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.

http://www.kereport.com/2013/04/10/rick-ackerman-sticking-1485-gold/

"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:

http://www.kereport.com/2013/04/05/weekending-thoughts-gold-silver-rick-ackerman/

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:

http://www.kereport.com/2013/04/03/wednesday-doctor-3/

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:
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9970294/Helicopter-QE-will-never-be-reversed.html

 

Also, the comment from 2 April:

http://www.kereport.com/2013/04/02/trader-rog-responds/
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:

http://www.kereport.com/2013/03/07/al-trader-rog-discuss-frustrating-market/
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.'

www.kereport.com/2013-01-25/jim-sinclair/

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."

Japanese Yen Gold has hit an all time high at last - or has it? 2013-02-04

The price of gold in Japanese Yen Gold has at long last hit an all time high in recent days - or has it? The strength of the Yen in recent decades has meant that it has been in the probably unique position where gold had not recorded a price in this bull market that exceeded the high reached in January 1980.

Some websites have said that the 155,000 Yen current price is a new all-time high. However, the Zero Hedge article by GoldCore (citing Bloomberg data) and an article on Bullion By Post state that the 21 January 1980 intraday high was actually ¥204,850. So, according to this, there is a fair way still to go.

The Kitco Yen gold chart shows that the Yen gold price is at new highs for the current bull market.

It is interesting that Ben Davies of Hinde Capital has recently re-stated his view on the Japanese entering the gold market in a major way. This is fascinating, because I am sure that he was well aware of the Yen gold price nearing its 1980 peak. It also coincides with the new policy of the Japanese government and central bank to indulge in realtively extreme Quantitative Easing and inflation targeting.

This is fascinating to watch these developments especially in light of the negative sentiment on the gold market in US dollar terms, in light of its lacklustre performance in the last 16 months.

John Nadler leaves Kitco; goldbugs happy! 2013-02-04

John Nadler has left Kitco after becoming the analyst that all goldbugs love to hate over the past few years for his relentlessly bearish commentries that were crystallised in his last piece that predicted gold declining for the next few years. It was posted on Kitco radio last week and, strangely, cannot now be found online!

Articles dealing with Nadler's departure:

http://www.mining.com/gloating-all-around-after-nadler-and-kitco-part-ways-12943//-

and

http://gata.org/node/12197
» Daily Dispatches
"Kitco cans analyst Nadler; gold rises $5.50"

and the original press release:
http://www.kitco.com/pr/1037/article_02012013174304.pdf

Ben Davies of Hinde Capital predicted QE in Japan and possible implications for gold. 2013-01-27

Ben Davies was the first person in the gold space to make a case for the Japanese to enter gold market, in his 2010 article ‘The World Monetary Earthquake - The Dash from Cash’ written in 2010. The ideas were discussed on King World News podcasts published on 29 September 2010 and 4 October 2010. Ben’s idea seemed radical and logical. I always enjoy listening to his interviews because he seems to have a deep intuitive and analytical understanding of markets.

Ben described the huge amount of Japanese Government Bonds (JGBs) that were owned by Japanese citizens and pension funds, perhaps amounting to up to $10 trillion. At the time, the gold price was around $1300, so this sum would have represented 253,000 tonnes of gold, more in fact than has ever been mined (which has been estimated at 140,000 – 160,000 tonnes). Only 10% of this sum put into gold would require 25,000 tonnes of gold at that price, which is about ¾ of all stated central bank reserves in the world. Obviously, a large upward gold price adjustment would be necessary to satisfy such huge demand if it came.

Ben’s piece made a case for Japan to have an outbreak of inflation due to excessive monetary easing that was likely to come into place as an aggressive step to solve Japan’s debt trap. The poor demographics in Japan with ageing population who may be likely to sell some of their savings in JGBs would necessitate the Bank of Japan to do more and more Quantitative Easing (QE) to buy these bonds. If inflation took hold in Japan, a flight out of these bonds is possible and could result in massive QE in Japan and the potential flight into gold as a hedge asset to hedge against this. He postulated that there was a likelihood of hyperinflation in Japan due to the government debt level of 200+% of their GDP, the highest in the developed world by far.

In fact, Ben Davies was two years ahead of his time because, as he discussed in later interviews on 8 December 2012 and 12 Jan 2013, the election of Mr Abe in Japan has given their government a mandate to pressure their Central Bank, the Bank of Japan (BoJ), to move forward with much more radical monetary easing (QE) than previously.

To quote Ben Davies, “Monetary policy has been annexed by government” in the Japan and the UK (with the latter appointing Mark Carney as the new Governor of the Bank of England, effectively on the say-so of Chancellor George Osborne). The new policy would be presented as ‘nominal GDP targeting’ to boost employment, etc.

Japan has recently announced that the BoJ will be targeting inflation of +2%, far higher than they have had in most of the last 20 years! Ben Bernanke at the Federal Reserve has also adopted similar ideas with his targeting of unemployment, saying that he will be buying bonds out of the market in QE3/QE4 until unemployment falls below some arbitrary level (6.5%). Ben described these policies as “the last desperate acts of a socialist system.”

The upshot of this is that Japan and the UK could be on the path to hyperinflation and the USA could also have surprisingly high inflation quite soon. 

The interviews are rather brilliant I would say - and are well worth a listen in their entirety. The interview pages on KWN are here (just click on the mp3 link on each page to listen):

Saturday 29 September 2010                     

Saturday 04 October 2010                           

Saturday 8 December 2012                         

Saturday 12 January 2013                            

Or look up his name on the KWN broadcast archive here, which is a useful link:

http://kingworldnews.com/kingworldnews/Broadcast/Archive.html

Happy listening!

 

 

Two bullish charts? Try these for size! 2012-07-16

OK, so I am bearish today. Sometimes I think technical analysis as it is called could be a load of old crap.

Here are two charts that do not paint a pretty picture for the precious metals:

and

However, the signs look poor on the charts for a gold rally. There is an ominous potential head and shoulders pattern that has already broken down from the neckline and tested resistance and been repelled. The the inverse thrade, the US dollar is whoing a lovely cup shaped bottom pattern after achieveing a head and shoulders target last year of about 73. The new inverted head and shoulders pattern has broken out of the necking and back tested it and confirmed it.

Looks like the dollar could be going to 90 and gold to $1300 if these patterns are correct.



The backdrop is a weak Euro in constant ongoing semi-crisis mode.

Silver near to breakout? Maybe. 2012-04-11

I can't make up my mind whether to be bullish or bearish on gold and sister silver. Nor can most investors in the space, it seems.

I originally called this blog '1000gold' because gold was coming to $800 in late 2007 and was about to make a new all time high - and I thought it will go over $1000. It did, in March 2008. Now the blog name has a new significance, because the gold price has been stuck at just over £1000 in Sterling since last August/September - indeed, for 8 months.

Taking a look at the weekly silver chart on stockcharts, it could look really bullish, even though silver is in the lower part of the trading range. The price is close to hugging the upper downsloping line of the traingle. The breakout point could be around $33-$34:

However, there have been many trading range moves and weakness in gold and silver whenever there is either bad or good economic news! So they are still in consolidation mode.

In 2010 when the Greek crisis erupted, gold and silver were in very bullish mode. gold rose over $1200 and then when Ben Nernanke at the Fed announced QE2 (Quantitative Easing version 2) money printing late in 2010, silver skyrocketed. There were big bullish moves through 2011 with the debt celing of the US government being raised and doubts about the validity of its finances. However, when gold and silver both became very overbought and subject to some wild speculation (silver in May 2011 and gold in September 2011) the prices broke down. Since then, all news seems to send them down. However, this is just mass psychology among investors to get to an oversold condition to start another rally, I feel.

Gold and silver have had nice upmoves today,, gold to $1675, up $20 and silver to $32.40, up 80 cents and they look promising, for the next five minutes anyway!

Its a wait and see game. I saw an article online a couple of years ago that had the phrase "Are we rich yet?" The answer is "No." There is a long time to wait. I wondwer if I will live to see the top in gold or even the big upmove. It is so slow coming. This slow bull market will wear me out. I will not get rich - whoever inherits my metals will maybe get rich instead!

Gold breakout annihilated: target now 1610-1625 dollars for this correction? 2012-03-06 2 pm GMT

My downside target for gold for this correction is 1610-1625 dollars. I was drawing this over the weekend but it is already coming true today! Charts to follow below, later today.

Gold is likely either to fall to the 61.8% Fibonacci retracement level (of its upmove from the low to the latest high) which is about £1625 or it might go further to retest the upper line of the pennant pattern that it has formed over the last few months. That would be around $1610.

I fancy that silver is retracing 50% of its recent upmove from the bottom at $26.50 (3rd chart).

Anyway, later today (Tuesday) the gold A-B-C corrective move is obvious on the chart but might just have completed in the 1670s. It still looks to me that it might have a way to run though. The C leg down is still much smaller than the A leg down. The intermediate B up wave was a bit pathetic, only about 38% of the size of the A wave down.

At the moment, 50% (half) of the entire upmove in gold has been wiped out. That is in fact a complete annihilation of the breakout move from 24th January as the chart shows, when there was a spectacular up day.

Bullish news would be that silver is still above its January 24th level and has a final target for the correction to be 50% of the upmove rather than the 61.8% or more for gold. This sort of strength in silver relative to gold might be unexpected if it is the strong dollar and credit problems with tightening credit spreads that are affecting the markets. One might have expected silver to underperform here but that is not the situation we are seeing at this time.

The silver chart has been looking quite a bit more 'perky' than gols as we can see above. Interesting that the big outperformance in silver came just before the crash. I think that has happened a few times before!

Despite all the rhetoric about manipulation, we can see that the gold and silver hiccup coincides with a decent sized rally in the dollar as the Europeans embraced their version of QE to infinity with a 700 billion injection last week, whereas Bernanke pretended to be hawkish in not annoucing QE3 in the USA: