Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

Gold Price and the 120-year Cycle Bottom

Commodities / Gold and Silver 2014 Dec 31, 2013 - 11:32 AM GMT

By: Clif_Droke

Commodities

Trading volume across all exchanges has been muted lately due to the holidays. Traders are still mostly on vacation which has produced low volatility and a lack of excitement. Not much is going on in the news front, either.

There was one news headline recently that was quite conspicuous, however. A news site known as the Deccan Chronicle (www.deccanchronicle.com) published a story on Dec. 25 entitled, "Lift of import curbs may crash gold prices." The story was in reference to the Indian government's proposal to relax import duties on gold. Dharmesh Bhatia, of Kotak Commodities Services Ltd., was quoted in the article as predicting a gold price crash if the Indian government removes the duties on gold imports or even relaxes the curbs significantly.


Mr Bhatia said that Barclays Bank had stated that commodity-linked investment funds are headed for record outflows in 2013 and between November 2012 to November 2013, there has been a $88 billion decline in assets under management. The article stated that investors had withdrawn $36.6 billion from commodity funds during this period due to the decline in prices of sugar, coffee, nickel, gold, silver, and other resources. By far the biggest decline, however, was witnessed in gold, with a 29 per cent crash after a rise over nearly 11 years. EPFR global estimated that investors have withdrawn $38.8 billion investments from gold funds alone.

"While there is no indication that government is in any hurry to left the ban on gold imports," the Deccan Chronicle reports, "there has been a demand from the Union commerce and industry minister Anand Sharma for relaxing the curbs on gold imports. Even the Reserve Bank of India governor Raghuram Rajan is of the view that if curbs on gold imports continue. It would incentivize smuggling."

Experienced investors know that when the word "crash" appears in a headline it typically carries a contrarian implication. It should further come as no surprise that this highly charged emotional word is prominent after a stock or commodity has experienced a steep decline. Could the appearance of a crash warning for gold signal the metal's imminent reversal? Perhaps, although a more likely interpretation is that gold has reached - or nearly reached - a temporarily "oversold" technical condition and is primed for at least a short-term technical rally.

We still need to see gold close at least two days higher above its 15-day moving average, and for the 15-day MA to turn up. This will provide the technical context for an immediate-term bottom and short-covering rally based on our technical discipline. A corresponding decline in the U.S. dollar index would increase the likelihood that an immediate-term breakout signal in gold won't prove to be a false signal. For now the immediate-term trend for gold remains down as defined by the position of gold's price line to the 15-day moving average (see chart below).

Dailh OHLC Gold Chart

Wall Street's reaction to the Fed's taper announcement at its December meeting was interpreted by many as a vote of confidence for the U.S. economy. The resulting rally in stocks and subsequent decline of gold's value would seem to justify this view. As I've argued in these pages, what's good for stocks is bad for gold and until something comes along to upset investor confidence in the economic and/or stock market outlook the bear market in gold is likely to continue.

Gold is in need of a catalyst to launch a revival of its fortunes. The year 2014 is the best bet for such a revival due to the influence of the major long-term yearly cycles scheduled to bottom later next year. A return of broad market volatility and global economic uncertainty would be the most likely candidates.

Speaking of the long-term cycles, a reader shared with me the following scenario: "Could it be that the gold and precious metals markets are reflecting the hard done phase of the Kress cycles? The action in gold the past few years is certainly consistent with what one might expect in the final sharp decline of the long term cycles. In fact, the action of silver might have been the best harbinger of the concomitant decline in the fall of the middle class over the second thirty year period.

"As you know, silver peaked in 1980 around $50/oz fairly close to the peak of the first half of the 60 year cycle. Setting up the hard down phase in the Kress cycles in 2011, silver failed to take out its 1980 high just under the $50/oz level. The middle class was teased, with silver flirting with its 1980 high, camouflaging the massive decline in purchasing power the last 30 years has wrought. Furthermore, the collapse in the silver price since 2011 has the potential on an inflation adjusted basis to challenge the 89% stock market decline witnessed during the early stage of the Great Depression.

"It might be that this time the 120 year cycle bottom coincides with the bottom in the precious metals bear cycle. Perhaps the stock market does not have a harsh decline until interest rates accelerate higher with the initial lift from a new 120 year cycle?"

My answer: This is thought provoking, and perhaps you're right that gold/silver will bottom out, long-term, in late 2014 with the 120-year cycle. As far as gold and silver bearing the brunt of the cycle, I'm not so sure. The Kress cycles are primarily equity cycles and secondarily economic cycles. I don't think Mr. Kress would have agreed gold and silver are primary recipients of the final "hard down" phase. Considering that gold is inflation/deflation sensitive, however, it's likely that the metals are experiencing a spillover effect from the cycles, however.

The main effects of the deflationary cycle, IMO, can be seen in the economic numbers: despite record levels of liquidity generated by the Fed since 2008, unemployment has dropped only slightly and inflation remains below 2%. What else other than the 120-year cycle of inflation/deflation can explain this?

High Probability Relative Strength Trading

Traders often ask what is the single best strategy to use for selecting stocks in bull and bear markets. Hands down, the best all-around strategy is a relative strength approach. With relative strength you can be assured that you're buying (or selling, depending on the market climate) the stocks that insiders are trading in. The powerful tool of relative strength allows you to see which stocks and ETFs the "smart money" pros are buying and selling before they make their next major move.

Find out how to incorporate a relative strength strategy in your trading system in my latest book, High Probability Relative Strength Analysis. In it you'll discover the best way to identify relative strength and profit from it while avoiding the volatility that comes with other systems of stock picking. Relative strength is probably the single most important, yet widely overlooked, strategies on Wall Street. This book explains to you in easy-to-understand terms all you need to know about it. The book is now available for sale at:

http://www.clifdroke.com/books/hprstrading.html

Order today to receive your autographed copy along with a free booklet on the best strategies for momentum trading. Also receive a FREE 1-month trial subscription to the Momentum Strategies Report newsletter.

By Clif Droke

www.clifdroke.com

Clif Droke is the editor of the daily Gold & Silver Stock Report. Published daily since 2002, the report provides forecasts and analysis of the leading gold, silver, uranium and energy stocks from a short-term technical standpoint. He is also the author of numerous books, including 'How to Read Chart Patterns for Greater Profits.' For more information visit www.clifdroke.com

Clif Droke 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