Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21
Ultimate Gaming and Home Working PC System Build 2021 - 5950X, RTX 3080, Asus MB - Scan Computers UK - 7th Jan 21
Inflation the bug-bear looking forward through 2021 - 7th Jan 21
ESG ETF Investing Flows Drive Clean Energy to Fresh Highs - 7th Jan 21
5 Financial Market Surprises in 2021 - 7th Jan 21
Time to ‘Reset’ Your Investment Portfolio in 2021? - 7th Jan 21
Bitcoin Price Collapses almost 20% at the start 2021 - 7th Jan 21
Fed Taper Nervous Breakdown - 6th Jan 21
What Will the U.S. Dollar Ring in for 2021? - 6th Jan 21
Stock market frenzy- Ride the bandwagon but be sure to take along some gold coins - 6th Jan 21
Overclockers UK Custom Build Gaming System Review Heat Test and Final Conclusion - 6th Jan 21
Precious Metals Resuming Bull Market, Gold, Silver, GDX Trend Forecasts 2021 - 5th Jan 21
Trump’s Iran-COVID-Gate Anniversary  - 5th Jan 21
2021 May Be A Good Year For The Cannabis / Marijuana Sector - 5th Jan 21
Stock Market Approaching an Important Target - 5th Jan 21
Consumer Prices Are Not Reflecting Higher Inflation; Neither Is The CRB - 5th Jan 21
NEW UK Coronavirus PANIC FULL Lockdown Imminent, All Schools to Close! GCSE Exams Cancelled! - 4th Jan 21
The Year the World Fell Down the Rabbit Hole - 4th Jan 21
A Year Like No Other for Precious Metals… and Everything Else - 4th Jan 21
The Stocks Bull Market is Only Half Completed - 4th Jan 21
An In- Depth Look At Gold Price Trend - 4th Jan 21
Building America Back After a Dark Covid Winter - 4th Jan 21
America's Dark Covid Winter Ahead - 4th Jan 21
Buy a Landrover Discovery Sport in 2021? 3 Year Driving Review - 3rd Jan 21
Stock Market Major Peak in Early April 2021 - 3rd Jan 21
Travel and Holidays 2021 - Flight Knight Cabin Bag Review - 3rd Jan 21
�� Happy New Year 2021 Fireworks and Drone Light Show from London and Sheffied - BBC�� - 2nd Jan 2
The Next IMMINENT Global Catastrophe After Coronavirus - 1st Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Bullion vs Paper Gold, Rock Crushes Scissors

Commodities / Gold and Silver 2010 Sep 27, 2010 - 11:48 AM GMT

By: Captain_Hook

Commodities

Best Financial Markets Analysis ArticleYou may remember my commentary entitled Paper Cover Rock from the end of July in which the game ‘rock paper scissors’ was employed to illustrate how at the time our bureaucracy’s price managers (the bank cartel, etc., call them what you will) crushed gold (and silver) going into August options despite excessive bearish sentiment at the time to prove a point, the point being prices will be contained no matter what. The idea here is paper pricing mechanisms (they are not true markets because of heavy manipulation) the bureaucracy uses to price precious metals (COMEX in this case) were successful in keeping prices contained in July, hence the title ‘paper covers rock’ at the time to reflect the outcome. Again, this was the outcome despite lopsided bearish bets at $1200 and above in COMEX Gold open interest put / call ratios, a primary measure of sentiment, that was suggestive prices should have been squeezed higher going into expiry, not the other way around.


Why did this occur? For me, where I have been a student of precious metals investing for over 20 years now, there could have been only one answer, and we are seeing this thinking proved in recent backwadation and rising lease rate episodes, with more to follow if stubbornly firm pricing is any indication. And the answer is physical demand (rock) is finally crushing the influence of COMEX (the scissors), hence a change to rock crushing scissors in the game. (i.e. physical demand outstrips paper market shenanigans in price discovery.) This of course does not mean that the influence of the various paper pricing mechanisms (COMEX, LBMA, ETF’s) will not be felt in the trade, however it should mean the negative influence these mechanisms have had throughout the years would be lessened, if not nullified at some point with physical delivery defaults, paper market trading halts, and possibly even catastrophic loss due to fraud in the paper markets that our wonderful bankers will undoubtedly attempt to pass on to the public in one way or another. (i.e. never hold your core positions in paper gold.)

So the question begs, are we at a point where the great inflation / deflation debate, which appears to be heating up at the moment, is finally answered with a decisive breakout higher in precious metals? (i.e. which would be taken as a ‘buy signal’ on system wide inflation.) Well, if money supply measures keep accelerating higher in front of the election, which on it’s own has price managers watching price stability by the second; this is what we should get all right. Thus, the fundamentals, the ones that can tip the balance, and naturally include the demand / supply situation, appear aligned and appear positive moving forward. And, undoubtedly much to the chagrin of our price managing bureaucracy, technicals also support higher prices in the intermediate term, were once the present short-term consolidation is complete (this may have ended yesterday), prices should serge higher once again led by the shares. In this regard you should know that as long as small share to large share ratios are rising, little doubt exists in this regard.

What could cause such an important breakout higher? How about a commercial short squeeze just like the one witnessed in 2007 that sent prices zooming. We are in position for this right now with money supply growth notching higher set against an almost record commercial short position, as seen here in the most recent bank participation report that witnessed a $28 million increase in precious metals related derivatives. This is how they cap precious metals prices you should know, with what they perceive as a limitless paper currency supply that can be used to suppress gold and silver prices. There’s only one problem with their thinking. Eventually they will run out of the physical commodity by keeping prices artificially low. This is a ‘dream trade’ for anybody who knows what he or she is doing because you are essentially arbing physical against a paper market that is out to lunch. This is of course why silver appears set to launch on the charts. (See Figure 1)

Figure 1


And what’s worse for our price managing bureaucracy is even their paper games are catching up to them as well, with investor / speculator sentiment cooling towards the metals recently, which we have well documented. In this regard you should know the open interest put / call ratio (seen here) for GLD shot up to 1.08 in yesterday’s reporting, where if this trend is maintained into ETF options expiry on Friday, would keep a good bid in gold. In fact, with the Gold / Silver Ratio at what will likely prove to be some degree of support, expect gold to outperform over the next few days or weeks, especially if stocks swoon post options expiry this week with the support of rising open interest put / call ratios. (i.e. you should know the ratios have generally been rising over the past few days accounting for the strength in stocks.) And as denoted above, this pushed silver to support on the Gold / Silver Ratio, which when viewed flipped around means silver is now in a position to breakout against gold. This can be seen clearly on the monthly Silver / Gold Ratio plot from the Chart Room, attached below for your convenience. (See Figure 2)

Figure 2


Further to this, once silver takes out the old highs at $21 on a sustained / closing basis it will be onward and upward from there, with the structural measure indicated on Figure 1 suggestive the present intermediate degree sequence will produce a move above $30. This is the target I would expect to see hit by Christmas as the strong seasonal period draws to an end. In the meantime however, which might be this week, as mentioned above it will need to better $21 on a lasting basis. The first stab at this metric could come quite soon considering overnight strength could panic the shorts in New York at the open. We may finally see a gap open on the New York charts today with the price management job yesterday such a failure, setting the stage for a squeeze aided by ETF buying. A close in gold above $1262 today or tomorrow would signal a move to $1300 this week, which is fait accompli given the sentiment backdrop in my books. Firm stock markets will provide the liquidity, and increasingly negative sentiment will provide the other necessary ingredient in a winning combination for higher prices. (See Figure 3)

Figure 3


Unfortunately we cannot carry on past this point, as the remainder of this analysis is reserved for our subscribers. Of course if the above is the kind of analysis you are looking for this is easily remedied by visiting our web site to discover more about how our service can help you in not only this regard, but also in achieving your financial goals. As you will find, our recently reconstructed site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts, to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented 'key' information concerning the markets we cover.

And if you are interested in finding out more about how our advisory service would have kept you on the right side of the equity and precious metals markets these past years, please take some time to review a publicly available and extensive archive located here, where you will find our track record speaks for itself.

Naturally if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line. We very much enjoy hearing from you on these matters.

 

Good investing all.

By Captain Hook

http://www.treasurechestsinfo.com/

Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2010 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

Captain Hook Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Paul
06 Oct 10, 14:11
Re..

Forget Gold, Buy Silver!


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules