Short

Gold - $2,000 Is a Death Trap

Updated

This is a follow up to my June 2 call for a new ATH on Gold, that will be bearish, instead of bullish:

Gold - When A New ATH Prints, Will You Get Trapped?

In the process of tracking this, price action did not meet expectations (in the sense that it has not traded low enough), and so I began to reconsider the overall topography of the market.

Also, right now, I have an open call on silver for $33:

Silver - 33 Moons [And An Options Opportunity]

Silver - 33 Moons [And An Options Opportunity]

However, as price has not traded down the levels I regard as requisite to trigger a bull impulse, while I still believe that these high prices will manifest in the future, the market makers desire lower prices first.

One thing to note about gold is both the monthly and weekly bars are actually bearish despite price having formed a long-term triple top:

But in the shorter term (1H-4H-1D) candles, gold is clearly heading towards higher prices after bouncing exactly over $1,900.

As I've said before, one of the problems with a metals bull market right now is that Xi Jinping and the Chinese government (the Chinese Communist Party) have amassed a large amount of gold in recent months.

China's economy is doing extremely poorly following the decimation of the Party by Wuhan Pneumonia and the CCP faces threats on all sides, especially from the International Rules Based Order who now chatters about "de-risking" from China.

Since the United States tends to be the market maker of everything, this is trouble for China's central bank. Large stocks of gold and a heavily declining price will put the regime in a great deal of trouble, depleting the money it has available for buying people off.

And this is a huge geopolitical threat, for Xi Jinping has one Trump card to play: throw away the CCP in the middle of Beijing time, which is the U.S. night, and weaponize the 24-year-long persecution and genocide against Falun Dafa (Falun Gong) meditation, which was launched by Jiang Zemin and its band of toad cronies in Shanghai.

Another thing to note is since the pandemic crash, BUT BEFORE 2022, gold has had something of an inverse covariance with the SPX and the SPX has an inverse covariance with the USD.

But after 2022, gold has traded mostly in lockstep with the SPX, although in recent days and weeks that has begun to decouple.

Looking at the daily covariance, gold and the USD have an inverse covariance with the overextended equities market:

And I anticipate a USD rally, as I state here:

DXY - The US Petrdollar And The "Prigozhin Coup" In Russia

Since I believe what the market makers have in store for us is a significant downtrend in the equities market until September:

SPX/ES - An Analysis Of The 'JPM Collar'

SPX/ES - An Analysis Of The 'JPM Collar'

Gold setting a new high right now doesn't make sense.

And so what I believe will happen is the target for the algorithm right now is $2,030, and it amounts to a short squeeze/bull trap.

This will both take out the June high and draw in buyside demand over the $2,000 level, since retail goldbugs are always pining for a new all time high.

But the rally will fail, again, and the markets at large will fail again (except for Natural Gas).

Natural Gas - The Girl Who Hopes You Remember Her

Natural Gas - The Girl Who Hopes You Remember Her

And as the rally fails we'll see lower prices. Probably ending in the $1,800 range.

This amounts to a 10%~ drop and is pretty painful if you're sitting leveraged long and even worse if you're leveraged on call options.

If $1,800 is violated, then the top is probably already in, in my opinion.

So, be careful and make sure you practice social distancing from atheism, Marxist-Leninism, the Theory of Evolution, QAnon, and the CCP itself.

Long gold is about returning to tradition, and mankind's Heaven sent traditions are even more luminous than an entire vault of 100.00% pure AU.

Note

Gold is certainly not strong, but it is showing higher lows at a time it should be dumping.

A brief rendezvous with $2,000 may be all she has in it. Markets are really on the edge.

Note

Pretty weak ass 1% breakout on a Friday. Looks like the intention is to go back to the lows after toying with a wick.

But since the low is exactly $1,900, it can only be to break it and we'll have to see if $1,950 or $2,000 are still ahead in July.

It's painful trading chop when you want trend.

Note

You'll notice on the GLD ETF that the $180~ level has been tightly defended.

Any lower on Monday and I think we have to say that today's price action was no better than a stop raid on the old July high and project prices under $175 will be delivered along with an 18-handle on GC.

Note

An interesting covariance to note is that in the 2021-2022 bull run, Gold traded with the US Dollar Index.

That covar broke and since gold has traded inversely to the USD.

Now, this would seem to appear to mean that the DXY action on Friday is bullish for gold.

However, there's a big divergence in Cable (GBPUSD) in that Cable made a higher high over a range top while the DXY made a higher low.

This likely confirms that the USD is heading for the $105 range to fill a really obvious gap.

Which would be significantly bearish for gold, based on the usual covar.

A sneaky market maker trap.

Note

Gold stopping at $1,990 and taking sellside pivots may mean the top is in on this leg.

Danger for goldbugs buying the dip. Should use a strict stoploss.

Note

Gold's second rejection is telling us that the market maker does not seek the greatest portion of the buyside liquidity.

This type of violent rejection coinciding with the indexes correcting heavily and post-FOMC is really significant.

However, there is space between where the June range topped and the May downside pivots, and it all centers around $2,000.

I suspect this as a final bull trap, sort of like what oil did a few months ago, is the idea.

Note

So, the monthly settlement gap up completes the trade, although I guess if you're short you might not want to keep the stop over the high since they left a $4 gap between 2002 and ~2006.

Note

We missed the July high by 1% and it was only on account of the new contract settling at a premium, but that's quite all right.

I suspect that $2,010 wasn't the top, but we're still bearish and not making highs yet.

Yet, we have quite a lot of range that can possibly be filled before more uppy.

Volatile days may be here on the indexes. Will look at a new gold call this weekend.

LordWrymouth

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