Monday, 17 January 2011

Possible Head & Shoulders top in gold ... and the Euro? - 2011-01-17

OK, here are a couple of charts, firstly of a piddly Head and Shoulders top in gold that is being made a meal of by some analysts and also of a bigger H+S top in the Euro, which has a potential target similar to Roger Wiegand's commentary on:
entitled Media, the News and Gold.

Gold has a tiny H+S top at the moment; the target may be around $1283, perhaps? That would still be above the June high of 1265, so not even a test of the breakout point. This H+S is piddly. It's only a 1 month or 5 week formation and a $1283 target would probably take the price about to the 200 day moving average. The price isn't that far from the rising 200 dma already and the 50 dma is still rising (just)::

Although the daily gold chart looks a bit like a rollover in price, you can hardly see it on the weekly chart. In fact, a 1283 target would take you about to the 40 week moving average on this weekly chart:

The weekly Euro chart on stockcharts looks a lot like a Head and Shoulders top with a target of about 1.171. A slightly upward sloping H&S topping pattern but target is close to what Roger Weigand mentioned at $1.185. This is a 6-7 month formation since June last year. The target would be a lower low confirming the 2+ year downtrend in the €:$ exchange rate. Actually, the right shoulder would only just be forming from the last large white up candlestick following the large red down candlestick:

This H+S looks a bit different on the daily chart. Again, it seems that the right shoulder is only just forming, so the pattern is not complete. Drawing the neckine a bit higher, that neckline is at about 1.30, a important level in the Euro from years ago (around 2004 when the Euro was $1.30 and gold was in the $400s) and that pattern has already been aborted so it seems. However, there is quote a pronounced head and shoulders look to the whole formation and James Dines calls this 'visual analysis' rather than technical analysis after all:

Blowing a silver trumpet - review of silver 2010 - 2011-01-16

Well, I am quite proud of my silver $30 target as suggested in

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

The chart was this one:

Now for a look at today's chart (daily ticks) coutesy .

What happens next?

"I have absolutely no idea!" as Doc Morrisey used to say in the wonderful 1970s comedy series 'The Fall and Rise of Reginald Perrin'.

Tuesday, 4 January 2011

Carlos Slim richest man and silver / Fresnillo rumour re-hashed, again! 2010-01-04

Wow, talk about old news! I was a bit disappointed when I read about this on the King World News (KWN) blog and then did a google search to see if it was new stuff.

A quick google search shows that this Slim/Fresnillo thing looks like an old chestnut going back to May 2010 ... or even August 2007!

Silver bugs will have to do better than that! It sounds like desperate hype.

Pity. I was thinking about buying some Fresnillo, though I think it might be getting late given the doubling in the last few months. All that upside missed!
Now I am having second thoughts and undecided, feeling a little suspicious of hype, hype, hype.

I have been fascinated by King World News since it started around May 2009 and I think I have listened to every single interview by Eric King on his website. He does get very enthusiastic on gold and silver but I think he overdid it a bit on this one. He has had some brilliant interviews on there over the last year and a half: Michael Berry, Felix Zulauf and, this week for the first time, David Einhorn of Greenlight Capital, as well as resource industry stars such as Rob McEwen, Pierre Lassonde and Sean Boyd and great commentators such as Rob Arnott, Chris Whalen, Bill Fleckenstein, etc., etc., "the top people in the world" as Eric audaciously announces in his outro. That always makes me smile. He gets some truly excellent scoops but this one might be a bit of a scoop of something else.

Latest hype:

Not exactly a scoop when the UK Daily Mail newspaper reported it 8 months ago! A few seconds of research was sufficient to find this!

Carlos Slim to dig deep for Fresnillo
Mail Online 5 May 2010 ... Mexican tycoon Carlos Slim, the world's richest individual, ... busy running the slide rule over Fresnillo, the world's largest silver producer.
By Geoff Foster
Last updated at 10:36 PM on 5th May 2010
"Rumours that a cash bid in the region of £8.6bn or £12 a share could soon be tabled helped the shares jump 43.5p to 807p."

Or try this old rumour from 2007:
Why the silver price is set to soar Aug 09, 2007
"If only a tiny fraction of these millionaires, ultra-HNWIs and billionaires decided to diversify out of their extensive property and stock portfolios and invest even a very small amount of their portfolios in silver it would result in the silver price increasing in price exponentially."
... Blah blah blah, Meaningless drivel.

Rumours, rumours. Now the Fresnillo share price is 1682p according to Yahoo Finance UK on 4 Jan 2011. (Update: since this article, the shares have dropped to 1,339 as of 21 January 2011 at 13:38 approximately. According to Yahoo, the 52 week high was 1768.)

Would not Mr. Slim have done better to deploy his billions in 2008 with silver at $9 or even in 2010 with Fresnillo at 8 quid instead of now at 16 quid in January 2011?!

Do your own due diligence! I'm sure Carlos Slim has. He didn't become a billionaire by following loose talk on blogs, even on the FT, which ought to know better.

I am rather disaapointed in King World News for pushing this one. The FT blog participation is a bit shocking but it shows that the FT blog appears to be merely a rumour mill with no credibility. I also note that none of those who replied to the zerohedge post had even bothered to do the 25 seconds of due diligence necessary to see that the story is up to 3 years of age!

Sometimes, I wonder why the always interesting Bob Hoye of Institutional Advisors who is a regular on makes so much fun of silver bugs. I think I may be beginning to realise the reason!