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Huge Money Flow Into GDX On September 4th – Dave Kranzler

Friday, September 5, 2014 3:18

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TND Guest Contributor: Dave Kranzler |

Obviously gold/silver and the miners were hit hard today. I can’t emphasize enough that the sell-off in the sector was 100% a product of an extreme degree of market intervention in the precious metals by the Fed/Comex Paper Bullion Banks. How do I know? Because if you look at an overnight graph of the price of gold, you’ll see that gold and silver drifted higher during Asian trading hours. Asia, of course is where massive accumulation of physical gold and silver is occurring.

Gold and silver did not get hit until about an hour before the Comex – long after Asian investors were in bed. That was right around the time that the ECB announced taking its interest rates more negative – something which should have been very bullish for gold.

I bring this up because a reader sent me a link from the Wall Street Journal which shows the money flows in and out of stocks. As it turns out, GDX – out of all of the stocks on the NYSE – had the largest inflow of money:

CLICK IMAGE TO ENLARGE

The metric is calculated by adding up the dollar value of uptick trades minus the dollar value of downtick trades. A stock can only have an uptick if enough investors step in to buy it at a given point in time. With GDX, $291.43 million shares traded on an uptick (meaning buyers lifted an offer) and $77.58 million traded on downtick trades (sellers). Now this does not mean that stock can’t go down just because more money flowed in on upticks than flow out on downticks. $1.2 billion worth of stock traded (buyers can buy stock from sellers on market crosses or no-ticks – this would be money flow neutral; if market makers see a lot of sell volume being offered, they take down their bid side – that’s how stocks can go lower even though money flow on the day is positive).

I thought this report was interesting and it further confirms my view – a view not originated by me and one that is shared by many market observers – that money is flowing into the miners even on days when the market is lower.

Today was the kind of day in which you kind of had to grin and bear. I traded in and out of JNUG all day long with limited success but at the end of the day I added to mining positions. In fact, as more evidence that manipulators were “shaking the tree hard,” JNUG was ripped down with about 10 minutes left in the trading day and popped back up more than 80 cents off its low in the last minute of trading. Umm, that would be aggressive and rampant short-covering, fyi.

The “foot forward” with regard to today is that it was a manipulated sell-off designed to scare precious metals investors. My other inclination, when I watched them hammer the metals on news that was metals’ bullish was that something really ominous is going on behind the scenes because they always smash gold ahead of an unpleasant event (see the late summer of 2008, for instance).

Everyone should hope my “best foot forward” is the correct alternative…

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About Dave Kranzler:

I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics. Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.