<gold buying during this decline is a contrary indicator of some sort?>
I think it's serious pent up investment and Flucht in die Sachwerte (flight into real goods) demand, and therefore the beginning of a new and dynamic trend. GLD has only been around a short while as an easy to use vehicle, and therefore there is a large universe of people (real folks, not paper speculators), who see this as a red light special. For instance my dad has too much money sitting around in short term CDs and money markets, and I've had to beat him off with a stick of late on GLD, so as to get decent entry timing. I think he is commonplace, many people know this USD defense is a sham. I do think Joe Sixpack piling into oversea stock markets is a contrary indicator though.
<I looked at gold and silver COTs tonight and there could be a long ways to go.>
As I posted last night I believe about half the big offside anti-USD postion that I have been warning about, has now liquidated. It's happening fast, and has been a pattern all year in various commodities. Then they reload, only this time there has been an enormous physical accumulation on the price drop.
Message 20927897
Frankly when I was sweating this prospective fund liquidation last fall, I thought the MoP would get a little more mileage out of this hedge fund flush than they have. Gold appears more levered, but the USD rally is pathetic, considering the degree of liquidation. The only way I see it being completely liquidated down to zero (as what happened in energy, but only though heroic effort), would be a continuation of the last four weeks of heroin withholding. In otherwords much tighter money than what we've seen prior to Dec. 8th. Do you think the Fed can stay away from the big coupon passes, debt monetization, and temps, and sec. lending to their cronies for much longer? I don't, it's like asking pedophiles to stay away from children. If they start up early next week with same o same o, the USD rally will fizzle in a flash. If they stay the tough guy course post-Dec 8th, then perhaps we may see the USD head a bit higher, and gold flush out some more. It's a game of road rage chicken, because the stock market is at severe risk during heroin withdrawals too.
stockcharts.com[l,a]daclniay[pd20,2!b50][vc60][iUc20!Lf]&pref=G
My positions: I've been loaded with stock index puts and naked call writes which are finally working, but am steadily picking off ultra cheap Amex traded PM juniors (which I feel already discount $325 POG). I think there are some 300-500% moves (over 18-24 months) coming there on the next big leg.
By the way, the big commercial short of silver, is a short corner by a group of institutions that was set up as a mechanism for China to dehoard enormous silver stockpiles during the 90's. That stockpile is gone, and the shorts are now trapped, but because it's a very thin physical market, the enormous paper market can manipulate it. In otherwords I discount the COTs on silver, and buy into a large part of the Ted Butler theory, which has been posted here and discussed in the past. Therefore I view the COTs on Fx and gold, as the best measure of this market.
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