What Has Been
A solid 2.5 years of risk management (to varying degrees) has been required of precious metals investors. It was most intensely required after the announcement of QE3, when the net commercial short position in silver began a relentless march toward a very bearish alignment in late 2012 and then the HUI Gold Bugs index lost an important support level at around 460. Here is the chart of silver with a heavy commercial net short position from NFTRH 215, dated 12.2.12:
So Jobless claims dropped by the most in over a year. The stock market is green, pre-open. That makes sense.
What makes less sense is the hard pop in gold and silver on this good economic news.
NFTRH 270 does a good job of defining what is in play for the stock market and going the other way, the precious metals, as we close out a very interesting year. I am especially intrigued by the possibilities implied by the ‘continuum’ chart (long-term T bond yields) near the end of the report, given the current state of the bond’s yield at a potential limiter in the monthly EMA 100.
If you’d like to take what you read on this site to a much more detailed level, why not try a subscription? Especially now that a 30 day free trial, with no strings attached, is being offered. If you are a pure stock trader, please do not bother. You will likely not be satisfied. But if you want to be on the right side of infinitely interesting markets going forward, have a look.
A little tag-along piece to the previous post asks whether the silver high in 2011 was a bubble (for the record, I have consistently called it a mini-bubble blow off). Using Saville’s thesis (and a log scale chart) it was not really much more than an overly frothy blow off very similar to the one in early 2006.
For anyone interested, the CoT data improved again, although silver is not yet near the level that put in the June bottom. This could best be termed a sentiment indicator I guess. Other sentiment indicators are contrarian bullish. Yet certain macro fundamentals are not. I would welcome a final event to clear the contradictions, croak the bottom callers and finally set things up for a rally or bull market.
Everybody’s afraid of the dreaded ‘taper’ and that may be just what is needed to get the inflationists out of the gold market (come on FOMC, don’t roll over on us again). They are absolutely obsessed with the money printing aspect of QE and yet not looking at yield relationships and ZIRP.
Gold and silver CoT data improved for the second week in a row.
It has been 2 years of chop, grind and drop in the gold sector. 2 years since my lousy projection on HUI’s monthly chart failed to do what the Russell 2000 still has a chance to do; measure the ‘Cup’ to an upside target.