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Gold: Sentiment, Technicals & Outright Manipulation at Trader’s Narrative





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The technical outlook for gold hasn’t changed much since the last time we looked at various breadth indicators for the sector about two weeks ago, Gold Update: Meandering Lower.

Technical Analysis
The bullish percent index for the sector has gone limp again, falling to 35% - slightly lower than the last time we checked in. The K-ratio is also benign, sitting at neutral levels. For further technical analysis of gold, check out this video from Adam Hewison of INO. I basically agree with Adam’s assessment so I won’t reinvent the wheel here, just click and watch his 5 minute video:

gold INO video screencap Mar 2010

Gold Sentiment
Turning to sentiment, according to Mark Hulbert, the keeper of the Hulbert Gold Newsletter Sentiment Index, newsletters devoted to market timing the precious metals markets have given up their bullish tendencies from earlier this month.

At the beginning of March 2010 they were recommending about +47% exposure - implying that almost half of their clients portfolio be long gold. Now they are only recommending a +18% exposure. The earlier bullishness corresponds to a price of gold in the area of $1130 while gold closed today at $1103.80.

While that reduction in exuberance may appear bullish at first glance, looking at the historical pattern of gold corrections in the past few years shows us that sentiment needs to get a lot lower. For example, during the low one year ago, the HGNSI fell to -17%; implying that gold timers were actually short gold.

Market Manipulation
Finally, leaving aside technical and sentiment considerations, let’s take a look at the recent news of market manipulation. If this is true then the consequences blow everything else we’ve discussed out of the water!

GATA has been working ceaselessly for many years to gather facts and information to expose what they believe is a massive and concerted manipulation of the gold and silver markets. They are constantly battling the label of “gold bug nutjobs”. A whistle blower from within the small closely knit club of metal traders may have given them their biggest boost and provided shocking confirmation of their thesis.

Andrew Maguire approached the CFTC and in meticulous detail showed them the manipulation that goes on everyday in the London Bullion Market Association. Similar to how the SEC repeatedly ignored the case that was handed to them by Harry Markopolos exposing Bernie Madoff, the CFTC took no action. Becoming frustrated at the CFTC’s inaction and being shut out of participating in the public inquiry, Maguire approached GATA and shared his emails with the CFTC.

Exclusive Interview:
Press play to hear the interview with London metals trader, Andrew Maguire, courtesy of King World News:

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3 Responses to “Gold: Sentiment, Technicals & Outright Manipulation”  

  1. 1 PAUL MONTGOMERY

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    Great Babak thanks - pls keep the Gold analysis coming

  2. 2 Babak

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    Paul, you’re welcome - did you listen to the interview? crazy stuff

  3. 3 PAUL MONTGOMERY

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    Did listen to the interview. I had a nice position in Silver in 2008 due to Ted Butler’s work. Butler was mentioned in the interview. I got shaken out by the takedown mentioned in the interview. When Butler started charging for his opinion, I lost faith - as I thought his timing was awful - after I imagine, a lot of his followers taking big losses - he gave a very strong Buy recomendation before the takedown, saying Silver cost of production was around $17 [I think], so downsize risk was supposedly low.

    Sure wish I was in now - but difficult decision to get in………..

    Most metal fans are in
    Pretcher’s analysis looks sound
    A stock correction looks imminent - metal got hit last time

    Had a buy order in for 1000 Gold 1000 January, that would suit me :o )

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