Thursday, September 10, 2009

The short-term picture would turn mildly menacing if December Gold were to print down to 981.40 today. There were no promising handholds for nightowls as of 7:10 p.m., but I'd suggest looking on the 5-minute chart if you are seeking camouflage to get long with a penny-ante stop-loss.

Our offbeat "strangle" in Goldman is starting to work, since the September 170 call we bought for 2.00 traded as high as 3.40 yesterday.  Its purpose was to slightly leverage the upside, thereby lowering the effective cost of four Jan 130 - Oct 130 put spreads that we also hold (for 3.40 apiece). Today only, offer the call to close for 4.80.  If the order fills, it will reduce our cost basis on the spreads to 2.70.  

My minimum downside expectation is still 76.05, a Hidden Pivot that you can  interpolate for trading purposes in whatever way you choose.  If the support is breached, look for the weakness to continue down to at least 75.57.

The futures blew past a 2.9048 midpoint resistance so easily that we should infer that the _____ Hidden Pivot target with which it is associated is very likely to be achieved.  A pullback to the midpoint should be viewed as a buying opportunity, but I'd wait for the turn higher, assuming it comes, so that you can board on a "camouflaged" signal.

With the G-20 meeting in Pittsburgh just two weeks off, we didn’t expect gold’s widely anticipated push past $1000 to be a piece of cake. Indeed, Bernanke & Friends are probably throwing everything they’ve got at gold right now to suppress its price. And for all we know, Uncle Sam has loaned every ingot (supposedly) in Fort Knox to carry-traders at J.P. Morgan and Goldman Sachs. The ability of these well-connected bullion bankers to borrow more or less unlimited quantities of physical gold is for them even better than a license to print money, since money itself is most surely not what it used to be. The feather merchants have repaid the government’s kindness by sitting on gold futures prices. This price-fixing operation is all the more impressive because its perpetrators have managed so far to peg bullion to $1000 even though the U.S. dollar has broken some key technical supports in recent days. This is quite a trick, but there are some powerful reasons why the bankers are not likely to prevail in the end. For one, strong and persistent global demand for gold has been feeding on mounting fears concerning the dollar’s integrity. Those fears are not about to abate any time soon. Consider who is in G-20 besides the U.S.:  South Korea, United Kingdom, Russia, Canada, France, Germany, Japan, Mexico, Italy, Brazil, China, Turkey, Vietnam, Iran, Indonesia, India, Egypt, Philippines, Nigeria, Pakistan and Bangladesh.  How many of those countries do you think are comfortable sitting on a growing pile of U.S. dollar reserves? The answer, even including such Friends of Bernanke as Japan and Britain is: zero.  Bernanke’s Cronies Bernanke may be working behind-the scenes with a couple of G-20 cronies to keep a lid on gold, but all of them (except Great Britain, perhaps, which has shown

The futures look like they are still on track for a predicted surge to 1053.00, although the bullish argument would weaken if they haven't accomplished this by Friday.  Although the September contract failed to push past some key, late-August highs near 1038.00, most of the action took place close to those highs and well above the meatiest part of the supply zone beneath them. Night owls can try bottom-fishing at 1029.75, a midpoint pivot, using a stop-loss no wider than 1.00 point. If the trade works, consider taking partial profits or implementing a trailing stop as early as 1033.00. _______ UPDATE (1 a.m.): The pullback went no lower than 1030.75, missing our bid by a full point. Signs now point to a minimum ______, or _____ if any higher. Either can be shorted by scalpers using a very tight stop-loss, but you'll be on your own thereafter.