gold, page-45068

Hi guys,

I passed some positives and negatives of gold on July 15 (quoted comment) and will just try to give some updates. Please refer that comment for more detailed explanations if needed

1/ GDX

GDX was around 22 then, and I mentioned that we seem to be in bottoming territory with historical support of 21 around past 1 year. This support level was clearly destroyed. I think the fact that it was such strong support over past year led to several GDX stops also being hit. I think if someone is willing to hang on for a year, then at least 21 should be hit at some point, and I’m being exceedingly conservative .

2/ GLD

GLD was at 118 in July. I mentioned support at 115. GLD did have some support there before further hits. Stops being hit again?
https://www.finviz.com/quote.ashx?t=gld&ty=c&ta=1&p=d

3/ Gold

Gold was 1240 then. I mentioned risks of falling till 1180 and 1200. So gold fall has not surprised me. Overall with gold, GDX and GLD, there would surely be tons of stops being hit. We can hope this was final capitulation.

4/ Gold commercial hedger position

Commercials are now net only around 7400 short. This is remarkable
http://news.goldseek.com/COT/1534534115.php

Bullion banks are now in one of the most bullish trading positions in the gold market in the past decade
https://kingworldnews.com/historic-capitulation-as-bullion-banks-tighten-noose-around-hedge-funds/

Keep in mind that this data is till Tuesday I think, and does not include any further covering from Wednesday’s smash

Meanwhile speculators are now net short for first time in 17 years
https://kingworldnews.com/major-alert-speculators-now-net-short-gold-for-first-time-since-2001/
Overall a dream scenario if you believe in the commercials

5/Fed meeting

I mentioned upcoming Fed meeting (July end) as being extremely negative. I thought things could stabilize after that, but in hindsight it was a great opportunity for a gold takedown after the meeting as gold bulls would let their guard down.
Not sure now whether any rise in gold will again be halted before next meeting? Obviously a point to consider. Maybe, we could have rise now for around 2 weeks and then again a pause before the next meeting?

6/ USD

I specifically mentioned in July comment that if strong resistance of 95 breaks, then some short term panic for gold bugs could be due as USD could even appreciate to around 97-98. 97 has now already been reached, and as expected, we have had panic, although panic in GDX especially surpassed my expecations. My primary expectation is that even if USD has to go furher, then around 98 maximum would be resistance for now. Further rise and 100 would be resistance
https://www.finviz.com/futures_charts.ashx?t=DX&p=w1

Meanwhile commercials continue to pile into USD shorts
https://www.finviz.com/futures_charts.ashx?t=DX&p=d1
http://news.goldseek.com/COT/1534534115.php

7/ JPY

Commercials still have a healthy long position although I’m slightly disappointed that they have reduced it a bit.
https://www.finviz.com/futures_charts.ashx?t=6J&p=d1

Also slightly concerned if uptrend from April in USDJPY leads USDJPY to test past resistance of 114 in time
https://www.finviz.com/forex_charts.ashx?p=d1&t=USDJPY

But as mentioned in July , 88 level of JPYUSD has been strong support in past

8/ Euro

1.16 very strong level broken. But commercials have reduced almost their entire short position. Bullish Euro = bearish US dollar index as Euro is main component
https://www.finviz.com/futures_charts.ashx?t=6E&p=d1

9/ GBP

Similarly strong support level of 1.3 to 1.32 was smashed. USD has surged against Euro and GBP in particular leading to strong DXY.
https://www.finviz.com/futures_charts.ashx?t=6B&p=d1

Commercials are piling into GBP bets

10/AUD

AS mentioned in July, it is concerning for Aussie goldies that commercials continue to pile into AUD bullish bets
https://www.finviz.com/futures_charts.ashx?t=6A&p=d1

11/ Silver

Good news as big reduction in silver shorts by commercials
https://www.finviz.com/futures_charts.ashx?t=SI&p=d1
http://news.goldseek.com/COT/1534534115.php
Shorts are still more than that for gold though – so not sure if some weakness still exists

12/ Platinum and palladium

It is slightly concerning that with zero/positive position by commercials, both platinum and palladium were totally destroyed although both made massive recoveries from lows.

https://www.finviz.com/futures_charts.ashx?t=PL&p=d1
https://www.finviz.com/futures_charts.ashx?t=PA&p=d1

Such a scenario is one concern I have for gold although such a smash in gold is more difficult due to being followed closely by all central banks globally with many looking to increase holdings. Still, we’ve had such huge falls in gold and most notably in 2013

13/Buy the weakness

Extreme pessimism in gold in past has almost always led to strong gains. Could we be having a great buying opportunity here

14/Elliot wave

I specifically mentioned in July that if IMO if wave 2 is still on, then there is some risk of further downward pressure on GDX at least till 21 IMO, if not lower. 21 was convincingly smashed. IMO, a pretty good setup for major wave 3 to commence at some point.

15/ Final words

Can’t predict anything with these crazy goldies but if you believe that commercial hedgers are right and they almost always are, then we have a potentially great bottoming setup.
I’m wary of suggesting any final bottom though, as we know that things can get crazy in a final capitulation, and as we just saw, commercials sometimes take positions pretty early.

Most gold holders are exhausted. Could we have further hits to gold to 1138/1050, etc, GLD to 108, 105 etc and GDX to around 12 and 13 as of Dec 2015/Jan 2016?

Who know for sure. I thought a bottoming process seemed to be in July. Bottoming process did seem to be going on as commercial hedger position is showing just that, but not before much more pain. So I’m wary of predicting dates for bottoming and talking of immediate future.

But it does appear that if you’re holding high quality goldies, then taking a conservative stance, there could probably a good chance of at least some decent returns if you’re willing to hold for a year as commercial position across the metals and currencies seem to suggest that.

Please please DYOR.