This year, I decided to sit for my portrait before I started drinking to greet the New Year, as I usually end up quite shit-faced, and wouldn't want to portray myself as some degenerate rake to our global audience:
So 2012 ended with a whimper, but both gold and silver did finish the year up close to 10%. Not bad.
I expect a big 2013 for the metals, but I think they'll continue to sell off in the near term. Note the 144-day MA has been effective resistance, and will probably require a few attempts to clear. In fact, I returned to trading by buying some GLD puts today.
I'll buy more puts if the 78-week MA is broken. Recall that the 78-week MA = exactly 1.5 years, and as I pointed out in a previous post, it's right around 1.5 years when the moving averages of gold appear monotonic over the course of the whole decade-plus bull market. The 78- week MA has also been strong support:
This chart from a month ago has proven quite useful. I won't go long gold until gold breaks above the downward channel (yellow-green) (perhaps short trades if it bounces off support lines as drawn). Fortunately, the downward channel is quite steep, so the longer gold meanders within this channel, the easier it will be to break through to the upside.
This ^HUI chart from a month ago surprised me: the white dotted line I drew has been pretty resilient despite a few very bad weeks for gold.
Similarly, gold's "Safe Haven Quotient Chart" has not yet broken the important trend line (purple). Note the two sets of Fibonacci retracements I've drawn (yellow and purple dotted): the pattern looks to repeat, where the purple trend line (and not the Fib line) becomes support on the second trip down. So it looks like gold should outperform the other commodities going forward, even if both do fall (and note ^CCI fell below its 200 day MA in the past few days... That's pretty big).
What about silver?
I'm happy to say, my networking with Jesse of Jesse's Cafe Americain has paid off. In return for an organic yule log that I made for him (while reading the paper, actually) ...
... he gave me the emails of some higher-ups and encouraged me to contact them. One of them (Jesus Christ, if you insist I drop names) shocked and staggered me more than Eric King after an interview with Michael Pento. Apparently, even God doesn't know what price silver will be on January 1, 2014. He only knows the probability distribution from which the price will be sampled on that date (and leading up to it, of course). Turns out it's a normal distribution, as I impressed him by guessing, with the 1/1/14 expected value equal to $38.75, and a standard deviation of ~$4.50, such that any price over $47.50 or under $30 would constitute a >2 sigma event (i.e. quite unlikely).
In hindsight, that makes sense, looking at the weekly chart below:
Alright, off to the main event! Thank you, Screwtape readers for making 2012 a great year, and best wishes for 2013!
Yours in health,