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July 27 - Gold $424.30 up $1.40 - Silver $7 up 2 cents
August Will Be A Humdinger For Gold And Silver
"Good judgment comes from experience; experience comes from bad judgment." --Mark Twain
This is just the kind of day we needed to really shore the gold market up. Gold was hit early, falling to $421.30, and then turned right around to pop to the upside. Nothing better than a lower opening, a quick jolt down, and then a reversal like we had today. It cleans the market out and firms it up technically for an accelerating move higher.
Confirmation this market is sold out is the gold open interest number which revealed 8525 longs running for the hills. The new OI is 256,886, which is what Dan Norcini was looking for weeks ago. In the recent past gold has bottomed when this number went into the 250’s.
One other point which adds credence to the notion gold is sold out: Yesterday’s volume was very heavy as the funds dumped longs. For gold to only drop a couple of bucks was actually constructive. If that is the best the bears can do on that much volume, they are in trouble.
The Gold Cartel has fleeced the funds for the zillionth time. They were sellers again today on the lows. However, some smaller funds were buyers.
This sort of fund liquidation going into first notice day is just what the floor was waiting for before turning bullish. Our sources say gold rocks to the upside in August.
The bad guys stopped gold cold again at $426 with heavy offers. Once gold clears that level on a closing basis, we should be off to the races.
August gold (has put in a rounded bottom)
http://futures.tradingcharts.com/chart/GD/85
The silver open interest fell 893 contracts to 123,485. Our silver floor people are bullish too. They say its dimes to the down side and dollars to the upside.
How about that copper? It won’t quit. SEP rose 2.05 cents to $1.6265 per pound.
Crude oil was last at $59.20, unchanged. It won’t go down either.
The CRB gained.97 to 307.10. No signs of deflation anywhere yet.
The dollar was all over the place again. First it rose, making it to 90.37. Then it made a Uee to close at 89.61, down 31. The SEP euro fell to 119.85, before it reversed and closed near its highs of the day at 121.03, up.54.
The currencies have been doing a very volatile yo-yo act of late. Action like this often signals the end of a move. If so, the strength of the dollar could be a thing of the past.
The John Brimelow Report
Tuesday climactic? New C Bank seller
Wednesday, July 27, 2005
Indian ex-duty premiums: AM $2.84, PM $2.50, with world gold at $422.85 and $422.80. Adequate for legal imports. This is basis Ahmedabad, as usual nowadays.
Bombay, India’s financial hub, was paralyzed by heavy flooding today: the main FX desks in the country were closed. These calculations were done using Reuters prices.
TOCOM remained comatose. Volume equaled only 8,287 Comex lots (+2%), open interest slipped 289 Comex, and Mitsubishi’s data implies the public sold 1.96 tonnes of their long (630 Comex contracts). The active contract gained 2 yen, but world gold was 70c below NY at the close.
Beneath the surface, yesterday was a dramatic day in NY. Volume was heavy: 111,481 contracts, or 72,781 contracts netting out the switch effect. Open interest dropped a steep 8,525 lots (26.5 tonnes) to only 256,886 contracts. Over the past year, liquidations have halted just above 250,000, so from this point of view, the stage is set for a recovery.
Opinion is divided as to the selling being long liquidation by Funds, or short covering. The price action could support both. Estimated volume today was also heavy: 90,000 net of the switch effect. Gold’s friends could consider the last three days as displaying symptoms of climax.
Barclays Research, commenting (and getting the arithmetic wrong) on the ECB gold sales, does surface the interesting fact that the latest IMF data shows Spain began selling in Q2 ’05 - 7.1 tonnes. This is a new name. Barclays argues:
"This evident selling interest among central banks…implies that physical market factors will not support gold prices"
One might more plausibly argue that the fact that the ECB group has sold 101 tonnes of gold in the past two months, and is on the brink of exceeding the WAG2 ceiling with two months still to go - during the allegedly quiet time of the year seasonally - implies exactly the reverse.
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