Today's move wasn't as severe or meaningful as some are making it out to be. This is the correction I was looking for last Thursday. I'll have to take my crystal ball back. The move down from Wed's closing was only $25, and the total move top to bottom was $40, and has so far recovered $10 from the bottom. In fact, just like I mentioned in previous posts, gold needs to do this from time to time to scare the crap out of bulls. There's nothing so far to indicate that today's move was the start of a new trend - and we're still about 3 days into an 11 day up-cycle. Todays' move was a 38.2% retracement from 1264. The dip today did a great job of bringing the RSI down from overbought territory, although it's still at the top end of the RSI range. Another day of wandering around will bring the RSI down nicely and recharge the charts for more upside - 1420.
Today's move will need a day to consolidate, so we'll probably see wandering tonight and tomorrow between pivot points 1318.7 and 1342.3. Possibly we could meander up to 1358.2.
Gold and stocks are a good buy opportunity at the moment - if you've been waiting for a pullback to get in - this is it.
Haven't fully analyzed silver yet, no comments there yet. I believe the same for gold applies to silver, but I need to look at it more.
Stocks (SP500) are still consolidating and will probably wander directionless on Friday. Overall Friday will probably be a snoozefest.
As far as my trading, the last few nights have been rather sleepless due to all of the night time activity. I was eying a target at 1269.3 last night and was fully loaded, planning to unload significantly near that target, but my plans were foiled by $3. Still, being cautious I did unload positions pretty quickly and avoided taking huge losses. I won't be able to make any money on this pullback, but I should come out about even (close to where I was last night) once we get back to the 1260's.
Support for gold is at 1318.7, resistance at 1342.3 and 1358.2.
PC, I'm flying as your wingman on this one. Lead the way.
Actually, you have a 6th sense on what you call the "energy" in these up moves. I often sell my miners way too early, way too often. Now it's coming down to buying weakness whenever you can and selling into great strength. I know MJ is out of stockers but I feel barren with more to accumulate. PM's are probably going to run into JS's January 14th, 2011 date and at some point you just have to hang on. I'm still a bit peeved that all the cheapo junior miners I picked up in July and August for $.75 to $1.50 a share are all now about 50-80% higher....but I made the "easy" 15-20% on the first up move...lol.
I do agree that if one is looking to get back into miners or physical to pay attention to this move.
<I know MJ is out of stockers but I feel barren with more to accumulate>
I had to sell the charts were so over extended. It was either hedge or sell at the high. I choose the high. I do feel neeked and will look to re enter.
I picked this up today right off of the 50. A classic support bounce. I think myself and ten others fought for this trade. I nailed it
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Tomorrow, I'm going to pull the trigger and buy NovaGold. I'm going to sell Johnson and Johnson and Apple. Total money move about $6,000. I normally don't discuss dollar amounts here on the board, not sure why I'm doing it now. I looked at some of the juniors and funds, but NovaGold is calling. Plan is to hold long term.
I like MJ's move today. Was contemplating buying FRG as well as it hit the 50dma but expected more downside tomorrow...that in retrospect probably won't come.
NovaGold has only had 1 big down day after peaking on a 2 month - 70% up move. It's flown past the top of the cup formation and one would think it's time to form a handle after that move. FRG at the bottom today would have been a safer move imo as it had been downtrending for days. NG scares me a bit after that huge bullish engulfing candle today. Can it go any more vertical with other intermediates and seniors are down over the past few weeks? I know Paulson likes it and is a big stakeholder based on his last public report.
WASHINGTON (AP) -- Fears of a full-blown currency war flared Thursday as the dollar fell to an eight-month low against the euro and the U.S. stepped up pressure on China to let its currency rise.
The escalating tension threatened to dominate a three-day conference of the International Monetary Fund and the World Bank. Leaders from both groups warned Thursday that a currency war could destabilize global financial markets at a fragile moment.
The flare-up comes as investors are anticipating the U.S. Federal Reserve will pump billions more dollars into the U.S. economy. That is weakening the value of the dollar against the euro, which has been surging.
A falling dollar can affect U.S. consumers, investors and businesses in various ways. Travel to Europe becomes more expensive for Americans. Exports from U.S. businesses become more affordable for European buyers. U.S. Treasurys become less attractive to investors.
A different scenario has been playing out with China. An undervalued Chinese yuan has weakened U.S. exports while making Chinese goods attractive to U.S. consumers. The imbalance has weakened U.S. economic growth. And it threatens U.S. manufacturing jobs at a time when the American economy is struggling with 9.6 percent unemployment.
At the same time, China's economy is soaring.
World Bank President Robert Zoellick said Thursday that the tensions over currencies could undermine investor confidence at a time when the world needs the private sector to bolster growth.
"If ever there were a time that we should not turn our backs on international cooperation, it is now," Zoellick said at a news conference ahead of three days of high-level talks on global finance in Washington.
Economists said they don't expect major breakthroughs coming out of the weekend meetings. Countries are feeling so much pressure to produce jobs by boosting exports. One way to do that is by lowering the value of the country's currency.
China is hardly alone in trying to gain a competitive advantage. The United States is contributing to a weaker dollar by pressuring Beijing and by the Fed flooding the markets with U.S. dollars.
The Japanese government intervened in currency markets for the first time in years on Sept. 15. It sold yen and bought dollars to push the yen's value lower. And this week, the Japanese central bank announced that it would pursue a policy similar to the Fed's: buy assets to lower Japanese interest rates, another way to lower the yen's value.
Brazil and South Korea have also taken recent actions to weaken their currencies as a way to protect their exporters.
"The global economy is struggling right now after a very deep recession. Everybody wants to grow through increasing their exports," said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University. "I think we will see more currency tensions and trade tensions."
High unemployment in the United States and many other nations could pressure leaders to establish trade embargoes that could further strain the global economy.
Already, the U.S. House has approved legislation that would allow for economic sanctions on China and other countries found to be manipulating their currencies to gain trade advantages.
The legislation is not expected to pass the Senate this year. Still, the Obama administration has responded by increasing pressure on Beijing in the weeks leading to congressional midterm elections. Those elections are shaping up to be a referendum on Democrats' handling of the economy.
American manufacturers would like to see the dollar fall by as much as 40 percent against the yuan. The administration is hoping this change will give a boost to U.S. manufacturing jobs.
The U.S. plans to make currency values a dominant topic at the IMF-World Bank meetings this weekend. It will also raise the issue during sideline discussions among the Group of 20 major economies. That group of rich nations and major developing countries includes China.
French President Nicolas Sarkozy will take over as chairman of the G-20 nations in November. French Finance Minister Christine Legarde told a Washington audience late Thursday that Sarkozy plans to make reform of the global currency system a top goal during his year as chairman of the G-20.
"We have to bring people together with as little preconceived ideas as possible but with the openness to create something that is working better than what we have at the moment," Legarde said in a speech at the Carnegie Endowment for International Peace.
Chinese officials have reacted strongly to the stepped up U.S. pressure. Prime Minister Wen Jiabao said Wednesday that "if the yuan is not stable, it will bring disaster to China and the world."
IMF Managing Director Dominique Strauss-Kahn and Zoellick said a compromise solution to the currency dispute would reassure financial markets.
Strauss-Kahn suggested China needs to move faster to address concerns about its undervalued currency if it wants more influence at the IMF. He echoed comments Wednesday by Treasury Secretary Timothy Geithner.
"If you want to have more say, more weight in the IMF, then you need to take more responsibility in the stability of the system," Strauss-Kahn said when asked about Geithner's speech Wednesday at The Brookings Institution.
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Friday was a great consolidation day and gold was able to recover some ground while it consolidated. After Friday gold should be ready for more upside on Monday, although it is a holiday I believe it will be trading internationally. Friday close less than $3 below Thursday's close.
This week was good and marks the 4th consecutive up-week in a row. See the weekly chart below. We managed to get the daily RSI down to about 70 which should give the chart enough room for another spurt, at least to my target of 1380 and then 1420.
Open to close week 9/13: +$28.90 week 9/20: +$20.60 week 9/27: +$20.80 week 10/4: +$28.20
So another "typical" week would bring us to 1375-1380, but I think there's a good chance we'll even see 1400 next week - unclear if we'll close the week above 1400. The timing models really aren't showing any big signals next week so it just might set my hair on fire with upside movement.
Silver following gold right up, I think they'll move in concert with each other.
GVZ - Gold volatility is really kicking up and the BB's are finally starting to spread out.
The only signals from the timing models called for a bottom in stocks today or Monday, and I think we did get that bottom very briefly this morning. Stocks sould be ready to unleash upwards, and the next signal isn't until Oct 26/27 calling for a top.
That Oct 26/27 date fits well with options expiration and a bond week. The G20 finance ministers and IMF meet on the weekend of 10/22-23 which should help supercharge that following week. Then the FOMC meets on Nov 2/3.
No Canadian market on Monday but US stock market will be open. Was disappointed that nothing in the miners was really on sale any lower today.
Man the $VIX at $18.89 looks tempting. It got a 8% haircut today on a flat market day. Rolling over months? Front end? Resets? Kinda weird.............MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Today was an unexciting consolidation day, and now the charts should be ready for the next move tonight or Tues. I have projections for the next move up to 1370.9, 1386.3, as well as the resistance levels I'll put at the bottom of this post. S & R levels have really widened up, and so I think an expectation of 1371 tonight/tues is a highly likely reality, with a move beyond that into the 1370's with a spike into the 1380's completely viable.
Support for Tues is at 1335.5, 1345.1, 1350.7, and resistance at 1360.3, 1365.9, and 1381.1.
For silver I have projections at 24.04 and 24.82, and I have a high degree of confidence in both of these targets being achieved within weeks with $24 achievable this week. With the support and resistance levels, $24.80 silver is even possible this week.
Support for Tues is at 23.005, and resistance at 23.34, and 23.63.
Bought some FRG the past few days based on the discussions here... up 3%+ so far
Those looking for a Uranium play, look at UEC, currently at $3.75 headed for $4.05 pretty easily for an 8% gain, catch a pullback to increase returns.
Edited to correct support & resistance levels which were completely wrong.
I've followed O'Connor's analysis for a while and he continues to get the trend right. Now calling for the dollar to bottom for a brief bounce back towards the 80 range. Then a continuation of the downtrend into Nov/Dec to test the previous cycle lows of 74 and 71. His cycle analysis has the dollar making a longer term 3 yr bottom next spring at all time lows. One possible roadmap for PM's as they perform inversely to the dollar.
Radomski urges some caution on miners based on his fairly accurate indicator of volume ratio of the GDX/SPY. It spiked on Oct 7th when the miners reached a short term top. This has typically lead to a further correction. Interesting to see if this will hold up when gold and silver appear to be forming bull flags/triangles/rectangles.
Coincrazy, I just bought a few hundred FRG shares, I don't mess with options much on anything but the indexes and ETFs like SPY and GLD. Are you trying to say there was a lot of volume on those calls?
I was a little early on my call for a breakout yesterday - I thought the fed meeting minutes might be the spark. But today the penant consolidation pattern in GC became obvious and it just wasn't ready. The good news is that we're at the end of the triangle, and the charts are full of energy. GOLD IS READY TO ROCK AGAIN. I don't think we'll see anything less than 1350 again until the big retracement comes. Look for a move over 1356.5 to signal that 'it's on!'
Support for Wed is at 1343, 1349.7, and resistance at 1357.9, 1364.6, and 1379.5. I kind of think we'll see 1380 Wed., with a precise target at 1381.7.
Silver should follow along for the ride. Support is at 23.015, 23.255, and resistance at 23.565, 23.805, 24.355.
SP500 also looking good for another little run here...
<< <i>I saw that someone purchased 5,000 at .20 not an expensive trade, but could pay nicely on a move up in the next 5 months. >>
I only see an open interest of 30 if I'm looking at it right. But this does look intruiging. Dec $10 calls are pretty cheap too. I might just have to buy a few of those lottery tickets
<< <i>GOLD IS READY TO ROCK AGAIN. I don't think we'll see anything less than 1350 again until the big retracement comes. Look for a move over 1356.5 to signal that 'it's on!'
<< <i>I saw that someone purchased 5,000 at .20 not an expensive trade, but could pay nicely on a move up in the next 5 months. >>
I only see an open interest of 30 if I'm looking at it right. But this does look intruiging. Dec $10 calls are pretty cheap too. I might just have to buy a few of those lottery tickets >>
Someone closed out 20 later in the day, would be my guess. 50x100= 5,000 so now it is 20x100= 2,000 open calls. There were also some put selling at 7.5 same exp.
<< <i>GOLD IS READY TO ROCK AGAIN. I don't think we'll see anything less than 1350 again until the big retracement comes. Look for a move over 1356.5 to signal that 'it's on!'
Bullish technicals are also driving investment demand to the long side of the gold market. Technically, gold bulls have the solid overall near-term technical advantage and gained still more power Wednesday. Prices are in a 2.5-month-old uptrend on the daily bar chart. There are no early technical clues to suggest a market top is close at hand.
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A great $15 day for gold, and it's not over yet... making new highs as I type this. Silver also having a great day. I think there's a little room left over for further upside to the current target, 1381.7, and silver to 24.31. Next resistance for gold would be 1400.
I'm going to try to play these resistance levels and sell a small portion, wait for a consolidation, and buy back slightly lower.
I know there's a LOT of concern about being overbought and an imminent retracement, but at this point we look good at least until Tuesday... which will probably coincide with 1420 gold.
Support for gold at 1356.6, 1366.1, resistance at 1382.3, 1391.8, 1417.5. support for silver at 23.51, 23.82, resistance at 24.365, 24.675, 25.53.
So does anyone believe me that we're in the final months of a parabolic move yet? The parabola actually started a few years before this chart, I only have since 2007 or so...
We had another consolidation day Friday which did well to re-energize the pattern and bring the daily RSI back down to border of being overbought... I think we can get one more surge out of this move before a more serious pullback.
With this pullback today (a 38.2% retrace of the move up from around 1328), I think there's a great chance that the bull run will actually continue until Oct 26 or Oct 27. In the McLellan timing models there was a call for a bottom on Monday, so we either saw that today or will see it on Monday (but those targets are often 1 or 2 days off). There's another indicator for a top on Oct 27. And while not definitive, because we have seen a mild pullback rather than a couple of HUGE up days, it does not appear that gold will want to have a big correction any time soon (at least not next week). We still need to be careful Tues/Wed and look for any signs of weakness.
The pattern is consolidated and does not need much more time, so we can resume upwards on Monday or Tuesday. I kind of have a feeling that things might get going Sunday night/Monday morning as Asian and European (and all) markets further digest the fed's comments from Friday.
I'm still looking for a top at around 1415-1430, with possibly a spike higher, 1450 or more.
Once again we have our 5th up-week in a row. Open to close (does not include high or low points. week 9/13: +$28.90 week 9/20: +$20.60 week 9/27: +$20.80 week 10/4: +$28.20 week 10/11: +$20.90
For Monday, support is at 1349.3, 1359.5, and resistance at 1373, 1383.2, 1396.7, 1420.4.
I want to bring up a mining stock (UXG) that is on the verge of breaking out of a pennant formation. I'm don't have anything else to say about it, other than this chart looks good to me. Buy at your own risk.
It's a little early to say, but silver could be in a pennant consolidation at the moment, and may need to consolidate for another day or two:
If this current pullback lasts more than a couple of days I'd expect to fill some gaps in GDX/GDXJ at around -8 to -10% as well as a gap in GLD at -5%. Equates to around gold at $1310.
Bill Downey has provided some excellent chart analysis on silver's major resistance points going back to 1980. Not surprisingly, silver has hit each of them over the past 10 yrs. Upper channel is currently at $30 with support at $21. A must view for silver holders or buyers.
Yes UXG appears to be getting ready to move up again towards the neckline at around 6 of the longer term cup formation. Then attach a handle with clear sailing to 9-10.
For long term pennants I like this consolidation on IAG in the weekly chart. It's the clearest cut formation of all the larger gold miners and is just itching to move up since last peaking in November 2009. On the monthly chart it looks ready to go. This miner has not really participated in 2010 considering it did so well in years prior. THM has the same chart and has just now started a breakout. In fact looking at the miner monthly charts there are a lot of them who are in the process of getting ready to complete cup formations or have broken out from them. Fertile ground.
GDX broken above cup formation With GDX and GDXJ broken out of formation it's now a matter of time to catch up the laggards in the indicies.
Kuch, I may have spoke too soon on NG. It has moved a lot in a short period but it might be getting ready to leave its neckline behind as well and head towards 20, with intermediate stops of 12 and 15 along the way.
Gold had just bounced back from $1353 to $1376 which was an approx 38% fib retrace of the drop from $1389. That's a very good spot to commence a pullback regardless of time of day. Someone pushed the Dow/S&P futures hard right at 4:00 so it probably affected gold/silver as well after hours.
Would like to hear PC's thoughts on whether there's going to be another move below $1353 to come. While most metals and commodities have been falling as of late, platinum and particular copper have bucked that trend. Copper actually gained today during the slam-fest which is a divergence of sorts. Interesting that the Dow and S&P500 futures were pushed off the cliff from 4:00-4:30 pm today. Is that a nudge intended for tomorrow's open?
The gold and silver trend lines have not been violated in any way yet. As I see it there are only 2 up legs so far since the late July metal's rally, with the most recent leg commencing around $1236. Seems to me there is one more upleg to go. Therefore I'd expect a correction of the leg from $1236-$1389, not the entire move up from $1155. A 38% Fib of the latest upleg, assuming it's complete, would take gold down to $1331.
Miners have usually ended longer up moves at 30-40% > 200 dma. And currently GDX peaked at around +20%. That's just too weak for this move to have put in a multi-month top. I would target the 63-70 range for GDX to complete this cycle (November-December).
You're right RR, it was a nice 38.2% retracement. It's amazing how precise they are, at 1353.3 was the low last night and is exactly 38.2% under 1388.1 as measured from the distinct 1297.0 low on 9-30.
I didn't expect it to go quite this low, and it did take out some stops I had which cost me a little, but I'm still up big for the month and I'll make it up shortly I presume.
The timing is getting tricky, as I had been saying that the rally should go until Tues (Oct 19), and then to look for a sharp retracement. But since we just had a pretty good retracement, I think we could be in for at least another week of rally. So my outlook is for a the rally to hit strong over the next week until Tues Oct 26, taking us up to $1400-1420 (possibly higher). HOWEVER, caution is in order tomorrow and if there is any major weakness, it may be time to bail should my original call for a retracement tomorrow be accurate. By major weakness, that would be a drop below 1360. Recall that the McLellan timing models are actually showing a top in the XAU on Oct 27, which fits good with this new scenario, so I think the odds are on for a full rally until next Tues. The same indicators for DJIA, NYSE, and SP500 indexes are also showing tops on Oct 26/27.
The RSI for gold comex is down to 70.5 from overbought levels (~90 at the recent peak) on the daily chart, so that should help as well.
These parabolic moves are powerful, and these re-energizing pullbacks can extend these rallies longer than we expect.
Loaded up on UXG and THM today.
Edited to add: Gold: Support for Tuesday is at 1357.2, 1366.4, resistance at 1379.6, 1388.8, and 1411.2. Silver: Support at 23.895, 24.205, resistance at 24.695, 25.005, 25.805.
Therefore I'd expect a correction of the leg from $1236-$1389, not the entire move up from $1155. A 38% Fib of the latest upleg, assuming it's complete, would take gold down to $1331.
Gold splunged to hit $1331.95 so far today. Off by 90 cents. Now the question, was that the end of it or just the 2nd leg down? Since gold does like to move down in fives, another final leg down could take it to the $1310 region. GDX has nother 3% or so to drop to close an obvious gap at 53.5 and dip below the 50 dma. This would also coincide to a retest of the breakout from the monthly cup formation, though today's dip could also be counted as a retest of that neckline. GDXJ doesn't quite have that gap as it was essentially filled on a prior sweepdown. But retesting that point again would also allow it to touch the 50 dma and retest its cup formation.
Note that if you compare the last 2 weeks of the GDX chart formation to the same period during the June highs, they are surprisingly similar. Today's drop was not quite as deep as the July 1st washout but that period was heading into the final washout of the summer. I don't believe we're in that type of final washout scenario right now. In the longer term, the HUI is going back to retest the key 500 level yet again. If you look back to 2008 that has been key resistance much like $1000 was to gold. Probably a physchological "round number" barrier more than anything else. In the past 3 yrs there have been a succession of smaller cups forming into that 500 point. Gold did much the same thing at $1000 before finally breaking out for good. I would expect something similar to the HUI after this final retest of the 500 line. It could dip down another 5-10% but I think this will be the last retest for HUI before heading on to higher ground once and for all.
I should have known things were getting a little too easy, and a 6th up-week in a row would be unlikely. So it appears that the next week is going to be a retracement week, and I would expect any immediate upside although I wouldn't rule out a return to 1360-1370's by early next week. And I wouldn't rule out any further downside. Additional downside is possible as far as 1299.3, which would be the 38.2% retracement of the entire move up from 1155.6. Such a move would re-energize the pattern tremendously, and taking a weak off will bring the RSI and other indicators down nicely so we can have an amazing Nov & Dec. I don't really see gold going any lower than $1300, so if we get down there I would load up the truck.
On the other hand, the McLellan indicators showed a bottom today for the XAU, which would indicate that today was THE bottom for this move.
Until this pattern plays out a bit more, I've closed most of my futures positions.
When she went from 1,250/oz to 1,200/oz in one day, she went lower to about 1168, or somewhere near that. We will probably see another $20-$50 drop before we head north once again.
If this current pullback lasts more than a couple of days I'd expect to fill some gaps in GDX/GDXJ at around -8 to -10% as well as a gap in GLD at -5%. Equates to around gold at $1310.
That would be the next step imo. Nibbled on some miners today that have already pulled back 15-23%. Most of the senior golds started correcting 9 days ago with the front runners only pulling back the last 3 days with gold and silver bullion. This weekend is a G20 finance ministers meeting coupled with gold futures expiration/bond week next week. So dragging on this weakness through next Wednesday is quite doable. Then the FED meets the first week in November.
I don't think this drop is going to invalidate all those cups, IH&S, and triangles that have been building for a while on the miners. Just another retest to demoralize anyone who is late to the game or tired of hanging on.
I don't have much to add to my earlier comments, except that I've reconciled my thoughts to an expectation that we'll see a mini-double top going into Oct 26/27 which will probably approach the 1380 area before another plunge. This makes sense of the McLellan timing model, as well as market psychology. Many gold bulls are probably going to see this as a big opportunity to buy and load up as the price starts to recover, only to be greatly demoralized when gold makes that second plunge. Trading is never easy, not even in a solid bull-move. We also have the election coming up, and somehow I think the gold price up-movement will ease for the election.
Still, I see solid support at 1300 for the second plunge, with perhaps very quick overshoots into the high 1200's.
So my personal plan is to get back on board here and ride this back up to 1370, although I'll try to pick up some contracts on a dip to 1320 tonight. Also be ready for some big volatility, as we'll probably see some big $30-40 oscillations in the next couple of days, so it probably won't hurt to book profits when you get a $10-20 move in your direction.
Support is at 1258.7, 1302, 1318.9, resistance at 1345.3, 1362.2, 1388.6.
As far as gold stocks, I don't know what to say. I don't see the pennant formations we've pointed out recently getting wrecked or resulting bearish, and most of the damage is done with gold, IMO. But if there is a double top you'll want to get back out again next Tues/Wed.
I suspect the dollar and GSR will pull back to test 50/200 dma's then a resumption of their downtrends. The H&S on the GSR predicts a number around 52-53. So a bounce back to the under side of the neckline (60-63) might be in order in the short term. Dollar will probably fizzle out somewhere between 78.5 to 80. Excellent charts. I see you redrew the GSR base line a bit further back than the last one. Gives a totally different perspective. Seems to me that the GSR just completed a 3rd leg down. After it's bounce it can resume the final leg down towards the low 50's.
It bounced exactly where we thought it would. .74 will be it's next test on the next leg down................MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Treasury Secretary Timothy Geithner vowed Oct. 18 that the US would not devalue the dollar. Does he mean, “not devalue the dollar again?”
What a joke. Too bad Larry Summers has gone. Geithner is less amusing doing a Stan Laurel solo impression without his Oliver Hardy On this the 23rd anniversary of the 1987 stock market crash, STOCKS proved they haven't changed much by dropping 1.48%, 165.07 Dow points to 10,978.52 and 18.81 on the S&P500 to 1,165.90. A dollar rally will hurt stocks much worse than silver and gold over time.
<< <i>cohodk, do you think they are trying to manage a soft landing for the dollar? do you believe that it's even possible? >>
I think they are hell bent to keep a massive amount of debt from imploding.
It interesting to note that since the beginning of 2008, the dollar is up, while the Euro is down. Even the Canadian dollar is down about 4%. It sure feels much worse than that.
Wouldnt it be cool to see the savings of millions wiped out? To ensure the typical American never travels overseas? To place great American assets in the hands of foreignors? Thats what they're set on acheiving. Lets see if they're successful.
<< <i>It interesting to note that since the beginning of 2008, the dollar is up, while the Euro is down. Even the Canadian dollar is down about 4%. It sure feels much worse than that. >>
Sounds like you need to look at the big picture. The dollar is up, relative to what? Are you referring to the dollar index? If that's the case, the dollar index is down compared to most of 2007 and the first half of 2009, so I'm not sure why you use 2008 as a comparison. The USD is still in the same range it's been in for quite a while. Against gold, the dollar is down almost 40-50% vs 2008 depending on what values you use, and the dollar is down vs. many commodities.
With the USD and Euro and other currencies falling similarly, they are all going to look relatively stable, which is why you have to look at commodity prices.
It "feels" worse because the dollar is buying a lot less than it used to.
Today's rebound in gold and miner prices caused me to think about a post on Kitco where someone mentioned that for months now Wed. has been the biggest "up" day in the week. Maybe I should go back and look at that a bit more closely. Is that the day the bankers play golf?
The pullback in gold to $1350 and silver to $24 just about coincided with the upper channel line in their current down trend. We'll see if that's all the oomph they have for now. The dollar was flat lining at around 77.0 contemplating its next direction.
< the dollar index is down compared to most of 2007 and the first half of 2009, so I'm not sure why you use 2008 as a comparison>
Because it fits his prose!. He picked the absolute recent highs for the Cando and Euro for his comparison. Recent history suggests that the dollar is getting tommahawked for 20% or more against almost all currencies. FYI- the dollar is getting smoked yet again today. Tests will be made at .74, .72 . For the dollar to rise the stock market will need to pull back, way way back. That is possible.
MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I just picked 2008 out of the air. It was a time when taxidrivers, Iranians and supermodels were choosing to own Euros over dollars. It was before the stock market collapsed. I have no agenda, these are the facts. Here's another--The dollar is within a couple pennies of where it was in 1992!!!!!
The Japanese Yen has been the strongest currency on the planet during that time. Where has that gotten them? I think people get too caught up in the "worthless" dollar mantra. I mean really, WHO CARES? Just get more of them. Isnt that what the gold and silver hoarders are tying to acheive?
Point was that in light of Trillions of dollars being printed, the US dollar still has still maintained its value against Euros and Candos. Amazing, isnt it? The Aussie dollar is up about 12%--US Treasuries have outperformed that. The Swiss Franc is up more, but hey, they're neutral.
PC, I can only think of a few things that dollars will buy less of today-PMs and maybe a few services. Only foreign investments cost more (and that really bums me out!!). Even manual labor is less expensive--which is exactly what Bernanke fears. Any inflation that develops will only be transitory, unless wages go higher. The great thing about commodities, is that they are just that, commodities. This year corn goes higher so next year farmers plant more, flood the market and the price goes down. So maybe next year it will be soybeans. Heck, cotton hit a 140 year high last week--hows that for a bear market? LOL
Think how many people in this country are dependant on agriculture--from the farmer to the grocer to the DE salesman. The G cant afford to have all those people collecting unemployment also. So what does the G do? Pass some garbage increasing the amount of ethanol in gasoline. Hey it worked to get food inflation going last time, so lets try it again. 15% ethanol Thirty-two (32) MILLION acres are being set aside to ensure grains prices continue to rise. Talk about subsidized inflation. There is no reason for idle cropland, other than the G needs inflation and keep unemployment bearable.
The great thing about commodities, is that they are just that, commodities. This year corn goes higher so next year farmers plant more, flood the market and the price goes down. So maybe next year it will be soybeans. Heck, cotton hit a 140 year high last week--hows that for a bear market? LOL
Too bad they just can't plant more gold, silver, pgm, and rare earth mines all over the world to jack up production. Well, they did do that in the late 1970's but that production didn't come on line until several years after PM's went bust in the early 1980's. Despite gold being 5X higher in price over the past 9 years mining production is actually lower. That's not getting it done. Miners are having to go deeper, higher, and in not so-friendly jurisdictions in search of more gold. If you're lucky enough to find gold in Venezuela, well you can just hand that over to Hugo once all the heavy lifting has been done. And if Hugo doesn't get it, then you can bank on increasing royalty taxes and held up/pulled permits if the govt doesn't think it's getting its fair share. Just read where mining giant Chile is considering doubling or tripling it's mining royalty tax....not great news for Chilean mining companies. And Australia just recently threatened to do the same thing. You would think by these types of actions that nations want to keep their gold safe in the ground. I think I read where there the number of monster ore finds (10+MILL ounces) is drastically down over the past 10-20 yrs. They aren't finding the big ones like they did in previous decades. South Africa which used to be the #1 mining country is now 4th and putting out about 40% of their 1970 high. So while they can flood the market with corn, they can't do that with precious metals...other than emptying central bank vaults in totality...and they only get to do that once. There are no "root" cellars in those vaults.
I sort of think the most likely move is shown in the above link. I see only 2 real legs up so far. So I'd side with their being another one left to go. The correction to $1328 was enough to get 'er done. Another $10-$20 if it comes, would likely be quick.
<< <i>I just picked 2008 out of the air. It was a time when taxidrivers, Iranians and supermodels were choosing to own Euros over dollars. It was before the stock market collapsed. I have no agenda, these are the facts. Here's another--The dollar is within a couple pennies of where it was in 1992!!!!! >>
The point is, in the past decade the dollar index has been higher and it's been lower than what it is today, so to even try to use that for a comparison is meaningless. And as far as the dollar being within pennies of 1992, again, are you talking about that worthless dollar index again? Everything costs a heck of a lot more today than it did 18 years ago.
<< <i>Point was that in light of Trillions of dollars being printed, the US dollar still has still maintained its value against Euros and Candos. Amazing, isnt it? The Aussie dollar is up about 12%--US Treasuries have outperformed that. The Swiss Franc is up more, but hey, they're neutral. >>
I don't agree at all. I remember going to Europe just after they started the Euro and I remember getting more Euros per USD. Now you get a fraction of a Euro per dollar. Same with Australia, I remember taking about 25% off of the AUD prices when I was there in the mid 00's, now they are almost equal! And what if you had invested in Australian treasuries 5 years ago? You'd be up 25% PLUS the interest rate they were paying!
<< <i>PC, I can only think of a few things that dollars will buy less of today-PMs and maybe a few services. Only foreign investments cost more (and that really bums me out!!). Even manual labor is less expensive--which is exactly what Bernanke fears. Any inflation that develops will only be transitory, unless wages go higher. The great thing about commodities, is that they are just that, commodities. This year corn goes higher so next year farmers plant more, flood the market and the price goes down. So maybe next year it will be soybeans. Heck, cotton hit a 140 year high last week--hows that for a bear market? LOL >>
I can think of only a few things that are cheaper today than a few years ago. Real estate (which doesn't count because it's still stabilizing after coming out of a bubble), some technology (which doesn't count because it naturally gets cheaper as it matures). I do know that I'm paying more at all of my favorite fast food places, and I just purchased a new car and those prices have definitely gone up, insurance and taxes have gone up, travel has gone up, all forms of entertainment have gone up, and on and on. At my real job I end up spending or directing the spend of probably close to a million dollar worth of equipment per year - electrical, mechanical, COTS & custom and I can tell you that NONE of the prices have gone down, and in most cases we've had at least two price hikes in the last 2-3 years. So I'm not sure where you live, but I might need to move there soon because everything here in Arizona just keeps going up.
<< <i>Think how many people in this country are dependant on agriculture--from the farmer to the grocer to the DE salesman... >>
The whole world depens on ag. I also oppose any manipulation of the market, which is exactly what you're referring to when the government pays people NOT to grow crops. The free market will correct itself if it's truly free, but we've abandoned any sense of a free market in this country in any industry.
Today was a consolidation of yesterday's drop and it's almost complete, and we've also accomplished a 38.2% retracement of the drop down. So now that the consolidation is pretty much over and the retracement is done, the next direction will likely be determined Thursday, as gold will either bust past the fib retracement level at ~1347 or the retracement will continue. So I think I'm going to look for a move above 1350 or a move below 1340 and hop on in whatever direction it goes from there with a small position.
Oct 26/27 is looking more and more important as an important swing day for stocks and gold, and I think I will be tempted to liquidate my accounts at closing on Oct 25 just in case. I'll know more once we get closer...
Commenced 3rd leg down right from the $1350 point mentioned yesterday. Gold traced a very neat 5 legs down in each of the previous 2 down legs so this one should have 5 as well. The first two legs down were $35 and $45 respectively. This last one has already taken $30 off. It will probably end up between $35-$40 or $1310-1315. The entire pattern so far has been quite compliant with EW theory.
Also noted that the last 2 senior gold holdouts (GG/EGO) finally closed their gaps from the Aug/Sept.
Comments
I knew it would happen.
Sing on, Brother jmski.
Today's move will need a day to consolidate, so we'll probably see wandering tonight and tomorrow between pivot points 1318.7 and 1342.3. Possibly we could meander up to 1358.2.
Gold and stocks are a good buy opportunity at the moment - if you've been waiting for a pullback to get in - this is it.
Haven't fully analyzed silver yet, no comments there yet. I believe the same for gold applies to silver, but I need to look at it more.
Stocks (SP500) are still consolidating and will probably wander directionless on Friday. Overall Friday will probably be a snoozefest.
As far as my trading, the last few nights have been rather sleepless due to all of the night time activity. I was eying a target at 1269.3 last night and was fully loaded, planning to unload significantly near that target, but my plans were foiled by $3. Still, being cautious I did unload positions pretty quickly and avoided taking huge losses. I won't be able to make any money on this pullback, but I should come out about even (close to where I was last night) once we get back to the 1260's.
Support for gold is at 1318.7, resistance at 1342.3 and 1358.2.
Actually, you have a 6th sense on what you call the "energy" in these up moves. I often sell my miners way too early, way too often. Now it's coming down to buying weakness whenever you can and selling into great strength. I know MJ is out of stockers but I feel barren with more to accumulate. PM's are probably going to run into JS's January 14th, 2011 date and at some point you just have to hang on. I'm still a bit peeved that all the cheapo junior miners I picked up in July and August for $.75 to $1.50 a share are all now about 50-80% higher....but I made the "easy" 15-20% on the first up move...lol.
I do agree that if one is looking to get back into miners or physical to pay attention to this move.
roadrunner
I had to sell the charts were so over extended. It was either hedge or sell at the high. I choose the high. I do feel neeked and will look to re enter.
I picked this up today right off of the 50. A classic support bounce. I think myself and ten others fought for this trade. I nailed it
My favorite chart play in a uptrending market
FRG
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I like MJ's move today. Was contemplating buying FRG as well as it hit the 50dma but expected more downside tomorrow...that in retrospect probably won't come.
NovaGold has only had 1 big down day after peaking on a 2 month - 70% up move. It's flown past the top of the cup formation and one would think it's time to form a handle after that move. FRG at the bottom today would have been a safer move imo as it had been downtrending for days. NG scares me a bit after that huge bullish engulfing candle today. Can it go any more vertical with other intermediates and seniors are down over the past few weeks? I know Paulson likes it and is a big stakeholder based on his last public report.
roadrunner
The escalating tension threatened to dominate a three-day conference of the International Monetary Fund and the World Bank. Leaders from both groups warned Thursday that a currency war could destabilize global financial markets at a fragile moment.
The flare-up comes as investors are anticipating the U.S. Federal Reserve will pump billions more dollars into the U.S. economy. That is weakening the value of the dollar against the euro, which has been surging.
A falling dollar can affect U.S. consumers, investors and businesses in various ways. Travel to Europe becomes more expensive for Americans. Exports from U.S. businesses become more affordable for European buyers. U.S. Treasurys become less attractive to investors.
A different scenario has been playing out with China. An undervalued Chinese yuan has weakened U.S. exports while making Chinese goods attractive to U.S. consumers. The imbalance has weakened U.S. economic growth. And it threatens U.S. manufacturing jobs at a time when the American economy is struggling with 9.6 percent unemployment.
At the same time, China's economy is soaring.
World Bank President Robert Zoellick said Thursday that the tensions over currencies could undermine investor confidence at a time when the world needs the private sector to bolster growth.
"If ever there were a time that we should not turn our backs on international cooperation, it is now," Zoellick said at a news conference ahead of three days of high-level talks on global finance in Washington.
Economists said they don't expect major breakthroughs coming out of the weekend meetings. Countries are feeling so much pressure to produce jobs by boosting exports. One way to do that is by lowering the value of the country's currency.
China is hardly alone in trying to gain a competitive advantage. The United States is contributing to a weaker dollar by pressuring Beijing and by the Fed flooding the markets with U.S. dollars.
The Japanese government intervened in currency markets for the first time in years on Sept. 15. It sold yen and bought dollars to push the yen's value lower. And this week, the Japanese central bank announced that it would pursue a policy similar to the Fed's: buy assets to lower Japanese interest rates, another way to lower the yen's value.
Brazil and South Korea have also taken recent actions to weaken their currencies as a way to protect their exporters.
"The global economy is struggling right now after a very deep recession. Everybody wants to grow through increasing their exports," said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University. "I think we will see more currency tensions and trade tensions."
High unemployment in the United States and many other nations could pressure leaders to establish trade embargoes that could further strain the global economy.
Already, the U.S. House has approved legislation that would allow for economic sanctions on China and other countries found to be manipulating their currencies to gain trade advantages.
The legislation is not expected to pass the Senate this year. Still, the Obama administration has responded by increasing pressure on Beijing in the weeks leading to congressional midterm elections. Those elections are shaping up to be a referendum on Democrats' handling of the economy.
American manufacturers would like to see the dollar fall by as much as 40 percent against the yuan. The administration is hoping this change will give a boost to U.S. manufacturing jobs.
The U.S. plans to make currency values a dominant topic at the IMF-World Bank meetings this weekend. It will also raise the issue during sideline discussions among the Group of 20 major economies. That group of rich nations and major developing countries includes China.
French President Nicolas Sarkozy will take over as chairman of the G-20 nations in November. French Finance Minister Christine Legarde told a Washington audience late Thursday that Sarkozy plans to make reform of the global currency system a top goal during his year as chairman of the G-20.
"We have to bring people together with as little preconceived ideas as possible but with the openness to create something that is working better than what we have at the moment," Legarde said in a speech at the Carnegie Endowment for International Peace.
Chinese officials have reacted strongly to the stepped up U.S. pressure. Prime Minister Wen Jiabao said Wednesday that "if the yuan is not stable, it will bring disaster to China and the world."
IMF Managing Director Dominique Strauss-Kahn and Zoellick said a compromise solution to the currency dispute would reassure financial markets.
Strauss-Kahn suggested China needs to move faster to address concerns about its undervalued currency if it wants more influence at the IMF. He echoed comments Wednesday by Treasury Secretary Timothy Geithner.
"If you want to have more say, more weight in the IMF, then you need to take more responsibility in the stability of the system," Strauss-Kahn said when asked about Geithner's speech Wednesday at The Brookings Institution.
(x2,Meltdown),cajun,Swampboy,SeaEagleCoins,InYHWHWeTrust, bstat1020,Spooly,timrutnat,oilstates200, vpr, guitarwes,
mariner67, and Mikes coins
This week was good and marks the 4th consecutive up-week in a row. See the weekly chart below. We managed to get the daily RSI down to about 70 which should give the chart enough room for another spurt, at least to my target of 1380 and then 1420.
Open to close
week 9/13: +$28.90
week 9/20: +$20.60
week 9/27: +$20.80
week 10/4: +$28.20
So another "typical" week would bring us to 1375-1380, but I think there's a good chance we'll even see 1400 next week - unclear if we'll close the week above 1400. The timing models really aren't showing any big signals next week so it just might set my hair on fire with upside movement.
Silver following gold right up, I think they'll move in concert with each other.
GVZ - Gold volatility is really kicking up and the BB's are finally starting to spread out.
The only signals from the timing models called for a bottom in stocks today or Monday, and I think we did get that bottom very briefly this morning. Stocks sould be ready to unleash upwards, and the next signal isn't until Oct 26/27 calling for a top.
No Canadian market on Monday but US stock market will be open. Was disappointed that nothing in the miners was really on sale any lower today.
roadrunner
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Support for Tues is at 1335.5, 1345.1, 1350.7, and resistance at 1360.3, 1365.9, and 1381.1.
For silver I have projections at 24.04 and 24.82, and I have a high degree of confidence in both of these targets being achieved within weeks with $24 achievable this week. With the support and resistance levels, $24.80 silver is even possible this week.
Support for Tues is at 23.005, and resistance at 23.34, and 23.63.
Bought some FRG the past few days based on the discussions here... up 3%+ so far
Those looking for a Uranium play, look at UEC, currently at $3.75 headed for $4.05 pretty easily for an 8% gain, catch a pullback to increase returns.
Edited to correct support & resistance levels which were completely wrong.
I've followed O'Connor's analysis for a while and he continues to get the trend right. Now calling for the dollar to bottom for a brief bounce back towards the 80 range. Then a continuation of the downtrend into Nov/Dec to test the previous cycle lows of 74 and 71. His cycle analysis has the dollar making a longer term 3 yr bottom next spring at all time lows. One possible roadmap for PM's as they perform inversely to the dollar.
Thomson compares the current potential of mining stocks vs. bullion
Radomski on GSX:SPY ratio
Radomski urges some caution on miners based on his fairly accurate indicator of volume ratio of the GDX/SPY. It spiked on Oct 7th when the miners reached a short term top. This has typically lead to a further correction. Interesting to see if this will hold up when gold and silver appear to be forming bull flags/triangles/rectangles.
roadrunner
Successful Trades: Swampboy,
I was a little early on my call for a breakout yesterday - I thought the fed meeting minutes might be the spark. But today the penant consolidation pattern in GC became obvious and it just wasn't ready. The good news is that we're at the end of the triangle, and the charts are full of energy. GOLD IS READY TO ROCK AGAIN. I don't think we'll see anything less than 1350 again until the big retracement comes. Look for a move over 1356.5 to signal that 'it's on!'
Support for Wed is at 1343, 1349.7, and resistance at 1357.9, 1364.6, and 1379.5. I kind of think we'll see 1380 Wed., with a precise target at 1381.7.
Silver should follow along for the ride.
Support is at 23.015, 23.255, and resistance at 23.565, 23.805, 24.355.
SP500 also looking good for another little run here...
Successful Trades: Swampboy,
<< <i>I saw that someone purchased 5,000 at .20 not an expensive trade, but could pay nicely on a move up in the next 5 months. >>
I only see an open interest of 30 if I'm looking at it right. But this does look intruiging. Dec $10 calls are pretty cheap too. I might just have to buy a few of those lottery tickets
<< <i>GOLD IS READY TO ROCK AGAIN. I don't think we'll see anything less than 1350 again until the big retracement comes. Look for a move over 1356.5 to signal that 'it's on!'
>>
1356.90
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<< <i>
<< <i>I saw that someone purchased 5,000 at .20 not an expensive trade, but could pay nicely on a move up in the next 5 months. >>
I only see an open interest of 30 if I'm looking at it right. But this does look intruiging. Dec $10 calls are pretty cheap too. I might just have to buy a few of those lottery tickets
Someone closed out 20 later in the day, would be my guess. 50x100= 5,000 so now it is 20x100= 2,000 open calls. There were also some put selling at 7.5 same exp.
Successful Trades: Swampboy,
<< <i>
<< <i>GOLD IS READY TO ROCK AGAIN. I don't think we'll see anything less than 1350 again until the big retracement comes. Look for a move over 1356.5 to signal that 'it's on!'
>>
1356.90
OKAY KONG
Successful Trades: Swampboy,
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mariner67, and Mikes coins
I'm going to try to play these resistance levels and sell a small portion, wait for a consolidation, and buy back slightly lower.
I know there's a LOT of concern about being overbought and an imminent retracement, but at this point we look good at least until Tuesday... which will probably coincide with 1420 gold.
Support for gold at 1356.6, 1366.1, resistance at 1382.3, 1391.8, 1417.5.
support for silver at 23.51, 23.82, resistance at 24.365, 24.675, 25.53.
The bullion banks entire short position is deeply underwater and sinking. I don't know how that jives with technicals. Anyone for panic buying?
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The parabola actually started a few years before this chart, I only have since 2007 or so...
With this pullback today (a 38.2% retrace of the move up from around 1328), I think there's a great chance that the bull run will actually continue until Oct 26 or Oct 27. In the McLellan timing models there was a call for a bottom on Monday, so we either saw that today or will see it on Monday (but those targets are often 1 or 2 days off). There's another indicator for a top on Oct 27. And while not definitive, because we have seen a mild pullback rather than a couple of HUGE up days, it does not appear that gold will want to have a big correction any time soon (at least not next week). We still need to be careful Tues/Wed and look for any signs of weakness.
The pattern is consolidated and does not need much more time, so we can resume upwards on Monday or Tuesday. I kind of have a feeling that things might get going Sunday night/Monday morning as Asian and European (and all) markets further digest the fed's comments from Friday.
I'm still looking for a top at around 1415-1430, with possibly a spike higher, 1450 or more.
Once again we have our 5th up-week in a row.
Open to close (does not include high or low points.
week 9/13: +$28.90
week 9/20: +$20.60
week 9/27: +$20.80
week 10/4: +$28.20
week 10/11: +$20.90
For Monday, support is at 1349.3, 1359.5, and resistance at 1373, 1383.2, 1396.7, 1420.4.
I want to bring up a mining stock (UXG) that is on the verge of breaking out of a pennant formation. I'm don't have anything else to say about it, other than this chart looks good to me. Buy at your own risk.
It's a little early to say, but silver could be in a pennant consolidation at the moment, and may need to consolidate for another day or two:
Bill Downey has provided some excellent chart analysis on silver's major resistance points going back to 1980. Not surprisingly, silver has hit each of them over the past 10 yrs. Upper channel is currently at $30 with support at $21. A must view for silver holders or buyers.
Downey's 30 yr silver chart analysis
Katz on 1-3 year silver chart triangles and price projections
_________________________
Yes UXG appears to be getting ready to move up again towards the neckline at around 6 of the longer term cup formation.
Then attach a handle with clear sailing to 9-10.
UXG long term chart
For long term pennants I like this consolidation on IAG in the weekly chart. It's the clearest cut formation of all the larger gold miners and is just itching to move up since last peaking in November 2009. On the monthly chart it looks ready to go. This miner has not really participated in 2010 considering it did so well in years prior. THM has the same chart and has just now started a breakout. In fact looking at the miner monthly charts there are a lot of them who are in the process of getting ready to complete cup formations or have broken out from them. Fertile ground.
IAG chart
THM chart
NXG chart - waiting on deck to break above the cup and handle
GDX broken above cup formation
With GDX and GDXJ broken out of formation it's now a matter of time to catch up the laggards in the indicies.
Kuch, I may have spoke too soon on NG. It has moved a lot in a short period but it might be getting ready to leave its neckline behind as well and head towards 20, with intermediate stops of 12 and 15 along the way.
Nova Gold chart
roadrunner
I like the IAG weekly chart, RR, thanks for pointing that out:
see today's chart....nailed gold for $7 an ounce after hours.....
they just wont give up.
Would like to hear PC's thoughts on whether there's going to be another move below $1353 to come. While most metals and commodities have been falling as of late, platinum and particular copper have bucked that trend. Copper actually gained today during the slam-fest which is a divergence of sorts. Interesting that the Dow and S&P500 futures were pushed off the cliff from 4:00-4:30 pm today. Is that a nudge intended for tomorrow's open?
The gold and silver trend lines have not been violated in any way yet. As I see it there are only 2 up legs so far since the late July metal's rally, with the most recent leg commencing around $1236. Seems to me there is one more upleg to go. Therefore I'd expect a correction of the leg from $1236-$1389, not the entire move up from $1155. A 38% Fib of the latest upleg, assuming it's complete, would take gold down to $1331.
Miners have usually ended longer up moves at 30-40% > 200 dma. And currently GDX peaked at around +20%. That's just too weak for this move to have put in a multi-month top. I would target the 63-70 range for GDX to complete this cycle (November-December).
roadrunner
I didn't expect it to go quite this low, and it did take out some stops I had which cost me a little, but I'm still up big for the month and I'll make it up shortly I presume.
The timing is getting tricky, as I had been saying that the rally should go until Tues (Oct 19), and then to look for a sharp retracement. But since we just had a pretty good retracement, I think we could be in for at least another week of rally. So my outlook is for a the rally to hit strong over the next week until Tues Oct 26, taking us up to $1400-1420 (possibly higher). HOWEVER, caution is in order tomorrow and if there is any major weakness, it may be time to bail should my original call for a retracement tomorrow be accurate. By major weakness, that would be a drop below 1360. Recall that the McLellan timing models are actually showing a top in the XAU on Oct 27, which fits good with this new scenario, so I think the odds are on for a full rally until next Tues. The same indicators for DJIA, NYSE, and SP500 indexes are also showing tops on Oct 26/27.
The RSI for gold comex is down to 70.5 from overbought levels (~90 at the recent peak) on the daily chart, so that should help as well.
These parabolic moves are powerful, and these re-energizing pullbacks can extend these rallies longer than we expect.
Loaded up on UXG and THM today.
Edited to add:
Gold: Support for Tuesday is at 1357.2, 1366.4, resistance at 1379.6, 1388.8, and 1411.2.
Silver: Support at 23.895, 24.205, resistance at 24.695, 25.005, 25.805.
Gold splunged to hit $1331.95 so far today. Off by 90 cents. Now the question, was that the end of it or just the 2nd leg down? Since gold does like to move down in fives, another final leg down could take it to the $1310 region. GDX has nother 3% or so to drop to close an obvious gap at 53.5 and dip below the 50 dma. This would also coincide to a retest of the breakout from the monthly cup formation, though today's dip could also be counted as a retest of that neckline. GDXJ doesn't quite have that gap as it was essentially filled on a prior sweepdown. But retesting that point again would also allow it to touch the 50 dma and retest its cup formation.
GDX
Note that if you compare the last 2 weeks of the GDX chart formation to the same period during the June highs, they are surprisingly similar. Today's drop was not quite as deep as the July 1st washout but that period was heading into the final washout of the summer. I don't believe we're in that type of final washout scenario right now. In the longer term, the HUI is going back to retest the key 500 level yet again. If you look back to 2008 that has been key resistance much like $1000 was to gold. Probably a physchological "round number" barrier more than anything else. In the past 3 yrs there have been a succession of smaller cups forming into that 500 point. Gold did much the same thing at $1000 before finally breaking out for good. I would expect something similar to the HUI after this final retest of the 500 line. It could dip down another 5-10% but I think this will be the last retest for HUI before heading on to higher ground once and for all.
roadrunner
On the other hand, the McLellan indicators showed a bottom today for the XAU, which would indicate that today was THE bottom for this move.
Until this pattern plays out a bit more, I've closed most of my futures positions.
<< <i>I don't really see gold going any lower than $1300, so if we get down there I would load up the truck.
. >>
We will probably see another $20-$50 drop before we head north once again.
That would be the next step imo. Nibbled on some miners today that have already pulled back 15-23%. Most of the senior golds started correcting 9 days ago with the front runners only pulling back the last 3 days with gold and silver bullion. This weekend is a G20 finance ministers meeting coupled with gold futures expiration/bond week next week. So dragging on this weakness through next Wednesday is quite doable. Then the FED meets the first week in November.
I don't think this drop is going to invalidate all those cups, IH&S, and triangles that have been building for a while on the miners. Just another retest to demoralize anyone who is late to the game or tired of hanging on.
roadrunner
Still, I see solid support at 1300 for the second plunge, with perhaps very quick overshoots into the high 1200's.
So my personal plan is to get back on board here and ride this back up to 1370, although I'll try to pick up some contracts on a dip to 1320 tonight. Also be ready for some big volatility, as we'll probably see some big $30-40 oscillations in the next couple of days, so it probably won't hurt to book profits when you get a $10-20 move in your direction.
Support is at 1258.7, 1302, 1318.9, resistance at 1345.3, 1362.2, 1388.6.
As far as gold stocks, I don't know what to say. I don't see the pennant formations we've pointed out recently getting wrecked or resulting bearish, and most of the damage is done with gold, IMO. But if there is a double top you'll want to get back out again next Tues/Wed.
Took it right to the trendline. Dang they're good.
Knowledge is the enemy of fear
roadrunner
I knew it would happen.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
What a joke. Too bad Larry Summers has gone. Geithner is less amusing doing a Stan Laurel solo impression without his Oliver Hardy On this the 23rd anniversary of the 1987 stock market crash, STOCKS proved they haven't changed much by dropping 1.48%, 165.07 Dow points to 10,978.52 and 18.81 on the S&P500 to 1,165.90. A dollar rally will hurt stocks much worse than silver and gold over time.
Text
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<< <i>cohodk, do you think they are trying to manage a soft landing for the dollar? do you believe that it's even possible? >>
I think they are hell bent to keep a massive amount of debt from imploding.
It interesting to note that since the beginning of 2008, the dollar is up, while the Euro is down. Even the Canadian dollar is down about 4%. It sure feels much worse than that.
Wouldnt it be cool to see the savings of millions wiped out? To ensure the typical American never travels overseas? To place great American assets in the hands of foreignors? Thats what they're set on acheiving. Lets see if they're successful.
Knowledge is the enemy of fear
<< <i>It interesting to note that since the beginning of 2008, the dollar is up, while the Euro is down. Even the Canadian dollar is down about 4%. It sure feels much worse than that. >>
Sounds like you need to look at the big picture. The dollar is up, relative to what? Are you referring to the dollar index? If that's the case, the dollar index is down compared to most of 2007 and the first half of 2009, so I'm not sure why you use 2008 as a comparison. The USD is still in the same range it's been in for quite a while. Against gold, the dollar is down almost 40-50% vs 2008 depending on what values you use, and the dollar is down vs. many commodities.
With the USD and Euro and other currencies falling similarly, they are all going to look relatively stable, which is why you have to look at commodity prices.
It "feels" worse because the dollar is buying a lot less than it used to.
The pullback in gold to $1350 and silver to $24 just about coincided with the upper channel line in their current down trend. We'll see if that's all the oomph they have for now. The dollar was flat lining at around 77.0 contemplating its next direction.
roadrunner
Because it fits his prose!
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
The Japanese Yen has been the strongest currency on the planet during that time. Where has that gotten them? I think people get too caught up in the "worthless" dollar mantra. I mean really, WHO CARES? Just get more of them. Isnt that what the gold and silver hoarders are tying to acheive?
Point was that in light of Trillions of dollars being printed, the US dollar still has still maintained its value against Euros and Candos. Amazing, isnt it? The Aussie dollar is up about 12%--US Treasuries have outperformed that. The Swiss Franc is up more, but hey, they're neutral.
PC, I can only think of a few things that dollars will buy less of today-PMs and maybe a few services. Only foreign investments cost more (and that really bums me out!!). Even manual labor is less expensive--which is exactly what Bernanke fears. Any inflation that develops will only be transitory, unless wages go higher. The great thing about commodities, is that they are just that, commodities. This year corn goes higher so next year farmers plant more, flood the market and the price goes down. So maybe next year it will be soybeans. Heck, cotton hit a 140 year high last week--hows that for a bear market? LOL
Think how many people in this country are dependant on agriculture--from the farmer to the grocer to the DE salesman. The G cant afford to have all those people collecting unemployment also. So what does the G do? Pass some garbage increasing the amount of ethanol in gasoline. Hey it worked to get food inflation going last time, so lets try it again. 15% ethanol Thirty-two (32) MILLION acres are being set aside to ensure grains prices continue to rise. Talk about subsidized inflation. There is no reason for idle cropland, other than the G needs inflation and keep unemployment bearable.
Knowledge is the enemy of fear
Too bad they just can't plant more gold, silver, pgm, and rare earth mines all over the world to jack up production. Well, they did do that in the late 1970's but that production didn't come on line until several years after PM's went bust in the early 1980's. Despite gold being 5X higher in price over the past 9 years mining production is actually lower. That's not getting it done. Miners are having to go deeper, higher, and in not so-friendly jurisdictions in search of more gold. If you're lucky enough to find gold in Venezuela, well you can just hand that over to Hugo once all the heavy lifting has been done. And if Hugo doesn't get it, then you can bank on increasing royalty taxes and held up/pulled permits if the govt doesn't think it's getting its fair share. Just read where mining giant Chile is considering doubling or tripling it's mining royalty tax....not great news for Chilean mining companies. And Australia just recently threatened to do the same thing. You would think by these types of actions that nations want to keep their gold safe in the ground. I think I read where there the number of monster ore finds (10+MILL ounces) is drastically down over the past 10-20 yrs. They aren't finding the big ones like they did in previous decades. South Africa which used to be the #1 mining country is now 4th and putting out about 40% of their 1970 high. So while they can flood the market with corn, they can't do that with precious metals...other than emptying central bank vaults in totality...and they only get to do that once. There are no "root" cellars in those vaults.
Gold charts
I sort of think the most likely move is shown in the above link. I see only 2 real legs up so far. So I'd side with their being another one left to go. The correction to $1328 was enough to get 'er done. Another $10-$20 if it comes, would likely be quick.
roadrunner
<< <i>I just picked 2008 out of the air. It was a time when taxidrivers, Iranians and supermodels were choosing to own Euros over dollars. It was before the stock market collapsed. I have no agenda, these are the facts. Here's another--The dollar is within a couple pennies of where it was in 1992!!!!! >>
The point is, in the past decade the dollar index has been higher and it's been lower than what it is today, so to even try to use that for a comparison is meaningless. And as far as the dollar being within pennies of 1992, again, are you talking about that worthless dollar index again? Everything costs a heck of a lot more today than it did 18 years ago.
<< <i>Point was that in light of Trillions of dollars being printed, the US dollar still has still maintained its value against Euros and Candos. Amazing, isnt it? The Aussie dollar is up about 12%--US Treasuries have outperformed that. The Swiss Franc is up more, but hey, they're neutral.
I don't agree at all. I remember going to Europe just after they started the Euro and I remember getting more Euros per USD. Now you get a fraction of a Euro per dollar. Same with Australia, I remember taking about 25% off of the AUD prices when I was there in the mid 00's, now they are almost equal! And what if you had invested in Australian treasuries 5 years ago? You'd be up 25% PLUS the interest rate they were paying!
<< <i>PC, I can only think of a few things that dollars will buy less of today-PMs and maybe a few services. Only foreign investments cost more (and that really bums me out!!). Even manual labor is less expensive--which is exactly what Bernanke fears. Any inflation that develops will only be transitory, unless wages go higher. The great thing about commodities, is that they are just that, commodities. This year corn goes higher so next year farmers plant more, flood the market and the price goes down. So maybe next year it will be soybeans. Heck, cotton hit a 140 year high last week--hows that for a bear market? LOL >>
I can think of only a few things that are cheaper today than a few years ago. Real estate (which doesn't count because it's still stabilizing after coming out of a bubble), some technology (which doesn't count because it naturally gets cheaper as it matures). I do know that I'm paying more at all of my favorite fast food places, and I just purchased a new car and those prices have definitely gone up, insurance and taxes have gone up, travel has gone up, all forms of entertainment have gone up, and on and on. At my real job I end up spending or directing the spend of probably close to a million dollar worth of equipment per year - electrical, mechanical, COTS & custom and I can tell you that NONE of the prices have gone down, and in most cases we've had at least two price hikes in the last 2-3 years. So I'm not sure where you live, but I might need to move there soon because everything here in Arizona just keeps going up.
<< <i>Think how many people in this country are dependant on agriculture--from the farmer to the grocer to the DE salesman... >>
The whole world depens on ag. I also oppose any manipulation of the market, which is exactly what you're referring to when the government pays people NOT to grow crops. The free market will correct itself if it's truly free, but we've abandoned any sense of a free market in this country in any industry.
Oct 26/27 is looking more and more important as an important swing day for stocks and gold, and I think I will be tempted to liquidate my accounts at closing on Oct 25 just in case. I'll know more once we get closer...
The first two legs down were $35 and $45 respectively. This last one has already taken $30 off. It will probably end up between $35-$40 or $1310-1315. The entire pattern so far has been quite compliant with EW theory.
Also noted that the last 2 senior gold holdouts (GG/EGO) finally closed their gaps from the Aug/Sept.
hourly gold chart
roadrunner