- Gold's Diffusion index (DI) has risen from -86% in October 2012 to +33% as of 01/08/13 (chart 1) This steady rise illustrates accumulation during the AB transition (delay) by the invisible hand.
- The weighted stochastic of open interest or "participation" has fallen dramatically since September 2012 (chart 2). Participation represents a good proxy for sentiment towards gold. As price declines, investors transition from positive sentiment - "I love gold" to negative sentiment - "I hate it." Gold has a tendency to bottom when everyone but the invisible hand hates gold.
- The invisible hand uses spreads to profit from phase transitions within a trend. These transitions include inflection and acceleration points (chart 3). A spike in spreading activity will hint an acceleration point is near.
- Silver correlates to gold with amplitude. Silver's money flow setup, i.e. diffusion index, continues to lag that of gold (chart 4). Silver's DI is -11%, while Gold's is +33%. Why is silver lagging? Participation in silver hasn't declined as much as gold (chart 5).
Chart 1: Gold London P.M Fixed and Gold Diffusion Index (DI)
Chart 2: Gold London P.M Fixed (Gold) and the COT Futures and Options Open Interest Stochastic Weighted Average (WA)
Chart 3: Gold London P.M Fixed And Noncommercial Spreading Activity Diffusion Index (DI)
Chart 4: Silver London P.M Fixed and the Silver Diffusion Index (DI)
Chart 5: Silver London P.M Fixed and the COT Futures and Options Open Interest Stochastic Weighted Average
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