MNeagle
10th September 2010, 05:31 PM
If only Goldman clients could receive a penny for every time the firm's sellside advice top ticked the market (to the dot), they would actually be in the green despite following said advice... The most recent blatant example of a concerted sell off following a Goldman "buy" note, occurred at the very peak of the gold move, when the yellow metal had just hit a new all time record high. Sure enough, Goldman, which now apparently caters only to the momentum crowd, decided to use that catalyst as a reason for a note (dated 8:18 am on September 8, note the time relative to the gold price below) to send the signal it was once again in the outright dumping mode.
The price action in gold is promising and I think we are poised for a break into new highs against the dollar very soon. We currently trade 1258 against the prior high in June of 1266. The price action on NFP was particularly revealing and reminded me of a NFP day almost 12 months ago when gold fell sharply 15 usd immediately after the number on both occasions and then turned rapidly to close up on the day. On the prior occasion gold had a very strong rally the following week taking us to new highs for several weeks after.
It remains to be seen whether history repeats itself and perhaps using vol mkt is the best way to express a safer view. Macro positioning is not overtly heavy and we have started to see interest to buy on dips. Comex length is still some way off its highs of earlier this year.
The physical market anecdotes are firmer as we move into festival season in India. Talk of strong agricultural harvests are also positive for Indian gold and silver demand.
The macro environment with regard to stresses in European banks and sovereign issues just isn't going away and I think we will see retail and private wealth client inflows into ETFs and bars/coins remain.
The bigger instutional flows have been much slower in allocating than I would have anticipated earlier this year but with summer holidays behind us we may start to get some weightings. At the end of the day the market will need to see these flows if we are to make material gains in future.
From a technical perspective 1266 is the first resistance and I think a break could lead a fairly quickly to 1300 where natural selling is likely to take place. There should be good support now at 1233 which makes a decent stop for short term traders. See Lars option comment below with regards to potential importance of dec 1500 strike expiries.
Good Luck
Zak
Gold options
1m 14.00/15.00
2m 15.75/16.75
3m 17.25/18.25
6m 20.25/21.25
1yr 23.50/24.50
Gold is within striking distance from the old highs back in June. This rally has been very orderly and thus vols are not getting bid up as market seems very content with the direction of spot. The covered call sellers (most recent big seller was 1270's in decent size) seem very relaxed. One of the largest open interest lies with Dec10 1500 calls standing at 24k lots or 2.4mm oz (it is the largest open interest across Oct10, Dec10, Apr11, Dec11 and Dec12 options traded in the market - standing at 5.9% of total open interest across those contracts). Intersting to note that last year the Dec09 1200 was the dominant strike and had enough gravitational strength to pull spot to 1200 by ear end. If this rally extends, the 1500's could easily come into play in the same fashion.
Silver
1m 26.75/28.25
2m 28.25/29.75
3m 30.50/31.50
6m 32.50/33.50
1yr 35.00/36.00
Lars Ahlgreen
Lots of words, yet judging by the chart below, Goldman either is either the worst top-ticker in the history of gold, or the firm has found the most effective way to telegraph when the smart money should be selling gold.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shirakawa/GS%20Gold%20Buy%2009082010_0.png
link (http://www.zerohedge.com/article/goldman-does-it-again-firm-top-ticks-record-gold-price-penny?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedg e+-+on+a+long+enough+timeline%2C+the+survival+rate+fo r+everyone+drops+to+zero%29)
The price action in gold is promising and I think we are poised for a break into new highs against the dollar very soon. We currently trade 1258 against the prior high in June of 1266. The price action on NFP was particularly revealing and reminded me of a NFP day almost 12 months ago when gold fell sharply 15 usd immediately after the number on both occasions and then turned rapidly to close up on the day. On the prior occasion gold had a very strong rally the following week taking us to new highs for several weeks after.
It remains to be seen whether history repeats itself and perhaps using vol mkt is the best way to express a safer view. Macro positioning is not overtly heavy and we have started to see interest to buy on dips. Comex length is still some way off its highs of earlier this year.
The physical market anecdotes are firmer as we move into festival season in India. Talk of strong agricultural harvests are also positive for Indian gold and silver demand.
The macro environment with regard to stresses in European banks and sovereign issues just isn't going away and I think we will see retail and private wealth client inflows into ETFs and bars/coins remain.
The bigger instutional flows have been much slower in allocating than I would have anticipated earlier this year but with summer holidays behind us we may start to get some weightings. At the end of the day the market will need to see these flows if we are to make material gains in future.
From a technical perspective 1266 is the first resistance and I think a break could lead a fairly quickly to 1300 where natural selling is likely to take place. There should be good support now at 1233 which makes a decent stop for short term traders. See Lars option comment below with regards to potential importance of dec 1500 strike expiries.
Good Luck
Zak
Gold options
1m 14.00/15.00
2m 15.75/16.75
3m 17.25/18.25
6m 20.25/21.25
1yr 23.50/24.50
Gold is within striking distance from the old highs back in June. This rally has been very orderly and thus vols are not getting bid up as market seems very content with the direction of spot. The covered call sellers (most recent big seller was 1270's in decent size) seem very relaxed. One of the largest open interest lies with Dec10 1500 calls standing at 24k lots or 2.4mm oz (it is the largest open interest across Oct10, Dec10, Apr11, Dec11 and Dec12 options traded in the market - standing at 5.9% of total open interest across those contracts). Intersting to note that last year the Dec09 1200 was the dominant strike and had enough gravitational strength to pull spot to 1200 by ear end. If this rally extends, the 1500's could easily come into play in the same fashion.
Silver
1m 26.75/28.25
2m 28.25/29.75
3m 30.50/31.50
6m 32.50/33.50
1yr 35.00/36.00
Lars Ahlgreen
Lots of words, yet judging by the chart below, Goldman either is either the worst top-ticker in the history of gold, or the firm has found the most effective way to telegraph when the smart money should be selling gold.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shirakawa/GS%20Gold%20Buy%2009082010_0.png
link (http://www.zerohedge.com/article/goldman-does-it-again-firm-top-ticks-record-gold-price-penny?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedg e+-+on+a+long+enough+timeline%2C+the+survival+rate+fo r+everyone+drops+to+zero%29)