Sunday pre-game, 9/22/2013

So, the Fed was forced to show its hand last week and it wasn't pretty. Of course, gold and silver always fall precipitously whenever a Fed shill farts out some noisome propaganda about imminent tapering, so it stood to reason that gold and silver would be up BIG this week. Except both gold and silver were down this week. 
That's why it's probably best just to use the charts. For example, I've mentioned many times here that on days when gold is flat but miners are getting killed, I always short gold. To my recollection, this trade has yet to fail.

And it didn't on Thursday/Friday:

Apart from that, I continue to keep an eye on relatively few charts here. E.g. the 144-day moving average, or even better, the 20-30 week "MA ribbon"(which corresponds to ~100-150 trading days, of course).  I had pointed out that the overall trend is down until $1425 is broken on a weekly close, but the good news is that that level has fallen, probably to $1400.

I'm also carefully watching the three-line break ratio charts that I've used as a signal for when to buy gold and silver, respectively

They have not yet had a reversal, but they are getting close. If that were to happen, that would tell me gold is going nowhere this fall/winter, whatever the fundamentals may be, as I'd expect another string of white bars up before the next red bar. So far, all we have is the third small, standard correction in an incredible bull market for anyone trading these ratios.

 And, I still suspect we won't see a daily bottom in gold until the top of the dotted wedge is hit by the ten-year yield measured in silver.

Then there's the very long term chart of the ratio of gold with the DJIA, which I pointed out was a big deal when it was broken not too long ago. (Similar charts with other stock indices). Looks to have bounced off of support. Another bearish sign. 

In short, I think our financial Overlords don't want gold and silver to rise, and so they won't, until they have to, which for all I know could be several months or several years away. But who cares what I think, the charts aren't pretty (I'll try to use more colors next time).

Till next time ...


GoldenEye said...

You offer good commentary and your bearish conclusion has proven correct today with gold dropping a tad and the miners falling heavily. NUGT down 9% while DUST up about 8%
Lets see what the rest of the week holds. Some other bloggers had predicted the stock market will fall in October or thereafter which would produce a bounce in the price of gold. For now the momentum seems to be going down.

GM Jenkins said...

Thanks GoldenEye.

I like Eric King's Homeric epithet, "the long suffering miners" ... I think from now on I will refer to them that way. I think it's truly a time to either step aside in this market, or at least actively manage risk ... Unfortunately, you never hear such advice from the usual suspects (e.g. "Billionaire Eric Sprott" and "Rising Star Egon von Greyerz")