(scroll down for post close comments). FVOI stands for Futures Volume and Open Interest. It is computed like On Balance Volume with the only difference being that open interest (the number of open gold futures contracts) is added into the calculation. FVOI (the red line) is a great tool to tell if the price of gold has gotten ahead of itself or if there is latent strength during gold declines. As you can see in the weekly chart above, FVOI normally tracks very well with gold. It is during times of divergence that the real value of the FVOI is found.
The current divergence is continuing to show that there is positive action going on with regard to the accumulation of gold futures contracts as the FVOI remains just below its recent high while the price of gold tries to rebound off of its early June low. While gold has been chopping around in seemingly directionless trade, the FVOI is still in a tight range just below its high. This is still a bullish configuration that tells us that gold contracts are being accumulated here. Once this accumulation phase is completed, we expect gold prices to move sharply higher.
Also from Mark Leibovit's VR Gold Letter's extensive Gold News Raw:
Gold will climb 22% to a record by yearend as the global economy slows from the weight of too much debt, says Eric Sprott, the founder and chairman of Canadian fund manager Sprott Inc. (SII)
“I just can’t imagine the demand for gold is going down,” he said in a July 9 interview at Bloomberg’s Toronto office. “I don’t personally see a solution to the problem that we’re in, the financial leveraging issue that we all have where everybody wants to shed debt and there’s no buyers.”
All the above comes from Mark's 24 page VR Gold Letter which you can read more about HERE
Post Close Comments
Ed Note: As you know Mark Leibovit is one of Michael Campbell's favorite analysts and here's a good reason why. I get all of Mark's services, and one thing stood out glaringly in his VR Trader Platinum service. Of the 31 recommended stocks that Mark has liquidated since June 4th/2012 81% of them were closed at a profit. The 6 that were closed at a loss, the losses were very smalll, specifically -.12 cents, -8 cents, -7 cents, -.30 cents , - 2 cents and a "big" -$1.25 on a $39 stock. Moreover of the 8 stocks Mark is currently long, only one is showing a loss at today's close of - 6 cents.
Now for Mark's closing commens for today:
The stock market is trading modestly lower after retail sales disappointed and following reports that Democrats will let the US go over the "fiscal cliff" if Republicans refuse to raise taxes on the wealthy. But the market is being supported by a better than expected manufacturing survey and hopes for Fed stimulus. The Dow is down 32, S&P down 2, and NASDAQ down 4.
Financials are steady (XLF -0.1%) after Citigroup (C +1.2%) reported better than expected earnings.
Industrials are the biggest losers (XLI -0.7%) after General Electric (GE -1.1%) was downgraded by Morgan Stanley.
Natural resource stocks are also weak (XLB -0.6% and XLE unchanged) as the weak economic data hurt commodity demand.
Treasuries rallied to record highs after the disappointing retail sales report. The long bond future is up 1 2/32 to 152 8/3
The US Dollar Index is trading lower after the US's disappointing economic data and the possibility of new stimulus from the Fed. The US Dollar Index is down 0.198 to 83.151.
The European Central Bank wants to impose losses on owners of Spanish debt even though finance ministers agreed not to do so.
The Euro is up 0.13% against the Dollar.
Precious metals are getting support from a flight to safety, but industrial metals are down on those demand concerns. Gold is up 4.30 to 1593.70 and silver is up 0.03 to 27.37, but platinum is down 12 to 1416, palladium is down 6 to 578, and copper is down 0.0165 to 3.4875.
Oil is getting support from continued unrest in Syria and its political implications. Crude oil is up 0.36 to 87.46.
Retail sales fell 0.5% in June, well below forecasts for a 0.2% increase. It was the third consecutive decline in sales, the first time that has occurred since 2008.
The Empire State manufacturing index rose from 2.3 to 7.4 in July. Economists expected a smaller rebound to 5.0.
The International Monetary Fund reduced its forecast for global GDP growth by 0.1% this year and 0.2% next year. The IMF now expected GDP to expand 3.5% in 2012 and 3.9% in 2013.
The Canadian market is down modestly, just like the US market. The TSX is down 8 or less than 0.1% and the TSX Venture is down 5 or 0.4%.
The Canadian Dollar is down slightly as traders move to safer currencies. FXC is down 0.12 to 97.88.
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Still in a Bullish Configuration (Updated post close)Share on Facebook Tweet on Twitter
Posted by Mark Leibovit - VR Gold Letter
on Monday, 16 July 2012 08:34