Saturday 27 August 2011

Gold - are we at Point Z already? P&F and daily charts look like silver

The charts of gold and silver in the last post showed some similarities over a period of a couple of years and my wondering whether the move in gold this August to next May could follow the move in silver August 2010 to May 2011 in a magnificent top.

The gold move has been more parabolic than the silver move was in the early stage of its rally from $18 to $50. The action in gold is a bit like the ending action in silver near $49 if you look at the http://www.stockcharts.com/ daily and point and figure charts in gallery view.

Silver at $49.50 or so did a double top within about a week. The first top was on Sunday night followed by a $5 drop all of the next day to the mid-40s level. The next top was the next Sunday night followed by the $6 drop in 11 minutes and a follow through drop to $32. They are chronicled in other posts and charts on this blog.

If gold is at point Z, ie at the top like silver was near $50, then it has happened much faster in gold than it did in silver. Silver took 8 months to get to $50 while gold has topped at $1920 in as many weeks.

Pierre Lassonde says "September is always a good month for gold" inhis KWN interview and sees an attack on $2000 in September.

The alternative case would be an ABC type correction in gold (A-wave down already happened and we are in wave B up, then the C wave would be to follow) or we could double top at $1920 like silver did at $49.50 and have a crash and burn for a while in gold.

This could prepare for a credit crisis crash in all assets this autumn with gold to $1400 and silver to $20 or so and an Au:Ag ratio of 70:1.


The alternative scenarios are that gold is at an earlier stage in this move. Interestingly, the first correction in this move on the gold daily chart doesn't even show on the weekly chart. This second correction is obvious on the weekly chart, a bit like the Christmas 2010 correction in silver. In that case, gold could have much further to run.

There are limits to 'Visual Analysis' as James Dines describes 'Technical Analysis'. Gold looks overbought at $1900 so needed a pullback, if only for a few days or weeks.

I find this move to $1900+ a little scary. The gold price topped £1000 sterling during the GATA conference in London, when it also topped Jim Sinclair's $1650 too. Soon gold was at $1900 or £1130. Amazing. A bonfire of all the currencies, except gold. We are in deep crisis with 'new levels of government with whole new powers' sa quoted on Jim Puplava's show this week. Unfoirtunately those powerful people seem powerless to stop the wreckage of our lives. Or maybe they want it.

Wednesday 17 August 2011

Two similar charts - gold and silver a year apart: possible gold target $2690. 2011-08-17 22:22 BST

Take a look at these two charts. Look at the similar features. They are stockcharts.com public weekly charts in the gallery view mode for Gold and Silver. i noticed the uncanny similarities a couple of months ago and labelled the features. Then I lost them! So now the breakout has occurred, I re-did them and the similarity seems to gel.

Here they are:



The first feature I noticed was that both charts had a quadruple rolling top formation around the November timeframe: silver in 2009 and gold in 2010. I then looked for other similar features. They are:

1. A new Spring high for the upmove followed by a lower high in an A-B-C type correction;
2: A new rally with a higher peak mid year.
3: The quadruple rolling top formation centred around November.
4: A new May high for the upmove followed by a lower peak in a small A-B-C type correction;
5: A magnificent breakout.

When I heard James Turk and Ben Davies talking about big mid-year rallies in gold for 2011 (James Turk talking about $1800 gold and Ben Davies talking about a +$400 move), I wondered if the similar patterns hinted that gold might have a similar breakout to the one we experienced in silver from August 2010 to May 2011. The gold breakout has now followed in August 2011, true to the pattern. No guarantees that it will match silver's move, but what if it does?

Gold has had its initial breakout and we seem to be in the repair mode of a correction since I made these charts. Gold topped at about $1820 and corrected to around $1725. It has now repaired the price to about $1780. Interestingly, this correction (so far, as of 17/8/2011) doesn't even show up as a single down candle on the weekly chart.

That recent breakout move up to $1820 has a bit of a parabolic look to it. Dan Norcini has said that as the price moved up to $1800, there was considerable covering of short positions. Then there was the correction to $1725 and the subsequent repair to $1780 as of today (17/8/2011). So, where might the equivalent point on the silver chart be? I have marked these points on the silver rally X, Y and Z.

X would be the point where the move in silver accelerated. I called that the November 'Fireworks' in silver around November 5th 2010 with increased volatility. Interestingly, the period after that was a period of increasing silver prices with some small corrections with short covering and long liquidation observed closely by Dan Norcini in his blog at the time. That would be a good parallel to gold right now and was at the $27 price range in silver.

Y would be the point where silver started a potentially parabolic move in the high $30s price range, say around $35 and it had a small correction and consolidation there.

Z would be the really undeniably parabolic move in silver to the top at $49.75 with the large corrections (a $5 drop in one day followed by a double top formed over $49 and the 11 minute $6 plunge to $42 and then price crashing to $32 over the next few days.

However, gold has dropped since reaching $1820 over a few days to $1725 or so intraday and now rallied back more than the Fibonacci 61.8% retracement of the downmove and gone to nearly $1780+. In fact, 75%of the fall has been retraced in the rally. maybe gold is forming a bullish flag pattern (a oennant) or maybe it is going to move through to a new high soon, similar to silver at points X and Y.

The most optimistic scenario would be to say gold is currently at point X ad the rally could last until next May.

So, what might be a target for gold based on these charts?

Start of silver rally was $18. Point X = $25, Point Y = $35, point Z = $40.
X, Y and Z are 39%, 94% and 177% above the starting point.

If we assume gold is at Point X now at about $1780 and the rally started at approx. $1520 (the average of the last short term high and low). Point X is an increase of 17%.. Proportionately therfore, points Y and Z could be at 41% and 77%. On this model, Z would be the top of the rally before a big correction. If gold goes to point Z it could reach :

$1520x1.77 = $2690 by end of May 2011.

Do your own due diligence! No advice is meant or implied by this blog. I have long positions in gold and am excited about it right now.

Sunday 7 August 2011

We know that over here, Lord Keynes said that gold was a barbarous relic but he is a dead western economist and he's irrelevant now. It's what the Asians think that matters most.


Robin Griffiths on Jim Puplava's Financial Sense Newshour last weekend:

Technician Robin Griffiths is Bearish on Equities, but Likes Gold

"We know that over here, Lord Keynes said that gold was a barbarous relic but he is a dead western economist and he's irrelevant now. It's what the Asians think that matters most."

Tonight he is proved correct. Gold opens in the Asian market on Sunday night up $20 at a brand new all-time high with a big gap up and a big green candlestick. This gives a jump from $1663 to $1689, so +$26 in 30 seconds. The old high was about $1680.

ABout 4 minutes later, the top of this spike was $1695. Now it has pulled back to about $1685.

Robin Griffiths is proved right in 4 minutes. The Asians evidently want gold!


Tuesday 2 August 2011

$1650 gold target reached. Congratulations to Jim Sinclair! 2011-08-02 20:20 BST UK Time

Just after I posted the last blog entry, I looked at my CMC Markets trading screen and gold spiked up just over $1650 per ounce. That is the target that Jim Sinclair has been quoting for almost the entire length of this bull market, since about 2001 I think. I am pretty sure that I remember seeing it myself in his articles as early as mid-2002. Even so, his later forecast of a date of January this year was off by 6 or 7 months.

Incidentally, I noticed the $1650 gold price at 20:20 UK time, which is in line with Mr. Sinclair's 20-20 vision of the gold market.

Missing the GATA conference but a bit richer! 2011-08-02 19:58 BST (UK Time)

Well, the GATA conference is sold out. It's a star-studded event with Sinclair, Sprott, Embry, Rickards, Davies, Salinas-Price and others, inclusing the Murph! A real goldbugs' fest. It's sweltering hot here in the English Midlands and London is even hotter. Maybe storms are coming. If Al and Roger were there from Korelin Economics Report, I might have been even more interested in going to see GATA in London. My pal is a bit crestfallen because it's too late to book now; it's all sold out.

Still, that will save me $800 US dollars or £500 quid conference fee, so I could nearly buy half an ounce of gold for that. Of course, there would also have been hotel and travelling expenses, as well as drinks at 8 quid a pint on top of that. Gold is $1640 today and I made a bit of money spreadbetting during my lunch break at work.

It's just started to rain. Thunderstorms are forecast but it's supposed to be very hot again tomorrow. It would be like an oven in London and I hate the hot weather - and thunderstorms. I am a temperate climate kind of guy.


Well, the GATA conference is sold out. It's a star-studded event with Sinclair, Sprott, Embry, Rickards, Davies, Salinas-Price and others, inclusing the Murph! A real goldbugs' fest. It's sweltering hot here in the English Midlands and London is even hotter. Maybe storms are coming. If Al and Roger were there from Korelin Economics Report, I might have been even more interested in going to see GATA in London. My pal is a bit crestfallen because it's too late to book now; it's all sold out.

Still, that will save me $800 US dollars or £500 quid conference feeso I could nearly buy an ounce of g, old for that. Of course, there would also have been hotel and travelling expenses, as well as drinks at 8 quid a pint on top of that. Gold is $1640 today and I made a bit of money spreadbetting during my lunch break at work.

It's just started to rain. Thunderstorms are forecast but it's supposed to be very hot again tomorrow. It would be like an oven in London and I hate the hot weather - and thunderstorms. I am a temperate climate kind of guy.

Gold is £1010.36 pn Kitco right now; $1645.90 or €1160.11. SO it's a whole percent over £1000 sterling, that used to be the strongest currency in the world; the only cureency to be minted in gold on all five inhabited continents. What a disgrace those central banker money printers have been and are.

Jim Sinclair will be pleased that gold might get over his major target of $1650 during the conference or even before it starts. Of course, his bet was that it would get to $1650 this January and he would have lost a million dollars if anyone had taken him up on it. Luckily for Jim, no-one had the guts to do it. He wasn't far out on the timing, just 6 months or so. It's been said never give a price and a time for a market forecast, just give one or the other.

Happy partying to those at GATA Gold Rush 2011 on 4-6 August in London! We will miss you. I suspect I wouldn't have fitted in because therewill be some egos there and I am just a piddly little tiny goldbug private investor. It should be a great do.