Gold Traction Looks Constructive

The Commitment of Traders (COT) managed money net longs fell from 200,116 to 148,793 as the price of gold (POG) fell from 1282 to 1257. This is very good traction and has to be considered constructive, especially if good traction continues. Most of this was serious fund long liquidation and not slinger shorting. There are still a few too many longs among the small specs.

In general I am more back into the game, although don’t think we are in table pounding territory. I will use 1210-1310 POG as my wild guess trading range. I would start to accumulate more in stages if the “market” plums the lower end of the gueesing range. On Friday I bought a first reentry installment of SPPP at 6.73.

The problem gold faces is that these algos are tuned into a race to the bottom Dollar strength. I am not sure if the election is actionable as it seems to be one giant psy-ops and reverse psy-ops.

The actionable event may come later with the Italian constitutional election on December 4. The algos are likely set up to trash the Euro if Renzi losses and quits. I strongly support the Italian 5 Star Movement, which unlike the paper tiger Greek Syriza party has the correct hard ball policies. This could trigger the exit of Italy from the EU, a default and this is a huge debtor with grossly overpriced sovereign bonds.

So game theorizing this through, the ideal set up for precious metals might be the “market” back to overpricing for a rate hike on Dec. 14 as we head into the Italian election. Right now this is put at 69.5%, so perhaps this goes a bit higher.

If the election goes to the good guys (who are portrayed in the cabal media as bad) then a phony algo Dollar rally might ensue causing an overshoot versus gold. At the same time my theory would look for the slinger shorts to move in on paper gold futures setting up excellent surfing conditions. Then the Yellen wolfers back down once again at the Dec 14 FOMC.

Disclosure: None.

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Elena D. Baker 1 year ago Member's comment

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