Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
THE INFLATION MEGA-TREND QE4EVER! - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold's Obituary

Commodities / Gold and Silver 2014 Oct 29, 2014 - 02:31 PM GMT

By: David_Petch

Commodities

This is probably not the type of article anyone who owns precious metal stocks would like to read, but here it is. The analysis presented today illustrates short-term and mid-term outlooks up front, with the Elliott Wave count indicating the longer-term trend expected over the next 5-7 years. I am not really going to provide much information on investment strategies around this analysis, but if one connects the dots, it should reveal a crystal clear picture.


Ratios

The daily chart of the gold/silver ratio is shown below, with Bollinger Bands® in proper order of alignment, indicating no overbought or oversold conditions exist. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in all three instances. Higher highs have been put in place, but it appears sideways to downward price action is the next likely trend.

Figure 1
Gold:Silver Daily Chart

The daily chart of the daily chart of the gold/oil chart is shown below, with the US Dollar denoted in black. The upper 21 MA Bollinger Band is above the 34 and 55 MA Bollinger Bands, indicating an overbought condition is developing. Lower 34 and 55 MA Bollinger Bands have yet to curl up, indicate that a top has been put in place or are looming. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and above the %D in 2 and 3. The chart is not very telling, but the ratio appears to have broken out of a trading range, so over the near term, expect gold to continue to outperform oil on a relative basis.

Figure 2
Gold:WTIC Daily Chart

The weekly chart of the HUI/Gold ratio is shown below, with gold denoted in black. All three upper Bollinger Bands are curling up, indicating that weakness in the HUI relative to gold is likely to continue for at least another 3-5 months. The ratio has plumbed to new lower low, indicating the 12 month consolidation was merely a pause between two down legs. This ratio could decline down to 0.05 if we have a repeat of 1999-2000. The US Dollar Index has not even started to break out yet and when it does, being in precious metals will be one of the last places one will wish they had money. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and 2 and above the %D in 3. The %K in stochastic 2 breaking below the lower downtrend line from 2009 until mid-2014 was a very bearish setup, indicating failure. Extrapolation of the %K in stochastics 1 and 2 suggest a mid-term bottom is not likely to be put in place until around late December 2014/January 2015.

Figure 3
HUI:Gold Weekly Chart

Gold

The daily chart of gold is shown below, with the lower 21 MA Bollinger Band beneath the 34 MA Bollinger Band, indicates an oversold condition. Upper Bollinger Bands have the 21 MA Bollinger Band beneath the 34 MA Bollinger Band, so there is a pull between oversold and overbought conditions. A lower high was put in place at $1255/ounce, indicates sustained weakness in gold. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in all three instances. The daily chart at best suggests continued sideways price action for another 2-3 weeks and aside from that, there is nothing really to extract from this chart.

Figure 4
Gold Daily Chart

The weekly chart of gold is shown below, with the lower 21 MA Bollinger Band beneath the 34 and 55 MA Bollinger Bands suggests an oversold condition continues to develop. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and 2 and above the %D in 3. With all three upper Bollinger Bands trending sideways, it would not take much to get them to curl up to indicate another down leg in gold. The weekly chart is not very telling, which suggests caution. With strength in the US Dollar Index hinting at no reprieve until at least August 2015, there is no reason to even attempt to play the precious metals arena at this particular point in time.

Figure 5
Gold Weekly Chart

The monthly chart of gold is shown below, with oversold conditions that existed for 10 months completely dissolved. A monthly close below $1175/ounce would set the stage for the potential to hit $600/ounce if the second down leg was to be equivalent to the first. The price of gold does not have to decline to $600/ounce, but the potential setup is there. Sideways price action for nearly 18 months in the price of gold with a series of lower highs and a flat bottom puts extreme pressure on gold to maintain pricing stability above $1180/ounce. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances. Extrapolation of the %K trend in stochastic 3 indicates no sign of a bottom anytime soon. The monthly chart suggests fresh lows are established before June 2015. There likely will be a bounce around this time that should coincide with weakness in the US Dollar. Remember that the US Dollar is likely in a new bull market lasting for at least another 5-6 years. Based upon this, it stands to reason that commodity prices remain weak over this period of time.

Figure 6
Gold Monthly Chart

The short-term Elliott Wave count of gold is shown below, with the start of a new leg down after breaking below the B-D line of the triangle. Wave C was equivalent in time to waves A+E, so from a triangle perspective, this fits the count quite well. A collapse after the breakdown to test the late 2013 support and bouncing is further validation that his pattern is correct. Based upon this pattern, wave (E) is likely to last for at least another 11-12 months before a final bottom is put in place. The absolute bottom in gold is likely years away, given that the US Dollar is in a 5-6 year bull market. Any daily close below $1175 is a strong indication of lower lows directly ahead.

Figure 7
Gold Daily Chart

The mid-term Elliott Wave count of gold is shown below, with the longer-term count shown over the past 7 years. It is important to note that the entire move from 2008 until present is thought to be a part of the same pattern. Following wave (E), this will complete higher Degree wave [C], which should be followed by wave [D] up and then wave [E] down. Based upon this pattern and knowing that wave (E).[C] has at least another 12 months left before bottoming, the remaining two waves should each consume at least 2-3 years each. If one does the math, the shortest expectation for a bottom in precious metals is in 5 years, or 2019 while the longest expectation for a bottom is 7 years, or late 2021/early 2022. There is no reason to warm up to precious metals anytime soon, aside from those who want to collect bullion as an averaging down approach. I thought this wave count I had was spooky and did not assign much validity to it, but examination of my US Dollar count indicates it probably is quite valid now in retrospect.

This is not what anyone really wants to hear, but in the current environment, a rising US Dollar is the symptom of deflation, with everyone seeking to preserve capital. There will be time to buy gold again...maybe when we hit a bottom in wave [E] near 2020, but there will be a very nice trade once wave [C] bottoms. The trade for the next 8-10 months? Being in US Dollar based investments, with index funds based upon the S&P 500 Composite Index. I decided to post this on the web because there are so many Gold BUGS expecting gold to vault to the moon. In the current environment, if it was to have happened it would have already started...With this, I bring you the Obituary of Gold. It will rise like Phoenix out of the ashes, but first it must be laid to ashes. And that should happen over the next 5-7 years, as per the Elliott Wave count of Gold.

Figure 8
Gold daily Chart 2

That is all for today....I will update the AMEX Gold BUGS Index tomorrow AM. Have a great day.

By David Petch

http://www.treasurechests.info

I generally try to write at least one editorial per week, although typically not as long as this one. At www.treasurechests.info , once per week (with updates if required), I track the Amex Gold BUGS Index, AMEX Oil Index, US Dollar Index, 10 Year US Treasury Index and the S&P 500 Index using various forms of technical analysis, including Elliott Wave. Captain Hook the site proprietor writes 2-3 articles per week on the “big picture” by tying in recent market action with numerous index ratios, money supply, COT positions etc. We also cover some 60 plus stocks in the precious metals, energy and base metals categories (with a focus on stocks around our provinces).

With the above being just one example of how we go about identifying value for investors, if this is the kind of analysis you are looking for we invite you to visit our site and discover more about how our service can further aid in achieving your financial goals. In this regard, whether it's top down macro-analysis designed to assist in opinion shaping and investment policy, or analysis on specific opportunities in the precious metals and energy sectors believed to possess exceptional value, like mindedly at Treasure Chests we in turn strive to provide the best value possible. So again, pay us a visit and discover why a small investment on your part could pay you handsome rewards in the not too distant future.

And of course if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these items.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2014 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

David Petch 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