“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


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Tuesday, November 12, 2013

Long Term Monthly Gold Chart

Can you see the significance of the 1280 region? It is the 38.2% Fibonacci Retracement level of the entire rally from the secondary low made back in April 2001 and the peak above $1900 made in September 2011. On the monthly chart, the price fell below that level reaching 1180 (1179 to be exact) but it did not see any downside followthrough the next month as it immediately rebounded eventually pushing back above $1400 before failing once again.



Now it is back to testing that level and though it is early in the month of November still, if gold closes out this month below that level, December will be a critical test of the resolve of the bulls. Failure to stay above $1280 on a month ending basis on TWO CONSECUTIVE MONTHS, would increase the likelihood of another test of that spike low near $1180. Were that to fail, the next critical target for gold would be near the 50% retracement of the entire decade long bull market in gold ( 2001- 2011).

That would probably represent a good area for longer term oriented players to begin buying as you are talking about prices below the cost of production for many gold mining companies.

I am not predicting a move to this area as of now, I am merely setting up some possible scenarios IF PRICE PERFORMS AS I MENTIONED ABOVE. Remember, we are trying to listen to the voice of the market only and tuning out anything else. That is the only way to ultimately be successful as a trader/investor.

One thing that this chart also shows us is that in order for the bulls to turn this chart to their advantage, they MUST take price at a bare minimum back above the $1400 level and hold it there.

Much of this will depend on market expectations in regards to the overall inflation picture. Today, crude oil is falling sharply again having neared $93. If it fails to secure a foothold near this level, steeper losses are ahead. It is most difficult, if not impossible, to make an argument for inflation if energy prices are sinking.

On the food side of the ledger, soybeans are moving higher and have been since that USDA report last week but that is coming mainly on the heels of reported sales to China. China is notorious for booking sales but then cancelling those sales later if prices drop so beans need some more time to see how the demand is going to hold up at these higher levels. Corn appears to have found a short-term interim bottom but it is difficult for me to get bullish on corn when a record crop is still coming our way. Much depends on the S. American growing season. If it continues to get off to a good start, both corn and beans should stop moving higher sooner rather than later. I am monitoring both charts to get a sense of these all important foods, not to mention wheat, which also has stabilized. That however seems to me to be more a function of spillover buying from the corn and bean markets than any outright bullish wheat fundamentals.

Stay tuned...

27 comments:

  1. Sound advice Dan to listen to what the market is saying.
    Ignore all the other nonsense that is still being pumped at us.

    I continue to dump the Gold shares that I am still up on. There will be time to re-enter the market...that time is not now.

    ReplyDelete
    Replies
    1. I agree. The marked underperformance of PMs relative to the broader market is startling given the monetary policy circumstances we find ourselves in.

      What is even more startling though, is the impressive and unabated performance of "Bitcoin" the so-called "digital" gold.

      According to www.ounce.me, an ounce of silver costs a mere 0.058 bitcoins, and an ounce of gold is just shy of 3.5 bitcoins. Absolutely mind boggling if you ask s.

      Delete
    2. The NSA FBI DOJ will work together soon to take the bit down. You can count on them protecting the illusion of the currencies. Govt are in jeopardy and they cannot stand for free market currencies.

      Delete
    3. "I continue to dump the Gold shares that I am still up on."

      Excellent stragey to buy high and sell low.
      I have the gut feeling, this blog has been infiltrated.

      Delete
  2. Looking at a simple monthly gold chart, one cannot help but see that the important !,000 level sticks out like a sore thumb, and the way gold is acting it is begging to touch it. I will take my hedges off at that point and begin to once again buy. As a follower of gold for a decade, I remember the angst and excitement as gold took out 875 and 1,000 on the way up. I also look at it with great anticipation on the way down.

    Let me say one thing, that was not that long ago. As gold takes out important numbers, one needs to go to longer term charts.

    We should feel a sense of satisfaction as what other asset has these telegraphing qualities?

    Nobody wants bonds or commodities. People want stocks. They will lift equities higher at the expense of gold. There is absolutely no reason to own gold right here. I like the asset shield qualities and would own it at 500 (just hedge).

    ReplyDelete
    Replies
    1. I look on the bright side - I am more than halfway home to another home run trade (my 1,000 bet placed at 1632 gold last February). For me, the faster we get there the better.

      Delete
    2. I'm with you on that Eph

      This slow death drama is getting stale.

      Delete
  3. Wow, look at the maniacal selling in silver.

    Simply ferocious liquidation.

    Huge volume in SLV, looks like many of the CIGA and GATA boyz had had enough and they are finally throwing in the towel after years of hanging on to hope.

    Just what we needed to clean out the last of the hangers on.

    ReplyDelete
  4. Mark

    The beatings will continue until no one...and I mean no one is left standing.

    ReplyDelete
    Replies
    1. Dean - Agree, I think there are a few more hangers on...That said, it should make my wife's antique silver hobby on ebay a little less costly.

      Delete
  5. We have a scorecard on the greatest central bank chairman in history. http://www.zerohedge.com/news/2013-11-12/ranking-bernanke
    I guess he gets an "F". Hooray for the pranksters.

    ReplyDelete
  6. Never reach $1000 oz. Never again

    ReplyDelete
  7. Tsla looking like the stock market soon unless jellen starts yapping.

    ReplyDelete
  8. Not to fear Wolf, Ol' Yeller will make damn sure no one at the party sobers up as she steps in.
    These people have egos that rise with the morning sun, there is no way Bernanke will leave with a tanking DOW and there is no way Yeller is going to start her reign of ridiculous with a tanking DOW.
    It may not hit $1000.00 again but it may languish at the present level for months, which is just as agonizing.

    ReplyDelete
  9. Bet you didn't know they video taped all of the possible candidates for Fed Chairman to try and determine who demonstrated the most applicable skill sets. Here are the finalists.
    This is classified info so don't spread it around.
    http://www.youtube.com/watch?v=sOJqoccCnwQ

    ReplyDelete
  10. Kind of fun watching really as the CB statesman (chief liars) start talking in circles to themselves. This is but the beginning of chaos never before witnessed since the depression. The market will crash..a matter of time, or outright dollar devaluation. Pick your poison, it is a matter of time. Confidence will destroy .. lack of confidence.

    ReplyDelete
  11. Has anyone been over to China lately to see the GOLD BUYING FRENZY? I have friends that go there and they told me they cannot confirm any such activity.

    ReplyDelete
  12. News Unit

    How would you detect anyone buying gold in a country like China?

    My nephew lives in Hong Kong, there is no visual buying frenzy anything no more than you would see a buying frenzy in America…what would it look like?
    In America people buy bullets because they are scarce…do you see a buying frenzy?
    When the crash of 08/09 happened did you see it on the freeway?
    No..No

    ReplyDelete
    Replies
    1. Good questions and I don't have all the answers. That's why I was asking.

      Delete
  13. "Failure to stay above $1280 on a month ending basis on TWO CONSECUTIVE MONTHS, would increase the likelihood of another test of that spike low near $1180. Were that to fail, the next critical target for gold would be near the 50% retracement of the entire decade long bull market in gold ( 2001- 2011). "

    Completely agree about that area, as the mlh inf of the upwards pitchfork for this time unit goes around 1270. A close under it breaks another long-term upwards charts, one of the last under the feet of the bulls...
    You said Comex is nearly a pure game of paper nowadays.
    People who would dare to ask for massive delivery would be punished (see Hunt brothers for silver).
    I don't know if we should even care about ratio between registered stocks and OI going beyond 60, 70 or 100 for that matter :(

    ReplyDelete
  14. No time to update charts, but they are the same.
    Reminder : on a given time unit, I'm using Cdur with 2 lines. One line is the short term CDur of that time unit, the bold line is the longer term CDur, close to the one of the upper time unit. When both are going the same direction, usually it supports the price direction. That's one way to use this indicator. The other way is to follow the short term CDur only and compare it with price variations. Cdur is a cyclical indicator, going up and down. It measures the strength of a trend. If we are in a bear trend, and prices go down a lot alongside Cdur, but then only lateralize when CDur goes back up, the trend is still strong and gives no sign of weakness.

    As a recap :

    - Daily time unit : we broke the mlh inf of the upwards pitchfork at 1300 a few days ago. Both CDur keep going down. See above. We hit the Bollinger bands and just are bouncing above it around 1270 $ area mentioned this weekend. Bollinger are in a range, which may provide some support, but my other indicators are not really helping to support the thesis that 1270-1275 area will hold. As I explained on the 4 hours chart yesterday, I was monitoring this area but found absolutely no reason to go long. I'm flat and have a biais down.

    - 2weeks time unit. Ouch! The Cdur short-term went down and took prices from 1800 to 1180. Then Cdur went back up all the way to its tops and prices...lateralized and are now at sub 1300. See explanation about how I use the Cdur above. That doesn't sound good for bulls :(

    - monthly time unit. We are already flirting with the mlh inf of the upwards pitchfrok. You don't want to see the recent lows of 1250 give way!

    Next support zone : a feeble one at 1250 because of last lows, and then 1220 i.e the Bollinger Band in range in the weekly time scale.
    As a contrarian trying to hit prices on the reverse, the trend being down, I'm trying to find an entry point long, but for now, I found none.

    ReplyDelete
    Replies
    1. Oops, I just found a long entry point, sorry :) :)
      I didn't watch the short term candles when writting my previous mail.

      So I just got long at breaking the 1 hour chart resistance of 1270 at 1271 $.
      Why?
      4 Hours charts are showing the Bollinger Inf reversing up and Bollinger getting into phase 4. The Bol inf is going up and is now at the level of recent low at 1260 $. Conclusion : Yes, I may put a stop loss at that level, close enough from my long trade.

      Is it confirmed on the shorter time unit?

      Yes. I see an upwards divergence on MACD vs prices.
      That's enough for me to try the trade.
      My strategy is still the same : get out fast 1/3 of position and raise my stop loss at my entry level as soon as prices went up a bit.
      I'll keep you posted.
      Don't know if I'll lose or not, just explain why I got long and how.

      Delete
  15. On the 1 hour time scale, MACD bumbed and reversed down at the zero line level, quickly crossing and followed by a new price correction.
    Conclusion : I'm dynamically monitoring my trade. As long as MACD doesn't bump on this line nor crosses down, I stay long. If it does, I'll dump half my position.

    ReplyDelete
  16. Dan, can you please edit this sentence..."Remember, we are trying to listen to the voice of the market only and tuning out anything else. That is the only way to ultimately be successful as a trader/investor.", you've made a typo. Should be...."Remember, we are trying to listen to the voice of the manipulators only and tuning out anything else. That is the only way to ultimately be successful as a trader/investor."

    ReplyDelete
    Replies
    1. twippers ; please tell us exactly who these manipulators are at the present time. Are they the bullion banks or the hedge funds? please provide documentation to prove that it is the bullion banks at the current time especially in light of the fact that the COT reports reveal they are mainly buying while the hedge funds are mainly selling.

      keep in mind that this web site is designed from a trader's perspective and that means it is designed to try to correctly read price action and profit accordingly. It is not designed to deal with theories which other web sites and groups deal with much more comprehensively. That is their purpose - not mine.

      One last thing - when I say we are tuning out anything else - that means those who continue to sit on the wrong side of the gold market and lose money all the while blaming everything except themselves for not getting out of the way of a freight train.

      When/if this market ever turns and begins a sustained move higher, I will hopefully be able to recognize that and then my tune will change accordingly. Remember - there are only three positions one can take towards a market - LONG, SHORT or FLAT (meaning no position while you wait). One does not always have to be long to make money....

      Delete