This past Friday when we broke thru the $1,290 level, we witnessed 28,000 new longs come into the market. On Monday, with a $ 20 dollar sell off, only 9,000 contracts headed for the exits. I have a concern now that the market could be vulnerable with what I view as an overbought spec long position in the marketplace.
Meaning, any significant sell off could be accelerated if we test the support levels at the $1,266 soft level and a significant support level at $1,261 in spot Gold.
Latest commitment of traders report still shows non-commercial positions (funds) still long 195,000 Gold contracts. There are many longs that still believe this market has upside potential, the question remains if we sell off, at what point will there be a fire sale and a head for the exit? My hope is we remain in this trading range until there is more clarity on the tax legislation.
Looking at the price of Gold this morning, the longs still seem to be in control.
The Bond market and the U.S. Dollar virtually unchanged this morning. The CBOE Volatility Index at 9.62 indicating that investors are very content with market expectations in the near term.
Bitcoin Update
Both the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) have released details on the upcoming futures trading for the cryptocurrency Bitcoin. Both companies are planning launches of Bitcoin contracts soon, barring any legal or regulation delays.
CME
The CME had previously announced that its Bitcoin futures product would be available for trading on December 11. However, according to Reuters, that date was posted on the CME website in error and the actual date has not yet been set. CME’s website now simply says that Bitcoin futures will come sometime before the end of the year. Contracts will be 5 BTC, and spot position limits will be set at 1,000 contracts. Further, the tick is set at $5 for each BTC in a contract, or $25 total. So far, it looks like the futures contract will not allow for delivery but be cash settled.
CBOE
In a similar statement, the CBOE released details regarding their intention to begin offering Bitcoin futures products under the ticker XBT. While still under regulatory review, the CBOE blog contained specific details on the nature of the futures contracts. Unlike the CME contracts, the CBOE contracts will be 1 BTC, and the tick will be set at $10.
Both announcements have made headline news and have driven the Bitcoin price to new all-time highs. While the jury is still out on whether this exchange product will be picked up by institutions and catch on fire for the retail investor is yet to be seen. One thing is certain, with hundreds of billions of dollars already invested in cryptocurrencies, the individual investors seem to be “all in” for this craze.
We take time out from this crazy world we now live in to give thanks to all we have. Family, friends and the liberty to be free. I would be remiss if I didn’t thank our service people, law enforcement and first responders, for their service, because without those dedicated men and women, I cannot imagine where this country would be today.
Happy Thanksgiving to all.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.