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'The Ring Is In Control'

|Includes: GDX, SPDR Gold Trust ETF (GLD), SLV

Mr. A's morning note to clients is below. Since he mentions the GSR, I thought I would again post the oh so tantalizing chart that is going to get where it is going when it feels like it, not on any individual's time schedule. Here in the deep summer doldrums, this keeps me in a holding pattern (unable to deliver much actionable content), while always keeping an eye on the compelling pattern of a different kind, that of the seemingly bottoming GSR.

Anyway, on to the morning note:

Scrappy overnight turnover leaves gold essentially unchanged this morning. The GSR is at 65.70 reflecting the stubborn recognition of inflation impact. My sources (always anonymous) from the Shire say that Uncle Ben was heard pleading to Sir Larry not to allow the Bush tax cuts to expire so as to mitigate the feared unleashing of QE2...Ben knows. Meanwhile in our version of The Ring the option boyz have control for the next 3 sessions and given that option put/call ratios have flattened out since Monday we should not be surprised to see trade close to either side of the Big Round Number ($1200) until next Wednesday when the December contract will take center stage. The technicians are emphatic that prices are still vulnerable from last Friday's pounding so we'd consider current levels shaky until we regain $1220. Open interest for Wednesday was unchanged (and probably will remain so as we roll from AUGs to DECs). Watch the GSR always a good leading indicator.

Disclosure: No positions mentioned