Nice charting there. The top right chart looks a bit more scary if 780 gets taken out. 780 is very important as it is horizontal support from November. If that level gets busted on a NY close, then 740 comes next. I would also watch Copper as well since I believe that the losses could really pile up in the base metals as we enter the new year. If the DX can settle over its 50DMA for more than a few days, then the pain will be very severe for commodities bulls...
February Gold (ZGG8)
- Thread starter Realist
- Start date
Nice charting there. The top right chart looks a bit more scary if 780 gets taken out. 780 is very important as it is horizontal support from November. If that level gets busted on a NY close, then 740 comes next. I would also watch Copper as well since I believe that the losses could really pile up in the base metals as we enter the new year. If the DX can settle over its 50DMA for more than a few days, then the pain will be very severe for commodities bulls...
Help me get this straight: Growth down, equities down, metals down, interest rates down. Where the heck do I put my money?
US T-Bills. In a destructive bout of wholesale liquidation by global fund managers, they are forced to put themselves in a much higher cash and bond allocation and hence the 91-Day US T-Bill rate plummets. This is now occurring in the exact manner as it did in early 2001. The dash to cash unfolds the entire story right before your very own eyes...
Thanks, and I agree that the 780 area is key. It can actually be traced back to the weekly closing high back in May 06. I am already short and will be until the downtrend line on the daily gets taken out. But if it closes below the $780 area I think it's good to $760 and then the $720 to $730 area IF the $760 support fails. I'll add to my short position at each support level if they should fail.
No predictions here, just trading it as it goes.
Good luck.
Sorry to belabor this, but if interest rates are down, T-bill returns can't be enough to offset inflation. And if you're about to point out that inflation (prices) will come down in a recessionary climate, think stagflation, especially at 4.25%. I also believe that peak oil, peak water, peak grain, and peak just about everything is going to make this inflation permanent and worsening -- that is, until we switch to Soylent Green.
Seriously, I don't see how to preserve my wealth in this climate short of rolling the dice at Vegas, or the stock market, as the case may be.
Seriously, I don't see how to preserve my wealth in this climate short of rolling the dice at Vegas, or the stock market, as the case may be.
The object is not to chase returns but rather to preserve capital until the markets return to a state of bullish posture to deploy funds. I expect the $IRX to go back to 2003 rates over the course of the next couple of years as the Fed will continue to cut rates but only when the markets experience extreme bouts of panic as I expect to see on the horizon. It would take a weekly close over 1525 on the SP in order to get me bullish again...
Crude also appears to be tracing out a very similar downtrend channel which is a very telling pattern of market distribution. It is quite possible that the entire complex could come off in a very dramatic fashion should more hedge funds and small specs decide to offset and exit stage left. A true flight to quality would be the likely culprit in my view...
The commercial buildup of short positions shows that they are unbuckled so far and are just as short as they were at the $846 cash high. The XAU and HUI are now leading gold bullion down just as the same signal occurred in May'06. This lag effect gave futures traders about a 1-2 week timeframe to get short gold while the gold shares were already under heavy distribution. I am considering taking a short position in gold myself very soon here as it would appear that the COT would like to push gold down to the 200EMA which is right at the 720-730 area on the continuous contract. If the DX continues to pick up bids and the Crude price resumes its trade under the 85 area then it is very likely that gold will get hit very hard imo. Fortunately I sold all gold shares pretty much right as the HUI started to trade under 400 so I was able to escape the carnage with a very small loss. I am now getting short some select gold and copper producers as I believe that a 30-40% cut is in store now...