Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Bull Market Not Over, Depressed Stocks Primed to Take off

Commodities / Gold and Silver 2012 Apr 02, 2012 - 02:32 AM GMT

By: Clive_Maund

Commodities

Diamond Rated - Best Financial Markets Analysis ArticleThere is no indication on gold's long-term chart that its bullmarket is over, it appears to be simply pausing to consolidate after its sharp rise last year. Why should its bullmarket be over when the only solution to the global debt problem is to buy time by creating more debt which makes the problems even worse? It's true that "they" might throw in the occasional deflation scare as an arm twisting measure to justify bailouts and more QE etc, but other than that the course is set firmly in the direction of fiat worthlessness.


Gold - Long Term

Gold has been flim-flamming around in a trading range for so long now - over 6-months from the September panic low - that we ought to be able to discern what kind of pattern is evolving. Well, we can, and there are 2 alternative explanations, both of which are bullish, and neither of which contradicts the other because they are complementary - because they are both valid interpretations of what is going on. They are shown on the two 1-year charts for gold shown below. They are not shown on the same chart as it would get too crowded and confusing.

Gold's significant rally in January and February was a positive development that snapped it out of its downtrend and in so doing changed the trend to neutral. This rally terminated in the zone of resistance in the vicinity of the November highs, making this zone of resistance the top boundary or "neckline" of a potential Head-and-Shoulders continuation pattern shown on the 1-year chart Chart A below, and if that is what it is then gold has just dropped down to form the Right Shoulder low of this pattern, and in so doing has thrown up an optimal buying opportunity from a price/time perspective. Gold "likes" these Head-and-Shoulders continuation patterns and you may recall that a huge one formed after its 2008 peak, with the low of the Head of that pattern being the late 2008 financial crisis panic lows. Gold will need to stay above the support approaching its September - October lows for this interpretation to remain valid, and it looks like it should.

Gold 1-Year Chart

The other interpretation, which is coexistent with the Head-and-Shoulders continuation pattern interpretation is that gold is marking out a 3-arc Fan Correction, as shown on the 1-year chart Chart B below. This interpretation is given added credence by the high volume that accompanied the breakout above the 2nd fanline in January and by the way the price found support at this fanline when it reacted back in March. The rule is that once the price breaks above the 3rd fanline of the 3-arc Fan Correction, it is free to take off higher, but if we have figured out the game plan in advance we don't have to miss out on a juicy $100 advance to that point while we wait for such confirmation. Instead, buying now and jamming in a stop below the support shown makes a lot more sense from a risk/reward perspective.

Gold 1-Year Chart

The latest COTs for gold look positive - Commercial short and Large Spec long positions are at a relatively low level again - similar to the levels prevailing before the sizeable rally in gold and silver that occurred in January and February, as can be seen on the COT chart below. This is another factor pointing to an imminent rally.

Gold COT

The shocking malaise of fiat is disguised by the fact that many investors and even professionals make the mistake of only comparing fiat currencies with each other. The right thing to do is to compare each currency with real money - gold - when you do that the gravity of the situation becomes clear. Gold is simply a barometer of the intrinsic value of fiat, so when gold is rising a lot against most currencies it simply means that fiat is going down the drain. When you comprehend this it is a sobering experience to look at a chart for the US stockmarket for the past decade relative to gold which we do now below.

SPX:GOLD

Many investors like to kid themselves that the stockmarket is "resilient" and "holding up well", but our stockmarket versus gold chart shows that the real value of holdings in the stockmarket is "going down the gurgler". This is bad news indeed for the many Americans whose pension money is holed up in the stockmarket and is reflected in the fact that the fiddled CPI index shows a low rate of inflation, but many Americans are caught in a financial vice as the price of their principal asset, their home, has fallen in price, while the price of the basic necessities of life, such as food and gas, has soared and looks set to continue to soar.

While gold and the PM sector have been getting a bad press in recent weeks as gloom and depression have become widespread amongst PM sector investors, which is understandable given the way many stock prices have been trashed, our charts show that we are probably at the point of a marked turn for the better. The 3-year chart for gold compared to the Dow Jones Industrials shown below reveals that after a steep relative decline, gold has arrived at strong relative support where it is likely to turn up soon, although a determined advance may be preceded by a period of stabilisation.

GOLD:DOW

Since PM stocks can be expected to anticipate an improvement in the fortunes of bullion, they are at a good point to turn higher right now. The annotated 1-year chart for the HUI index below shows that they have been in the habit of reversing direction in a significant manner every 20 trading days for the past year, and clearly if this cycle continues the sector should take off higher shortly from its current depressed levels.

HUI Index 1-Year Chart

Gold and silver's recent reaction has brought a lot of conspiracy theorists out of the woodwork again as usual, harping on about "The Cartel" and their cruel and wicked plan to suppress the gold price, and deprive PM sector investors and speculators of the rich rewards they have been looking forward to for so long, all because a rise in the price of gold and silver will declare to the world the bankruptcy of their fiat monetary system. Well, if that their aim, our first chart at the top of the page shows that they have not had much success with their evil plan, as gold has risen from a low at about $250 to a recent high above $1900 in just 11 years - so much for the success of The Cartel. Carping on about some shady bunch of manipulators suppressing the gold price makes about as much sense as moaning to a gas station attendant about the price of gas - stop wasting time and pay up and get on with your life. So what if the gold and silver price are being manipulated to some extent? - most markets are - those in power will always manipulate things to their advantage, that's basic human nature. If you must ask questions then the point to start is to enquire about why these people are promulgating these conspiracy theories in the first place - are they just cranks or are they making money out of it some way - what's their angle?

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2012 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules