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Daily Digger - Tuesday April 19, '05


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You know what - last April was a retest of monthly support in the 80 area

 

between 110 and 80 is the trading range and we just hit at the lower range of it in the 86 area and some support from that cause from last April

 

if we are trending we won't hit below the 86 area or go to 80...

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brief comment:

"Secondly, commercial futures traders remain heavily short in gold. They are very apt at timing the market. For the past four years, every time they have been heavily short gold the metal has dropped. They have also covered at major bottoms timing them correctly too. It doesn't pay to bet against them.

 

When gold hit 410 in February, commercial traders covered their positions. But as gold rallied back up towards 450 they piled on new short positions. What is troubling is that, even though gold has been dropping for the past four weeks, the commercial traders have barely covered at all. As of April 12, 2005, the commercials are 142,000 contracts net short. Bottoms haven't come until they have been net short much less, 40,000 - 75,000 contracts. It will likely take a drop in gold to at least the 400-410 to cause them to get their short positions to that lower level.

 

We are in a short-term downtrend and downtrends come to an end in one of two ways. Either they end in a final selling climax or in a slow base building sideways process. That would mean Gold would have to fall to 410 or even below it, with the XAU gapping down big one morning and then reversing on high volume to rally into the close. This is exactly how the gold bottom came a year ago in May. Downside for the XAU is probably 10% from here, with a fall of around 5% most likely."

 

http://www.wallstreetwindow.com

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Is it possible that a run silver could lead a run in gold and drag the miners higher? Silver seems like it's ready to pop to me.

 

Hamilton addresses COT data over on Gold Eagle with some multi - year charts. Not quite as daunting as it appears. Although I won't be one to argue with its' accuracy lately.

Sometimes when you settle in and get used to a certain indicator it changes on you. I hope they get caught.

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KRY and GRS are the first stocks worth mentioning to regain bullishness. NEM and Zow (my proxies) turned ST postive yesterday morning and are now trending up.

 

Sinclair talks about valueing miners - should not be based on cash flow, but on metal in the ground. Both GRS and KRY don't make money but are sitting on huge deposits.

 

Maybe the game is on. :)

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