Sunday, 17 October 2010

Inverted Head & Shoulders in silver: Target $30? 2010-10-17

I just read this article by Bill Downey of with a few nice charts of the silver breakout.

I decided to look at the weekly silver chart on because there seemed to be a likely inverted Head and Shoulders pattern dating back to March 2008, with a breakout in August 2010. Here is my annotated chart:

Anyway, the target here would be around $30 if the Head and Shoulders were to be considered as valid; $30.60 if you take intraday prices, a little lower for weekly closes. The inverted Head & Shoulders is a huge formation, 30 months in the making.

This chart is similar to the first (silver manipulation timeline) chart on the goldtrends analysis on / page linked above. Interestingly, that chart showed daily ticks and, looking at the left hand side, you can see that $19.50 was a key level during for 30 months - it was actually support in March 2008 after the breakout. That support was tested successfully on one occasion and then broke down after gold and silver topped in the credit crunch when Bear Stearns was rescued. Thereafter, until a couple of months ago, $19.50 was resistance!

I was interested to see the fourth chart in that article. It also points to a target of $30, considering the 'upper momentum line' of that chart. Two analyses, same target, not a guarantee but an interesting agreement!

Wednesday, 13 October 2010

Breakout in HUI Gold Bugs Index at last? P&F chart. 2010-10-13

Although a breakout in the HUI Gold Bugs index of 'unhedged' gold miners has been touted for a few days, a quick look on revealed today that the Point and Figure chart is now actually showing an 'Ascending Triple Top Breakout' as of 13th October 2010. Here is the webpage - the P&F chart is the bottom one in this gallery view of daily, weekly and P&F charts:$HUI

Saturday, 9 October 2010

$941 MAGIC NUMBER for gold for Jon Nadler and Jeffrey Christian 2010-10-09

The MAGIC NUMBER for gold

I listened to the interview with Jon Nadler, dubbed the "uber bear" on gold somewhat unfairly perhaps on the Korelin Economics Report last week. The interview can be found here:

It was quite interesting because he recommends 6-10% of one's portfolio in gold as insurance but refuses to be bullish. In fact, he repeated his prediction of the end of the gold bull market within 12 months and stated that the financial crisis has already ended. In other words, 2008-2009 was the financial crisis.

His more specific predictions were given on Kitco radio the week before as discussed in my previous post on my blog:

The radio commentary is here:

He said gold may overshoot on the upside and top in the next 9 months. That is his 'sell by' date on the gold market.

He stated that he wouldn't give a price and timing at the same time, but he went on to say that gold may 'overshoot' to $1320 to $1380. He just couldn't resist it.

Furthermore, he asserted that it's leveraged speculation with hedge funds that is driving gold at the moment. Maybe he is right; I don't know. Others say it's physical demand, but they are goldbugs like James Turk, it has to be admitted.

Jon Nadler then discussed the 1980 $850 top in gold with the presenter and told us that inflation and general conditions were much worse in 1980 than now and therefore the spike in the gold price was more 'justified' in 1980 than it is now.

He warned that investors could soon see a top (within 9 months) and then suggested that a 8% annual drop for 10 years could then occur. Well, I got my Windows calculator out and calculated 0.92 to the power of 10, which is 0.4344, so gold could drop to 43.44% of its top value. Taking his top figure of $1380, 0.4344x1380= $599.45.

I decided to make a comparison with Jeffrey Christian's commentary on the future price of gold, since they both seem to be true believers in the power of central bankers and 'the system' to right itself without further crises. Jeffrey Christian of CPM Group has given a decade average forecast for gold at $941 per ounce.

What would be the average price of gold predicted by John Nadler using his model? Here are the yearly prices of gold during his 10 year decline of 8% per year, starting at $1380, to find the average. Adding them and dividing by the number of prices, i.e. 11, gives:



... wait for it ...


$941. Isn't that AMAZING! This is just the same figure given for the post-bull market average by Jeffrey Christian recently by a different method.

Here is his expert page on FSN:

From my notes from one of his internet interviews, Jeff Christian as I understood him said that the average gold price would likely be $941 in this coming 2010-2020 decade. He compared that to the average price from roughly 1980-1997, which was $390, with fluctuations. He also said that gold might spike higher in the iterim (as it did in 1980) before settling on this average.

In other words, it might spike higher than $941, much higher. If $390 in 1980-1997 is equivalent to $941 in this next decade, then the 1980 $850 spike would be equivalent to 941*850/390= $2050 spike this decade.

So Jeff Christian appears to have admitted implicitly that gold could reach $2050 in a price spike sometime during 2010-2020 without the world coming to an end (after all, we survived 1980).

I find it quite amazing that these two guys make forecasts that give the same average price for gold over the next decade. Look out for that $941 magic number!