Wednesday, 10 April 2013

Comments on possible gold bear market: 9 April 2013.

As Silverbug Dave on the Korelin Economics Report blog, I have posted several comments recently on the gold correction, discussing possible lower targets for the move and the duration of the downmove.

"Summer is usually the weak season (but it wasn’t in 2011 though).
I still fear a multi year cyclical bear here for gold and islver, like in 1974-78, with the price taking 4 years then to return to the 1974 high ie 2 years down and 2 years up, although this latest bull market in gold has run more slowly so it might be 4-5 years down and 4-5 years up as the dollar has a bull rally and then tops, maybe in 2016 would be my guess."

Another poster said he thought that gold could fall as far as $850. My reply was that I thought  $890 was possible:

"$890 would be a Fibonacci 61.8% correction of the entire bull run from $253 to $1920, i.e. a $1030 drop from the $1920 top.
$890 is aso the 1980 high in April 1980 Gold Futures.
A 38.2% correction of the run would be to $1282 and a 50% retreacement would go to $1086. Take your pick. I think we could go to one of the above 3 figures, as the non US dollar currencies unravel, then up to $8000+ when the US dollar unravels.
An $890 low target sounds very severe but would be a bit like the 1974-76 retracement in the 1970s bull market which saw about a 61% retracement of the upmove and basically dropped the nominal gold price by half. Then the market went up 8x to the 21 January 1980 top at $800+.
Perhaps you could get an Elliott Wave analyst to come and give us an idea of where they think we are in the cycles.
Gold could of course fly to new highs tomorrow but people always think that in a bear market because denial has set in.
However, I can tell by the tone of voice of Al and his interviewees that disappontment is in the air, so maybe it is time for a bounce.
Whatever happens, this correction has told us that we can't assume anything. Aren't markets fascinating?"

From 5th April 2013 regarding the commentaries on Al Korelin's show by Rock Ackerman, Richard Postma ('Doc') and Roger Wiegand:

On April 5, 2013 at 2:20 pm,
Silverbug Dave says:

Al, your team is for my money by far the best on the internet now with Doc and Rick and Rog, whether they agree or not.
I have also been wondering like Doc about the gold bear that we have been having lately, that it seems to indicate deflation in the wind and why would the Fed want to have people fear deflation right now? Rick has been quite a deflationist so maybe his forecasts of further drop in the precious metals might be part of that thesis? What do you say. Rick?
We had a nice bounce today but if I was one of these perpetual buyers who have come in at $1550 time after time, I would step aside on one occasion to see if I could get my next tranche of gold a bit cheaper! I kind of wonder why they came in today, perhaps it wasn’t the fundamental buyers but the speculators instead today – on the economic news, maybe the gold shorts got an attack of cold feet.

Another post on the correction in gold from 3 April:

The Doctor Is In – Wed 3 Apr, 2013 - Wednesday and The Doctor Is In.
Richard Postma gices abnalysis on Koreline Economics Report on gold, money velocity and other things:
On April 3, 2013 at 12:50 pm,
Silverbug Dave said:

"Thanks Doc for a very good interview as usual.
Dollar up against Euro and Yen – gold down. Yen and Euro up against dollar, gold down.
Looks like there simply isn’t a bid for the precious metals and that’s it.
More buyers than sellers, despite all the ultra hype from some sources on Chinese buying, etc as usual.
Going further: Fallin stock market: gold down (on safety trade), rising stock market, gold down (on risk trade). Let’s face it, gold was MASSIVELY overbought after a 12 year bull market and has to be sold off to a sufficient degree to get the speculators out, those speculators who keep cheering every time they think it is the bottom – and there are lots of those, including me."

Another poster linked to this readable article:

Also, the comment from 2 April:
On April 2, 2013 at 3:42 pm,
Silverbug Dave says:

"I second that (ie that Roger Wiegand is humble in his  market commentaries)
I think the gold bull market is over for a while, like it took a mid-1970s break from 1974-76 only longer. Therefore it requires much more capitulation than previous interim bottoms between 2001-2010. Perhaps funds going net short might be a signal?
There is little or no rehabilitation of the gold price in this correction; the price again is STILL in the bottom quartile of this correction’s trading range between $1520 and $1920. It is quite DISMAL preformance. I disagree with Trader Rog, the major correction is NOW. Look for more disappointment and then , when we are all out, the price will go to $8000."

And going back to March - moderately bearish on gold:
Al's Insights – Thu 7 Mar, 2013
Al and Trader Rog discuss this frustrating market

On March 8, 2013 at 2:13 am,
SIlverbug Dave says:

"Martin Armstrong’s interview on Financial Survival Network in the last week is still worth a listen. So is Jim Sinclair’s latest interview on KWN and Rick Rule’s interview linked from this site on a previous blog post.

However, none of them are going to give you the answer on whether this is the bottom of the market! Just like us, they don’t know!

It’s easy to get information overload on these markets but basically, most of what happens is in the hands of politicians and central bankers and how much money they print.

Who would have thought in March 2009 that the Dow would make a new high by early 2013? Who would have thought it a year ago? Well, Peter Grandich thought it and I think he said so on KEReport a long time ago.

The tide of sentiment has turned against gold significantly in recent months but it sometimes has a big rise when everyone is not watching, witness the late 2005 early 2006 run. I could ever firure out wat precipitated that rise at that particular time. It would not surprise me to see a 3-5 year sideways to down gold price either, although sentiment is bad at the moment and some kind of rally may be imminent. The relatively strong US dollar compared to the denominator currencies of the US dollar index (Euro, Yen and Pound) usn’t helping the dollar gold price. HOwever, we have seen strength in Yen gold and decent strength in Euro gold too, with new highs this year and last year respectively.

It was noticeable that speculation and positive sentiment (a lot based on expectations of QE3) was rife on the bounce to nearly $1800 in September last year and the sentiment was giddy very quickly even with no sign of a new high. So maybe we are not quite washed out yet in this market."

Here is a comment I made on 26 January 2013, relating to Jim Sinclair's piece entitled :
'Defend Yourself By Not Giving In' - Please do not fall for this classic manipulation, blah, blah.'

On January 26, 2013 at 6:10 am,
Silverbug Dave said:

"Patience in the gold market is needed here and it looks potentially bullish but could still be bearish: rangebound markets. Sometimes the market moves up without any apparent news.
However, I feel disquiet because the big goldbugs (Sinclair et al) are getting more aggressive in their manipulation talk. That is a little troubling because so many stories are in about Chinese gold demand and the German gold repatriation and there is not one upward blip in the market. The speculators are playing elsewhere and are not coming in. Share price performance in gold is also rubbish. It seems that the goldbugs are all in and are coming out all guns blazing and they cannot get the market to go up any way at all. One wonders how leveraged some of these guys are and how badly they need for the price to move up and not down. I sense goldbug desperation here in their rhetoric. I think we have a dangerously unstable market here."