tag:blogger.com,1999:blog-5673441815180854503.post6554828788232342374..comments2023-09-10T09:54:59.309+01:00Comments on Screwtape Files: In Like a Lion and Out Like a Lamb: GoldLouis Cypherhttp://www.blogger.com/profile/07670126160101669248noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5673441815180854503.post-23940791594642410782012-03-31T19:42:52.649+01:002012-03-31T19:42:52.649+01:00.....CONTINUED FROM PRIOR COMMENT
The pattern I ........CONTINUED FROM PRIOR COMMENT<br /><br /><br />The pattern I see right now could also be a complex inverse head and shoulders with what looks like, if you look closely, TWO left and right shoulders ... these ones often have extreme moves attached to them. I may be wrong and welcome any feedback by yourself or any other reader. <br /><br />If I have one concern it is surrounding ratios. Whether it be the gold/platinum ratio or the gold silver ratio. Ratios are historical and there is no firm rule anywhere that implies that the ratio must revert to historical levels or must be at any set ratio number. This is where my beef with the silver permabulls lies when they refer to the historical ratio. I often point out that there is no rule that the lower cost asset must increase to the historical ratio average. What’s to say that the more expensive of the two assets won’t fall to satisfy the historical ratio? Silver permabulls often argue the historical silver/gold ratio as a reason for silver to continue to rapidly appreciate. However they fail to note that gold could easily get clobbered at which time the ratio can still revert to the historical average. I don’t want future readers to imply that this is what I am predicting.. I am merely pointing out an example. <br /><br />Keep up the good work. <br />DanTFVhttps://www.blogger.com/profile/08602354364491223521noreply@blogger.comtag:blogger.com,1999:blog-5673441815180854503.post-73441257971559108312012-03-31T19:42:34.308+01:002012-03-31T19:42:34.308+01:00Excellent work Jeanne .... I hope you don't mi...Excellent work Jeanne .... I hope you don't mind if I provide the link to my own analysis of last week in which I tried to lay out both the bullish and bearish arguments for the technical overview on both the gold and silver markets. As the title of my own analysis indicated, the charts are exhibiting signs that we are on the cusp of extreme moves and I attempted to lay out key areas that we should be watching for to aid with giving clearer direction.<br /><br />If you prefer that I don't provide links then please let me know for future reference. I don't want to be perceived as trolling or flaunting my own site. <br /><br />Here's the link:<br /><br />http://thefundamentalview.blogspot.ca/2012/03/gold-and-silver-do-extreme-moves-lie.html<br /><br />I also identifed the inverse H&S in both metals and what struck me was the sheer size of the pattern, perhapsthe biggest such one that has appeared in over 3 years. The significance I place on this is simple ... the bigger the pattern, the bigger the potential move that ensues. I normally use an inversed correlation to the potential move if that pattern is validated. <br /><br />I laid this out in my post but to be brief, the breakout target is usually equivalent in either dollars or percentage moves. <br /><br />Using very easy to understand numbers for the purpose of this example, if the Head is at $10.00 and the neckline is at $15.00, if the pattern is confirmed, the first target is usually $20.00. (head to neckline difference is $5.00 so the ensuing move should equalthat difference. The other way to view it is on a percentage basis. For example, the had to neck difference is 50% so, a 50% move from the neckline is usually expected...I find the latter less so, usually noting that the dollar move is the first area of real resistance. <br /><br />Of course, anything can change the targets. This includes news, geopolitical events, unexpected events etc and as we've seen this past year, even whispers of news or how those whispers are perceived or distorted can often cause moves as well. <br /><br />The bottom line is that technical indicators and trends should be used for "Trading" purposes only. These should not be confused with underlying fundamentals of any asset. What most novice market players often mistake is the significant difference between an investment or a trade. For example, I invest in bullion during pullbacks ... bullion that remains part of my long-term hold...but I "trade" short term set-ups. <br /><br />On my own blog for example, nothing riles up the bulls more than when I go short. They fail to note my underlying longer term fundamental goals. There is nothing wrong with going short on technical set-ups even though your core holding remains longer term bullish. <br /><br />Pardon me for straying slightly off topic but many an investor needs to understand that technical analysis is just another tool and should never be mistaken for fundamental outlooks. I say this because all too often I get hit with the trolls on my own blog who dismiss the power and potential of identifying trade set-ups using technical analysis. I went short gold last fall not because of the fundamentals but because of the technical analysis ... while others were still baging the table for $3,000 gold. <br /><br />Your post does an excellent job of outlining the current indicators and I agree with you that my bias right now is for the resumption of a move upwards. In my own view, given the sheer size of the pattern on the verge of being completed could signal an extreme move upward. <br /><br />This was not unlike the last major inverse head and shoulders in the summer of 2010 when silver was trading at roughly $23.00. At that time I called for an extreme move as well based on the size of the pattern. What happened? Silver started a tear that would eventually take it to $48.00. <br /><br /><br />CONTINUED .....TFVhttps://www.blogger.com/profile/08602354364491223521noreply@blogger.com