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Dan Norcini continues:
“After the third attempt to break that key level was unsuccessful, we have seen some of the stale longs which I spoke about over the weekend begin to take profit. Minus bounces in gold, the short- bias remains negative, even though the intermediate-to-long-term bias is clearly higher.
Traders and investors are going to have to see where the bottom of the trading range is so key players can begin to create a floor for this consolidation in gold....
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“Some of the players are basically trying to figure out, if the gold market has a correction, how deep the correction will be or how shallow it may be. Nobody knows for sure at this point because we haven’t tested any support levels of major importance.
If we continue to see the $1,740 area and above hold support, in a convincing fashion, that will bring in a fresh influx of money and take gold back up to the higher end of the trading range. Until gold can extend through $1,800, we are going to stay in the near-term bearish bias.
But at some point gold will punch above the $1,800 level, it’s just a question of when? The way gold has traded is very reminiscent of how it traded when it was back at the $1,600 level. We had a couple of months where gold had fierce resistance at the $1,600 area, until gold broke convincingly above that zone.
After taking out $1,600 to the upside, gold then fell back to that ($1,600) area before accelerating to the upside. So $1,600 became the floor of support, and then the gold market promptly marched $200 higher. We may see something similar here where we march sideways here for a period of time, until gold can convincingly break through the $1,800 level.
So if the pattern holds, at some point we will see a surge through $1,800, and then the market may establish the floor at that level before accelerating to the upside. A breakout would create a significant move in gold towards the $1,900 area, and then to the all-time high.
In the short-term, if gold does drop back down to the $1,740 area of support, we want to see the same buying that emerged at that level the last time. If those buyers think they can buy gold cheaper, then we may see gold drop down to $1,720, and possibly $1,700.
But people have to understand that there should be very strong central bank buying in that $1,700 to $1,720 zone, so it will be very difficult for the bears to take gold through that support. If gold drops to the $1,700 to $1,720 area, that would take out more of the weak-handed small specs, which have crowded into the gold market, as well as some of the hedge fund longs.
But as I mentioned, because the primary trend in gold is still higher, we should expect to see strong central bank buying emerge in that $1,700 to $1,720 zone, as well as massive short-covering by the swap dealers and the commercials. The swap dealers and commercials will be aware of the central bank buying and will try to step in front of those buyer orders so they can cover.
This type of action would allow both commercials and swap dealers to cover a great deal of shorts in a very brief period of time.”
Norcini also had this to say regarding silver: “As I mentioned over the weekend, the swap dealers had a massive reversal in their positions in the silver market. The swap dealers went from 16,000 net longs to 14,000 net shorts. The commercials have also continued to short as well.
The silver bulls should understand that the key for them lies in the action in the gold market. If the gold bulls can mount an advance that pushes gold through $1,800, then silver will follow gold higher. If, however, we continue to see further weakness in the gold market, this will put additional pressure on the silver market and force more liquidation of long positions by the weak hands. We are at a point where so goes gold, so goes silver.”
Norcini has this to say regarding the mining shares: “If gold should drop to the low $1,700s, this would move the HUI (Gold Bugs Index) down to the strong support between the 475 to 480 area. For investors looking to accumulate shares, that may be a good area to do some purchases of the quality mining shares.
Right now the 50 day moving average on the HUI is at 468, but if the index were to drift that low, I would expect it to bounce right back.”
I would just add to what Norcini has said here that the commercials and swap dealers have a very strong desire to push gold lower in order to facilitate some short-covering. If for some reason the gold market was to get away from them and break above the $1,800 level, the commercials have deep pockets (backstopped by the government) and they would be able to take the heat.
What I am saying is the commercials would simply regroup, wait for an appropriate selloff and cover into that weakness. KWN readers have to remember that the bullion bank management of the gold market is a national security issue on both sides of the Atlantic because as gold rises it is an indictment of all global fiat currencies.
Because of this, the government, through the bullion banks, has some of the best traders in the world overseeing the gold market, and these are not the type of traders who would easily panic, even under the harshest of circumstances. These people are master manipulators. Investors and traders in the gold market need to keep that in mind as they watch the action in gold.
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
The interviews with Stephen Leeb, John Embry, Gerald Celente, Rick Santelli, Michael Pento and Don Coxe are available now. Also, be sure to listen to last week’s line-up of other KWN interviews which included, Pierre Lassonde, Rick Rule, Nigel Farage, Ben Davies, and Dr. Keith Barron by CLICKING HERE.
Eric King
More Incredibly Important Developments In Both Gold & Silver
Today King World News is reporting on more incredibly important developments taking place in the gold and silver markets. Acclaimed commodity trader Dan Norcini updates KWN readers globally on what the key players are doing right now in these critical markets, and what to expect next as the battle in the gold and silver markets continues to rage.
Norcini has been stunningly accurate in his predictions of the movement of the gold and silver markets. Now the acclaimed trader discusses these important developments in both metals: “$1,800 has been a critical resistance level that has now been reinforced three times. This level has a great deal of technical significance because the bulls have attacked the $1,800 area on those three separate occasions, but each attempt has been rebuffed.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
October 10, 2012
