Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Signs of Gold's Upcoming Price Decline

Commodities / Gold and Silver 2013 Dec 13, 2013 - 05:43 PM GMT

By: P_Radomski_CFA

Commodities

This week was full of action for precious metals investors and traders. Gold, mining stocks, and (especially) silver rallied in the first days of the week only to disappoint on Wednesday and Thursday. No wonder; the rally didn't have "strong legs" as gold's strength was meager compared to that seen in the euro - another USD alternative.

In today's essay we will provide you with 3 gold-related charts (courtesy of http://stockcharts.com), each will tell a different story about gold's performance, but ultimately, they will all point in the same direction - the direction of another move lower in the price of gold.


Let's start off by taking a look at the chart featuring gold priced in the British pound.

Gold in British Pounds Daily Chart

As far as gold priced in the British pound is concerned, we saw a verification of the breakdown below the previous 2013 low, nothing more. The outlook remains bearish.

Even though we saw rally in USD terms, and it looked quite bullish at the first sight, keeping an eye out on gold priced in other currencies warned that not everything about that rally was so bullish. It was not a true rally, but a verification of a breakdown.

We can say an analogous thing about the Dow to gold ratio. In this case, we had previously seen a breakout and this week we simply saw verification thereof.

Dow/Gold Monthly Chart

Last week we wrote the following:

That's one of the most important and useful ratios there are as far as long- and medium-term trends are concerned. In particular, the big price moves can be detected before they happen (note the breakout in the first months of the year that heralded declines in gold).

We saw a breakout above the 12.5 level 2 weeks ago and shortly thereafter we wrote thatwith the ratio even higher today, we have a good possibility that the breakout will be confirmed and that we will see a big drop in the price of gold in the coming weeks or months.

The ratio moved even higher last week and this and it's already at 13.03. However given the sharpness of the most recent move up, we wouldn't be surprised to see a correction to the previously broken 12.50 level before the upswing continues.

The Dow to gold ratio moved slightly lower earlier this week, which didn't change anything as it remained above the previously broken 12.50 level. The bearish implications remain in place.

The True Seasonal patterns have given us a hint that this week's rally was likely a temporary move before another significant decline. In the second Market Alert that we posted on Dec 10 we wrote the following:

Additionally, the True Seasonal patterns suggest a final move higher between Dec 8 and Dec 11 after which gold usually declines well below the previous December low.

Here's why we wrote it:

Gold Seasonals Chart

Please note that while the average price that we are to expect after Dec 11 decreases, the quality of projection increases. This means that while the shape of the preceding rally is less clear, it's more certain that there will be a decline of some sort. This may also mean that the decline could be much greater than indicated by the pattern.

Summing up, the medium-term outlook for gold remains bearish and it seems that we might see another sizable downswing shortly. This week's initial "strength" was quickly invalidated.

We would like to emphasize that we continue to think that gold is likely to move much higher in the coming years. Gold is a system hedge and with practically all monetary authorities trying to print and inflate their way out of their problems, the systemic risk will continue to increase.

However, markets are logical only in the very long run. In the medium and short term, they are emotional and vulnerable to multiple psychological traits that humans (that ultimately create markets) exhibit. Consequently, every bull market will also have temporary downturns without any good logical reason - and it seems that this is where we are right now. The good news about them is that they allow informed investors to take advantage of these emotional price swings and increase their profits. This means that instead of hating these corrections one might be better off by taking advantage of them.

Thank you for reading. Have a great and profitable week!

To make sure that you are notified once the new features are implemented, and get immediate access to our free thoughts on the market, including information not available publicly, we urge you to sign up for our free gold newsletter. Sign up today and you'll also get free, 7-day access to the Premium Sections on our website, including valuable tools and charts dedicated to serious Precious Metals Investors and Traders along with our 14 best gold investment practices. It's free and you may unsubscribe at any time.

Thank you for reading.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Gold & Silver Investment & Trading Website - SunshineProfits.com

* * * * *

About Sunshine Profits

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski Archive

© 2005-2022 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