i'm interested in your thoughts on yesterdays UST sale by Ben. was this part of OpTw since he was selling short term bonds the proceeds of which will be invested in longer term UST's? what perverse effects on the markets do you think this will have?
i think there is a bigger story unfolding here. personally, i think TLT has topped. i believe in symmetry and patterns. note the small double top with the right top just higher than the left top? where have we seen this before? oh yeah; gold! my TBT short has been doing well the past several days and i'm into that big. i think this was a sell the news event much like late last year when Ben announced QE2. this could be a big winner in the biggest bond bubble of all time.
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Any asset can function as money when better or more convenient options have been exhausted. Gold is a real/physical asset whose primary function serves as money.
When I call gold an asset, it can be assumed that I mean: a real, tangible, effectively indestructible, counterparty-less, turn it around in your hand and see it for yourself, value imbued throughout history, closest thing to abstract representation of money in the physical world, absolute best physical option for use as both store of wealth and metric of value, won't kill you or disappear in a puff of smoke, consistent asset.
Real estate requires maintenance, paper burns in flame, wheat can be eaten, oil is highly toxic, rocks are very common and manufactured tools don't have the same value for everyone. Maybe gold could be called a real derivative? Productivity and wealth created by the use of other assets and labor flow into it, yet it's still a physical object with decentralized control and ownership; the original Bitcoin.
I'm going to quote this next time.
its a good quote.
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For the week ending today, October 7th, looking only at the price gives a heavy picture. It's reasonable to expect further gold price drops in the immediate future. Combining price with volume, the direction is less certain, throwing almost a 50/50 chance. This is where open interest is critical, despite the fact that it's only the OI for the COMEX futures. For as long as it remains the dominant futures exchange, it is a basis for overall global market trading comparison.
As discussed yesterday, the open interest has been declining gradually - almost no forced or panic liquidation since the end of last month, and even that wasn't very significant in size. That measured decline is normal, whereas a sharp drop would be leveraged players being squeezed out or underwater longs cutting losses. What this means is that it's virtually a certainty the remaining contracts are what form a normal baseline for the market, like hitting bedrock while digging through topsoil. Further liquidation of size is therefore simply not in the cards.
From analysis above, it's easy to see that price is important, but it is only one metric. It's a representation of capital flow. Volume is necessary to determine the overall strength of capital movement. Open interest provides a measure of how much movement is left. It's entirely possible to use only the latter two as trading guides (V & OI), but then you wouldn't have any way to know how much you gained or lost when closing a trade.
In the middle of a move, it's possible to use the above three factors to gauge how far the shift can go in either direction. When at extremes, they show the buying and selling ranges. I prefer certainty over just getting the "feel" of a market. The way I see it, advanced price chart analysis in the form of Elliott waves and such (beyond trendlines and Fibonacci levels) are attempts at extrapolating the interplay of volume and open interest from the price itself. That makes sense for equities and other asset classes, but why bother with divination when those values are readily available for commodity markets?
As discussed yesterday, the open interest has been declining gradually - almost no forced or panic liquidation since the end of last month, and even that wasn't very significant in size. That measured decline is normal, whereas a sharp drop would be leveraged players being squeezed out or underwater longs cutting losses. What this means is that it's virtually a certainty the remaining contracts are what form a normal baseline for the market, like hitting bedrock while digging through topsoil. Further liquidation of size is therefore simply not in the cards.
From analysis above, it's easy to see that price is important, but it is only one metric. It's a representation of capital flow. Volume is necessary to determine the overall strength of capital movement. Open interest provides a measure of how much movement is left. It's entirely possible to use only the latter two as trading guides (V & OI), but then you wouldn't have any way to know how much you gained or lost when closing a trade.
In the middle of a move, it's possible to use the above three factors to gauge how far the shift can go in either direction. When at extremes, they show the buying and selling ranges. I prefer certainty over just getting the "feel" of a market. The way I see it, advanced price chart analysis in the form of Elliott waves and such (beyond trendlines and Fibonacci levels) are attempts at extrapolating the interplay of volume and open interest from the price itself. That makes sense for equities and other asset classes, but why bother with divination when those values are readily available for commodity markets?
this is all good info. we all use our own tools. i agree the pm charts look heavy. my interpretation however completely disagrees with yours. no surprise. i interpret the decreasing volume along with slowly rising price as a warning; a divergence as i've drawn on the chart below. todays action was very bearish to my eye and we could soon rollover again. you can even see a crossover on the stochs and a rollover of the RSI
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I will if you can explain how gold itself is a Ponzi scheme when it promises nothing nor returns anything. What is the dollar, if not a Ponzi scheme - a promise that pieces of paper have exchangeable value even though the material itself has no unique physical properties?
you're right. i've used the same argument for Bitcoin.
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Wait... are you advocating faith? Where are these lines of buyers for gold? You're right that the decision comes down to the individual. This entire thread has been an excellent opportunity to test theories, assess assumptions and reaffirm conclusions; not to mention it's been entertaining as well. Thanks!
no, thank you!
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didn't you say several times that the once the avg Joe comes to the party the price will skyrocket?
Yes. Where is he? Busy working, unemployed, going back to school instead of reading all about gold and finance?
precisely why i don't think he's coming to the gold party. i still think we've topped in gold and silver. the silver chart break just looks too ugly to me with 2 sharp breakdowns. silver and the stocks lead gold as well.
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b/c Iseree said so. 
LOL - well, that changes everything.
Enjoy the weekend!
i didn't mean to be dismissive here but my rationale is based on just what you hate most; technical analysis.
i think the pm's have topped as i said above. they still represent a good short. i think TLT may have topped as well in a long term double top. i own TBT in a big way as a short.
and here's the kicker; i agree with Iseree in that i think stocks rally from here based on the following chart divergences and volume analysis as i've drawn and my cycle analysis which shows a confluence of different cycles bottoming right here. i know it sounds crazy and impossible and i may be wrong but i think we get one more bounce in stocks for a few months and then we get the big down leg where everything gets in gear to the downside with the $DXY skyrocketing. if stocks rally then the $DXY may come back down to test the consolidation channel from where it broke out. next week will be big in that if stocks do a nosedive down out of the bear flag then everything i just said is wrong and we go straight to hell from here.
if you need a reason stocks might rally then think about where the money coming out of gold and UST's needs to go. i don't think it just goes to USD cash just right now. i think it goes to stocks which are oversold at this point and at a prime cycle point to turn up. despite all the bad news. but after this rally armageddon begins.
