Thursday, 28 November 2013

Rally targets on gold: 1250 and 1240-1244 possible? 2013-11-29

Looking at my charts today, I wonder if there are rally targets on gold: 1250 and 1240-1244.

If the price drifted upwards or sideways to the red line on the chart below which has been resistance recently, the uptrend of the last 2 days would just be a wash rinse and repeat cycle of the last several weeks.

Gold needs to get above $1250 to have a chance at a rally. Strangely or maybe not so strangly, the present rally could just hit $1250 which is also horizontal resistance that precviously was support a number of weeks ago. It seems almost an ideal place for this rally to stop and turn back down.

A break decently above $1251 (especially a daily or weekly close) would be potentially bullish.

Here is my chart:


Gold is a pain to trade, long or short, even though the pattern is quite clear.

Price might intersect the red resistance line tonight 28 November or Friday 29 November so there should be a signal at that point quite soon.

Wednesday, 27 November 2013

Gold compared to CEMIG stock (US:CIG) described in the Biblical Money Code advertisement video

I want to share with you the remarkable similarity between the behaviour of gold and the behaiour of stock of the company CEMIG (US ticker CIG), the Companhia Energ├ętica de Minas Gerais S.A. in Brazil.

I noticed this as I viewed the (very long) video advert from Sean Hyman who is promoting his Biblical Money Code service on kitco.com on Tuesday (yesterday).

He showed CEMIG stock chart from 2012-2013.

The video is too long really - he should cut it by 1/2 or 2/3 - too repetitive but interesting content!

He showed CEMIG stock as an illustration of sentiment extremes at a low, despite what he described as strong fundamental analysis of the stock at the time.

I just looked agog as I saw something that looked identical to the gold chart:

A downtrend off a top (like gold from $1800 to the mid-$1500s) followed by
a tiny bounce in a downtrend (like gold at $1590) followed by
a huge drop (like 12-15 April gold to $1321) followed by
an abortive rally (like gold to 1480) followed by
another downtrend accelerating to a new low (like gold to $1180 on 27-28 June) followed by
a decent rally (like gold from $1180 to $1434 by August) foll.owed by
another decline with a crummy corrective rally in the middle (like gold from late Aug to late Nov 2013), then to where?

To a new low! Followed by
a decent rally (as if gold rallies to above $1434) folowed by
a sharp downmove to yet another new low followed by
a choppy and gradual repair process.
I wonder if this is a model for gold?

The Biblical Money Code advert video is at the link below and it speaks of "looking well into the matter" and also of Biblical ethics with regard to investing and offers what sounds like an interesting service. Have a cup of coffee or tea and a piece of cake handy - it is a really long video!

http://www.moneynews.com/MKTNews/Financial-bible-Hyman/2013/07/08/id/513894/?promo_code=141BA-1

Here are the charts:
 

This was the moment when I sat somewhat aghast at a chart that looked just like gold: 


Dear Sean Hyman: I tried to find an email address for you online to ask if I can use the above chart but I could not find one! If you wish me to remove it, post a comment and I will delete it and use a stockcharts.com somewhere else for a chart instead.

Unfortunately the stockcharts chart is too compressed to show it well:

http://stockcharts.com/freecharts/gallery.html?s=cig

However, CEMIG had a nice recovery after the bear market in 2011/2013 and made it up to the intermediate low from its double top. This might be equivalent to the $1520 level in gold which was the low of late 2011-2012 that was hit a few times. Then the bear market resumed and CEMIG is not near to its bear market low again:

Tuesday, 26 November 2013

Gold charts still bearish 2013-11-26. Gold retook $1251 for a monent on Monday then back down.

Charts for today Monday 25th November 2013 showing inverted Swiss Stairs formation and also the upmove ingold today that threatens to retake $1251. The $1222 low is not surprising, since it is right on the centre line of the downtrending pitchfork that starts in September 2012.

The usual suspects are spouting their usual nonsense about the sellers selling 'uneconomically' in gold by selling largish tranches at a time.

However, they are incorrect. The chart clearly shows a kind of reverse Swiss Stairs formation in gold, except that the flat parts of the stairs are uptrending choppy action.

The sellers are allowing the bulls to take the price up before they sell each tranch. As soon as the price reaches resistance, they sell another lot. Does this imply that there is a very large seller unloading a very large position in tranches?

Fascinatingly, the upsloping lines are exactly parellel to the support line for the late June to August rally from $1180 to $1434.

These lines sees choppy upside action along them.

Every upsloping line in the chart linked from here is a support line that becomes resistance and then there is a markdown. This has been true for all the action since the red arrow at $1376.
These guys are getting a decent price for their gold that they are selling.

However, gold is challenging the key $1251 level right now, this very moment, on Monday 25 November 2013 at 20:25 GMT

 
 
 
Note how the downtrends are getting steeper, fortunately each one is slightly shorter than the last but the point to targets at $1100 and $950:


Trying to put a potential path to $950 on the chart respecting the downtrends and lines of support and resistance:
 

or:



As of Tuesday, gold made it to 1253 then turned straight down again! Not at all surprising.

Kitco confirms the bear market psychology by having the headline:
"Comex Gold Sees Corrective Technical Bounce And Short Covering - Kitco News, Nov 26 2013 8:21AM"
http://www.kitco.com/news/2013-11-26/AM-Kitco-Metals-Roundup-Comex-Gold-Sees-Corrective-Technical-Bounce-And-Short-Covering.html

This is the first time I remember seeing the phrase corrective bounce used, ie a counter trend move in a bear market .

It's all in the US dollar. On that bounce in gold, the US dollar went from going up to going down, now it is going up again and gold has tuend down quite sharply, an unbroken line of seven red 20 minute bars or candles on the chart as I write on Tuesday at 1730 GMT. A couple of minutes later, we get the first blue candle on the 20 min chart for over 2 hours!

I also posted a siilar comment on Korelin Economics Report.





Wednesday, 13 November 2013

Commentary for Korelin Economics Report 2013-11-13

This is my comment on the kereport.com guests' blog for 13 November 2013.

"Things usually look very technically bad and scary at a market bottom but gold's performance this year has been so disappointing. Gary sounds like he has been right on track with his forecasts but we have not broken below 1251 or 1180 just yet. I think we might get a test of about 1190 and if it fails then 1120-25 based upon my own charts. But it's all guesswork really.

Secular bear or cyclical bear? Well, looks more and more like a secular bear to me. A break below $1180 would prove a secular bear market because it would be 39% down in about 2.3 years.

I don't think that gold will be in as long a bear market as the 1980-1999 bear market (about 20 years), but I think is more serious that the little bear market of 1974-76, which actually took 4 years (between 1974 and 1978) to get back to the roughly $200 high before going on up to $850 in the final phase of the bull market

The 1974-78 correction and consolidation was actually a 4 year round trip from 200 to 100 and back to 200. That was equal in length to the first leg of the bull market from 1970/71 until 1974 (which went from $35 to just under $200).

In this cycle, we have had a 10 year bull with some spikes and correction but more or less uninterrupted (as far as year over year increases were concerned it was a 12 year bull from 2001-2012). Let's call it 10 years. I wonder if we are going to have a round trip that might last about the same length, about 10 years from 2011 to 2021 let's say. That is a significant bear market. The low might be $1180 or $1030 but I fear it could be even as far as 3 figures, perhaps $850-900 or even $650-700.

Buyers are going to become more price sensitive as the prices drop. On 2011-2012, a price of $1520 was a bargain, then in April 2013, $1321 was a bargain and in June $1180 was a bargain. As we look now, $5120 was NOT a bargain. I cannot see gold going above $1520 for a long time, because it was massive support turned into resistance. So we need to look at the psychology as the price drops further and for longer. Today's prices for physical gold buyers ($1250-1300) may look expensive next year. People might say ,"$1250 gold? No way!" That is a big danger as we go lower, that could extend the bear market for years to come.

Note that we were in a trading range of $1520-1920 for 18 months. It was bearish because the price spent most of its time at $1600-1650, well into the bottom half of that range. Semi-numismatic coin premiums were also very low, typical of market tops, indicating a bearish prospect. Now we are in a $1120-1520 range perhaps and are again languishing in the lower half of the range. $1520 is a long way away. I am going to do a bit of research into whether semi-numismatic coin premiums are higher now.

I begin to favour a market that acts as Ross Clark of CIBC mentioned on Howestreet.com years ago. It is running at 1/3 the pace of the 1970s market. That would imply at least a 10 year round trip before the gold price gets back to $1920 where it topped in 2011. Similar for silver. Maybe then there might be a bubble phase in to the early 2020s.

So is it time for me to sell? I don't know. Such a long correction could mean that money sitting in gold, silver and PM stocks is not a good investment for me and any money in those things over and above an insurance allocation is not going to result in good investment returns that might be available elsewhere. It would also wear out many others in the space ("wear you out of scare you out" as David Morgan says). That would almost be the most inconvenient set of circumstances and that is what often happens in markets. As Sinclair has said, the people at the top in 1980 were not the same as the people coming in 1970 There was a turnover of investors several times (I think he said about 3 times) over the length of the 1970-80 bull in gold. Such a situation would be a fantastic opportunity for long term well-heeled investors with cash to accumulate stocks in a ravaged industry for a potential fabulous gain sometime in the fairly distant future as the demand comes back in and the supply of precious metals is likely to be hugely curtailed due to lack of investment and development. (Currently, certain market experts are still telling us that mine supply is increasing because of new projects that have been developed during the 2000-2011 bull market). I think it's going to be a really long slog - a 5year round trip at an absolute minimum and perhaps 10 years."

Monday, 11 November 2013

Head and shoulders neckline being challenged. Potential target $1120.

Gold's head and shoulders neckline is being challenged. The potential target is about $1120.

See chart below. Measured on the chart right now, I get a target of $1119.

Rick Ackerman on kereport.com gave this as potential target of $1120 for gold a number of days ago. It may either be from a similar pattern or from the 18 month long $1520-1920 trading range being mirrored on the downside to $1120-1520.

Either way, it is not bullish!

The neckline shown in heavy dashes should act as support because it is a multiple prior support line. If it is broken then look out below. The previous short dashed line has already broken down but came back. False breakdowns are of course possible.

The height of the left and right shoulders above the neckine is about the same. Treating those as the top of a trading range would give a downside target near $1190, almost down to the 28 June low if the neckline fails.