Author Archive: Dan Norcini

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Live or Die by the QE Sword

Live or Die by the QE Sword

Today’s rally in gold (and in silver for that matter) was completely based on expectations for additional liquidity measures forthcoming from the Central Banks of the world. First there was chatter than China would be easing. Then came expectations of a rate cut from the ECB. If that were not enough, talk surfaced that the Bank of England would be restarting its bond purchasing program (England’s QE) and of course, the non-stop, near religious belief that the Federal Reserve is going to start round 3 of QE “anyday now”. I do not know about you readers but I am more and more disgusted with what is happening to the trading/investing […]

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Hedge Funds Continue to Pummel Silver – Until Today

Hedge Funds Continue to Pummel Silver – Until Today

If you want to talk about how utterly insane our markets have become and how schizophrenic the trading action has mutated into, look no further than the last two days of trading this very week. On Thursday, silver was mauled by hedge fund selling tied to both long liquidation and brand new fresh short selling. The result? Silver hit a 52 week low! One day later – it rockets to close 5% higher in a single day. This is the type of madness that has been unleashed by Central Bank interference into the market place which is the SOLE CAUSE of this volatility. I could give example after example of […]

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Deciphering Silver

Deciphering Silver

The internet has been awash with comments recently about the downdraft in silver and the strong increase in Open Interest on last week’s big down day. As usual, the chatter is about an orchestrated attempt by JP Morgan to smash the price of silver lower so that they can cover their “losing short position”. Let me first state that I am a firm believer in the view that the US government has a vested interest in controlling the price of gold. Being a good friend of GATA, we both have ridden through the ups and down of this together for the last decade. However, that being said, not every move […]

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HUI Chart Pattern Needs Some Help

HUI Chart Pattern Needs Some Help

As has been the case with the mining shares for some time, (going back as far as the first round of QE in late 2008), they require a shift in trader sentiment away from a DEFLATIONARY scenario towards one of INFLATION. The latter is what has resulted from each round of stimulus launched by the Federal Reserve. This week’s lack of an imminent launch of a QE3, has set mining shares, as well as bullion, back on their heels as traders have made the shift back towards expecting a further slowdown in global growth and more of a deflationary environment. This shift is showing up in the decidedly bearish chart […]

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Gold Stocks Recover from Late Friday Afternoon Mauling

Gold Stocks Recover from Late Friday Afternoon Mauling

AS many of you no doubt are aware, there appeared to have been some sort of coordinated bear raid on many of the smaller gold companies late Friday afternoon, particularly in the aftermarket hours when trading conditions are at their absolute thinnest. The entire sector however is getting a firm bid in today’s session even with the metals initially lower. Their strength seems to be pulling both gold and silver higher. The HUI is closing in on very stubborn chart resistance in the 460 region. This region marked the bottom of a consolidation period back in March of this year and is now serving as a line for sellers to short […]

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Dan Norcini about addiction, excessive debt and the gold price

Dan Norcini about addiction, excessive debt and the gold price

That’s the attitude that gold bulls have apparently adopted heading into this weekend’s crucial Greece vote. Whereas yesterday seemed to be a day of caution among traders, today seems to have morphed into a day of expectations of the punch bowl, complete with accompanying hard liquor, being filled to capacity by the Central Banks of the West. If the Greece vote turns out to be one which threatens the stability of the Euro and sends shock waves through the foreign exchange markets, traders are convinced that a large bouquet of liquidity is coming their way early next week. If the Greece vote turns out to be one in which the […]

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Gold Market Continues to Reflect Currency Turmoil

Gold Market Continues to Reflect Currency Turmoil

Simply put – as the situation in Europe further deteriorates (yesterday the market YAWNED at the $125 billion Spain bailout), Italy is now coming into focus. Strangely enough, the US equity markets somehow think all of this is inconsequential as the bulls there continue to be giddy with delight.Their attitude is best described by an old Steve Wariner song, “Some Fools Never Learn”. You play with the fire, you’re gonna get burned”.Considering just how tenuous things are, the degree of complacency that exists among equity bulls is nothing short of astonishing. The situation can best be described by looking at a chart of the VIX, or Volatility Index.While the index […]

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Mining Shares Continue to Outperform the Broader Equity Markets

Mining Shares Continue to Outperform the Broader Equity Markets

The last time we had a THREE CONSECUTIVE WEEKS during which the mining shares outperformed the broader US equity markets was in late October/early November of 2011.  While the  month of May this year has been attrocious for the S&P 500, it has been an excellent month for the miners. June is starting out on a good note to say the least as we witness today’s strong upmove in the mining shares. My interpretation of this event is that today’s payrolls number, which was so horrible that it cannot have any sort of positive spin placed upon it, has jolted traders into moving more and more to the view that […]

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Gold Achieves that ” 16 ” Handle

Gold Achieves that ” 16 ” Handle

Gold’s reaction to the payrolls number this morning was instantaneous – it shot up as if it was fired out of a cannon! As stated in the post on the mining shares this AM, gold is now fully expecting the Fed to move forward with a round of QE3 Sooner rather than later. It is this anticipation of a Fed move that has it blowing the recent hedge fund short positions out. Not only that, the ability to capture this elusive “16” handle and HOLD IT, has fresh money that has been sitting on the sidelines or in Treasuries (obtaining next to nothing for yield) willing to come in on the […]

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Dan Norcini: The Futility of QE

This is an attempt to explain what I believe will be the futility of another round of Quantitative Easing on the part of the Federal Reserve to do anything more than to merely provide another TEMPORARY boost to paper assets and by consequence, a short-lived blip in consumer confidence. As such, it is going to be much to the point without any rhetorical flourishes or attempts at refined writing. I do wish to start this brief piece by noting that I believe the Fed is indeed going to act, sooner rather than later, unless they want to witness a meltdown of the equity markets. Practically, for them to stand idly […]

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Monthly Gold Charts for May 2012

Monthly Gold Charts for May 2012

I do want to note that since we are facing a very similar set of deflationary factors at the current time as we did back in 2008 when the credit crisis first erupted, that time frame is an analogous year and for that reason provides at least some sort of frame of reference for a guide to price action. Using MONTHLY CLOSING PRICES only, gold fell from a peak of $975 down to a low of $715 or a drop of 26.5% from it best monthly closing price BEFORE THE FED made clear that a round of Quantitative Easing would commence. You will recall that the purchases consisted mainly of […]

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Gold Continues to Attract Buying at the Bottom of its Trading Range

Gold Continues to Attract Buying at the Bottom of its Trading Range

Gold has once again attracted strong buying down near the bottom of its broad 8 month trading range and has now bounced higher for the day. Strength in the yellow metal has pulled silver up a tad which was sinking under the weight of a collapsing copper market. While some are ready to pronounce gold DEAD as a safe haven asset, the chart picture denotes otherwise, especially given the broad weakness in the commodity sector as a whole and the rallying Dollar, which continues its technical march towards the 84 level on the USDX. Whenever I see gold moving higher alongside Treasuries and the Dollar, it tells me that all […]

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Gold continues its bounce on 18 May 2012

Gold continues its bounce on 18 May 2012

Gold continues to bounce higher in today’s session as it moves further away from the bottom of the BROAD 8 MONTH TRADING RANGE shown on the chart below. The metal actually seems to be reverting to its safe haven function as it is holding its gain in spite of continued weakness in the broader US equity markets. It does seem to have hit a band of resistance, as might be expected, near the psychological round number of $1600. For gold to get a handle of “16” in front of the price, we are going to need to see more hedge funds willing to go long this market even as their […]

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Gold Bouncing from Support in Asian Trade

Gold Bouncing from Support in Asian Trade

After what seems like a nearly vertical fall in the gold price over the last 7 or 8 days, gold is finally getting a bit of a reprieve this evening as it enters Asian trade. The interesting thing about this most recent selloff is that reports of physical offtake have indicated good buying of the metal down here at these levels. This has been swamped by hedge fund liquidation and some fresh short selling as some in this category are moving onto the short side. As you can see on the chart, gold fell nearly right to the very bottom of this 8 month long trading range before bouncing higher. It […]

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