The (beginning of the) End



 Greetings friends!



We’re not yet at the end of the great bear market in gold (2011-2015), but I can confidently say it’s the beginning of the end.

[update 6/9] To clarify, based on a question in the comments, re: my statement to "expect a new low soon." Note that although the chart pattern suggests the next up leg in gold should begin when the $TNX/silver ratio hits the green line, in the past these points have been accompanied by a new low in gold first. So my best guess is that a new low is coming soon, while interest rates may also fall to keep the ratio near where it is.

[*update 6/15] Ratio is indeed still at 1.50 at the close of this week, with gold approaching a new low. One thing I should've made more clear is that the pertinent lows on this chart are for weekly closing prices, so a new low would be < $1158, which was the closing price the first week of March of this year. (It was also the lowest closing price in gold in 5 years, going all the way back to April 2010!) ...Working on some cool charts but no time yet to post.




Let it be widely known that I first called this 2 years ago. It actually surprised even me how relevant that post remains. 


However, I regret to say, a video I had posted at the top, the content of which I have only the vaguest recollection, but the titillation derived whereof I distinctly recall, has vanished…

Well, this one should be timeless. 

Note: Below the fold a chart that illustrates the trend in nominal interest rates since 1980, i refer to it in the comments


Quick Analysis on Sticky Gold (chart)

A very quick chart for Gold price (in USD/oz) to demonstrate the gold doldrums. For those who debate Gold's proper value : the market says it is fairly priced at around $1,200/oz. The graph below shows the sample of the mid-point price points for this year, expressed as a percentage of all price samples. The underlying data is for XAU_USD currency pair, from Oanda's trading platform, analysis of all M1 intervals available for calendar year 2015 to date.


$30 range around $1200/oz is highlighted in yellow.
Data points are for Jan - May 2015, from Oanda.


Worldwide Turmoil, Financial Upheaval and Cataclysm

When the Global Financial Crisis (GFC) of 2008 occurred, many including myself were shocked enough to start doing further investigation into the nuts and bolts of our modern financial system. My at-the-time-research led me to be long gold and short sydney property - in 2011. Here we are in 2015 and the result of that is pretty (painfully) clear to me. It's not just my timeframes which were screwy, it became obvious that most of the narrative I had collected was incorrect. Recently I've been exploring this dichotomy, but today I want to bring some definition to something that comes up in a lot of discussion - the idea that the GFC was simply just a dress researsal for something much bigger.

Giving this supposed event a name allows us to study it better, so I'm proposing the term 'Worldwide Turmoil, Financial Upheaval and Cataclysm' or WTFUC for short. We have a new poll running at the right hand side of the page here - I encourage you to vote in it because it's kind of unique - the poll will run for 20 years finishing in 2035 and (fingers crossed) I hope to be around to write a synopsis on the final results. If the blogger platform remains constant then you should always be able to change your vote over time, although it won't let me change the options. The poll allows you to nominate your expected timing for the WTFUC and the hope is that this helps us discuss our beliefs and expectations in a practical fashion (even as they may change over time).

Correlation does not always mean....correlation.

Just a quick post.
I read a lot of stuff, mostly financial, and I'm always interested in others' views. However, I read everything with a critical mindset, especially when there's a paid service being touted. Nevertheless, sometimes 'free' content can highlight some interesting facts about the 'expert' analysis.
I just read this post and noticed something that I decided to share, merely because it is so obvious, it made me smile.
There's a chart within the post which shows the KBW Bank Index plotted against the gold price over the last couple of years. The writer makes the point that the two have been negatively correlated for a long while, and has placed some arrows on the two charts to illustrate this point, with green up arrows on the bank index, and red down arrows on the gold chart. Very easy to follow for the simple souls that might be seeking 'expert' views. (Disclaimer: I am colour blind, but the arrows do look red/green to me).
Trouble is, the arrows don't align at all! Ok, well to be fair, one pair of arrows does align, but two pairs don't align at all, in fact they show that the two charts are positively correlated on those two occasions. Weird eh? Here's the chart with my vertical lines added:
What's most interesting about this little slip up is that the writer often criticises sloppy analysis elsewhere, but isn't immune to it himself. No one is perfect of course (perhaps his ruler slipped), but some are more sanctimonious than others.
Good luck.

Sunday PM pre-game, 5/17/2015

 Greetings, friends!

There's been a rally in gold and silver since last we spoke, and my educated guess is that it has provoked and inspired a lot of chatter on the net that the tide has turned, gold is finally headed to $2000, etc.

Now, regarding the online chatter from the usual suspects, that's only a guess, since I haven't been online recently. Truth be told, I don't have a computer. Can't afford one. I'm currently at the public library next to the Beckley, West Virginia Hooters. (Speaking of which, I love hearing the laughter of children, but not when I'm eating French fries at Hooters. I might have to start looking elsewhere to dine.)

Anyway, the next long term bull cycle in the PM market is not here yet, but I'm seeing this August as a legitimate candidate for a final bottom. You heard it here first. But since that's still months away, here are some charts to keep you guys busy. I'm gonna get right to it here, as my hour at the public library is just about up.

The situation in gold hasn't changed since my last post. Outlook bearish until $1250 can be cleared. But there are so many different lines and curves of resistance there, I don't see it happening. For example, here's a chart I haven't pulled out in a while: the 89-week (Fib) moving average (green), the breaking of which augured the April 2013 crash


Here's a similar chart to the one from my last post. Like the 2-year MA, the 21-month (Fib) MA is right at $1250 too ...
 


The "yields in silver" chart is snaking towards the wedge....




Note GDXJ has popped out of its 3-sigma bollinger band for the first time since its inception. We see that a lot - fairly obvious short covering rally. Yet- it's barely gone up 5%

Reinventing the Democratic Process in Australia

Recently in Australia, the Labor party joined hands with the Liberals to pass a bill on Data Retention, showing the primary distinctions between the two duopolist parties: i.e. no difference at all. With this incident, the political term 'opposition' gets relegated to 'sad joke' status and squarely demonstrates Australia's tepid leadership. While our bureaucratic overlords seem to think this is a great game, I pondered whether the bill would have had any support from the general public; in PROTEST I have designed an overhaul of the entire Australian electoral system, which I present for review. Those of you who are advanced in Political Science can set me straight on which elements are impractical, but please consider every part in total first:

Goals:
  • - Take advantage of modern technological advancements (but is not in itself E-Democracy), to generally increase the security, quality and speed of electoral results.
  • - Maximize the satisfaction levels of all participants (individuals or collectives), with the view this enables efficiency and empowerment.
  • - Reduce waste by limiting size and power of government.
  • - Bring more transparency to positions of influence in the voting process.
  • - Use free market mechanisms to reward honesty and punish bad political behaviour.
  • - Produce the most accurate map of the wishes of the voting public.
Constraints:
  • - Zero political-will to change the current system.
  • - One hundred years of bloated, bureaucratic legacy.
  • - Weak leadership with vested interests.

Sadly, both the goals and constraints are simultaneously the reasons why change will never be put into place - even as I write this article, the current government are proposing new laws to limit the influence of micro-parties. My ideas first got rolling when I was reading about the recent iVoting in the NSW election, where a team of independent researchers found a flaw in the voting website. I considered penning an article on that alone from my tech background (suffice to say security is purely a question of quality), but was more interested in the surrounding discussion where someone highlighted the conundrum: 'with internet-voting it is impossible to design a system which ensures the person voting cannot sell their vote'. So I started a thought experiment 'if selling your vote were allowed, would that help things and what would change?' It led to an interesting design, here are the primary elements of my proposal: