At any rate, as I mentioned last week, I won't be able to post much till March, but I'll try to keep my usual charts updated as time allows, especially with all the good commentary going on.
First things first, gold expectedly stalled at the 144-day MA. I'd rather not be trading currently, but I had to buy some GLD puts yesterday. Check the resistance of the RSI as well.
Someone in the comments asked about my end of the world predictions from last month (when, looking back, I was in something of an apocalyptic mood, wasn't I?). The $TNX:$GOLD, which is the amount of gold the US Government gives you every year for lending it $1000, is approaching the parabolic resistance on the log chart.
If you recall the original post, January 2015 was the date when the parabolic shape is scheduled to level off asymptotically. If on that date interest rates are near zero, there's no limit to how low gold could go. Assuming interest rates are around what they are now, gold would be in the $2500-$3000 range. If rates are at 3.5%, gold would be at a minimum of ~$6500. Etc.
The $TNX:$SILVER chart, on the other hand, gave a conflicting and far more apocalyptic prediction: it predicted a "singularity," where the dollar would collapse on January 14th. Alas, it seems that prediction was no better than the Mayan's, as that parabola has been broken.
The "rubber" chart was the original of the 3-chart Apocalypse series, a straight linear regression of $TNX:$CCI, which is still pointing to dollar collapse in mid 2014.
Cheers,
GM
[UPDATE: in the comments, our friend SRoche mentioned the 89-week MA that we sometimes look at. I'm adding the 11 year, 5 year, and 1 year version of the chart. Pretty redundant, I know, but I have noticed (purely impressionistically, I admit) that when an important MA or obvious support line is broken -- even by a hair -- after a short lag there's generally further downside (though that may follow a short false move back over the line). The 1-yr chart with the 89-week shows it has been broken (on a weekly closing basis) for the the first time since 2008!]
16 comments:
hi
im newbie. i find this blog by chance.
your article look interesting but i don't understand in many point can you explain it in a simple words
thanks,
Hi xTrader
You've asked for an explanation of "it". Here you go:-
"Used to refer to that one previously mentioned. Used of a nonhuman entity; an animate being whose sex is unspecified, "
OK?
you buy some put
you mean next week gold price may drop ?
another, can you explain silver chart with parabolic line
does it mean price may rising fast this year?
"Unspecified sex"......well I do fondle my physical silver in appropriately at times. That's pretty specific and easy to understand. Did I say ...."easy"? Boy do I sleep well at night.
xTrader you sound like a troll, so perhaps I should let duggo's response stand, but troll or no, you do raise the good point that someone who blogs on metals should be concrete. That way readers can use his prediction as a datapoint, either as part of the law of large numbers/wisdom of crowds or as a contrarian indicator.
The way I see it: the next leg up in gold and silver is coming (my best guess, fall 2013, judging by the lengths of the previous big corrections) and when it does happen, it will be at least as strong as the 2009-2011 move, but more likely stronger, i.e. "parabolic" on the logarithmic chart for sustained periods of time (the 2009-2011 move was pretty linear on the log chart, as a simple glance at my chart above shows).
Since I believe that explosion will occur on the next leg up (my rationale being, a move through $2000/$50 will make crazy headlines) gold& silver will have to make that move from a major correction-through-price or major correction through time. The present correction through time for both gold and silver hasn't yet lasted as long as the 2008 correction, which had a much steeper fall in price. And because of GM'S Fundamental Law of this gold bull, I don't see a huge correction in price, so meanwhile we will have to wait patiently, as price grinds down and rally's are sold. There will probably be at least one more bull trap in early 2013. Etc.
If I sound more intermediate term bearish than e.g. early last year, it is because last year I wasn't quite sure the major post-2009 leg up had ended. Now it is clear to me it has ended. Whatever the merit behind believing GATA's case re: manipulation, it at least is a useful fiction to think: the manipulators (those who need the Federal Reserve Note to reign supreme) are in control.
I should add that if and when the next leg up comes (e.g. gold decisively through $1900) gold bulls should want it to motor up steadily, as it did 2009-2011, because parabolas on the log chart always end badly.
It's also possible that there will be no leg up. Anything is possible.
I don't have to choose: underneath the seemingly pleasant visage there lurks the rarely seen Prochesimian, how's that for Bona Fides.
It is kind of you to suggest the guest post status for my comment, however, I don't think it would reflect great credit on Screwtape as the rating system I used is very subjective, even erratic.
Back to work, GMJ: was it you suggesting a look at the 89 week moving average?
Incidentally, I think a bit harsh there on xTrader who appears not to enjoy English as a first language and is apparently looking for basic guidance. Here you go xT: trade small while you learn; 10,000hrs later: trade large.
You're probably right, sorry xTrader!
FYI I added some charts to the post re: 89-week MA
Lol I just saw your avatar :D
Sorry.... me too. I was being flippant.
That avatar is the best thing I have ever seen, S Roche.
a move through $2000/$50 will make crazy headlines
Good point GM Jenkins, could this be the headline that gets the retail investing public to start piling in?
"GOLD SMASHES THROUGH $2000, GOING TO $5000 SAY ANALYSTS"
Of course further downside is a possibility, but I think there is a good chance Gold (and Silver) bottomed during the wipeout to $1625 on the "Fed will quit QE in 2013" scare.
Higher prices to come in the months ahead. The correction is becoming extremely stretched (time wise) as pointed out by James Flanagan in a recent presentation (see pages 20-26):
PDF Doco
No doubt the freegolders will continue plugging their giants metal of choice, but I think over the next 12-18 months Silver is likely to shine again as it has another volatile burst higher:
Silver To Shine Again: Prepare For A Burst Higher
Where will the stress of the Buba gold repatriation show first? GOFO?
As of today: We don't need no steenkin' gold!
08-Jan-13 0.27500 0.30833 0.33833 0.39500 0.44833
09-Jan-13 0.30333 0.32833 0.35167 0.39833 0.45167
10-Jan-13 0.32000 0.34333 0.36167 0.40000 0.46500
11-Jan-13 0.31833 0.34333 0.36167 0.40667 0.46000
14-Jan-13 0.31500 0.34167 0.36167 0.40833 0.45833
15-Jan-13 0.30500 0.33000 0.35333 0.40500 0.45833
16-Jan-13 0.26800 0.30200 0.32200 0.39200 0.44800
http://www.lbma.org.uk/pages/index.cfm?page_id=55&title=gold_forwards&show=2013
First the price, then the news:
"No gold will be moved out of the Bank of England's vaults, however. It will still keep 13% of its total reserves in London, the German central bank said."
http://www.bbc.co.uk/news/business-21040214
The last time the $VIX was this low?
June 2007.
The August 2011 debt ceiling kabuki sent S&P 500 plummeting. So (if I understand correctly how the implied volatility is calulated, with $VIX at 13.49 as of today) why is the market saying a greater than 3.7% change (up or down) in the S&P 500 would be a >1-sigma event? Truly baffling. Is this the Exchange Stabilization Fund in action?
GM - Go back to Oct of 2006 when the SPX broke out to the upside. The VIX was right around where it is today - 12.5. From there, we all know what happened; tripple top violence throughout 2007 and the VIX hit it's all-time low at 9.38.
We're basically sitting in the same spot for both the SPX trying to break it's upper TL resistance and the VIX breaking down.
And the weekly BB's on the DX are narrower than there were in.....you guess it...Sept of 2008.
I don't know the next move, but I do know someone is going to get their a-hole ripped apart. Happy trading! lol...
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