat this because I think it is important: forget the Central Planners for a minute [if you can]; think more about the GLD. GLD is the ETF [exchange traded fund] that is in the top ten of gold holders in the world. Gold has been higher 11 years in a row. The market is now within about $40 - $50 of the 2011 close [1563].

What happens when all the “Ma & Pa Kettles” of the world decide it’s time to take some profits from holding gold the last [pick a number between 1 and 11] years. How does GLD sell [within two days for settlement] tonnes of gold into a weak market without absolutely killing it lower? And if that happens, won’t lower prices induce more panic selling?

Fact is, since the GLD was formed gold has been higher every year. Maybe, just maybe, we get to see what happens when the other 800 lb. gorilla in the room gets seriously grumpy and needs to sell. Think it could get a little ugly?

“Oh boy.”

Everybody [meaning blogs and pundits] talks about the day when there is no offer and gold is bid at $3,000 / oz. and there are no sellers. OK, how about when you wake up some morning and Europe is wall-to-wall riots and gold is $350 / oz. lower? If you own gold and the GLD is selling 1,000 tonnes of gold with more to come, and you own some gold yourself, what do you do? You gonna just sit there? [Maybe, but I doubt it. Why do you think it is called panic selling?]

First and foremost I am a trader. When I come to the trading table [pit or electronic] all my senses are on alert. I don’t buy hype; I try and look at things objectively and the quickest way I can make money via the algorithm. Right now, gold looks very, very sick and reminds my stomach of the early 1980’s. Talk then was exactly like it is now.

Maybe gold goes ballistic from here and ends 2012 at $3,000 / oz. All I’m saying is be prepared for something a lot lower than where we are at now.

Opinions kill.

Have a good day everyone.



  1. Chill out man.
    If you're in PMs as a trader then you deserve ulcers. If you're in it for the long haul then you go about your business and realize it could be very volatile for the time being.

    If gold bugs intuitions are valid then the world economy will turn to Gold (at some point,in some manner) as a reference point to the fiats.

    Reading Jim Willie today, he outlined a possible scenario. Yep, it's something along the lines of what I'd figured would happen.

    More deterioration needs to happen first though, as Jim Willie (and fofoa) have stated ... gold price as seen in the current (corrupted) paper markets could actually go down in the short term.

    And traders ...fuck traders. Speculators piling on lemming like, looking for an easy buck are what screws things up for everyone.

  2. Chill out? I've been trading gold since 1979; I think I can handle it. No ulcers or health problems here. I guess I must be one of the guys who screws things up for everyone. Oh well.