What a Day for Gold
What a day for gold and silver. Gold closes at a new all-time high of $1,232.66 if we count after-market activity. That’s a pop of just under $30 overall and about $12 higher than the near-active contract closed on the COMEX bourse floor in New York.
We can say without reservation that gold was in high demand today. So was silver. Silver had yet another stellar day, with cash silver jumping 81-cents for its first close above $19 since a brief stint there in December of last year.
If one wanted to know just how much demand there was for immediate delivery in today’s sharp rise for gold and silver, they might look at the cash price relative to the near-active contract for a clue.
Notice that in today’s closing report that cash gold actually printed $1,232.66 at the close, which is $12.36 over the June contract.
Futures courtesy of Barcharts.com.
Silver for immediate delivery also closed marginally higher than the near-active July contract.
Both gold and silver therefore closed in minor backwardation, where the cash price is higher than the near contracts. In gold’s case cash gold ended higher than even the July 2011 contract!
What that shows is very strong demand for precious metals on the heels of the nearly $1 trillion E.U. “rescue package” comprised of loan guarantees and (essentially) European money printing.
Think investors believe that governments will now do just about anything, including massive debasement of their own currency, to keep the music playing in the global sovereign debt musical chairs game?
There’s a reason for that. Those are not really chairs the finance ministers are dancing around. They are over-sized dominoes.
On another note, today we saw the big miners answer the move higher for gold. As gold rose roughly 2.5% the HUI managed to book a 27.64-point, 6% gain. That’s the good news and it came even though the broad markets sold off toward the close.
The CDNX, on the other hand, only managed to advance a smaller 1.4% as 304 million shares changed hands north of the border. Generally we are more bullish when the “little guys” outperform the larger gold miners, not the other way around, but we’ll take an advance on both any day.
The larger sized shares in Canada also fared better than their smaller cousins. Using the XGD as a proxy, note that it advanced nearly as much as the HUI, just under 6%.
Clearly investors jumped on the gold and mining share bandwagon today, but not yet in the manic way they have in the past. Most every chart we look at has yet to cut new all time highs except for gold. The HUI hasn’t, the CDNX isn’t even close, the XGD hasn’t, the GDX hasn’t, silver hasn’t even gotten close to its 2008 high yet and we could go on and on, but the point is made. We believe that remains a non-confirmation of sorts and it shows that investors are more cautious and fearful than they were before 2008 reminded everyone that really bad markets can and do rear their ugly heads from time to time.
We strongly suspect that if both gold and silver manage to hang onto their gains and advance further, that as long as the Big Markets don’t do a Chernobyl on us, we will see new highs on most all the markets associated with the PMs. We think there is a good chance of legendary gains in them just ahead, if the world holds it more or less together.
Perhaps the best looking chart of the day was our old friend the gold/silver ratio, which came in another 1.18 points to 63.80. That’s good action on a strong up day for the metals.
On another note, today’s strong upside action in gold and silver just happened to occur on the cutoff day for the commitments of traders report. As one might imagine, we cannot wait to see the new COT report that will be released late Friday afternoon. It certainly will be interesting and unless we are reading the tea leaves wrongly, it just may prove to be a shocker.
That today’s short-covering style action comes on the COT report day, right after we learned the CFTC and the DoJ are looking into possible silver manipulation on the COMEX is just too much of a coincidence to not mention it.
Obviously we are encouraged by the action today, but as with all tests of upper resistance, it is time once again to raise our trading stops. If we still had a short term position in silver, we would be compelled to raise the stop from a $17.50 equivalent to near $18.00. On gold we will be moving our stops higher tomorrow morning from $1,156 to at least the $1,180 equivalent. We still want to allow for more than usual volatility.
Communication issues for three and a half hours prevented our posting this at a more reasonable time. Apologies for the lateness of it.
That is all for now, but there is more to come.
We can say without reservation that gold was in high demand today. So was silver. Silver had yet another stellar day, with cash silver jumping 81-cents for its first close above $19 since a brief stint there in December of last year.
If one wanted to know just how much demand there was for immediate delivery in today’s sharp rise for gold and silver, they might look at the cash price relative to the near-active contract for a clue.
Notice that in today’s closing report that cash gold actually printed $1,232.66 at the close, which is $12.36 over the June contract.
Futures courtesy of Barcharts.com.
Silver for immediate delivery also closed marginally higher than the near-active July contract.
Both gold and silver therefore closed in minor backwardation, where the cash price is higher than the near contracts. In gold’s case cash gold ended higher than even the July 2011 contract!
What that shows is very strong demand for precious metals on the heels of the nearly $1 trillion E.U. “rescue package” comprised of loan guarantees and (essentially) European money printing.
Think investors believe that governments will now do just about anything, including massive debasement of their own currency, to keep the music playing in the global sovereign debt musical chairs game?
There’s a reason for that. Those are not really chairs the finance ministers are dancing around. They are over-sized dominoes.
On another note, today we saw the big miners answer the move higher for gold. As gold rose roughly 2.5% the HUI managed to book a 27.64-point, 6% gain. That’s the good news and it came even though the broad markets sold off toward the close.
The CDNX, on the other hand, only managed to advance a smaller 1.4% as 304 million shares changed hands north of the border. Generally we are more bullish when the “little guys” outperform the larger gold miners, not the other way around, but we’ll take an advance on both any day.
The larger sized shares in Canada also fared better than their smaller cousins. Using the XGD as a proxy, note that it advanced nearly as much as the HUI, just under 6%.
Clearly investors jumped on the gold and mining share bandwagon today, but not yet in the manic way they have in the past. Most every chart we look at has yet to cut new all time highs except for gold. The HUI hasn’t, the CDNX isn’t even close, the XGD hasn’t, the GDX hasn’t, silver hasn’t even gotten close to its 2008 high yet and we could go on and on, but the point is made. We believe that remains a non-confirmation of sorts and it shows that investors are more cautious and fearful than they were before 2008 reminded everyone that really bad markets can and do rear their ugly heads from time to time.
We strongly suspect that if both gold and silver manage to hang onto their gains and advance further, that as long as the Big Markets don’t do a Chernobyl on us, we will see new highs on most all the markets associated with the PMs. We think there is a good chance of legendary gains in them just ahead, if the world holds it more or less together.
Perhaps the best looking chart of the day was our old friend the gold/silver ratio, which came in another 1.18 points to 63.80. That’s good action on a strong up day for the metals.
On another note, today’s strong upside action in gold and silver just happened to occur on the cutoff day for the commitments of traders report. As one might imagine, we cannot wait to see the new COT report that will be released late Friday afternoon. It certainly will be interesting and unless we are reading the tea leaves wrongly, it just may prove to be a shocker.
That today’s short-covering style action comes on the COT report day, right after we learned the CFTC and the DoJ are looking into possible silver manipulation on the COMEX is just too much of a coincidence to not mention it.
Obviously we are encouraged by the action today, but as with all tests of upper resistance, it is time once again to raise our trading stops. If we still had a short term position in silver, we would be compelled to raise the stop from a $17.50 equivalent to near $18.00. On gold we will be moving our stops higher tomorrow morning from $1,156 to at least the $1,180 equivalent. We still want to allow for more than usual volatility.
Communication issues for three and a half hours prevented our posting this at a more reasonable time. Apologies for the lateness of it.
That is all for now, but there is more to come.
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