Gold Buyers Own The Trading Volume


In settling the abbreviated trading week on Thursday at a price of 1730, Gold's net change from the prior Friday was but -1 point.

But here's the real but: Gold's trading range for the week initially ran from 1733 down to 1677, and then back up to 1732 -- boo boo bee doo, you Short April Fool. That's a 55-point positive reversal through which true Longs survived, but shallow Shorts died. 'Tis once again exemplary as we've on occasion put forth these many years that "Shorting Gold is a bad idea." And the recovery off the week's low was fierce against the frail Shorts, price therein leaping 34 points within just six hours on 31 March: "Got Gold to show in your portfolio for the Q1 close?" Darn tootin' you do! (GLD)

But wait, there's more: The cumulative contract volume on the way down (across 38 hours) was 75,760. The cumulative contract volume on the way back up (across 54 hours) was 370,239. Thus with the Sellers in charge, an average of 1,994 contracts traded per hour; but when the Buyers then took charge, an average of 6,856 contracts traded per hour. Buyers win by 3.4x. Right now, the Buyers own the trading volume ... Ready for higher Gold prices?

This remarkable week of resiliency for Gold really fuels our recent reckoning that price is setting a near-term course for 1800. 'Course, 'twas all obscured within the FinMedia, the overwhelming focus there instead being on the S&P 500 eclipsing the 4000 level, at which moment we sent the following one-liner to our Investors Roundtable: "S&P 4000 ... 'Live' P/E 74.9x ... Lord have mercy ..."

Suicidal stock market insanity. From 1987-to-date, we've been through all the major S&P 500 crashes, none of which remotely were preceded by such pricing excess relative to earnings as we have today. And with the next debacle in the inevitable balance, metaphorically to again quote Gabor Vernon in the role of Borchoi, ('Octopussy', United Artists/Eon Productions, 1983): "Be at least 25 miles away when it goes off."

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