From Daily Reckoning
by Greg Guenther, Editor, Daily Reckoning's Rude Awakening
I was expecting a relatively quiet morning Friday. I was wrong.
As I was compiling my notes early in the day, gold futures started to tumble. They had been slowly drifting lower overnight, giving back about $10 by 5 a.m. But it was the action at $1,450 that bothered me. After it crossed below this level, the floodgates opened—sending gold futures sharply lower. By 7:30 a.m., gold had coughed up $40, hitting a low of $1,427. Before the day ended the price dropped a little further and then rebounded to close at $1,448, down $20 for the day.
Spying direction is hard enough in precious metals right now without confusing form and location...
So what's your gold or silver really worth today? Like everything else, it's worth the most that somebody else will pay you for it, right here and now. That's the simple truth, as last month's crash proved all too plainly.
There were no gold buyers in size on Friday 12th and Monday 15th April, not between $1550 and $1325 per ounce. But gold has found plenty of buyers since then, after finding a floor more than 30% below its peak of September 2011.
Gold’s Daily Cycle has drifted lower and from a timing perspective has reached our “fork in the Cycle”. At some point early next week we should see a significant move as gold reveals its intended path. I don’t have particularly strong opinions either way here, but from what evidence I have, I’m interpreting it as bearish for gold.
What exactly does 'speculative net long' mean...?
Every Friday, the Commodity Futures Trading Commission publishes data that enable analysts to 'take the pulse' of various commodity markets.
The Commitments of Traders (CoT) report gives the aggregate positions held by traders from the previous Tuesday, including the number of long contracts (that stand to benefit if prices rise) and short contracts (that benefit if they fall).
Included in the CoT is positioning in gold and silver futures and options on the New York Comex. A futures contract is a standardized agreement to buy or sell a particular commodity at a particular date in the future. On the Comex, each gold futures contract is for 100 troy ounces, while each silver contract is an agreement to buy or sell 5,000 ounces. A Comex option meanwhile gives its owner the right, but not the obligation, to buy or sell a futures contract.
How much gold & silver might Arizona, Utah and the other states now involved in hard-currency laws come to need...?
ARIZONA is moving to allow gold and silver coin to be used to pay debts, and - effectively - go shopping.
This has already been approved in the state of Utah, and there is an assortment of other states that are moving in this direction as well. However, Utah's gold currency law has been on the books for more than a year. But it has not yet made any headway into how to manage gold and silver being used as currency. Nor will payees be obliged to accept bullion as payment. As a result, many pundits are pooh-poohing Arizona's gold idea, acting as obstacles to its possible success.