Morning Gold Fix – September 23, 2010

FMX | Connect – www.fmxconnect.com - (Reported 9/23/2010)

The following is a summary of yesterday’s US gold activity and a recap of Asia & European markets overnight. It includes our proprietary options analytics and news stories from industry professionals.

The Competitive Devaluation Cometh

· Japan- BOJ wants a weaker yen to stimulate exports

· Europe- Wants a weaker Euro to stave off sovereign defaults and keep German Exports going.

· USA – needs a weaker Dollar to punish those not spending and to reanimate the dead horse that is consumer spending among other things

Fiat Currencies are circling the drain boys and girls. How else can you explain Stocks, Bonds, and Gold going up while the dollar craps the bed? You cannot fight the fed. Just position yourself for the pop in the liquidity bubble.  Perhaps a minor bought of Hyper-Inflation would cure this. Anyway, we are rolling some Gold profits into Grains now.

Options/ Technical  Report

All signs continue to point to higher based on the Bollinger Band break out last week as alerted to here. For now we remain long and are trailing stops higher on residual gamma.  Despite the big ranges, the option activity has been orderly.

Gold now exudes all the qualities of the stock market. Volatility decreases in a rally, and increases in a sell off. This is because a major part of the business is now in GLD and GLD players are usually long stock and doing covered writes against their positions. Hence orderly call selling in the markets, even though producers are not hedging like they used to. The financialization of gold is now in full force and the option flow is the “tell”. The blue line below is yesterday, the yellow the prior day volatilities.

From here an aggressive move increases in probability. We are hoping higher, all indications point to a blow off spike. One thing makes us cautious. Bullion dealers are beginning to buy puts and put spreads in the rally, suggesting washout, while those hedge funds that are long calls sold aggressively yesterday. So we are sticking to the B-Bands lightly long until a settlement under the top band or a an intraday pierce of last week’s settlement. For Market Prices Click Here

-Elizabeth Thawne

Summary

October Gold settled at $1288.50 per 100 troy ounces on Wednesday, a net gain of of $17.80 for the day.

October gold was down $.30 to $1290.20 per 100 troy ounces as of 7:30 AM EST, this morning. The December U.S. dollar index was up .176 to 80.045. October platinum was up $.10 to $1633 per 50 troy ounces. December silver was down 2.5 cents to $21.03.

Gold Options Report

For Market Prices Click Here

Bloomberg (Reported 9/23/2010)

“Gold, trading near a record in London, may climb on concerns over the strength of the U.S. economic rebound and rising inflows into exchange-traded products. Silver pared gains after advancing to a 30-month high.

Global holdings of gold by ETPs rose to a record yesterday, according to Bloomberg data from 10 providers. Reports today may show that existing home sales in the U.S. climbed in August to the second-lowest level on record, indicating housing remains depressed a year after the economic recovery began, while jobless claims held at a two-month low.” Gold May Advance on U.S. Economy Concern, Exchange-Traded Product Demand

NS Futures (Reported 9/23/2010)

“While the gold market could have been undermined by news that a major gold producer (Gold Fields) was planning to expand its gold production, the gold market hasn’t exactly given the supply side of the equation that much credence. Similar news that Indian gold production in the April through July timeframe rose modestly is probably of little importance to thw gold trade, as the ebb and flow of investment demand has somewhat dominated the marketplace.e

While equity markets in Asia were mixed overnight, stock markets in Europe are generally weaker this morning. U.S. stock indices have trading moderately lower during the early Thursday trade.” Daily Metals Commentary





Reuters (Reported 9/23/2010)

“Gold held near record highs on Thursday, eyeing a breach of $1,300 an ounce, while silver flirted with 30-year peaks as the threat of currency devaluation lifted interest in the metals as a safe store of value.

Spot gold was bid at $1,291.85 an ounce at 0939 GMT, against $1,289.60 late in New York on Wednesday. U.S. gold futures for December delivery rose 60 cents to $1,292.70.” Gold Holds Near Record High on Currency Fears

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