THE MICIK MARKET LETTER
Gold Update

Alan Micik snippet
Posted Oct 15, 2012

“Monday, Monday, can’t trust that day…”- The Mamas and the Papas

The COT’s for gold and silver remain extremely bearish at this time. Speculators have now increased their net long position to the highest level in all of reported COT data, so Speculators in gold are “all in.” The percentage declines from prior Speculator record net long positions have yielded significant price drops in the past. MML will update Subscribers during this week on the percentage drops and the time required for those corrections from those previous “all in” readings.

MML’s first conclusion from the COT’s is that while they are not the “Holy Grail” (they are not precision-like indicators), they tell us to be cautious about adding to our gold and/or silver trading positions at this time. Second, they can precede significant highs or be co-incident with price highs. Third, they warn that speculative positions might be trimmed down since the “majority” is doing the opposite or that Trader’s Stops should be moved up to reflect additional risk.

Sentiment for the upcoming week and prior 3 weeks shows that 3 of these 4 weeks have had an average reading of 80% bulls. These readings are on the high side, and do confirm the COT readings noted above. Like the COT’s, sentiment is not a precision-like indicator.

Our proprietary cycle (PC) had identified the week ending on 9/28/12 ($U.S. 1,774) as a “high zone” week for gold. Last week’s close was 1,781, so there is almost no change since that time. While this PC has more precision characteristics than the COT’s or sentiment, it is not a precise indicator of when to “hedge.” It is a “when” to sell indicator for Traders, not Investors.

The $U.S. (DXY) is predisposed to rally during October based on our research. But, the FED and all the CB’s are now fighting this natural outcome as we all have seen. Will the CB’s be able to stop the $U.S. in October? If not, stocks and gold go down. If U.S stocks sharply decline in another “Fall Classic” move, gold and silver might be sold this time around since the COT’s demonstrate that Large Specs are “hiding out” in them and a universal “risk-off” mode might prevail. Our stock analysis this week indicates that there is a “classical” technical sell signal that this might (not will) begin on Monday for the U.S. Stock markets.

Our “hedging” since November of 2011 has produced closed “hedging profits” on our physical gold of $135 per ounce for Investors, but more importantly, we retained every physical ounce our Investors own as we will never sell our “core” physical gold position. With Spot gold at $U.S.1,781 on Friday’s close (10/5/12), our physical gold is now worth $U.S. 1,916 (1,781 +135= 1,916). MML has also taken some Trader bullish stances during this period which have produced another $70+ profit since November for those that have elected to trade.

If you would like to review our current MML forecasts for gold, silver, the $U.S., $U.S. Stocks, or $U.S. Bonds, consider a subscription (details are listed below). Note that unlike other market reports, we do not have regular “publication” dates as the markets create the dates of action, and thus the communication to our subscribers.

More follows for Subscribers...

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Al Micik
email: atmmail@sbcglobal.net

The Micik Market Letter (MML) covers opportunities in any market sector when low-risk opportunities are identified for the investor and/or trader. Ongoing coverage is provided for gold and physical gold hedging strategies. Silver & GDX are periodically covered when low-risk opportunities occur. MML uses proprietary indicators combined with technical analysis, and contrary opinion. Unlike other market reports, we do not have regular “publication dates,” as the markets create the dates of action, and thus the communication to our subscribers. Individual shares in any sector are generally not covered, but nor are they excluded. By using baskets of stocks (ETF’s), we seek to decrease our risks and have improved liquidity when it’s time to exit a position. This enables us to use reasonable Stops, and we use them on every single trade in order to limit our own emotions. This is a new 2011 publication, but the editor has 36 years of market experience.

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