Gold- Easy as ABCD

The first week of May, the average time window for the D-wave decline, is approaching.

D-Waves Actual & Estimate:


The Diffusion Index reveals the transition from D-wave (Down) to A-wave (Up). A-wave advances are characterized by doubt and slow steady gains.

Gold London P.M. Fixed and the Commercial Traders COT Futures and Options Gold Diffusion Index (DI):


The D-wave spikes in 2010 are clearly not as strong as the comparable 2006 to 2007 period. See chart below. While a big statistically flip-flop is still possibly, market realities could very well alter footprint. Simply put, demand for physical gold is intensifying. It’s harder to control. A large statistical flip-flop (from bear to bull), while profitable, risks the loss of control. Control is more important than profit.

Think of paper gold as a giant battlefield between paper and physical gold. As demand for physical gold intensifies, more paper (cannons) must be committed to the battlefield to prevent a rout. Eventually, there will be so much paper (cannons) it will be difficult to conceal the control relative to actual gold.

Gold London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest