Is now the time to 'Back Up The Truck'? | <b>Gold</b> Silver Worlds |
| Is now the time to 'Back Up The Truck'? | <b>Gold</b> Silver Worlds Posted: 14 Jan 2014 11:41 AM PST This article is a guest post from Peter Degraaf who has over 50 years of investing experience. He reminds us that it was 29 months ago when gold reached its new high in its current bull market cycle. The current downtrend has lasted 22 months (top to bottom). The bottom was reached on June 28th 2013 at $1180. Confirmation of the bottom came on Dec 31 when gold briefly touched $1182, and left behind a double bottom, which is shown on chart number 3. There have been two other corrections that lasted 6 months or more, from top to bottom:
Thus a 22 month down-cycle qualifies under the Gann definition as 'time is up'. There have been 4 pullbacks of 16% or more since gold began its current bull market run in 2002:
This number is close enough to be a Fibonacci retracement (technically at 38.2%), to have run its course. For some reason, the higher the price, the deeper is the eventual pullback. By extrapolating these numbers, the next major correction could very well cause a 50% price reduction. Possible numbers could be from a top at $3,850 down to support at $1,925. That scenario is a few years down the road. Featured is the weekly gold chart. Despite the 22 month long decline (from top to bottom), the bull market is intact. The short-term double bottom (June to December), is receiving positive confirmation from the supporting indicators. This chart courtesy Bloomberg and the Tocqueville Letter, shows the US Real Interest Rate (TBIL – CPI), remains negative, even while the CPI understates inflation. Negative real rates provide energy for a gold price bull market. Featured is the daily bar chart for gold bullion. The green arrows point to identical 'upside reversals'. The first one came at $1180 and the second one at $1182 (see green arrows). A double bottom does not come much better than that! The blue arrow shows a breakout from a bullish falling wedge. The supporting indicators are positive, including the all-important Accumulation/Distribution line at the bottom. A breakout at the black arrow will confirm the double bottom formation and this in turn will cause a lot of bears to become bulls. This chart courtesy @KoosJansen shows the amount of physical gold withdrawn from the Shanghai Exchange (red bars), compared to the total amount of gold produced worldwide (yellow background). During a number of months in 2013 the Chinese bought every ounce that the mines of the world were producing. This chart courtesy 24hgold.com shows the number of ounces of gold at the COMEX available for delivery, has dwindled to 416.56 thousand. When this number nears zero, the COMEX will declare 'force majeure', and a number of traders who thought they owned gold bullion will have to settle for pieces of paper. "But then, finally, the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The Crack- Up-Boom appears. Everybody is anxious to swap their money against "real" goods, whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them." by Ludwig von Mises. This chart courtesy sources listed, shows the percentage of Total US Financial Assets that are concentrated on Gold at present, as compared to the times when the gold price peaked. Featured is the daily bar chart for Royal Gold. It trades on the NASDAQ under RGLD, and on the TSX under RGL.TO. Many traders and investors consider this stock to be a bellwether for the gold mining sector. Since carving out a secondary, (ABC) bottom in December, there have already been a number of upside breakouts. The supporting indicators are positive. The next breakout, at the blue arrow, will set up a target at the green arrow. RGL is setting a positive example for the rest of the gold mining industry. Featured is the index that compares silver to gold. The trend has favored silver since August. The supporting indicators are slowly turning positive again. A breakout at the blue arrow will set up rally similar to the one that started at the green arrow. This will be bullish for both metals but especially for gold. This chart courtesy Zerohedge.com shows the number of people not in the Labor Force has reached an all-time high of 91.8 million. (Macy's just announced that they are closing 5 stores and laying off 2,500 workers). If the people who have given up looking for work were included with the BLS unemployment statistics, the unemployment rate would be at least 11.5%. FED chief Janet Yellen has expressed concern for the unemployed in some of her speeches. The expectation is that she will opt for more QE rather than less, as her way of 'solving this problem'. More QE represent more monetary inflation. Gold and silver will benefit. Charts are courtesy of Stockcharts.com (unless indicated). About the author: Peter Degraaf has over 50 years of investing experience. He publishes a daily market letter for his many subscribers. For a sample copy of a recent issue, send him an E-mail, or visit his website www.pdegraaf.com Disclaimer: Investing involves risk. Please do your own due diligence. Peter Degraaf is not responsible for your trading decisions.  | |
| Will <b>Gold</b> and Silver <b>Price</b> Increase from Here? :: The Market Oracle <b>...</b> Posted: 10 Jan 2014 07:10 AM PST By: P_Radomski_CFA
(…) gold's lack of will to really (!) react to positive news, like the dollar's huge intra-day drop, is a bearish piece of information on its own and an indication that gold is likely to move lower in the short run. On the next trading day, after the essay was posted, gold and silver declined and dropped to their fresh monthly lows. With this downward move gold almost touched the June low. This strong support level encouraged buyers to push the buy button and the yellow metal, which last week saw its best week since October, rebounded to around $1,250. At the same time, silver came back above $20. Will the recent week's rally continue? Before we try to answer this question, we'll examine the long-term charts of gold and silver to see if there's anything on the horizon that could these precious metals higher or lower in the near future. We'll start with the long-term chart of gold (charts courtesy by http://stockcharts.com). Even though a lot happened last and this week, from the long-term perspective not much changed on the gold market. We saw a move back to the rising long-term resistance line (currently close to $1,250), but gold only touched it, only to decline once again. At this time the medium-term outlook remains bearish. Any additional rally is not likely to move significantly above this level (from this perspective significantly means not more than $50 above it, which takes significant intra-day volatility into account). Our previous essay on gold we wrote the following: Please note that the exact target for gold is quite difficult to provide. In the cases of silver and mining stocks there are respectively: combinations of strong support levels, and a major support in the form of the 2008 low. In the case of gold, there are 4 support levels that could stop the decline and each of them is coincidentally located $50 below the previous one starting at $1,150: $1,150, $1,100, $1,050, and $1,000. Taking into account the current situation in the yellow metal, the above price targets remain valid. Let's take a look at the chart featuring gold's price from the non-USD perspective. From the non-USD perspective, gold simply moved back to the previously broken support line and verified it as resistance. There was only an intra-week move above it, but the price is already back below the line, and it seems that it will close the week below it as well. Please note that in the final part of 2013 we also saw one intra-week move back above this line and this move was even more significant than what we saw this week. It too didn't invalidate the breakdown. In fact, it was followed by a significant downswing. We can expect the situation to be quite similar shortly, if gold does indeed rally. The move higher could be temporary, and unless we have a weekly close above the rising support line (dashed line, currently close to 46), we will not have any bullish implications whatsoever. Even if we see some strength, the ratio would have to move above 48 (where the upper declining resistance line is currently located) in order for the situation to become bullish. Consequently, some short-term strength is clearly possible, but we don't think that the medium-term downtrend will be invalidated. Having discussed the current situation in gold, let's take a look at the long-term chart of silver. It is often said that history repeats itself (or that it rhymes) and it surely applies when we look at silver's recent performance. At the end of December silver moved temporarily back above the rising support/resistance line, but didn't manage to hold this level. The white metal gave up the gains and dropped below both long-term support/resistance lines, which triggered further deterioration. This week, the white metal made another attempt to move back above the resistance lines, but failed to move above the upper of them and ultimately the breakdown below these lines was not invalidated. The next downside target is the previous 2013 low, slightly above the $18 level. Once we see silver below it, the next (and probably final) stop will likely be close to $16. Overall, the trend remains down. Summing up, looking at the current situation in gold and silver, we see that the medium-term trends remain down and the outlook for both remains bearish. However, on a short-term basis we can expect to see a temporary move higher. In case of gold, it doesn't seem that the yellow metal will move above $1,250, and even if that happened, it would not be likely to move above $1,285 and change the medium-term trend. In the case of silver, given the white metal's back-and-forth performance in the recent weeks, we also can't rule out another move higher before the next big move down materializes. To make sure that you are notified once the new features are implemented, and get immediate access to our free thoughts on the market, including information not available publicly, we urge you to sign up for our free gold newsletter. Sign up today and you'll also get free, 7-day access to the Premium Sections on our website, including valuable tools and charts dedicated to serious Precious Metals Investors and Traders along with our 14 best gold investment practices. It's free and you may unsubscribe at any time. Thank you for reading. On behalf of the whole Sunshine Profits Team, I would also like to thank you for staying with us in 2013 and wish you a Happy and Prosperous 2014! Przemyslaw Radomski, CFA Founder, Editor-in-chief Gold & Silver Investment & Trading Website - SunshineProfits.com * * * * * About Sunshine Profits Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing. Disclaimer All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
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