Starting with gold, the 144-day moving average (pink) has been intraday support a bunch of times in the past few weeks. Note that it has moved significantly above the blue "line of best fit" first drawn back on June 10th, but moving parallel, shifted about $50 higher. Will the pink line return to the blue line? Well, it's so far above now, that it seems unlikely to correct through time (i.e. move sideways until it hits it). A real gold crash (e.g. below $1500) would seem necessary. But, the 200-day MA (green), about to hit $1550, should be really strong support. So I think it would take a really fundamentals-damaging bearish event. I.e. not just standard bear raids, such as in late September, when panic (and stops) were triggered by a mysterious bulk seller determined to trade at the most illiquid hours to minimize his profit.
Of course, let's not be so naive as to imagine that fundamentals-damaging external events can't themselves be engineered. For example, a few days ago, in what can only be called a great day for America (if by America you mean the parasites that rule over us), Kaddafi was killed. As G. Celente says, if Libya exported broccoli, would we be there? No, obviously the goal was theft of some subtle or blatant nature-- not only of oil, but of his now-frozen assets, including gold (Reuters: "The International Monetary Fund has said it believes Libya had at least 140 tons of gold hidden away - if not more and that the bulk was hidden in the vaults of the central bank in Tripoli"). Might Kaddafi's gold soon be flooding the market, creating technical damage? Certainly not impossible.
You see, dear reader, your taxes were used to fund the unmanned drone that hit Kaddafi's car (and blew off the arms of his incoherent son), so that some new Libyan nut (or junta of nuts) could replace the old one, with the exception that the new one will be more grateful and accommodating to their benefactors, happily accepting colored paper in exchange for a lot of real assets that will help keep the parasites that rule over you in power a little longer. And you're footing the bill. Brilliant!
But I digress. Where was I? Ahh, yes, technical analysis.
Here's the chart of gold's daily closing prices, with the 144-day and 89-day (Fibonacci) moving averages. I mentioned a few weeks ago that this correction isn't over until we're comfortably above the 89-day, now at $1678. It has been strong resistance.
On the weekly chart, we see that the bottom of the black channel has been support yet again. I'm still somewhat expecting a weekly close there. One dangerous thing about such an effective line of support though is that, if broken, expect months of wallowing in the mire. This week the line rises above $1600. So that level is important to watch: if we see the $1500's again, we might be in serious trouble.
On the monthly chart, this is the last full trading week of October (with next Monday being the last trading day). So, here too, a close under $1600 would be an ominous sign. You never want to fall out of a rising wedge ...
Then there's silver:
Stubbornly staying inside the blue channel for almost 4 weeks now, but hanging by a thread:
And here, the daily chart with the steeper trend lines. A fall out of the red zone probably means we see $26 silver again. If we break out of it, perhaps the correction is over, though we still would need to get back into the main channel, currently at $37.50.
Perhaps the most encouraging chart for silver is the 10-yr-yield ratio chart. We're close to hitting the top of the purple channel for the second time since I noticed the ladder like pattern back in May. If the pattern continues (always a big if, of course) then the ratio is headed back down fairly soon, which probably means silver is going up in November (especially with 10-yr yields already quite low).
* the astute reader will notice the distance between the green "rungs" appears to be a geometric sequence, with r= 1/2.
8 comments:
Thanks for the video link. No fan of Qadaffi for his past acts of lunacy but they really appeared to be cleaning up their act the last few years.
If every country was to be bombed based on their history of recent aggression we would all be living in the stone age.
What his son had to say was very interesting. I'm surprised he didn't mention the rebels forming a central bank and oil company. http://thenewamerican.com/world-mainmenu-26/africa-mainmenu-27/6915-libyan-rebels-create-central-bank-oil-company
...and if memory serves it was within weeks of the conflict starting. There was also his Fathers plan to have a Gold backed currency on the African continent.
You are next Mr Chavez.
All signs appear to be pointing towards a bond ass kicking with the huge surge in M1.
http://research.stlouisfed.org/publications/usfd/page3.pdf
But it's not getting into the common mans pocket.
Wonder what Bernanke has left in his bag of tricks.
I should add with all the craziness going on in Europe US bonds may become a short term haven of safety. The world is run by lunatics.
So, silver could still have a bucket load of volatility the way things are going? (based on the green ladder geometric progression getting smaller).
Nice to see that violent moves are not limited to silver at least. My potash stock 'did a silver' a few days ago.
Thanks GM for the weekly charts!
Louis, that's right I forgot about the gold backed currency idea he was throwing out there. What's incredibly depressing at this point is the lack of public indignation over this latest aggressive regime change--this one against a cooperative sovreign state --with no US voter-approved directive. We're truly a nation with no honor, at the mercy of soulless, effete sociopaths at home and abroad.
Warren, I looked into that pattern a little further. The first green rung starts at silver's 2009 peak (the Dec 4 crash). Placing the ensuing rungs at every point where the lower purple line is first crossed (and noting that by similarity of triangles time elapsed is proportional to diagonal distance between rungs), the next rung starts on Nov 9, 2010, 340 days later (regular days, not trading days). The one after that is at the May 2, 2011 peak, 174 days later. The next rung starts on August 8, 98 days later. If we take the average scale, r, as 0.535, then we expect the next cross of the lower purple line to be 52 days later, or on Sepember 29 … which is a few days away from where the purple line was crossed on its way back up! So the next cross of the lower line should be 28 days from then, or … sometime this week. Will there be a gigantic explosion in the price of silver this week or next?? Stay tuned, lol.
"r" might also be applied to our memory as it seems to be diminishing every week. All we can seem to remember is what we were just reminded of in the last few weeks about Qadaffi. Lockerbie, WMD, Human rights violations. Nothing about his son turning a regime around, donations to poor African countries, lending to other nations, cutting ties with terrorists, etc etc.
As his son pointed out the biggest mistake was to not buy weapons. Maybe if he had kept buying weapons he would have been considered a good World citizen by an oil to guns program.
No doubt Quakki is going to burn in Hell for his sins but he was on the right path these last few years.
Libya was a country on the path to real democracy until we (the west) interfered.
How about the next country we invade would be the one where they rape, kill, maim while the UN sits around and passes resolutions about how nasty these boys are. Mogadishu comes to mind but if the the people want some help they better find a stash of Oil or just open a central bank with Gold backing.
Rant mode off.
If the Euro clowns keep up this stupidity come Monday every sane European should be out buying some shiny stuff.
@GM, An explosion in the silver price at the end of this month, would be most welcome :) Thank you for the precise details. It really seems to me the price of silver is mashed up somehow in the gears of derivatives (no idea how that works still).
@Louis, fully agree about what just happened in Libya. Here in Australia they showed pictures of his death all over the news and crowed about how he hid in a drainpipe. It made me sick to my stomach. It just isn't right and yet no one here batted an eyelid because we're powerless and desensitized.
I agree, Warren, that a big bull rally in silver would be most welcome, but fun with patterns aside, I don't expect it. (I have no current paper position in silver.) I think the main source of my pessimism in silver (and also gold) is that if/when silver hits ~$40 again, and gold passes Jim Sinclair's hyper-pivotal $1764 mark again (which to his credit was fanatically defended as he predicted), I think $75 silver and $2500 gold will follow quickly. Even using only a market psychology perspective, what doesn't kill a bull market makes it stronger, so that if silver, after its most violent crash in 30+ years, works its way right back up to the $40-50 range, hands will start getting really strong as they assume selling into fear is stupid and that eventually $50 will be cracked. So i think whatever forces do not want silver or gold to explode (and I'm convinced no objective observer can possibly believe that such forces don't exist) will do whatever they can to delay $40 silver and $1764 gold. I hope I'm wrong, but that's what I've been feeling since the September waterfall.
Been looking at the lease rates and they look to be turning up for Palladium and Platinum. Not something I look at very often as they are usually pretty boring. Occasionally they go nuts.
I look at Palladium as you guys know because Palladium (IMHO) is a front runner for Silver.
http://www.kitco.com/lease.chart.html
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