The Currency Nobody Wants Today
Gold $393 Silver $5.95 Wednesday 7th July, 3am Sydney.
G'day. Gold very quiet all day through Asia and Europe notwithstanding the continued softness of the Dollar. Large selling of Euro between $1.2320-50 has held it in check for the time being and it appears there are a lot of stoploss buying orders above on the break. Watching it carefully. With the Euro here, I would have thought a $410 level on gold would have been tested although there has been some resolute gold selling encountered just below the $400 level. I think we will require a clear break of $405-8 level to grab some more attention. Silver is holding above $6 for the time being and we are stuck pretty much in the middle of the range. Not surprisingly we got a nice lift in the metal equities late Friday and we should be pushing the $200 level again shortly.
The commodity and "Carry" currencies have all had a pop in the past few days including the Aussie and Kiwi. I am still surprised at the Rand strength of late and suspect the internal political landscape could well put some pressure on it in the coming months.
The above was written before Comex opened. Disregard. Gold smashed. Dollar unchanged. Go figure.
It is interesting that gold got absolutely crushed in minutes from $398 to $392.50 and the Euro moved about 50 pips. Yen was basically unchanged. Someone certainly wanted gold lower and with a thin market was able to trigger stop loss selling and the floodgates opened. I would be surprised to see gold close below $395 if the euro is above $1.2270 but now we're trading at $388 with Euro at same level. Good bids seen down here from physical and Middle Eastern buyers.
Gold is obviously the currency nobody wants today. Maybe it's the obvious global inflationary increases or the higher oil price or negative interest rates or the weak dollar or blah, blah, blah .... Of course this is the perfect gold selling scenario. Yeah right. So what's driving this move? I'm scratching my head and can find nothing to warrant such a move. Maybe the market was just a little long and we have just had a nice flush out. All things being equal, we should know very shortly.
Am hearing a fund is buying Gold PUT options (Oct 380 and Aug 390 strikes) over about 10 tonnes in total. Delta is about 30-35%. Interesting that I heard this before the violent selloff. Am now hearing selling of short dated $375 Puts in the market.
Sentiment isn't too good in gold if this, from a fellow Minyan, is any gauge.
The price action in gold is nothing less than astounding to me. The strength and persistency of what appears to be government intervention is amazing. It seems that the speculative community has given up on being long. I consider myself a member of that camp as of today. After successfully trading the futures for the past 18 months, I have taken far too many losses in the past 8 weeks to continue. I'm keeping my core positions in gold stocks and physical, but I can't fight the intervention in the futures anymore. It's too demoralizing.
I don't blame you Brian. You certainly aren't Robinson Crusoe tallying up the red ink of the past few months. It certainly appears that there has been some sort of intervention to drive the price lower, no matter what else is happening in the markets. We have seen this occur too frequently recently and I understand people's reluctance to play any more. That may be one of the desired outcomes.
As mentioned previously, this whole scene is taking on the eerily familiar shape of the London Gold Pool debacle of the late 1960's. Those who tried to control the gold price (to protect the dollar, no less) eventually lost out to market forces and Nixon's US Dollar default of 1971 was the result. The physical market supply/demand fundamentals will eventually win out, it is just a matter of time, in my opinion. I just don't know what else to say except that I am a little surprised at the lack of noise about the move in the FX markets. The gold move sticks out like a sore thumb when compared to the currency movements.
The metal equities are not as badly hit as one would imagine following such a dramatic reversal in the underlying gold price. It is certainly unusual to have the underlying metal falling further than the equities themselves. Maybe the equities don't believe this move is for keeps as they have been a good leading indicator the past few years.
I think we should see good support in gold around today's lows of about $388.50 and would be surprised if we retest $400 anytime fast, judging by the aggression and willingness of those selling. Maybe with the dollar lower again some buyers will emerge but we are 3 euro higher than we were when we last traded at $390, so I am somewhat perplexed.
How predictable was this?? ...
"The Wallabies will need a new captain, halfback, fullback and probably an outside centre for the opening Tri Nations match against New Zealand on July 17 after the in-your-face approach of the Pacific Islanders caused a long list of Australian casualties on Saturday night. Australia were bashed and battered and there were no surprises that the Pacific Islanders took several casualties with them, as they play the most physical of games, showing no mercy, especially at the tackle.
On an often wet and windy night, the busiest people at the ground were the Wallabies medical staff, endlessly attending to Australian players after they had been the victims of man-and-all tackles." ... The Sydney Morning Herald, 4 July...
Well, it wasn't quite rocket science to figure out that we'd lose a couple of players through injury. At least the Islanders are playing New Zealand this weekend. This may even up the injury list.
Ski Lodge ran a nice race on Saturday but as expected they were a little too sharp for her over the sprint distance and the time was pretty quick as well. She was beaten by 4 lengths and ran the fastest final 2 furlongs in the race. Still, there's no prize money for trying, just 1st through 4th. Looking for longer races in the coming weeks as she gets race fit.
Interestingly a few good Minyans found and reported the current bookies' odds for Exceed and Excel in the July Gold Cup in England. The first I heard on Friday had him at 10-1 and another I received on Saturday said 7-1. Minyan Hugh just sent me through the latest Ladbrokes odds and he is now 6-1. Maybe someone has plonked a few bucks down on him in the last few days. He is still not confirmed as a starter but the latest word is that there will be a decision in the next 12 hours. Good luck to Minyan Martin who got set at 10-1 as E&E would be lucky to be 4-1 in any sprint race in Australia. There are obviously a few doubts as to his fitness and the increased price reflects the risk. A risk I have taken on board as well.
Enjoy the rest of your day....
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