Wednesday, June 11, 2014

In fact, we can make up a narrative explaining GDXJ

Let's zoom back out to a normal view of GDXJ:

Look at the volume at May 27/28, and the volume yesterday.

On May 27/28, gold got smacked down in OpEx. What would you do? You'd short junior miners, right? Thus the large red volume bars.

Then yesterday, when the juniors fail to fall along with what certainly is still a pretty horrible gold chart, you'd have to cover, no? Thus high volume yesterday.

I wonder if the shorting volume from May 27/28 has been fully covered yet, or if we can get another day or two of pop. We'll see. Who knows, maybe gold even continues to dig itself out of the OpEx hole.

Then I wonder if gold (and then the miners) starts to suck again in anticipation of the Jun 18 Fed meeting. Or something. Cos it's always something.


  1. The best that can be said about gold is that having broken down below key support at the end of the month, its price stabilized as soon as the
    calendar allocations had been executed. In the process new support at $1240 was established, which now acts as a buffer between its $1260.13
    closing price and “last ditch” support at $1,180. This may well come into play towards the end of the month since June typically sees the second
    largest annual portfolio allocations which can be expected to lead to more redemption pressure on the metal.
    We note that gold continues to be positively correlated with bond yields. This is a substantial change for the metal and one that suggests that
    gold may be starting to act a little more like a monetary instrument than a safe haven. This is potentially a key shift, since it would allow the
    metal to hitch a ride off the general strength of the commodity complex once its excess ownership has finally been liquidated over the summer
    m shaoul marketfield weekly june 11 wrote the above comment

    1. He assumes the allocation action will be to sell gold. Problems:

      1. Who the fuck still owns gold in the US anyway?
      2. Why would they liquidate at the low instead of add? Last time gold and the miners were down here, Josh Brown called them a buy, and the market did buy.
      3. It also depends on if the inflation narrative takes hold by the end of the month, eh?
      4. What would you reallocate out of gold into? Everyone still hates stocks, and bond yields are too low.