With June 2013 now complete we can compare it to its "fraternal twin" of October 2008 in both time and price.
rr, do you think that there's a Lehman event taking place behind the scenes right now?
The April and May 2013 candles were both bullish though far shorter in size than Aug and Sept 2008. June 2013 GSR candle is an inverted hammer or a gravestone doji....very similar to October 2008 which was also a large inverted hammer. The months of Nov and Dec 2008 did allow for rebounds in GSR even if the low in gold was already in by October 24th. I suspect we'll see some final surges in July/August 2013 to match the 2008 pattern.
This kinda implies that silver is weak, doesn't it? Do you think the GSR should be turning back around? The economy remains not so good, I think.
I suspect we'll see some final surges in July/August 2013 to match the 2008 pattern. So far, this 3 month GSR breakout is quite weak compared to 2008 where GSR ran to 83 and the dollar to 88-90. Without the GSR to help push things along, the dollar probably won't easily soar back to the upper 80's.
There's enough going on around the world that the dollar has relative/comparative strength vs. lots of other currencies. I know that you're disappointed with Sinclair, but what do you make of the trend away from dollar settlement in world trade? Willie is big on this, too.
I love taking time to read your technical analysis, and I'm trying to fit it into the fundamental picture.
Q: Are You Printing Money? Bernanke: Not Literally
The gap at $1328 corresponds nicely with a fib retrace point. It's also the level which the last sharp gold push down started from....much like the PTB did from the $1422 gap back in mid May. That gap was filled on the rebound into early June.
Yeah, make no mistake about it - it's still "game on". If PC and cohodk are both tippy-toeing back in, I gotta ask myself it there isn't another down leg planned.
Q: Are You Printing Money? Bernanke: Not Literally
"The stage is set for the large bullion banks to profit from a rally. Expect a rally."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Yeah, make no mistake about it - it's still "game on". If PC and cohodk are both tippy-toeing back in, I gotta ask myself it there isn't another down leg planned. >>
No more talk of this "another down leg" stuff. Quit raining on our recovery parade, and no more down leg mumbo jumbo. This is the bottom, and any one that even hints that its not,...
May the fleas of a thousand camels infest your PCGS slabs.
NumbersUsa, FairUs, Alipac, CapsWeb, and TeamAmericaPac
Stand and Deliver! If everyone would get OUT of their paper gold/silver ETF's and take delivery, we would see a very nice physical price. Take the loss on the paper side, because I believe you will recoup it and more on the physical side.
"In essence, rampant monetary easing in some of the world’s largest economies has lowered the currency bar to abnormally low levels. Compared to itself, the U.S. dollar doesn’t have the same value it did before QE3 began. Compared to other dwindling currencies, however, the dollar is as strong as it’s been in years. U.S. dollar strength – and yen weakness – is weighing heavily on gold prices right now. A turnaround in gold may thus depend not on when Ben Bernanke says it’s time to pull the plug on QE3 … but when the Bank of Japan puts the brakes on its own monetary easing."
I expect a quicker turnaround to come from FED efforts to weaken the dollar index. US exports (jobs) depend on it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
rr, do you think that there's a Lehman event taking place behind the scenes right now?
Would generally say yes. Maybe not a distinct failure event like Lehman when they were flushed. But maybe a lot of dike plugging in the bond markets for example. Definitely a liquidity crisis of sorts in progress and churning. Whether it gets to the same extreme as Sept-Oct 2008 is probably unlikely as the CB's of the world will QE to infinity if they have to. And they've had plenty of notice and practice to liquify the system when needed. They didn't do that in 2008 until the crisis blew up in their faces. They had no clue in Sept 2008 how things would turn out following the Lehman kill. That and AIG helped the dollar soar to 88+ as it was "the" only liquid currency for settling derivative trades. I had the opportunity to talk to a 45+ year trader/fund manager today who worked in upper managment in the world's largest brokerages. Here's what he had to say about otc derivatives (specifically interest rate contracts) and why we just can't net them all out or have the govt decree them to be null and void tomorrow with no winners or losers. I'm not sure I fully understand what he said.
<< <i>Derivatives on bonds are twofold. One is a put option on downside. Holders of bonds would be the big, big losers. The other derivatives are promises to deliver bonds which are used as good collateral. No derivatives means no collateral. Those are huge losses >>
....he basically agrees with Willie and Sinclair that the system would implode if these contracts were put into a position where they failed to perform. Derivatives netted out = TBonds netted out and vaporized. Collateral backing $Trillions in debt instantly vanishes. Poof. The fact that these deriv bets are linked to a very real TBond that is being used as collateral all around the world apparently is the issue. Sounds similar to unallocated gold accounts. You think you own the gold until the music stops and your chair has been taken by a bankster who got to the vault first.
This kinda implies that silver is weak, doesn't it? Do you think the GSR should be turning back around? The economy remains not so good, I think.
If the GSR continues to follow the same 5 yr cycle as it did in 2003-2008 then it's getting long in the tooth with only aftershocks left. The major quakes occurred in April-June. I'll continue to follow this cycle pattern to see if it holds. The dollar is still following an expanding wedge pattern over the past several months. But, it's possible 84.5 last month was the peak and what's occurring now is a dead-cat bounce. The FED probably doesn't want the dollar over 84 either. GSR has typically run in 8-9 cycles peak to peak. The fact that this current one has extended to 11 months makes it way overdue for a gap filling pull back to the 55-57 range for starters. I can't rule out a GSR run to 80-90 either as the half way point projection from the 31-60 leg would suggest another 30 pt leg in progress. It's also not impossible for gold to rally with GSR headed to 80. It did that from 1999 to 2003 (ie recessionary times). Silver went up as well but was far outpaced by gold. Silver is not a good recessionary metal. I'm figuring on the GSR turning around as it's weekly chart shows the macd turned over and trying to cross. The daily GSR chart shows large negative divergences in rsi and macd. The dollar looks like it is following the May rally pattern into a rounding over top again. We'll see. Intermediate and yearly cycles are trying to bottom and hence the massive volatility we're seeing in GSR, dollar, etc.
There's enough going on around the world that the dollar has relative/comparative strength vs. lots of other currencies. I know that you're disappointed with Sinclair, but what do you make of the trend away from dollar settlement in world trade? Willie is big on this, too.
We could still see the dollar rally up to 88-90+ again. Anything is possible in this over-controlled bankster environment. While the dollar is "due" for a 3 yr bottom in 2014, the FED & Co could do things to extend that out...maybe indefinitely. Charles Nenner, a good cycle theory guy is looking at a dollar top in 2014. The 120 yr economic cycle bottom (think 1894 all over again) is due to bottom into next year or thereabouts. It will magnify anything negative in the economy or financial system. The current administration will try to delay these events so that the system crashes on the next guy's watch. But, juggling all these issues into into the end of 2015 w/o a system dump/stock market crash is going to be a slick trick. Also, agree with Cohodk that the dollar is not going away any time soon. Replacing it with other currencies in trade and debt settlement will be a very long process lasting many years.
<< <i>Definitely a liquidity crisis of sorts in progress and churning. >>
rr, always respect your technical analysis, but gotta differ with you on this one. Isn't the real behind the scenes crisis for our major financial organizations a solvency problem? Liquidity problems can be and have been addressed via FED QE. If in fact there is a liquidity crisis in progress why not just issue more QE? The banks have a lot of new money currently on deposit with the FED with the sole purpose of liquidity protection.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Not much difference in my mind between solvency or liquidity at this time. Maybe solvency would have been a better word. And with that insolvency (which has been around since 2007-2008) one needs ever-increasing liquidity (QE) to plug the holes in the dam. Many more leaks have popped up over the past couple of months. The big banks are experiencing huge reductions in the values of their derivative trades, esp interest rate contracts as rates have moved higher. Liquidity is needed to plug those solvency gaps. The FED is stuffing them with everything they got. And to help the FED I'd bet that Morgan Stanley and others are adding to their pile of otc interest rate contracts to try and force rates back down. If they can add $50 TRILL or more in short order then they can turn rates back down much like they did back in early 2011....much to the shagrin of Bill Gross who told his clients to get out of TBonds.
So far, the liquidity provided by QE has prevented insolvency. Further solvency crisis will dictate more QE. Like I have said many times, QE is here to stay. Jawboning about tapering is cheap talk.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The fact that these deriv bets are linked to a very real TBond that is being used as collateral all around the world apparently is the issue.
I need to keep remembering this point. The only way out is to keep creating more, keep rates low - and hope for a "Hail Mary" touchdown with the economy. It's not going to happen that way.
With the Japan chart that derryb posted, it's clear why the dollar is strong. duh. I'm somewhat surprised that we don't hear much about Japanese gold buying.
The big banks are experiencing huge reductions in the values of their derivative trades, esp interest rate contracts as rates have moved higher. Liquidity is needed to plug those solvency gaps.
Rollovers from interest rate contracts? How long can they do this without the real market superceding? Weimar happens.
If they can add $50 TRILL or more in short order then they can turn rates back down much like they did back in early 2011....much to the shagrin of Bill Gross who told his clients to get out of TBonds.
It still completely baffles me how this can ever work. Well, except for the graft & corruption factors.
Q: Are You Printing Money? Bernanke: Not Literally
If they can add $50 TRILL or more in short order then they can turn rates back down much like they did back in early 2011....much to the shagrin of Bill Gross who told his clients to get out of TBonds
It still completely baffles me how this can ever work. Well, except for the graft & corruption factors.
Yeah, it baffles me too. But the proof is in the pudding....it did work in the first half of 2011. Morgan Stanley alone added something around $10 to $14 TRILL in otc derivatives in a very short period of time. Up to that point you never saw them do that. If is hard to believe that this "imaginery" system of otc derivatives is the foundation for the western financial system. They took a clue from mathematics where imaginery and complex numbers form a large part of mathematical theory. We should start putting an i on all our currency and bond issuances. If the ruby slippers could take Dorothy back to Kansas, I guess so can derivatives.
I'm getting a real good idea for D. Carr's next series...............Imaginary Currency............Imaginary Gold Coins..............Imaginary Debt Certificates.........
Daniel, if you use this - you'll owe me, imaginarily speaking of course...
Q: Are You Printing Money? Bernanke: Not Literally
It's too early to tell, but it looks to me like gold is bottoming here are $1220. I think it will still be a couple weeks or more before gold goes anywhere, but it could put in a nice +$100 move very easily without even necessarily being bullish. A liquidity crunch is still coming, some time this month I think.
There’s a lot of spot gold futures gaps from $1236 to $1328. Regardless of wave count it’s unlikely that the monstrous 50c gap from today's jobs report at $1236 will survive more than 24-48 trading hours. And as long as we’re above $1212 and then $1226, the odds increase only more. Next lower GLD gap is at $109-$110. Next higher ones are at $119, $120.6, $123. GLD closed at $118.03. Looks to me like $1232-$1236 (50% fib) before having to deal with $1197 gap...if at all. Spot gold gaps at $1197, $1236, $1250, $1254, $1264, $1276, $1277, $1298, $1328. Much more close range pull from above vs. below. Strong volume in GDX buying during the last 30 minutes of trading today. COT numbets out on Monday.
Dust just did 3 days down and 3 days up….exactly like the May 20th to 28th move. Nugt to Dust volume ratio closed at 35.2, near the highs of the day. Strong volume in GDX and NUGT into the last 30 min of close. Decent rise in price too. Dust put in a gapped up gravestone doji that don't appear very often....usually near peaks. CDNX had very close to an up day today and didn't follow GDX down the past 4 days. Next week are Treasury auctions with Fed minutes on Wed. Not that bearish a setup. Next week could still be a decent pre-OpEx week for PMs and miners.
Next lower GLD gap is over $70/oz away. GLD lower gap filling may be done for a while. That would be nice. Large spot gold gap this morning adds ammo that whatever of these targets is hit, a bounce back very soon to $1236 is very likely. I felt this whole dump this morning was manufactured and will be retraced quick enough. UUP matching close to the May high on a hugely gapped up doji. Not so sure that's bullish by itself. After a wild 13 day bounce back up to match the wild 12 day drop a few weeks ago, a rest may be needed to consolidate that move. Maybe it does what it did back in May and bounce back and forth between 83.5 and 84.5 for a while. UUP candle today looks a lot like the one from the May 17th gapped up peak in both shape and location.
Something has gotten into gold.... I'm really liking my entry points now and feel more and more confident that THE BOTTOM is in. It's a little too early to get excited (after all, a rebound to $1300+ is almost expected in any scenario), but things are looking good tonight...
Bizzaro World: S&P Hits All Time High As Detroit Files For Bankruptcy
And this is how one creates jobs. Bankruptcy lawyer jobs that is.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"At $1250 gold, a single 100-ounce futures contract controls $125,000 worth of the metal. But traders don't have to put up the full $125k to play. The minimum maintenance margin on COMEX gold futures contracts these days is just $8k. This means the maximum leverage available to aggressive gold shorts is 15.6 to 1! Stock traders can scarcely comprehend that, as stock margin has been legally limited to 2 to 1 since 1974. At maximum leverage, a mere 6.4% gold rally would wipe out 100% of the capital risked by gold shorts! While not all futures traders run with minimum margin, plenty do. The faster that gold rallies, the more pressure it puts on these guys to buy offsetting futures longs to cover. Short squeezes are born when just a small fraction of traders are forced to cover, unleashing buying pressure that sucks in many more."
"And given such extreme spec gold shorts, widespread despair, and gold recently hitting the most oversold levels by far of its secular bull, it is due for a monster upleg. As this accelerates, the leveraged shorts will be forced to buy back the gold they owe at increasing rates. This will feed on itself and likely ignite a buying panic. It will very likely lead to the biggest and fastest upleg of gold's entire secular bull."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
AH/Zeal has been on the wrong side of gold for quite some time now, like most every other bull out there. His typical buying rules have failed miserably once gold broke the $1700 level for good and kept going down. While he's right about a short squeeze, there's still the potential for just the opposite....a long squeeze. There are just as many commercials piled into long positions as there are specs piled into shorts. The specs have been calling this dead-on since around Feb/March. Until they relinguish control and run it up the other way, it will stay the same. Yes, calling the bottom in October 2008 worked pretty well for AH. Unfortunately, this current bottom is behaving far differently than 2008 which was probably a correction of a lower order. This one is the big kahuna. One could go broke buying up all the great PM stocks Zeal lists on their website. Remember the great deal nat gas was when it broke $10? Then $8? Great time to load up. But, it went all the way down to $2....and even now still nowhere near $8. I was a Zeal subscriber for 2-3 months back in 2012. The subscription offered nothing for me. Same old talk of great values and a recovery just around the corner.
In looking at the monthly charts I noticed that silver and the miners blew through their monthly cloud resistances the past couple of months (ie Ichimoku cloud). Gold has just fallen into its cloud in July. It first bounced off the top of it during June. I have to wonder if gold "has" to traverse the width of the cloud resistance like silver and miners have had to do. If that's the case that could mean $1100 before it's done. Even if that's not the plan, it will not be easy for gold to break free from the $1300-$1330 resistance area until Oct/November. At least that's one possibility. Another pattern I've noticed is that gold has been stair stepping down the fib sequence of monthly moving averages. It started with the 21 mma, then the 34 month, then the 55 month ma was broken (around $1375). The 89 month ma is the next lower one and sits at $1136. In any event, this is the first time in this bull market where gold has been trapped by the monthly cloud. Silver spent 3 months in it back in 2008 (went all the way through it and then right back out - no appreciable time under the cloud). This time around silver has already spent 2 months well under the cloud. In fact the base of it now sits up at $29 and that is in effect until March 2015. Recall that the 1974-1978 silver correction took 5 years to make it back to the 1974 peak price (ie April 2016). Gold needed 40 months to recover to its 1974 peak (ie early 2015). The fact that Sinclair and Co. are all lined up again calling for $3500 gold tends to suggest there are still too many bulls out there. No shortage of bulls that feel the bottom is in and $1500 is right around the corner again. Can it be that easy and that quick? It took 3-5 years to recover in the mid-1970's. The monthly charts for gold and silver are in a place they have never been before since the late 1990's. There was no rip-roaring bounce off the bottom during that time. Gold is currently being held back by monthly cloud resistance at $1295-$1300. While it could break free and bounce strongly to $1325-$1375, I have a feeling it's going to eventually mirror what silver and the miners have done. Every other thing that entered in monthly cloud resistance the past 10 years eventually went all the way through (oil, dollar, silver, miners, stocks, etc.). So why not gold?
EXCELLENT analysis roadrunner. A bit more technical than I like to get but end result is the same.
Those betting the house thinking there are" record shorts" are going to need new shorts before gold rallies appreciably. Now its stacking time--- slow and steady and deliberate.
<< <i> Now its stacking time--- slow and steady and deliberate. >>
And those that have been doing this since 2008, regardless of periodic set backs, have a good head start. There will be more periodic set backs, do not dispair.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i> Now its stacking time--- slow and steady and deliberate. >>
And those that have been doing this since 2008, regardless of periodic set backs, have a good head start. There will be more periodic set backs, do not dispair. >>
Not so....all of their purchases since 2011 are "under water," compared to those that have been selling their stash since 2011 and are now slowly beginning to accumulate again. Timing, and doing your "homework" is one of the key's to successful investing.
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
The bottom is certainly in and pending a breakout over $1300, it's time to load up the truck as we are pretty much done with the $1200's and lower prices. The breakout over $1300 could take a couple more weeks but I think we'll see it early next week at which time I'm going to a full position that I plan to just hold. I'm not looking for any kind of fast recovery. $1500 by year end is reasonable. The breakout in gold is probably to accompany some real trouble in the stock market (SP500). The double top is likely in, it is all down hill from here. Not sure how metal stocks will react, that is the one thing that has me puzzled as metal stocks have been demolished and it's hard to see them going lower if metal prices stabilize and start to recover as I predict. Metal stocks are probably not the best place to be just yet.
<< <i> Now its stacking time--- slow and steady and deliberate. >>
And those that have been doing this since 2008, regardless of periodic set backs, have a good head start. There will be more periodic set backs, do not dispair. >>
Not so....all of their purchases since 2011 are "under water," compared to those that have been selling their stash since 2011 and are now slowly beginning to accumulate again. Timing, and doing your "homework" is one of the key's to successful investing. >>
and those that are accumulating now will also be under water on the next decline. Timing is more applicable to paper metal trading than it is to the physical market due to the expenses of selling and shipping physical. For the long term stacker temporary declines are nothing more than missed opportunity to maximize profits. Hitting the highs and the lows at the right time with these volatile products is not ensured even with lots of homework. As a long term stacker buying and selling at the "right" time is not as important to me as is adding to the stack at the right time. My cost averaging since 2001, and buying the dips since has kept me well above water. This philospy works for me because I maximize my profits in the paper market. Paper is my investment, physical is my "certificates of deposit."
Could I have made more money buying and selling physical silver. Sure, but I prefer to trade paper and accumulate physical with the paper profits. This allows me to view my physical as free holdings. Until this model is broken I will not attempt to fix it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Could I have made more money buying and selling physical silver
Might have made a lot more buying equities, no? PMs are just another asset class. The sun will shine on them again. Unfortunately many of the old folk scared into buying PMs by unscrupulous bloggers, TV and radio ads and other media outlets will never see that sun shine again.
Again, we forget the effect of time in our investing.
The rebound in gold is showing a lot of strength. $1350 is likely to be near term resistance. Looking for this initial move to top out at about $1440 over the next month or two thus retracing the big move down. Near term I'm looking to add to my position on a dip down to $1307 if I get that lucky.
Some Elliot Wave guys are getting all excited that this is a fresh new bull market (ie like August 1976). Some concerns in that gold is up 18 days now, just ran into into the 7 month downtrend line from the January high, the 3 month downtrend line, and matched to the dollar so far the somewhat similar mid April-early May bounce (ie +$167: $1321 to $1488 vs. $1180 to $1347).
Whatever this 18 day pattern is, it can't be an Elliot Wave 4 since it overlapped the May 20th low of $1337. That would suggest that the down move from $1488 to $1180 was complete unto itself. Lots of gaps left behind on this rally starting back at $1197. GLD and GDX are littered with them. The big gap Sunday night from $1295/$19.50 did have the look and feel of a breakout gap though. We've been so used to seeing lower gaps fill the past 22 months....but, at some point there will have to be lower gaps left behind in a bullish gold recovery. Running into resistance lines of multi-month order....but, gold might not care. Silver wasn't able to muster a new high today to match miners and gold. GSr is still swinging in that 64-67 range much the way it did in November 2008 as gold rallied away. So far we're still matching that GSr action of 2003-2008. The big difference is that the dollar is not rising this time to help draw GSr to greater extremes. The dollar was needed to settle derivative contracts during the Sept-Oct 2008 Lehman bust period. That need is not quite there at the moment. And with the SM rallying away to all time highs, who needs the dollar?
So far the bulls are ignoring any influences of the approaching Thursday options expiration. Typically, Tues/Wed of this week starts the weakness. The bulls mostly ignored last week's stock market OpEx (GLD, GDX, SLV, etc.) by powering up Thursday and Friday following a $30 Ben Bernanke influenced dip on Wednesday. I guess gold could slice through $1350 and head up to $1375-$1425 depending on what happens to the dollar over the next week or so. If the bankers are now the gold bulls, who knows where this ends?
Last night's and this morning's action filled in some pieces. In looking at the 1 and 5 min futures charts more closely last night I started getting the feeling that a 5 wave pattern from $1295 was complete at $1347 at 5:13 pm.
Filled yesterday's break out gap at $1335 where the NY traders didn't get a chance to play with the action from $1336-$1347. So for starters they brought it back down. But we haven't revisisted a breakout gap in a while. So that's somewhat bearish. I think we finished the 5 waves up from $1180 yesterday at 5:13 pm just into the Globex close. It looked like there could have only been 3 waves up (of 5) yesterday afternoon. But, there is another 5 wave pattern of around $5 from around 3:40-5:12 pm. Spikey action between 2:30-7 pm yesterday was odd, esp. on either side of the trading lull period (5:15-6 pm). Silver wasn't participating yesterday and refused to make a higher high or break $20.50. Now it's briefly breeched the important $20.20 support level again. And for those watching for another leg up in the sequence from $1270, I think the chances of that are now diminshed with overlapping yesterday's wave 1 (of 5 of 5) from $1326 to $1336 ($1334 hit this morning). So whatever lies ahead, it's not going to be a remaining 5th wave from yesterday's sequence. Could get a bounce right back up to $1343 to gap fill this morning's breakdown gap (ie retest the broken 2 day uptrend line). The NY traders didn't get a chance at the $1295-$1315 breakout range Sunday night. The time would be ripe now over the next 6 days to do that (OpEx Thurs-Monday/TBond auctions through Thursday this week/FOMC meeting next Tu/Wed).
The gold market is a flea on the back of the bond market. Keep your eyes on the bond market and interest rates. Interest rates won't kill a gold rally, but legislation or rules changes will. When the bond market is in trouble, TPTB tend to have a very heavy hand. The good news is that their biggest problem isn't the gold market per se' - it is mainly keeping in the herd from stampeding away from financial paper, both stocks and bonds. When that happens (and it probably will), they'll blame whoever happens to be handy, and they'll do just about anything to keep their perks and power.
Buy physical.
Q: Are You Printing Money? Bernanke: Not Literally
Rising interest rates will null deflation and fuel commodities as well as inflation. Metals will benefit greatly.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Caught up on Armstrong’s economic confidence time table that I religiously watched back in 2006-2011. He pretty much nailed gold’s move from April 2009 to June 2011 during declining economic confidence (ie gold positive). And no surprise that from June 2011 to August 2013 on increasing economic confidence, we’ve had a rising stock market and consolidating gold.
The next down leg down begins August 7th 2013 and runs to Sept 2014. That should generally be gold positive and stock market negative…rhymes with the bottoming of the 60 and 120 year business cycles. It will be nice to have Armstrong’s model running with the PM bulls again. Better that, than against it like we just saw for 2 years. The model is not perfect as there are times when rising economic confidence pulls gold along with it (Nov 2002 – May 2004). But the model is worth keeping an eye on. Interesting that he calls for a potential max Dow of 43,000 down the road under the most extreme (QE) assumptions. Then again, he called for a total stock market crash in August 2013...a year ago. We're only 2 weeks away and so far not looking like a crash. If she does go down as the economic confidence cycle hits a 2 year top I suspect everything could be dragged down with it at first. 43,000 DOW would apparently come in Sept 2015 or November 2017 when the economic conf model tops the next 2 times. Those would likely be gold bottoming areas. Of the last 3 cycle bottoms over the past 7 years, they all nailed the gold tops to within 3 months….with the tops coming in months after the cycle bottomed. And the 2008 top was nailed to within a week. Not bad timing at all. Next target Sept 2014. Odds favor August-Dec 2014 for the gold bottom using the model. He also notes that the EC model is not the same as stock market cycles. Then can be different by quite a few months, though in the same ballpark. So August 2013 doesn't have to be a stock market top just because confidence is peaking. It took most of 2007 for the SM to peak after confidence reached a high in late Feb 2007. It takes a while sometimes to burn off the euphoria.
Armstrong apparently agrees with what I am seeing then. There is a big stock market crash coming. I actually think the down move has started and I have actually shorted the SP500 and sold all non-metal stocks. The real move/crash might not come for a couple of weeks (i.e, Aug 7. Crashes are usually caused by liquidity problems, which I do see in the near future. I'm still in a quandary about selling my mining stocks... something tells me that is a good idea even lieu of the coming move in gold back to $1440 in the fairly near term.
I'm looking to gold to hold this ~1318 level right now as a 28.3% retrace of the last move up. It may dip to 1306 or so tonight but it should quickly recover. I added to my position at 1315 in hopes of padding the profits on this move up. I think we could be stuck at the 1350 level as a max for another couple days or so.
I really like the chart action for gold, the market has definitely changed modes. Not holding 1318 (aside from a quick dip below tonight or tomorrow) would be a big concern here.
If the equity market "crashes" then gold will as well.
Im not expecting a crash, but September is usually a weak month. I own only 1 stock.
I think gold revisits 1200 again. Some modest strength in the indicators, but the 50dma is sharply downward trending and momos hit very low levels (extreme weakness) last month.
Thanks Cohodk. Just for comparison I posted the 50 dma and 2008 gold chart below. Gofo's have been at historic negative levels now for a couple weeks. I'd rather see them turn the other way now as they have done for all other rallies of the past 5 years.
Goldcorp posted earnings today and came out with a self-sustaining gold cash cost (2nd quarter) of $1279/oz. Gold price averaged around $1350-$1400 2nd quarter. So add another $50-$100/oz to that cost as we commenced 3rd quarter. Hopefully, that corrects all the misguidance about gold "cash costs" at $600-$900/oz being the real deal. AEM reported yesterday with a net loss for the quarter of $24 MILL. They had dropped $50 MILL in net income in each of the past 2 quarters ($100 MILL drop on the last 2 reports). Gold mining is easy, right? THM, a junior explorer with a 10 MILL oz gold mine near Fairbanks, Alaska came out with a feasibility study 2 days ago that said the project was unprofitable at under $1500- $1600 gold. The cost to build the mine was $4 BILL or so. Anyone want to buy into that project? That $4 BILL figure is a little less than Barrick's estimate to finish the stalled Pascua Lama project (Peru) which is a much larger oz. project already 50% built. THM stock doubled the past 2 weeks from 45 to 90 cents, then crashed all the way back on their bad news.
Goldcorp reported adjusted net income of $117 MILL....down 65% from same qtr last year. They also took a $1.96 billion impairment charge this quarter as one of their primary mine's value was adjusted downward. In essence, they lost nearly $2 BILL this quarter....not exactly unexpected as gold dropped from $1600 first quarter to $1400 or so 2nd qtr. Impairment charges will help to clean out the dead wood to get share prices right for once.
But the model is worth keeping an eye on. Interesting that he calls for a potential max Dow of 43,000 down the road under the most extreme (QE) assumptions. Then again, he called for a total stock market crash in August 2013...a year ago. We're only 2 weeks away and so far not looking like a crash. If she does go down as the economic confidence cycle hits a 2 year top I suspect everything could be dragged down with it at first. 43,000 DOW would apparently come in Sept 2015 or November 2017
Company earnings aren't exactly on a tear right now. The cost structure of obamacare will start to kick in soon if it's not de-funded. The bailout cycle for defunct municipalities is just beginning. Lot's of demand for capital and no good sources for it. Hoisington discounts the actual inflation in their model and it's not going to be as easy as they imply to keep rates under control, unless the economy gets really bad. I can't discount the possibility of a Weimar experience. Cohodk thinks that the economy is going to be flat, I think we'll be lucky to see that.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>I think gold revisits 1200 again. Some modest strength in the indicators, but the 50dma is sharply downward trending and momos hit very low levels (extreme weakness) last month. >>
I won't rule out a revisit of 1200, but 1440 is in the cards first. The 38.2% retrace of the move down is under way and will complete.
<< <i>If the equity market "crashes" then gold will as well.
Im not expecting a crash, but September is usually a weak month. I own only 1 stock.
I think gold revisits 1200 again. Some modest strength in the indicators, but the 50dma is sharply downward trending and momos hit very low levels (extreme weakness) last month. >>
Stocks have had a good run, I like to keep two or three years expenses in cash and that allocation is down, I feel now is a good time to replenish it.
<< <i>I think gold revisits 1200 again. Some modest strength in the indicators, but the 50dma is sharply downward trending and momos hit very low levels (extreme weakness) last month. >>
I won't rule out a revisit of 1200, but 1440 is in the cards first. The 38.2% retrace of the move down is under way and will complete. >>
Is it possible that the move down is really from the break of support at 1550? If so then the 38% retrace is complete.
<< <i>I think gold revisits 1200 again. Some modest strength in the indicators, but the 50dma is sharply downward trending and momos hit very low levels (extreme weakness) last month. >>
I won't rule out a revisit of 1200, but 1440 is in the cards first. The 38.2% retrace of the move down is under way and will complete. >>
Is it possible that the move down is really from the break of support at 1550? If so then the 38% retrace is complete. >>
I think how it works is that all moves in all time frames need to retrace... eventually. My call is still that the bigger move needs to retrace. Guess we'll find out shortly. I don't think the current pattern is showing a ton of strength but the price action appears to have changed to me. There is a lot of fuel to push a recovery... ETF holdings have not started to recover. Sentiment is still uber-low. But I don't think sentiment is going to change overnight (although it could), and that's ideal for a gradual recovery as investors pile back in. It's not like any economic factors or indicators have gotten better and less-favorable for gold.
A copper price breakdown now will be indicative of further PM price declines. Keep an eye on copper.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Copper has been more closely tied to stocks that metals for several years. And with the stock market crash coming in the next week or so, copper is probably headed down also as well.
Now stocks and gold have alternated over the past few years, with sometimes there's a positive correlation and sometimes a negative one. Lately it's been a negative correlation as far as I can tell.
Copper movement is a good indicator for hard commodity price movement, PMs included.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Comments
rr, do you think that there's a Lehman event taking place behind the scenes right now?
The April and May 2013 candles were both bullish though far shorter in size than Aug and Sept 2008. June 2013 GSR candle is an inverted hammer or a gravestone doji....very similar to October 2008 which was also a large inverted hammer. The months of Nov and Dec 2008 did allow for rebounds in GSR even if the low in gold was already in by October 24th. I suspect we'll see some final surges in July/August 2013 to match the 2008 pattern.
This kinda implies that silver is weak, doesn't it? Do you think the GSR should be turning back around? The economy remains not so good, I think.
I suspect we'll see some final surges in July/August 2013 to match the 2008 pattern. So far, this 3 month GSR breakout is quite weak compared to 2008 where GSR ran to 83 and the dollar to 88-90. Without the GSR to help push things along, the dollar probably won't easily soar back to the upper 80's.
There's enough going on around the world that the dollar has relative/comparative strength vs. lots of other currencies. I know that you're disappointed with Sinclair, but what do you make of the trend away from dollar settlement in world trade? Willie is big on this, too.
I love taking time to read your technical analysis, and I'm trying to fit it into the fundamental picture.
I knew it would happen.
Yeah, make no mistake about it - it's still "game on". If PC and cohodk are both tippy-toeing back in, I gotta ask myself it there isn't another down leg planned.
I knew it would happen.
"The stage is set for the large bullion banks to profit from a rally. Expect a rally."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
Yeah, make no mistake about it - it's still "game on". If PC and cohodk are both tippy-toeing back in, I gotta ask myself it there isn't another down leg planned. >>
No more talk of this "another down leg" stuff. Quit raining on our recovery parade, and no more down leg mumbo jumbo. This is the bottom, and any one that even hints that its not,...
May the fleas of a thousand camels infest your PCGS slabs.
Stand and Deliver!!!!
"In essence, rampant monetary easing in some of the world’s largest economies has lowered the currency bar to abnormally low levels. Compared to itself, the U.S. dollar doesn’t have the same value it did before QE3 began. Compared to other dwindling currencies, however, the dollar is as strong as it’s been in years. U.S. dollar strength – and yen weakness – is weighing heavily on gold prices right now. A turnaround in gold may thus depend not on when Ben Bernanke says it’s time to pull the plug on QE3 … but when the Bank of Japan puts the brakes on its own monetary easing."
I expect a quicker turnaround to come from FED efforts to weaken the dollar index. US exports (jobs) depend on it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
rr, do you think that there's a Lehman event taking place behind the scenes right now?
Would generally say yes. Maybe not a distinct failure event like Lehman when they were flushed. But maybe a lot of dike plugging in the bond markets for example. Definitely a
liquidity crisis of sorts in progress and churning. Whether it gets to the same extreme as Sept-Oct 2008 is probably unlikely as the CB's of the world will QE to infinity if they have to. And
they've had plenty of notice and practice to liquify the system when needed. They didn't do that in 2008 until the crisis blew up in their faces. They had no clue in Sept 2008 how things
would turn out following the Lehman kill. That and AIG helped the dollar soar to 88+ as it was "the" only liquid currency for settling derivative trades. I had the opportunity to talk to
a 45+ year trader/fund manager today who worked in upper managment in the world's largest brokerages. Here's what he had to say about otc derivatives (specifically interest rate
contracts) and why we just can't net them all out or have the govt decree them to be null and void tomorrow with no winners or losers. I'm not sure I fully understand what he said.
<< <i>Derivatives on bonds are twofold. One is a put option on downside. Holders of bonds would be the big, big losers. The other derivatives are promises to deliver bonds which are used
as good collateral. No derivatives means no collateral. Those are huge losses >>
....he basically agrees with Willie and Sinclair that the system would implode if these contracts were put into a position where they failed to perform. Derivatives netted out = TBonds netted out and vaporized. Collateral backing $Trillions in debt instantly vanishes. Poof. The fact that these deriv bets are linked to a very real TBond that is being used as collateral all around the world apparently is the issue. Sounds similar to unallocated gold accounts. You think you own the gold until the music stops and your chair has been taken by a bankster who got to the vault first.
This kinda implies that silver is weak, doesn't it? Do you think the GSR should be turning back around? The economy remains not so good, I think.
If the GSR continues to follow the same 5 yr cycle as it did in 2003-2008 then it's getting long in the tooth with only aftershocks left. The major quakes occurred in April-June. I'll continue
to follow this cycle pattern to see if it holds. The dollar is still following an expanding wedge pattern over the past several months. But, it's possible 84.5 last month was the peak and
what's occurring now is a dead-cat bounce. The FED probably doesn't want the dollar over 84 either. GSR has typically run in 8-9 cycles peak to peak. The fact that this current one has
extended to 11 months makes it way overdue for a gap filling pull back to the 55-57 range for starters. I can't rule out a GSR run to 80-90 either as the half way point projection from
the 31-60 leg would suggest another 30 pt leg in progress. It's also not impossible for gold to rally with GSR headed to 80. It did that from 1999 to 2003 (ie recessionary times). Silver
went up as well but was far outpaced by gold. Silver is not a good recessionary metal. I'm figuring on the GSR turning around as it's weekly chart shows the macd turned over and trying
to cross. The daily GSR chart shows large negative divergences in rsi and macd. The dollar looks like it is following the May rally pattern into a rounding over top again. We'll see.
Intermediate and yearly cycles are trying to bottom and hence the massive volatility we're seeing in GSR, dollar, etc.
There's enough going on around the world that the dollar has relative/comparative strength vs. lots of other currencies. I know that you're disappointed with Sinclair,
but what do you make of the trend away from dollar settlement in world trade? Willie is big on this, too.
We could still see the dollar rally up to 88-90+ again. Anything is possible in this over-controlled bankster environment. While the dollar is "due" for a 3 yr bottom in 2014, the FED & Co
could do things to extend that out...maybe indefinitely. Charles Nenner, a good cycle theory guy is looking at a dollar top in 2014. The 120 yr economic cycle bottom (think 1894 all
over again) is due to bottom into next year or thereabouts. It will magnify anything negative in the economy or financial system. The current administration will try to delay these
events so that the system crashes on the next guy's watch. But, juggling all these issues into into the end of 2015 w/o a system dump/stock market crash is going to be a slick trick.
Also, agree with Cohodk that the dollar is not going away any time soon. Replacing it with other currencies in trade and debt settlement will be a very long process lasting many years.
Nenner called the $1900 top and gold and projected $1285 as the downside target
<< <i>Definitely a liquidity crisis of sorts in progress and churning. >>
rr, always respect your technical analysis, but gotta differ with you on this one. Isn't the real behind the scenes crisis for our major financial organizations a solvency problem? Liquidity problems can be and have been addressed via FED QE. If in fact there is a liquidity crisis in progress why not just issue more QE? The banks have a lot of new money currently on deposit with the FED with the sole purpose of liquidity protection.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
2007-2008) one needs ever-increasing liquidity (QE) to plug the holes in the dam. Many more leaks have popped up over the past couple of months. The big banks are experiencing
huge reductions in the values of their derivative trades, esp interest rate contracts as rates have moved higher. Liquidity is needed to plug those solvency gaps. The FED is stuffing
them with everything they got. And to help the FED I'd bet that Morgan Stanley and others are adding to their pile of otc interest rate contracts to try and force rates back down. If they
can add $50 TRILL or more in short order then they can turn rates back down much like they did back in early 2011....much to the shagrin of Bill Gross who told his clients to get out of
TBonds.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I need to keep remembering this point. The only way out is to keep creating more, keep rates low - and hope for a "Hail Mary" touchdown with the economy. It's not going to happen that way.
With the Japan chart that derryb posted, it's clear why the dollar is strong. duh. I'm somewhat surprised that we don't hear much about Japanese gold buying.
The big banks are experiencing huge reductions in the values of their derivative trades, esp interest rate contracts as rates have moved higher. Liquidity is needed to plug those solvency gaps.
Rollovers from interest rate contracts? How long can they do this without the real market superceding? Weimar happens.
If they can add $50 TRILL or more in short order then they can turn rates back down much like they did back in early 2011....much to the shagrin of Bill Gross who told his clients to get out of TBonds.
It still completely baffles me how this can ever work. Well, except for the graft & corruption factors.
I knew it would happen.
It still completely baffles me how this can ever work. Well, except for the graft & corruption factors.
Yeah, it baffles me too. But the proof is in the pudding....it did work in the first half of 2011. Morgan Stanley alone added something around $10 to $14 TRILL in otc derivatives in
a very short period of time. Up to that point you never saw them do that. If is hard to believe that this "imaginery" system of otc derivatives is the foundation for the western financial
system. They took a clue from mathematics where imaginery and complex numbers form a large part of mathematical theory. We should start putting an i on all our currency and
bond issuances. If the ruby slippers could take Dorothy back to Kansas, I guess so can derivatives.
Daniel, if you use this - you'll owe me, imaginarily speaking of course...
I knew it would happen.
A liquidity crunch is still coming, some time this month I think.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
Dust just did 3 days down and 3 days up….exactly like the May 20th to 28th move. Nugt to Dust volume ratio closed at 35.2, near the highs of the day. Strong volume in GDX and NUGT into the last 30 min of close. Decent rise in price too. Dust put in a gapped up gravestone doji that don't appear very often....usually near peaks. CDNX had very close to an up day today and didn't follow GDX down the past 4 days. Next week are Treasury auctions with Fed minutes on Wed. Not that bearish a setup. Next week could still be a decent pre-OpEx week for PMs and miners.
Next lower GLD gap is over $70/oz away. GLD lower gap filling may be done for a while. That would be nice. Large spot gold gap this morning adds ammo that whatever of these targets is hit, a bounce back very soon to $1236 is very likely. I felt this whole dump this morning was manufactured and will be retraced quick enough. UUP matching close to the May high on a hugely gapped up doji. Not so sure that's bullish by itself. After a wild 13 day bounce back up to match the wild 12 day drop a few weeks ago, a rest may be needed to consolidate that move. Maybe it does what it did back in May and bounce back and forth between 83.5 and 84.5 for a while. UUP candle today looks a lot like the one from the May 17th gapped up peak in both shape and location.
And this is how one creates jobs. Bankruptcy lawyer jobs that is.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"At $1250 gold, a single 100-ounce futures contract controls $125,000 worth of the metal. But traders don't have to put up the full $125k to play. The minimum maintenance margin on COMEX gold futures contracts these days is just $8k. This means the maximum leverage available to aggressive gold shorts is 15.6 to 1! Stock traders can scarcely comprehend that, as stock margin has been legally limited to 2 to 1 since 1974. At maximum leverage, a mere 6.4% gold rally would wipe out 100% of the capital risked by gold shorts! While not all futures traders run with minimum margin, plenty do. The faster that gold rallies, the more pressure it puts on these guys to buy offsetting futures longs to cover. Short squeezes are born when just a small fraction of traders are forced to cover, unleashing buying pressure that sucks in many more."
"And given such extreme spec gold shorts, widespread despair, and gold recently hitting the most oversold levels by far of its secular bull, it is due for a monster upleg. As this accelerates, the leveraged shorts will be forced to buy back the gold they owe at increasing rates. This will feed on itself and likely ignite a buying panic. It will very likely lead to the biggest and fastest upleg of gold's entire secular bull."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
In looking at the monthly charts I noticed that silver and the miners blew through their monthly cloud resistances the past couple of months (ie Ichimoku cloud). Gold has just fallen into its cloud in July. It first bounced off the top of it during June. I have to wonder if gold "has" to traverse the width of the cloud resistance like silver and miners have had to do. If that's the case that could mean $1100 before it's done. Even if that's not the plan, it will not be easy for gold to break free from the $1300-$1330 resistance area until Oct/November. At least that's one possibility. Another pattern I've noticed is that gold has been stair stepping down the fib sequence of monthly moving averages. It started with the 21 mma, then the 34 month, then the 55 month ma was broken (around $1375). The 89 month ma is the next lower one and sits at $1136. In any event, this is the first time in this bull market where gold has been trapped by the monthly cloud. Silver spent 3 months in it back in 2008 (went all the way through it and then right back out - no appreciable time under the cloud). This time around silver has already spent 2 months well under the cloud. In fact the base of it now sits up at $29 and that is in effect until March 2015. Recall that the 1974-1978 silver correction took 5 years to make it back to the 1974 peak price (ie April 2016). Gold needed 40 months to recover to its 1974 peak (ie early 2015). The fact that Sinclair and Co. are all lined up again calling for $3500 gold tends to suggest there are still too many bulls out there. No shortage of bulls that feel the bottom is in and $1500 is right around the corner again. Can it be that easy and that quick? It took 3-5 years to recover in the mid-1970's. The monthly charts for gold and silver are in a place they have never been before since the late 1990's. There was no rip-roaring bounce off the bottom during that time. Gold is currently being held back by monthly cloud resistance at $1295-$1300. While it could break free and bounce strongly to $1325-$1375, I have a feeling it's going to eventually mirror what silver and the miners have done. Every other thing that entered in monthly cloud resistance the past 10 years eventually went all the way through (oil, dollar, silver, miners, stocks, etc.). So why not gold?
Those betting the house thinking there are" record shorts" are going to need new shorts before gold rallies appreciably. Now its stacking time--- slow and steady and deliberate.
Knowledge is the enemy of fear
<< <i> Now its stacking time--- slow and steady and deliberate. >>
I agree....especially SLOW...no need to rush in head first.
Excellent unbiased report by rr...Thanks
<< <i> Now its stacking time--- slow and steady and deliberate. >>
And those that have been doing this since 2008, regardless of periodic set backs, have a good head start. There will be more periodic set backs, do not dispair.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i> Now its stacking time--- slow and steady and deliberate. >>
And those that have been doing this since 2008, regardless of periodic set backs, have a good head start. There will be more periodic set backs, do not dispair. >>
Not so....all of their purchases since 2011 are "under water," compared to those that have been selling their stash since 2011 and are now slowly beginning to accumulate again. Timing, and doing your "homework" is one of the key's to successful investing.
<< <i>
<< <i>
<< <i> Now its stacking time--- slow and steady and deliberate. >>
And those that have been doing this since 2008, regardless of periodic set backs, have a good head start. There will be more periodic set backs, do not dispair. >>
Not so....all of their purchases since 2011 are "under water," compared to those that have been selling their stash since 2011 and are now slowly beginning to accumulate again. Timing, and doing your "homework" is one of the key's to successful investing. >>
and those that are accumulating now will also be under water on the next decline. Timing is more applicable to paper metal trading than it is to the physical market due to the expenses of selling and shipping physical. For the long term stacker temporary declines are nothing more than missed opportunity to maximize profits. Hitting the highs and the lows at the right time with these volatile products is not ensured even with lots of homework. As a long term stacker buying and selling at the "right" time is not as important to me as is adding to the stack at the right time. My cost averaging since 2001, and buying the dips since has kept me well above water. This philospy works for me because I maximize my profits in the paper market. Paper is my investment, physical is my "certificates of deposit."
Could I have made more money buying and selling physical silver. Sure, but I prefer to trade paper and accumulate physical with the paper profits. This allows me to view my physical as free holdings. Until this model is broken I will not attempt to fix it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Might have made a lot more buying equities, no? PMs are just another asset class. The sun will shine on them again. Unfortunately many of the old folk scared into buying PMs by unscrupulous bloggers, TV and radio ads and other media outlets will never see that sun shine again.
Again, we forget the effect of time in our investing.
Knowledge is the enemy of fear
downtrend line from the January high, the 3 month downtrend line, and matched to the dollar so far the somewhat similar mid April-early May bounce (ie +$167: $1321 to $1488 vs.
$1180 to $1347).
Whatever this 18 day pattern is, it can't be an Elliot Wave 4 since it overlapped the May 20th low of $1337. That would suggest that the down move from $1488 to $1180 was complete
unto itself. Lots of gaps left behind on this rally starting back at $1197. GLD and GDX are littered with them. The big gap Sunday night from $1295/$19.50 did have the look and feel of
a breakout gap though. We've been so used to seeing lower gaps fill the past 22 months....but, at some point there will have to be lower gaps left behind in a bullish gold recovery.
Running into resistance lines of multi-month order....but, gold might not care. Silver wasn't able to muster a new high today to match miners and gold. GSr is still swinging in that
64-67 range much the way it did in November 2008 as gold rallied away. So far we're still matching that GSr action of 2003-2008. The big difference is that the dollar is not rising this
time to help draw GSr to greater extremes. The dollar was needed to settle derivative contracts during the Sept-Oct 2008 Lehman bust period. That need is not quite there at the
moment. And with the SM rallying away to all time highs, who needs the dollar?
So far the bulls are ignoring any influences of the approaching Thursday options expiration. Typically, Tues/Wed of this week starts the weakness. The bulls mostly ignored last week's
stock market OpEx (GLD, GDX, SLV, etc.) by powering up Thursday and Friday following a $30 Ben Bernanke influenced dip on Wednesday. I guess gold could slice through $1350 and
head up to $1375-$1425 depending on what happens to the dollar over the next week or so. If the bankers are now the gold bulls, who knows where this ends?
Filled yesterday's break out gap at $1335 where the NY traders didn't get a chance to play with the action from $1336-$1347. So for starters they brought it back down. But we haven't revisisted a breakout gap in a while. So that's somewhat bearish. I think we finished the 5 waves up from $1180 yesterday at 5:13 pm just into the Globex close. It looked like there could have only been 3 waves up (of 5) yesterday afternoon. But, there is another 5 wave pattern of around $5 from around 3:40-5:12 pm. Spikey action between 2:30-7 pm yesterday was odd, esp. on either side of the trading lull period (5:15-6 pm). Silver wasn't participating yesterday and refused to make a higher high or break $20.50. Now it's briefly breeched the important $20.20 support level again. And for those watching for another leg up in the sequence from $1270, I think the chances of that are now diminshed with overlapping yesterday's wave 1 (of 5 of 5) from $1326 to $1336 ($1334 hit this morning). So whatever lies ahead, it's not going to be a remaining 5th wave from yesterday's sequence. Could get a bounce right back up to $1343 to gap fill this morning's breakdown gap (ie retest the broken 2 day uptrend line). The NY traders didn't get a chance at the $1295-$1315 breakout range Sunday night. The time would be ripe now over the next 6 days to do that (OpEx Thurs-Monday/TBond auctions through Thursday this week/FOMC meeting next Tu/Wed).
The gold market is a flea on the back of the bond market. Keep your eyes on the bond market and interest rates. Interest rates won't kill a gold rally, but legislation or rules changes will. When the bond market is in trouble, TPTB tend to have a very heavy hand. The good news is that their biggest problem isn't the gold market per se' - it is mainly keeping in the herd from stampeding away from financial paper, both stocks and bonds. When that happens (and it probably will), they'll blame whoever happens to be handy, and they'll do just about anything to keep their perks and power.
Buy physical.
I knew it would happen.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The next down leg down begins August 7th 2013 and runs to Sept 2014. That should generally be gold positive and stock market negative…rhymes with the bottoming of the 60 and 120 year business cycles. It will be nice to have Armstrong’s model running with the PM bulls again. Better that, than against it like we just saw for 2 years. The model is not perfect as there are times when rising economic confidence pulls gold along with it (Nov 2002 – May 2004). But the model is worth keeping an eye on. Interesting that he calls for a potential max Dow of 43,000 down the road under the most extreme (QE) assumptions. Then again, he called for a total stock market crash in August 2013...a year ago. We're only 2 weeks away and so far not looking like a crash. If she does go down as the economic confidence cycle hits a 2 year top I suspect everything could be dragged down with it at first. 43,000 DOW would apparently come in Sept 2015 or November 2017 when the economic conf model tops the next 2 times. Those would likely be gold bottoming areas. Of the last 3 cycle bottoms over the past 7 years, they all nailed the gold tops to within 3 months….with the tops coming in months after the cycle bottomed. And the 2008 top was nailed to within a week. Not bad timing at all. Next target Sept 2014. Odds favor August-Dec 2014 for the gold bottom using the model. He also notes that the EC model is not the same as stock market cycles. Then can be different by quite a few months, though in the same ballpark. So August 2013 doesn't have to be a stock market top just because confidence is peaking. It took most of 2007 for the SM to peak after confidence reached a high in late Feb 2007. It takes a while sometimes to burn off the euphoria.
I'm looking to gold to hold this ~1318 level right now as a 28.3% retrace of the last move up. It may dip to 1306 or so tonight but it should quickly recover. I added to my position at 1315 in hopes of padding the profits on this move up. I think we could be stuck at the 1350 level as a max for another couple days or so.
I really like the chart action for gold, the market has definitely changed modes. Not holding 1318 (aside from a quick dip below tonight or tomorrow) would be a big concern here.
Im not expecting a crash, but September is usually a weak month. I own only 1 stock.
I think gold revisits 1200 again. Some modest strength in the indicators, but the 50dma is sharply downward trending and momos hit very low levels (extreme weakness) last month.
Knowledge is the enemy of fear
the other way now as they have done for all other rallies of the past 5 years.
2008 gold chart
Goldcorp posted earnings today and came out with a self-sustaining gold cash cost (2nd quarter) of $1279/oz. Gold price averaged around $1350-$1400 2nd quarter. So add another
$50-$100/oz to that cost as we commenced 3rd quarter. Hopefully, that corrects all the misguidance about gold "cash costs" at $600-$900/oz being the real deal. AEM reported
yesterday with a net loss for the quarter of $24 MILL. They had dropped $50 MILL in net income in each of the past 2 quarters ($100 MILL drop on the last 2 reports). Gold mining is
easy, right? THM, a junior explorer with a 10 MILL oz gold mine near Fairbanks, Alaska came out with a feasibility study 2 days ago that said the project was unprofitable at under $1500-
$1600 gold. The cost to build the mine was $4 BILL or so. Anyone want to buy into that project? That $4 BILL figure is a little less than Barrick's estimate to finish the stalled Pascua
Lama project (Peru) which is a much larger oz. project already 50% built. THM stock doubled the past 2 weeks from 45 to 90 cents, then crashed all the way back on their bad news.
Goldcorp reported adjusted net income of $117 MILL....down 65% from same qtr last year. They also took a $1.96 billion impairment charge this quarter as one of their primary mine's
value was adjusted downward. In essence, they lost nearly $2 BILL this quarter....not exactly unexpected as gold dropped from $1600 first quarter to $1400 or so 2nd qtr. Impairment
charges will help to clean out the dead wood to get share prices right for once.
Company earnings aren't exactly on a tear right now. The cost structure of obamacare will start to kick in soon if it's not de-funded. The bailout cycle for defunct municipalities is just beginning. Lot's of demand for capital and no good sources for it. Hoisington discounts the actual inflation in their model and it's not going to be as easy as they imply to keep rates under control, unless the economy gets really bad. I can't discount the possibility of a Weimar experience. Cohodk thinks that the economy is going to be flat, I think we'll be lucky to see that.
I knew it would happen.
<< <i>I think gold revisits 1200 again. Some modest strength in the indicators, but the 50dma is sharply downward trending and momos hit very low levels (extreme weakness) last month. >>
I won't rule out a revisit of 1200, but 1440 is in the cards first. The 38.2% retrace of the move down is under way and will complete.
<< <i>If the equity market "crashes" then gold will as well.
Im not expecting a crash, but September is usually a weak month. I own only 1 stock.
I think gold revisits 1200 again. Some modest strength in the indicators, but the 50dma is sharply downward trending and momos hit very low levels (extreme weakness) last month. >>
Stocks have had a good run, I like to keep two or three years expenses in cash and that allocation is down, I feel now is a good time to replenish it.
<< <i>
<< <i>I think gold revisits 1200 again. Some modest strength in the indicators, but the 50dma is sharply downward trending and momos hit very low levels (extreme weakness) last month. >>
I won't rule out a revisit of 1200, but 1440 is in the cards first. The 38.2% retrace of the move down is under way and will complete. >>
Is it possible that the move down is really from the break of support at 1550? If so then the 38% retrace is complete.
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>I think gold revisits 1200 again. Some modest strength in the indicators, but the 50dma is sharply downward trending and momos hit very low levels (extreme weakness) last month. >>
I won't rule out a revisit of 1200, but 1440 is in the cards first. The 38.2% retrace of the move down is under way and will complete. >>
Is it possible that the move down is really from the break of support at 1550? If so then the 38% retrace is complete. >>
I think how it works is that all moves in all time frames need to retrace... eventually. My call is still that the bigger move needs to retrace. Guess we'll find out shortly.
I don't think the current pattern is showing a ton of strength but the price action appears to have changed to me. There is a lot of fuel to push a recovery... ETF holdings have not started to recover. Sentiment is still uber-low. But I don't think sentiment is going to change overnight (although it could), and that's ideal for a gradual recovery as investors pile back in. It's not like any economic factors or indicators have gotten better and less-favorable for gold.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Is not gold a noble enough asset to not be overwhelmed with lowly copper?
What of the "fundamentals" of gold? No one warned me that golds value is dependent on copper.
FWIW-- I think copper could drop 30%( and have written so much in these threads).
Knowledge is the enemy of fear
Now stocks and gold have alternated over the past few years, with sometimes there's a positive correlation and sometimes a negative one. Lately it's been a negative correlation as far as I can tell.
<< <i>What does copper have to do with gold? >>
Copper movement is a good indicator for hard commodity price movement, PMs included.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>And with the stock market crash coming in the next week or so >>
Really?....Coming from you, I'm not holding my breath.
<< <i>
<< <i>What does copper have to do with gold? >>
Copper movement is a good indicator for hard commodity price movement, PMs included. >>
Its too bad gold isnt more a currency than a commodity.
Crash in the next week? You still long gold?
Knowledge is the enemy of fear
Yeah, really?
Guess I better do something fast!