Model Gold Portfolio: Neutral, last signal 12/01 “exit long”

Technical Read: The last 3 trading days have seen considerable  intraday swings but not a lot of directional motion. We are still in the trading range (approx. 112-117.3, GLD basis). Is the 114 level going to hold? The market held on the 5^th and 16^th, but the last rebound is not convincing. Nonlinear trading analysis is not suggesting it will stabilize here. No signal.

Backdrop:

• Catalyst 1 – The dollar rallied strongly on Wednesday and had a more muted follow-through today. The Russian ruble crisis is grabbing most of the headlines in this asset class (CNBC was quoting the ruble/dollar on its short-list currency screen). Dollar up is bearish for the yellow metal.
• Catalyst 2 – The S&P 500 rocketed up over the last two days, putting it near resistance. The “Chiller” network carries the tag line “Scary Good” and to some extent the line has applied to the plunge in crude. The discount in energy prices (simulating a massive tax cut) is the “good.” But there has been concerns that a massive re-pricing of such a major asset class might result in a major financial institution getting caught on the wrong side and failing (ala Long Term Capital Management), hence the “scary” part. Jane Yellen’s comments labeling the plunge a net positive event has helped relieve the stress. The equity rally is a negative for gold.
• Bond Trading Signals. I am offering a similar Mummy process for Treasuries. See the “Bond Trading Signals” tab for more info.

GH Garrett – Veteran Commodity Watcher for ConquerTheMummy.com