Defragmenting GLD

This article presents some recent bar list work and shines that spotlight even deeper into the darkness of the vault. Does anyone remember the old 'defrag disk' programs we had before solid-state-drives? The screens were beautiful to watch as they worked! Seeing the individual blocks of data move around gave a better idea of what our data was doing and showed a different side to the disk drive we only ever saw the outside of.

A typical defrag program - showing data allocations on a computer file system.
The software would remove blocks from one location and write them in another.
Some files did not move at all (and you could see which blocks stayed).
The mechanic shares some similarity with a gold vault, an analogy close enough that we can take advantage of - a specific fixed area filled with lots of small (identical) units which take up space and are easily moved around.

Ukrainian Gold Fantasies

I am sure that most STFU readers know by now of the news from more than a week ago, reported by GATA on 7 March (, that the US had taken custody of all of the Ukrainian gold reserves.  I originally saw a barely intelligible machine translation (no URL saved) of the original news release from Iskra News (located in the Eastern Ukraine, where there are a majority of Russian speakers), but the GATA version has been cleaned up considerably.

A reworded, condensed version of the story (with my quotation marks) is that four trucks and two VW minibuses, all without license plates, were waiting on the tarmac when a 'transport aircraft' landed at Borispol Airport, near Kiev.  The fifteen waiting people, dressed in black and armed, quickly loaded more than 40 'heavy boxes' onto the aircraft, which (after other mysterious men had boarded) then took off on an emergency basis. Later, a senior official of the former Ministry of Income and Fees reported in a return call (presumably to Iskra) that the US had taken custody of all gold reserves in Ukraine. Various estimates from the intertubes of the Ukrainian gold reserves involved have varied from 33 or 36 up to 43.2 tonnes.

Sunday PM pre-game, 3/16/2014

Greetings, friends-

Eric Sprott in his latest appearance on King World News mentioned an imminent "golden cross," wherein gold's 50-day MA is expected to rise above its 200-day MA.

“We are going to have the ‘Golden Cross’ probably sometime next week, which I think will bring lots of guys in from the sidelines who realize that a new bull market has started because there is no better sign than the Golden Cross.

First off, could it really be the case that “Billionaire Eric Sprott” doesn’t have an army of interns crunching numbers for him, to keep him from sounding less sophisticated with his prognostications than a day trader at a barber shop? (Actually, he wouldn’t need an army, just an eighth grader with a TI-89.) 

Rather than guessing “within days” or “sometime next week,” Sprott could’ve been quite specific in his prediction: Friday. It’s virtually impossible the “golden cross” will occur Monday, Tuesday, or Wednesday, and highly unlikely it will occur Thursday, as gold would have to hold an *average* closing price over those 4 days $50 higher than where it is now. For the MAs to meet on Friday, the closing price of gold only has to average $1375 next week, so that's possible. Of course, if price falls next week, the golden cross will not occur next week. But most KWN readers, I fear, tend not to consider that possibility.

See the chart below for what the average price of gold would have to be over n days for the golden cross to occur in n days. And someone forward it to Mr. Sprott...

Note that though the golden cross is likely to occur within 5-10 trading days, it isn’t *quite* as inevitable as KWN’s Team of Erics seems to imply in that interview (at least practically speaking, since the cross would have to be fairly emphatic for it to have any self-fulfilling effect on momentum) -- e.g. if gold drops back below the $1275 level over the next 4 weeks, there will be some coiling (the 200-day MA is on pace to flatten and start turning up), and the outlook becomes dicey. 

Let's visit Sprott's statement: “there is no better [bullish] sign than the Golden Cross.” Strong words. So he'd probably say there's no worse bearish sign than its opposite, the so-called “Death cross," right? Actually, no, as it turns out, that's bullish too. Please see Sprott's mention in the article "The Death Cross is actually bullish for gold" from last year... where you'll also find mentioned the fact that the "golden cross" has an even worse track record. Ah Sprott, you gotta love the guy. 

Anyway, seeing as I was already at King World News (I go there for the pictures), I read Egon von Greyerz piece, where he showed that the bull market in equities loses its luster when measured in Swiss Francs. I recommend it. I don't think I've posted a gold in Swiss Francs chart in something like 2 years, so here it is. Note that an all-time high was hit on October 1, 2012. So we Ameri-centric investors tend to think the gold bear market has been grinding on for 2.5 - 3 years now, but with respect to Francs (and Euros), let's remember that the all-time high was in play even in 2013. See the blue trend line I've drawn in: it starts on Oct 1 (the day of US gov't shutdown, when Euro rallied), and was touched a few times, the last being right after the Cyprus bail-in news exactly one year ago, when Gartman predicted gold would jump 5% when trading resumed. Let's see if that trend-line will be strong resistance (I suspect so).

Sunday PM pre-game, 3/2/2014

It’s a new month, and I have a lot of cool monthly charts for you guys (including some unorthodox ones, e.g. kagi, three-line-break), but unfortunately not a lot of time for explanation today. Long story short, I had a crazy bitch over at my place last night who vomited and crapped all over my floor. Poor dog must’ve gotten into my “medicinal” stash. To boot (pardon the pun), her owner was no longer in the mood for romance after that. Ah, bitches, you can’t live with ‘em. 

Anyway, I’ll do a data dump (ahem) for you guys, and post these charts for your perusal, perhaps we can discuss in the comments.

A quick point, though: I haven’t been presenting the 5% 20-day EMA envelopes for the longest time, as I’ve been trying to shift my focus away from daily action, but it really is an important chart to follow, providing excellent tradeable signals most of the time (pretty much excluding only the major, short-lived "3-sigma" type events). 

Seems to me gold still has some room to climb, with the 20-day EMA of ~$1300 (or better, 40-day EMA at ~$1285) a good place for a stop. So I went long Friday, gambling on a move to $1375-1400.

And here's an amazing monthly 3-line-break chart (since the '80s) of 10-yr yields measured in oil. Almost as interesting as the regularity of the chart is how the upward trends coincide with major geopolitical/macroeconomic events, which kind of peter out ... and it's business as usual again (government borrowing becomes cheaper in black gold, and real sh#t in general). Note we're very close to a reversal this month! I'll be following this so you don't have to.