A lot of the post-2008 charts are, frankly, useless for the time being. We need to wait for the new macro-trend to develop (what I expect will be a macro uptrend), and that won't happen overnight, so my posting will be sporadic for awhile. All I can point you to at this time are the very long term charts and moving averages, which reveal fundamentals-based growth patterns that shine through the miasma of short-term manipulation and frenzied speculative bullshit.
But, since you ask, the likely short-term scenario, assuming the ship doesn't keel over entirely, is a bounce followed by one more scare. Check the CCI indicator on the gold chart: when it gets this low (currently, -250), there's always another shoe that falls. Also note the (Fibonacci) 377-day MA (blue):
+($GOLD)','$GOLD','&p=M&st=2001-03-01&en=(today)&id=p03204705196&a=246144122').png)
. . . similar to the 89-week MA on the weekly chart (black, dotted):
And the 21-month MA on the monthly chart (green, dotted), where the correction thus far looks like mere noise
(and exposes the amateurish gloating of naysayers like Roubini for the fearfulness it is. Were their interests and egos not on the line, they wouldn't be talking such amateurish smack while the game's still in progress).
I still expect $1550-70 to hold.
The fact that silver has been down an almost unprecedented 13 of 16 trading days (with only marginal up days in between), yet still hovers around $29 is a very encouraging sign; it probably confirms that the ultra-bullish picture you'll hear from The King World Crew™, while undoubtedly inflated by book-talking hyperbole, is nonetheless based on some strong fundamental truths, and that a move to the $22 level (red circle) may not be in the cards. I'm going to stick with $27.50 coinciding with the gold low.
Alright, I'll be back when the fog clears up a bit. Till then, any specific inquiries on where we're headed should be directed to Warren's secretary, who has Bernanke on speed dial, or Louis Cypher, provided that Dimon, Blankfein, Masters et al. have forgiven him for the aye aye heads they regularly find in their beds.
20 comments:
So...no Martingale?
Adam Brochert gives some good arguments for this being the low. He points out that the RSI is oversold at 30, first time for about five/six months, similar position with STO.
.. Ben finally admitted to me that gold is way more important than he is allowed to let on publicly, and complained about the juggling act he has to do with the bond market and then keeping the 'market muppets' in line (as he put it) but he laughed when I suggested to him that gold might replace the USD as a reserve asset in some countries. He said he never heard of FOFOA before and expressed mild interest but I could tell he was just being polite. Anyway, he said not to worry about gold, that he will fix it, beginning next week with a weekly close over 1600. I asked him if he kept any powder dry and he said hell yes.
(sorry, slow news day, peace, Warren)
Ha no martingale, it's a good strategy until the whole casino goes up in flames.
I agree with Brochert that this *should* be a bottom, but silver is trading strangely, RSI at 22 and dropping steadily, without any real "deflationary" confirmation in equities. My guess is these markets are being micromanaged with great skill. Jim Rickards said the fix was in when David Axelrod tweeted a few months ago about how Republicans shoudl give credit to Obama for bringing stocks back from the abyss. It's sure looking like that. Maybe mining stocks aren't being manipulated down, as the King world Crew suspects, but just they're not being pumped like everything else.
FWIW, I bought some SLV and GLD calls today. Risk/reward here looked good to me. Why was Dow flat and commodities up?
What's up with the skitzo gold price? $20 daily moves? Better break out the sea-sick tablets.
Say what you will about manipulation, but the Metropole Cafe crowd (led by Andy Hoffman) talk about a 12 PM "cap" on prices. Maybe it's a natural phenomenon, but I notice it a lot, so I sold 1/2 my calls from Tue right before then and sure enough the price looks capped from there...
RSI!!
So, a $30 move inside of a few hours .. GM are you saying that gold could have had more upside with this move if the 'quick-do-something-about-the-gold-price' button was not pressed?
This game has a lot of moving parts, I'm still scratching my head a little.
The good thing is that this violent price action will provide me with a lot of interesting data points to correlate against bars data. My day job is eating me alive @ the minute but I get some time off soon.
My data download routines are still getting the daily bar documents and last weekend I managed to code around the BullionVault login requirement.
No, I wouldn't necessarily expect more than a $30 pop today, as this just appears to be the bounce we've been waiting for. But literally dozens of times this year, too many to count, the kitco chart on fairly strong up days looks essentially the same. A strong move up that peaks, generally quite sharply (i.e. it doesn't roll over) at EXACTLY 12 pm (as GATA/Casey's Ed Steer would write it). I don't know what it means (as you say, a lot of moving parts), but I've traded successfully with that in mind several times. I feel comfortable selling short term trades right before 12 eastern. (In fact, the only exceptions I vaguely recall are another "pattern" that happens, the bullish Fridays where gold/silver just inch up steadily to the close. Maybe some Tuesdays). Really looking forward to the bar stuff.
Edwardo had a comment that appears to have been lost:
"GM, FWIW, the estimable Terry Laundry's TTheory has the low for gold's correction (now in its eighth month) coming in late June. The price, as per his work, is somewhere in the mid 1400s with a worst case scenario in the low 1300s. I think how far today's rally can carry will have a lot to say about the odds of the worst case scenario unfolding. If the profile of the '08 retrace has anything to say about the present action, this correction is getting long in the tooth."
It's interesting to think that it's come to the point that the enormous global market for gold, probably the most consistently sought after asset in world history, is now a mere function of the decision of one man. If QE3 is announced before mid-June, it becomes highly unlikely it will fall $1400, and very likely would challenge $1780 again on its way to a new all time high. Otherwise, $1300-$1400 is entirely possible. Since we know from Paulson in 2008 that the Fed tells the Wall Street bigwigs what's going to happen in advance, so they can help out with the agenda in some capacity (and massively profit for their noble efforts), there will rpbably be some signs when the event is happening. Yesterday's FOMC report struck me as a bluff, perhaps a final bluff, to keep the diddlyshits in the dark and fearful of commodities. But ho much longer can the Fed stare down these falling equity prices… Let's see what happens tomorrow with Facebook, that seminal contribution to civilizational greatness.
"Facebook, that seminal contribution to civilizational greatness". lol. :)
Well, the gold game (very much a game) continues - end of June is the EURO mark-to-market day. I forget the expected price but I guess they want the price a bit higher than is currently. They only have four or five weeks left.
But Bron is right of course, we should never forget the amounts of hot money still flowing through the system, which really distort the picture. I am still waiting on my Buddy Bernanke to pop the price over $1600 like he said he would on the phone to me. That was a good start yesterday, but he needs to pull his socks up if he wants to be re-invited to my annual Christmas BBQ.
I think the 3 peaks and domed house analog is appropriate for the broad markets. Look at RUT or SPY over the past year and half, near perfect correlation to the analog
Another $20 move in so many hours - looks my boy Benny is coming good on his promise. It's over $1600 in AUD anyway ;p
Gotta admit when gold was kissing $1530 it looked bleak. The next question is "WTF is going on"?
Regarding all the other reactions off lows this year...sentiment at this latest low was at record lows...
Yup, sentiment was ridiculously low given that there's a goddamn bank run going on in Europe (or a "bank jog" as per Krugman http://www.nytimes.com/2012/05/18/opinion/krugman-apocalypse-fairly-soon.html?_r=3&nl=todaysheadlines&emc=edit_th_20120518). I understand that in the short term prices could go all over the place in a liquidation event, so traders might be wary, but investors' sentiment should be generally positive, as mine is.
I sold the remainder of my calls right before 12 pm and once again, it was the right move, as you see the same pattern on the chart, this time peaking at 11:30 am and flat the rest of the way. Up exactly 1%, again
Maybe these markets aren't being micromanaged; maybe these patterns are just natural phenomena (though tey can't be due to random chance). Despite there being an obvious motive for the govt to not have gold explode when they want to keep QE3 as an option (among many other potential reasons). I say, if it look like a duck swims like a duck quacks like a duck ...
GM Jenkins,
I remember some statistics that the price gain per day was either limited to 2% (and then a flat day) or to 1% (and then maximum another 1% day) before the next down day **during the 1990s**.
I wonder whether anyone has any reliable statistics on whether this pattern has persisted after May 2001. And does it apply to COMEX during NY floor trading hours or to the loco London spot price during any 24h period. What's the small print?
Victor
Gold is massively managed. I'd wager that it's far from random chance that it has moved up, on average, 19% per year since its lows well over a decade ago. I am going to be very interested to see if after all the kerfuffle if it ends the year around 1900 which would keep the aforesaid trend mostly intact.
Victor, I once asked Nick Laird (sharelynx) by email and he said he's not a believer of the 2% cap rule. He should know. What strikes me as strange though is the exact 1.00% closes that have been happening with some regularity over the past few months since it was brought to my attention by Andy Hoffman or some other blogger who thinks gold is massively managed.
Edwardo, I agree. The ascent has been extremely steady, with this one of the very few moments where that steady path seems somewhat at risk, at least from a pure technical standpoint. Another +19% close would be far more important than just a single data point in buttressing the manipulation argument.
GM Jenkins,
has anyone plotted the histogram of relative daily changes since 2001? I.e. the frequencies by which each relative daily change occurs?
Of course, it depends on how you measure it, say by COMEX close, by midnight NY, by London pm, or whatever. But if they frequently cap at 1% or at 2%, it should be rather obvious from the histogram.
If someone gives me access to intra-day spot price data, say 1-hour candles (olhc), I would be happy to perform the analysis. So far, however, I don't have access to historical intra-day prices.
Victor
hey Victor - Bron posted that data in the Chris Martenson Harvey Organ interview thread.
http://www.chrismartenson.com/blog/harvey-organ-get-physical-gold-silver/73933
it's in there somewhere. I think you took part in that thread too? can't remember....
the claim that gold price are capped is a myth, according to Bron's data, which I have also analyzed.
Right, I should have remembered Bron'd postings.
Also, I looked up my favourite reference, and indeed there is **no** evidence for a 1% or 2% rule during the 1990s. I remembered that wrong. Must some GATA induced brainwashing. I am going to take a day off.
Victor
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