Hourly Action In Gold From Trader Dan

Posted at 2:05 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

The silver market was abuzz with news today about CFTC Commissioner, Bart Chilton, concerns over price manipulation. The fact that he has come out so publicly took many, outside the camp of GATA and others, by surprise and lit a fire under that market which took it up into a resistance area near $24 on the charts. Strength in silver then worked to pull up gold which had been under pressure from the falling Euro and the subsequent bounce towards 78 in the Dollar.

You have to wonder about the many who have insulted GATA and its fine work over the years and ridiculed them in such a derogatory fashion whether they will now have the common decency to apologize for their shameless and contemptuous treatment of my friends Bill Murphy and Chris Powell and all the other dedicated members of the GATA board. The fact that Commissioner Chilton has come out so forcefully and chosen to use the words, “fraudulent” and “devious” in regards to the silver market is remarkable for its clarity and frankness. He was careful not to come to a conclusion about actual manipulation but as he pointed out, attempted manipulation is an entirely different matter. Based on his own words, it is evident that he strongly believes that attempted manipulation has been occurring regularly.

From here on, those who refer to GATA and its supporters as “the tin foil hat” crowd are only making fools out of themselves and revealing themselves to be mere hacks of the bullion bank crowd. GATA can no longer be dismissed as some sort of rogue band of disgruntled “gold bugs” but as the fine group of people that they are; people who share a genuine concern for the integrity of our financial markets and whose tireless research and efforts on the part of the precious metals markets deserves to be given the respect that is due to any organization which has produced work of the nature and quality that GATA has. I am not holding my breath however; very few are able to conquer their own pride and remain slaves to it all their lives. It takes a man of real character to admit he was wrong. Generally speaking, the most vocal opponents of GATA seem lacking in this department.

Hats off also to Commissioner Chilton for having the integrity to follow through on this even in the face of what no doubt must have been some very strong opposition. It is refreshing to see a man who actually takes what he does seriously and is working in the interests of the general public and not just a few favored special interests. If you have not done so, please take the time to send him an email encouraging him and thanking him for his efforts. So often men in his position only get emails or letters haranguing them.

Back to gold – it has reinforced its range trade after failing to take out $1,350 on the topside and moving lower back within its box that is defined by $1320 on the bottom and $1350 on the top. I still think it will work this range ahead of the next FOMC meeting in early November barring any drastic moves in the Dollar. Silver, even though it responded nicely to the Chilton news, has yet to break above $24 on the topside, which is the level it needs to best to give it a shot at $25 once again.

The HUI is up but below the strong chart level of 520 that needs to be vanquished before it can mount another assault on its recent peak. As long as it holds 490 on the downside it should be okay and continue consolidating.

The Dollar is also working in a range between 78 on the top and 77 on the bottom. The longer these markets range trade ahead of the FOMC, the more significance that meeting and what comes out of it is going to be.

There is some pressure in the bond market over the amount of supply coming. Until bond traders see the extent of any QE announcement, they are going to be bit worried whether demand will be sufficient to absorb it all.

We are all basically reduced to sitting around waiting for the Fed to act. A week is going to seem like an eternity.

Oh by the way, I have enjoyed the comments on my comments about the cotton market. For those of you are might be interested, they increased the limit to 600 points for today’s trading. It is up over 500 as I write this. The madness will continue until it just stops and then that will be that. That market is looking like a huge disaster just waiting to happen.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini