Thursday, December 8, 2011

Here's a fascinating item just in from Rick's Picks forum regular Roger Erickson: 3:26 PM Gold leasing rates are at record lows, driven down by French and Italian banks lending the metal in exchange for needed greenbacks. Tuesday's rate of -0.57% suggests a bank would actually have to pay for the privilege of lending its gold for dollars. A comment by 'Youngman': "Double HMMMM..this is why the price of gold and silver are down...you will never know how many times they have loaned one bar to how many entities...Probably in the 100´s....as the bank knows no one will take possession...talk about a scam.."

In today's gold tout I've sketched out the perfect 'camo' opportunity for bulls looking to get on board. If things play out as imagined, I'll establish a tracking position for your further guidance.

There's no change in my immediate outlook, which calls for a burst to 34.270 if and when that number's midpoint sibling at 32.960 gives way. A pop to 33.380 would still create an impulse leg sufficiently robust to make 34.270 an odds-on bet for the near term. Traders should consider using the two peaks just below 33.375 to leverage a camouflage ‘buy’. They are best viewed on a 30-minute chart, which can be accessed by calling up Wednesday's tout for this vehicle.

Today's commentary took notice of the most recent downleg's narrow failure to reach a compelling midpoint support. This is bullish as far as it goes, although we'll want to see further proof each step of the way. Most immediately, that would require a pop above the 1751.30 peak labeled in the chart. If the implied 'point B' peak were to fall below the slightly higher peak just to the left of 1751.30, it would set up an excellent 'camo' buying opportunity. I've sketched this out hypothetically to guide you (see inset) and will record and track a four-contract position officially if things play out more or less as sketched. _______ UPDATE (2:16 p.m. EST):  Gold head-faked its way to a fleeting peak at 1760 before collapsing more than $50 to a so-far low at 1707.80. There was an opportunity to get long via 'camouflage' for the final upthrust, but you'd need to have been nimble to come away with a profit. Now, my minimum downside target (5-min) is 1703.10, the Hidden Pivot midpoint of A=1760.50, B=1711.70 and C=1727.30.  My very strong gut feeling, however, is that the 1633.00 midpoint support of a larger pattern drum-rolled here earlier will need to be achieved before February Gold can try to find traction.

Shorts have turned catamite, allowing themselves to be brutalized and tormented no matter what the supposed news from Europe. The result has been a nervous dither beneath November's key highs that's looking increasingly like a consolidation. From a trading perspective, entering on any b-c pullback from somewhere between the two labeled highs looks like it can't miss. The buy-stop entry signal at 'x' is likely to come quickly, though, so you'll need to be alert to catch the opportunity.

Comex Gold has taken some wicked turns in recent days, none more promising than Tuesday’s 1705.70 low. We were looking to buy near there ourselves using a technically derived bid at 1702.60.  However, when the futures trampolined from a low that lay $3 above our bid, we came up empty-handed.  Even so, from a technical standpoint the price action was encouraging, since we regard any trend up or down that fails to reach its “Hidden Pivot” target as the last gasp of that trend.  In this case, under the rules of our proprietary forecasting and trading method, 1702.60 became the calculated ‘p’ midpoint support of the ABC pattern shown. Although we expected a very precise hit because the pattern itself was so clear and compelling, the fact that bears were unable to push the futures down to the target suggests they are tiring. But not quite down for the count. Before we assume this to be true, we require that the current rally create a bullish “impulse leg” on the hourly chart and continue to its ‘D’ target.  That means the futures will need to hit 1754.80 today, nearly $8 above yesterday’s high, to give bears reason to be nervous. As traders, however, we’ll be looking to jump on the February contract Wednesday night or Thursday on any rally that pokes above 1751.30, since that would generate a fresh “impulse leg” for February Gold on the hourly chart.  Under this scenario, the ideal trade entry would come following a pullback from a tick or two above 1751.30.  Any higher would make the breakout too obvious to too many, creating a traffic jam for bulls. The specific technique we use to leverage very subtle breakouts is called “camouflage.”  If you’d like to know more about this method, which can help reduce