Taking Stock : The Mayans Love Their Gold – Buy Now or Buy Later ?
I was sitting in front of the terminal, late night 28th Nov, and yakking away with my friends on line when my eyes did a double take on the Gold chart.
I witnessed the big Yellow arrow which took my breath away.
That big yellow arrow is a small arrow in the overall scheme of a longer term chart but it caught my interest because, 1. there was no satisfactory explanation in market reports that followed, and 2. it was followed by more of such drops.
For a detailed chart that captured the 4 Dec drop, click here to access a Zerohedge article.
Small headlines gave vague to bizarre reasons like, Gold falls sharply on evidence of improving US economy and COMEX trader talks of fat finger trade and speculation related to Iran-Turkey Gold Trade. Trader reports talk of chunky put option buying at around the 1,700 handle for the year end, which resulted in the sharp and short decline on gamma hedging.
It gave me cause for slight concern and netted me some small profits over the next week as I was convinced that Gold would be capped despite the decent recovery candles .
This week we have Goldman Sachs cutting Gold outlook for 2013 while UBS and Nomura see a rally into the FOMC next week.
Dragging out the correlation trades, I realise that Gold has decoupled from the Silver and EUR in the past month whilst throwing in its lot with the S&P 500 as well as 10Y UST. It just makes you go hmmm.
| GOLD vs | 3 Weeks | 1 Year | DIFF |
| ADXY | 0.367 | 0.546 | -0.18 |
| SPX | 0.718 | 0.576 | 0.14 |
| SILVER | 0.407 | 0.713 | -0.31 |
| 10Y UST | 0.399 | 0.244 | 0.16 |
| EUR | 0.32 | 0.518 | -0.20 |
| WTI | 0.454 | 0.488 | -0.03 |
| AUD | 0.574 | 0.614 | -0.04 |
| DXY | -0.374 | -0.575 | 0.20 |
| JPY | -0.125 | -0.185 | 0.06 |
I cannot bring myself to slag the Gold trade off. I cannot bring myself to bear against the best trading minds of the world, the likes of Paulson, Bill Gross, Marc Faber, Rosenberg and Soros. There is something about the safe haven of Gold that 3 out of 4 people I speak to like very much. These are investors who obviously bought the Gold run story that my banker sends me at least 3 times a week.
We are well into December and the end of the world trade. The Mayans love their Gold and so does every Chinese farmer out there, China started interbank Gold trading on 3rd Dec last week and the best reason I have…. Gold is $1,700/oz while Cocaine is $4,791/oz (and gone in a snort) – Zerohedge.
Singapore is investigating this dubious Gold deposit “ponzi-like” scheme and I am looking that the Gold medium term chart.
Damn. It still looks like 1 leg lower before I can buy anything.
Mark the Mayans, Mark $1,650, Then Load Up.