The information in today’s full daily newsletter is especially relevant. Don’t miss the articles by Russell, Sinclair and especially Williams. The last three articles plus the John Williams article deal with the election. Read them before you cast your vote.
The following was published on JSMineset late Friday evening. It is an explanation of why gold dropped below $1700 and why it won’t stay there. If you are worried about the bottom falling out, don’t.
Gold Market Overview From An HFT Perspective – JSMineset.com
November 2, 2012, at 7:46 pm
by Jim Sinclair
I’m sure your mailbox is inundated with letters, so I’d like to help. Feel free to post this if you think it will relieve some of the pressure. Thank you for all you have done for gold.
Here is an overview of market action for gold longs from a HFT perspective. If you plan to trade on my information, then the trade is: Buy physical gold. Any HFT worth their salt (or silicon) already knows what I have written here.
TAKE HEART GOLD LONGS, THE PAIN IS ALMOST OVER. The next leg of our journey takes us to $1800 and over, probably in time for Christmas. The best advice I ever received in gold is: “Your emotions are always wrong.” This was from a highly skilled trader named Jim Sinclair. Thank you, Jim.
Here is what is going on:
Market releases are important, and NFP is the most important.
NFP (non-farm payrolls) is the most volatile of all data releases. Every HFT (algo and human) trade it. The high-risk trade is to short bonds or long S&P prior to the release. The HFT method is to close your position pre-release and have your finger on the mouse ready to pounce. Failing that, the human method is to fade the spike and profit from mean reversion.
On a ladder, you can see 1 min before a data release that orders are pulled and volume is barren. As the data is released, algos get it first. They slam orders into the market. A second (or less) later, humans add to these orders at market and the algos sweep their profits. This drives the price as stops are crossed and slow traders enter.
For this NFP release, everyone knew the data release would be the same as October. It’s an election year. The number may be revised in a week or 2, but that won’t matter after the election.
Knowing in markets is a powerful thing. Most trading is guessing and hoping, so knowing is a comfort rarely experienced.
When the release happens, the gold market got slammed. The previous day, traders were pulling their longs from $1725, causing the price to drop. For the release, the shorts know that longs have stops under $1700. This is a human “line in the sand”. So the goal is to cross $1700. You can see the stops trigger to $1696. From there, longs feel the pain and close positions, allowing the shorts to hit the price again into the next level $1678. These were the levels in my last email, and nothing has changed. The short goal is $1650, but won’t get a chance to push $1650 and here is why:
China demand. The Chinese government has encouraged it citizens to buy gold. This is a saving culture with little faith in governments and currency. These avid savers have already bought large amounts of gold and will be buying more under the assumption that “If the price was good at $1750, then it’s great at $1700!” This is how value buying works.
Come Monday, Asian value buyers will be into the market. Some may want to try to get $1650 prices or wait until Tuesday to get a better price, but will quickly snap up gold as they see the price start to go up. These physical buyers will be buying on as the price starts to press $1700 for fear of missing this BREIF pullback in price.
CIGAs should also be value buying at these levels.
On Monday, shorts will try to breach $1678. They may get it to fall (briefly) but that level won’t hold. Spec shorts will be closing positions and adding longs at these prices. Spec shorts don’t want to get caught behind the wave of big money value buyers. High volume VALUE traders will be back into the market on Wednesday, after the election smoke clears. These traders will be snapping up every pullback of gold, knowing they can reap a big profit before the end of the year. This starts the gold run to $1800 (short term, ie Christmas) and $2000 close behind. $2000 is a low estimate with a looming fiscal cliff and rabid money printing.
It is an election week. All eyes (news coverage) will be on the election, with real news hidden in the folds. No matter who wins, nothing will change.
If Obama wins, Bernanke will continue QE as normal, secure in his job. If Romney wins, Bernanke will increase QE in an attempt to keep his job. Either way, the printing press rolls on devaluing in the dollar and increasing the book price of hard assets. Markets know this. Knowing something in a market is a strong motivator.
There is NO scenario short of an election coup d’état of congress that can stop the presses.
If you are NOT buying gold at these prices, you have NO insurance for what is to come.
If you are long physical gold, turn off the tape and come back to it on Thursday when this paper BS is over.
Jim, thank you for all of your wisdom and advice.
Cheers, CIGA Henry (HFT)
As you can see, from this report, the spark that started the selling was the strong jobs report. But wait… according to John Williams (Shadowstats):
November 2nd, 2012
October Jobs and Unemployment Numbers Were Not Credible, Artifacts of a Broken Reporting System and/or Direct Manipulation.
With Consistent Seasonal Adjustments, October Jobs Gain Would Have Been About 117,000 Instead of 171,000.
October Unemployment: 7.9% (U.3), 14.6% (U.6), 22.9%
M3 Annual Growth Picks Up Again.
Here is what Jim Sinclair has to say about John Williams:
John Williams of www.shawdowstats.com is the only trustworthy source of economic statistics available to the public. If you do not subscribe to him you are hurting yourself. Today we live in a false world of fabrications accepted with gratitude by the sheeple.
– Jim Sinclair, Jim’s Mailbox, November 2 2012
This is two months in a row that the Jobs and Unemployment Numbers were rigged. Give me a break! This system is so rigged, so obviously manipulated that a “rational” observer would never find it reliable. I said reliable, but I probably should have said credible. If this pre-election BS doesn’t cause you to doubt our current administration, then you deserve what you get! They blatantly manipulate and “adjust” the statistics to persuade the voters that things are improving and Obama has turned things around. Well, he hasn’t!
Headline in Saturday’s Minneapolis StarTribune paper: JOBS REPORT SHOWS ECONOMY IS IMPROVING.
As to be expected, the funds and bullion banks pounced all over gold and silver. Even though they knew the numbers were BS, they understood that the High Frequency Trading Algos would short the metals, which of course they did. In a couple of weeks, after the election, when they “revise” the numbers, the metals will trade back up, so I am not worried about this latest contrived attack, but it makes me sick that this administration will use any dirty trick in the book to pull out the election.
If you are reading this daily and still vote for Obama, I just don’t get it – and neither do you. Your only excuse might be “if the Republicans were in power, they would have done the same thing.” And you know what, you’d probably be right. The truth is – it’s not just the Democrats; the entire political system is corrupt and broken. Nothing is as it seems. All we get from Washington and Wall Street is MOPE (Jim Sinclair’s term for Management Of Perspective Economics). All the endless borrowing and spending, in the name of “buying more votes,” will continue no matter which box you check. Your choice is bad and worse. But that’s usually the case.
What should you do? Cast your vote for gold and silver; that is your best protection against these liars. That is the only honest and winning ticket and the only thing that will keep you above water when TRUTH finally surfaces and then, all the lies and manipulations in the world will not save the dollar or the economy!
Check out the following from Jim Sinclair. This is the traders’ reaction to the jobs report. Also, here for the first time, Jim lays out a timetable for $3,500 gold and .72 US Dollar. It depends on whom we vote into office. If Romney wins, the timetable moves up to next year. If Obama wins it is pushed out to 2015-2017.
The reason that Romney will accelerate gold’s move up is because he is committed to reigning in Bernanke and that will spell disaster for the economy and the banks. In fact, Sinclair says it will be nothing short of suicidal to stop or curtail QE. But the important thing is that IT IS GOING TO HAPPEN. Like I have told you for years now, if you buy physical gold and silver and hold it, YOU HAVE ALREADY WON. What could be simpler?
In The News Today – JSMineset.com
November 4, 2012, at 2:58 am
by Jim Sinclair
My Dear Friends,
There is much discussion this weekend of the following:
Almost 192 million ounces of paper Silver were ‘dumped’ on the market Friday within ten minutes upon the NFP release. This is the equivalent to one-quarter of the world’s annual physical Silver production.
Have you for a moment considered that 192 million ounces of silver were purchased on the market on Friday within 10 minutes?
In The News Today – JSMineset.com
November 3, 2012, at 2:03 pm
by Jim Sinclair
My Dear Friends,
The thesis of MSM is that “Nothing must ever disturb the social order.” Mother Nature can do this in seconds, and an overnight collapse of confidence in the dollar will do it in three days.
Currency induced cost push inflation is what will collapse confidence overnight and cause an explosion in the velocity of money in three days. Study history. It has happened before and will happen again. Although you will not want to hear this, it is true.
Ben Bernanke is the only person in the US financial management that thoroughly understands the mess that has been made, that which I have taught you. His action with QE is the only tool to buy time. QE is the only way the can gets kicked down the road for 3 years, preventing for some time, a total collapse. To fire Bernanke will be the single greatest error made in US financial management ever. We are over the cliff and in a free fall. Anyone speaking austerity and the dollar is unknowingly speaking about the final Western world financial collapse, without any remedy, within 9 months. If they knew, they would keep their mouths shut.
What I know and Bernanke knows is that your vote next week in the USA is for immediate (9 months) collapse or for the test coming between 2015 and 2017. You have the right to select the time of the end. This choice of leadership is between the devil you know or the devil you do not know.
Having your business assets in East Africa is a calming feeling. Two major Brics taking Tanzania under their wing gives me comfort. The choice of next week’s election in the USA is gold at and above $3500 either immediately defined as within 6 to 9 months from now, or in 2015-2017. The US dollar will trade at USDX .7200 and lower in the same timeframes resulting from your vote.
For more of today’s commentary please read the full Miles Franklin Daily Gold & Silver Summary