Technical Brief: Get a Grip

PREVIEW: Flow Traders and End of Year Behavior


  1. Gold has Seasonality. NEUTRAL
  2. The December contract has a history of being annual peak price for Gold annually.- BEARISH?
  3. That does not mean we peak in December.- BEARISH
  4. Flow traders expect anyone who allocates to a market in January, adds to that position next year if it is ITM- BULLISH
  5. Buyers of Gold in January are ITM, thus Bank desks with client flow tend to position themselves for their analysts RE-recommendation to add to the positions in 2017- BULLISH
  6. Flow traders paint the picture for clients to come in and buy strength and they dump their front run positions on them- BULLISH BLOWOFF
  7. We do not see #4 to 6 as a factor at all yet- CRAP
  8. We believe that  Rate hike is coming in December  post election but signs are today showing September is on the table- BEARISH
  9. If #8 happens, that is only to reload the Fed Gun for the QE4 event. Which will have almost metaphysical certitude if JGP and EU do it first.- Uber BULLISH
  10. At the risk of beating a dead horse: this is playing out as stated thus far- Why Gold Bulls Should Want a Rate Hike- Analysis

If you are wringing your hands because of Gold's weaknss look at what its done this year. Look at the wide tether between Price and Value it has as described by DB in their report. Gold could be priced anywhere between $1700 and $900 and you shouldn't sweat it IF you value it as a monetary hedge against Forex debasement and not a religious item. More on that from our friend who needs to remain anonymous. He is a Banking Exec in the Real estate sector who we call when we personally need our hands held.

His caustic words of wisdom were:

Get a grip

Gold continues to grind higher year after year. Safes are sold out in Germany. Germans are buying safes reportedly to store marks... but soon to store gold. Everything (stocks, bonds, metal, oil) is now very highly correlated. Gold has been historically very highly correlated to oil. If oil crashes everything is going with it, except (counter intuitively) gold. 

Only an EU international banking crisis can take down the barbarous relic at this point. Even then the floor is at $900. At the current QE rate the ECB will own all the outstanding EU sovereign debt in about 8-10 years.

And we believe collect all EU Gold as a by product.There you have it. His "EU forcing Gold lower" concept is something we've discussed in the past. Basically the ECB will discourage Gold ownership by giving 100% face for BBB Greek bonds adn only 50% collateral on Gold for balance sheet purposes and access to the ECB window. And we believe it would be the ECB and the rest of big 4 Central banks buying that Gold from them. Monetize debt while taking the other side of physical pukes. You think China is the only CB buying Gold?- SK

Yesterday's Chart

Today's Update

-  H/T VBL on Twitter

Today's Chart

Other than that we are now using the Technical reports as a guideline for a bottoming area- SK

-Interactive Chart HERE


DEC GOLD Resist: 132650, 1333*, 134390* ST Trend: Down(131380) Supprt: 1313?, 1300+/- Obj: 1316- ACHD TRP: 1343.90Comment: The market remains in a downturn, hitting the primary targets at 1316, but retains a chance towash to 1300-. Corrective congestion should stay under 1333* to maintain aggressive bear forces. A closeover 1333* signals for stronger rebounds, but a close over 134390* is the key for a reversing turnaround. Aclose under 1308 will encourage follow through selloffs.

DEC SILVER Resist: 19105, 19385-1940* ST Trend: Down(1866) Supprt: 18495, 18375, 1811- Obj: 1811 TRP: 1940.0Comment: The market is in a downturn and a close under 18375 could add a wash along 1811-. Anyadditional rebounds or corrective congestion will likely stall inside Friday’s range and use sidewayscongestion to bear flag and setup for selloffs. A pop over 1914 is near term friendly. However, only a closeover 1940* triggers a reversing turnaround.

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Good Luck

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