Saturday, 26 November 2016

USDX chart from March 2013 with Price objective of 102!

USDX point and figure chart from March 2013 with Price objective of 102! This target flipped to 75 near the end of 2013 for just a little while, then became back in early 2014, when the dollar was in the low 80s and then what happened? The dollar has gone to 102!

Thursday, 27 October 2016

CPI has informative correlation with energy prices.

The CPI index for all items, year over year, has a remarkable correlation with energy prices over the past 16 months.

So much so, that one can take the year over year energy price changes as given by the Bureau of Labor Statistics (BLS) in their inflation reports and track the All Items inflation rate to within about +/- 0.3%.

In the following chart, I have used the energy price changes, scaled them by a weighting and overlaid it on the CPI all items index graph. EC on the charts stands for Energy (price) Contribution. Energy typically contributes about 7% of the CPI with slight month to month variations in the BLS data. Here is the basic comparison between CPI and energy price changes (Energy sector, gasoline and the WTIC oil contract):

In the second chart the energy price changes have been scaled by the weighting that energy has in the CPI calculation.
Blue line is CPI All Items index year over year for each month reported.
Red, green and purple lines are calculated from changes in energy prices using three slightly different weighting models:

I believe that this shows that inflation is critically dependent on energy price changes as the energy bear market might be starting to flatten out and turn up. This has big implications for interest rate policy and gold prices going forward.

I have prepared a more comprehensive report showing the methodology and covering a wider time frame. It uses my own proprietary model to attempts to forecast the Feb 2017 and Mar 2017 inflation figures that will be published by the US government on 15 March and 14 April respectively. I am currently refining this model in an attempt to forecast inflation directly from commodity price changes, particularly crude oil which is traded on a daily basis and appears to have predictive value. 

Once the Feb inflation figures are announced, further refining of the model will be possible and I intend to publish a second report later in march modelling the prospects for price inflation until then end of 2017.

I have posted a rehearsal of a presentation on this subject on YouTube at: (please forgive the shaky hand held camera!)

Monday, 10 October 2016

Target for Pound $1.11, gold $1170 or $1100, gold might still be near £1000/oz.

My charts as of last week:

Target for Pound $1.11, gold $1170 or $1100, gold might still be near £1000/oz.

Once $1250 region is breached, $1170 and $100 come into play at the lower ines of the Andrews pitchforks:

As for you Britush pound, $.11 target would just need a duplicate of the Brexit fall in a typical Trident Trading ABCD pattern (not marked):

1st move $1.48 to 1.30, next move 1.29 to 1.11. It could be worse. It could be taken from 1.50 to 1.28 then 1.29 to 1.07:

Target for Pound $1.11, gold $1170 or $1100, gold might still be near £1000/oz.

My charts as of last week:

Target for Pound $1.11, gold $1170 or $1100, gold might still be near £1000/oz.

Once $1250 region is breached, $1170 and $100 come into play at the lower ines of the Andrews pitchforks:

As for you Britush pound, $.11 target would just need a duplicate of the Brexit fall in a typical Trident Trading ABCD pattern (not marked):

1st move $1.48 to 1.30, next move 1.29 to 1.11. It could be worse. It could be taken from 1.50 to 1.28 then 1.29 to 1.07:

20 months EMA on gold being tested - Twins?

Looking at the monthly gold chart posted by FullGold crown on goldtadise, the 20 months EMA on gold is being tested. Do we have twins? For bears there probably needs to be a little end run around this average before the plunge. For bulls, the 20EMA had better hold.

Thursday, 25 August 2016

GDX return to base?

GDX has returned to the breakout point of a pitchfork structure (click to enlarge):

Wednesday, 6 July 2016

Gold price in GBP sterling has retraced 61.8% of its losses and more.

I just posted this on in reply to Mark's post.

Mark was looking at gold's move to $1369 and saying that in USD that is very close to a 38.2% retracement of the entire downmove from $1900+ to $1045 and possibly a point for resistance. I replied:

It is now $1368.70 / $1369.70 Bid/Ask on Kitco, right where your lines meet (1369.90).
High so far today was $1371.90, low $1364.00 (6 July 2016 10,00 BST UK time).
I guess you are looking at the 38.2% retracement of the entire downmove from $1920 to $1045 approx coming in around $1369, approx.
I am looking at gold in GBP and I can tell you that the retracement of the downmove is now more than 61.8% in sterling. Not that it is the most important price but it is interesting to note.

Actually I have taken a closer look and it is very close to 61.8% in sterling. Close enough still to be resistance. Also, today's sterling price (£1057) has just broken above the upper end of the support zone during the market topping process (2011-2013) which was from about 960 to 1015 BP. Last week's close price was about 1013 but today's is 1057 GBP. I don't know why the $GOLD:$GBPUSD chart is not giving me any of this week's prices but there you go! Here is the chart:

Wednesday, 15 June 2016

Gold's bull market pitchfork there all along.

Gold has been tracing out a bull market pitchfork structure that began in early 2011 at the $1309 low. Strange that $1309 was the level at which the price was rejected from re-entering that very same structure early in 2015 and stranger that so many are looking at $1309 yet again under the name of the "Matterhorn" - the goal to reach in the first leg of a potential new bull market.

Sure, $1309 is a crucial horizontal resistance/support level going back to early 2011 at least. However, my chart tells me that $1400 is going to be the  key. A move over $1400 is now needed to get gold back into this bullish pitchfork structure. Since it is an up-sloping channel, as time goes on, this target creeps gradually higher and will soon get to $1430 another key level of resistance in late 2010 and Summer 2013 - green line on second chart.

Strangely, or not so strangely, the recent bullish action in gold has followed a half width parallel pitchfork (show in orange) parallel to and just underneath the larger structure. Possibly that is encouraging, since it means that the slope of the larger structure is still in force or has re-asserted itself as a determinant of price action.

The median line of this structure is at $1750 so a move above $1400 or so back into the blue pitchfork would suggest a potential quick move to $1750:

The action-reaction lines and the symmetry of the trading pattern would suggest a quick move to $1400 after a hesitation near $1300 and then a pullback before another quick move to $1750. The final target would be $2100 at the top of the fork but let's not get ahead of ourselves:

Sunday, 1 May 2016

Silver's outrageous bull market pitchfork (and comparison with gold's).

OK, this one is for silverbugs:

Here is my outrageous pitchfork that stamps a bull market on silver that never ended, despite the 70% correction. Just for fun! Silver can go just below $16 again and not negate the pattern. Note the price support action since the December 2015 low has the same slope as all the price support between October 2008 and September 2010 before the bubble phase began:
silver outrageous bullish pitchfork dont care

The median line of this pitchfork has so many hits that it looks very good to me. Also the price top at $50 absolutely mandates the position of the lower line that has just been hit by the December 2013 lows. It could have hit a bit sooner or a bit later. Even so, this is not quite the same as my bullish gold fork. In the silver one the $26 level is key as is the reversal from support to resistance along the blue median line. The bear market Point Of Recognition started at the $26 level of horizontal support but was triggered by the move below around $30 on the blue line in early 2013.

With gold, the median line goes straight through the POR; not quite the as for silver I don't care. These look good to me; good enough for now anyway. Symmetry of the action and reaction lines on the gold chart also adds to the juice:


Saturday, 23 April 2016

Is the silver up-move overdone?

Is the silver up-move overdone? Bob Hoye on says "Yes" in his past two interviews:
Gold, Silver and Metals Rally Continuing
Precious Metals Show End of Bear Market

Bob is looking for a cyclical bull market in precious metals but is warning that the silver rally is very overbought. One of his favourite indicators ins the daily RSI (relative strength index) on the silver:gold ratio. If it goes above 78, he considers it a warning sign.

The RSI on silver:gold ratio has just gone over 80 and that is usually a sign of a very overextended move in the precious metals. Even higher levels on this RSI at over 90 have been seen at the secular precious metals market top in January 1980 ($850 gold, $50 silver) and at the silver market top of $50 in May 2011. The rebound in the market in September 2012 saw this RSI hit 84 and it is reaching that level again.

Bob is a senior in the marketplace and, though he is something of a deflationist and was wrongly bearish on the stock markets in 2009-2011 he is a real bright guy and evergreen in his analysis, which is usually spot on. You canm see interestingly that the three past spikes in this RSI were in the precious metals rallies in the third quarters of 2012, 2013 and 2014.

However, on these charts, it doesn't look quite as extreme as Bob Hoye implies in his interview. The RSI has spent only a little time over 70, less than on some other occasions and not all the visits well over the 70 level were disasters for price action; it's just that some were highly disastrous! SO it is a warning sign I guess.

Anyway, what about weekly and monthly RSI's? Are those not also important?

Daily RSI charts are shown below:

Thursday, 11 February 2016

Gold:oil ratio hits 43 as markets start to shakeout.

Gold:oil ratio is now 43. It broke out above a 30-year high at 33.30 some weeks ago, rocketed to 39, backed off to test support at 33 and now - voom! It's 43.

As far as I can tell from research of historic prices, the only time gold:oil was around 40 was around 1933 and that was not a very good year for the financial system.

Monday, 1 February 2016

Gold:WTIC oil ratio is back-testing its breakout above 33.

Taking a look at the charts this afternoon, I noticed that the Gold:WTIC oil ratio is back-testing its breakout above 33 at the very right hand end of the chart, after a very brief visit to 39:

goldoil goldwtic wtic oil backtesting testing 33

gold wtic oil goldwtic ratio backtest 33 line

Thursday, 28 January 2016

Ultimate bond and stock market bubbles?

It may be the ultimate bond bubble where the central banks and nations become the main speculators (think South Sea or Mississippi bubbles).

It may be the ultimate stock market bubble where the companies themselves buy much of their public traded stock and they are the willing recipients of massive distribution.