"As a technician, I feel that there are few analysts that offer value for me, but you do. Your work on Gold ratios has helped my analysis greatly." --Jordan Roy-Byrne, CMT (The Daily Gold) 4.9.10

Monday, September 20, 2010

Gold This Morning: A Week to Watch the Invisible Hand --Jon

Active turnover for a Sunday night with prices holding quite well at $1275.60 during an early evening probe when sellers took out some stops. Leading stealth indicator GSR is more or less unchanged at ~61.20. Weekly COT numbers continue the obvious pattern of the last several reports and as one would expect the large specs get longer which is offset by the commercials getting shorter. The impact of commercials being short was abundantly quantified last week when AngloGold Ashanti announced that they were buying back their hedge book which was short 3.2 million ounces (~ 100 tons!). Quite remarkable in it's magnitude and according to Anglos the negative mark-to-market on the position was $2.4 billion-ouch. I cannot find any reporting on the mechanics of how they covered and whether it is being 'papered over' or is there a physical component. I do believe however that it will thin available supply in the continuing saga of just how many times the physical gold supply is marginalized by paper. Today: We again remind you that this week has the regularly scheduled Fed meeting during which gold prices have an uncanny pattern of being subdued and next Monday is the expiration of October options; the expiring $1300 option is heavily weighted to the call side. My contrary instinct is not to be a chaser this week, but definitely a dip buyer. Next week post expiration and convoluted official pronouncements we will examine the 'hyperbolic parabola' and other tales in the ongoing saga of 'Adventures of the Gold-Bugs'