First a clarification, the gold position taken this morning is a short position. In other words, the objective is to benefit from gold going down.
Those interested in gold and silver may benefit from reading our morning post from today. Subscribers to ZYX Buy Change Alert and ZYX Short Sell Change Alert receive similar morning posts most mornings before the market opens. Reproduced below is the post from today that was published at 9:27 am.
Longer-term refinancing operation (LTRO) is a big hit again. 800 European banks borrowed from ECB €529.5bn at 1% for three years. This is the second phase of LTRO.
The first phase of LTRO was a game changer that helped stabilize European banking system.
The big rally in most markets in 2012 is mostly due to the success of LTRO.
There is a popular myth that LTRO is highly inflationary and good for gold and silver. A rigorous analysis shows that LTRO is negative for precious metals in the long run. However, for the time being a rigorous analysis based on hard cold data is of no consequence because legions of momo investors continue to act on the inflation myth. In due course, we will be writing more about the subject so that our subscribers have a better understanding of this issue.
Success of LTRO has created wide-spread optimism. This is the last day of the month; expect money managers to mark up certain high beta stocks. Also keep in mind that the first three days of a new month are usually positive.
Gold futures are at $1783, silver futures are at $37.10, and oil futures are $106.59.
S&P 500 resistance levels are 1380, 1400, and 1410; support levels are 1368, 1358, and 1352.
DJIA futures are up 7 points.
Our earlier short sell on gold was done when gold was at $1785. The sell was prompted by our Smart Money Indicator.
For the first time, right around 9:45, our computer algorithms starting showing that Smart Money was aggressively selling gold and silver as well as popular miners including Barrick (ABX), Newmont (NEM), Silver Wheaten (SLW), and miner ETF (GDX). This is the first Smart Money selling seen in recent weeks. Our algorithms have been consistently showing that the recent run up in gold and silver was caused by mom and pop momo crowd.
As of this writing, gold has fallen over $55.
So far today net selling by Smart Money in GLD ETF is $111.7 million and net selling in SLV ETF is $44.3 million.
