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Your article gave some of the answers i was looking for in my question on
goldprice versus other prices.
Another article in the "Gold Eagle" compares the situation with "yen carry"
trades last year, which resulted in an 18% drop in 4 days, when the concept
blew up.(The "carry gold" parallell would be to borrow gold from Central
banks at below 1% terest and sell it, ot "go short")
Ira came with an interesting point of view when comparing an incident in
the grains market involving russia (they announced they were not buying,
which caused the price to drop to a level where they started buying), which
made me think about Goldstocks.
Take a look at the enclosed gif which shows four of the goldminingstocks I
follow.
If you plot the On Balance Volume on to the chart (in red) and compare that
to the price of the stocks, we find that there are people who have quietly
accumulated these stocks while prices have been falling
Now, for the sake of argument, lets say these "carry gold" trades, above,
will experience the same fate as the "carry yen" trades and result in a
sudden upmove in gold (if Bonds go to 104 for instance....?).
What do you think will happen with goldstocks?
Applying simple charting analysis on these stocks we find rising potentials
of more than 50% in several of these stocks. We know that Goldstocks can be
VERY volatile and DANGEROUS. They FALL just as quickly as they rise - (I
KNOW!!!!!!)
The XAU index closed friday at 68.72.
If you look closely you will find that we last week hit the roof at the
neckline of an inverted Head&Shoulder pattern in the XAU index.
If that line is broken, we have a potential in that index of 130.
A POTENTIAL RISE OF 88%!
Please not that the XAU has NOT made a new low!
Now, lets say these shorting guys in Gold loose 20% (like the yen case) on
their short gold trades (275->330), they still could make perhaps 75%
on their goldstocks.
Not a bad deal, or what do you guys think?
Could THAT be the "conspiracy"
I also found another article that could be of interest at
http://www.the-privateer.com/gold6.html#latest
It further explains the connection between gold and interest rates.
Since my success as a trader did not materialize the way I thought, I
suggest you take this as interesting information only and not as a trade
recommendation.
Make your own research on which to make decisions.
..-------------------------
The following is an explanation on OBV On balance volume, copied from OBV
interpretation in Metastock, intended for the newer trader/investor.
It discusses the shorterm aplication of OBV although I think it cold also
be applied to long term scenarios. (otherwise my case above is very
doubtful....!)
:
On Balance Volume is a running total of volume. It seeks to show if volume
is flowing into or out of a security. When the security closes higher than
the previous close, all of the day's volume is considered up-volume. When
the security closes lower than the previous close, all of the day's volume
is considered down-volume.
Joe Granville is the father of OBV and its analysis. We can barely begin
to explain a simplified version of OBV interpretation here. If you want
further information on OBV analysis, we recommend that you read his book,
New Strategy of Daily Stock Market Timing for Maximum Profits (see
Suggested Reading).
The basic assumption, regarding OBV analysis, is that OBV changes precede
price changes. The theory is that smart money can be seen flowing into the
security by a rising OBV. When the public then moves into the security,
both the security and the OBV will surge ahead.
If the security's price movement precedes OBV movement, a
"non-confirmation" is said to have occurred. Non-confirmations can occur
at bull market tops (when the security rises without, or before, the OBV)
or at bear market bottoms (when the security falls without, or before, the
OBV).
The OBV is said to be in a rising trend when each new peak is higher than
the previous peak and each new trough is higher than the previous trough.
Likewise, the OBV is in a falling trend when each successive peak is lower
than the previous peak and each successive trough is lower than the
previous trough. When the OBV is moving sideways and is not making
successive highs and lows, it is in a doubtful trend.
Once a trend is established, it remains in force until it is broken. There
are two ways in which the OBV trend can be broken. The first occurs when
the trend changes from a rising trend to a falling trend, or from a falling
trend to a rising trend.
The second way the OBV trend can be broken is if the trend changes to a
doubtful trend and remains doubtful for more than three days. Thus, if the
security changes from a rising trend to a doubtful trend and remains
doubtful for only two days before changing back to a rising trend, the OBV
is considered to have always been in a rising trend.
When the OBV changes to a rising or falling trend, a breakout is said to
have occurred. Since OBV breakouts normally precede security breakouts,
investors should buy long on OBV upside breakouts. Likewise, investors
should sell short when the OBV makes a downside breakout. Positions should
be held until the trend changes (as explained in the preceding paragraph).
This method of analyzing On Balance Volume is designed for trading
short-term cycles. According to Granville, investors must act quickly and
decisively if they wish to profit from short-term OBV analysis.
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