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 Price Glimmer of Hope

Commodities / Gold and Silver 2015 Mar 01, 2015 - 06:29 PM GMT

By: Gary_Savage

Commodities

As most of you who’ve followed me over the years already know, I’m not really expecting a final three year cycle low in the CRB until later in the year. However… there are a few signs popping up that could be indicating that 3 year cycle low is going to come earlier than expected. And by earlier I mean it may have already occurred.

First I want to talk a little bit about oil. I think everyone knows by now that the fundamentals for oil are completely broken, there is simply too much supply, and price will never be able to rise by any significant amount anytime in the near future. I’m starting to see outrageous predictions of $20 oil. However, that is exactly the kind of sentiment I would expect to see at a three year cycle low.


Moving on to some long term charts, you can see that the CRB has reached the kind of oversold levels indicative of a major three year cycle low. By some measures the CRB is more oversold than either of the last two major cyclical bottoms in 2009 & 2012.

Clearly the main driver forcing commodities lower is that the dollar has been in a seven year bull market. However, seven years is just about a normal duration for a dollar bull, and as you can see in the chart below the dollar has retraced 50% of the previous decline, which is coincidentally the same retracement that the previous bull accomplished prior to a bear market. Note the extreme overbought conditions on the monthly chart. With interest rates at virtually 0, and little incentive to raise them in the near future one has to wonder how much upside is left in this bull.

The last thing that anyone is expecting right now would be for the dollars three year cycle to top in a left translated fashion on month 10. I think everyone is expecting the dollar and euro to go to par sometime this year (as am I). I just wonder if it might do the exact opposite and catch everyone on the wrong side of the boat.

And yes I know, my expectation has been for a counter trend move early in the year followed by one more drop into a three year cycle low in the summer or early fall. And that does still remain the most likely scenario.

However, the mining stocks (and energy stocks) are not been behaving like they usually do during an intermediate degree decline, and that has me wondering if gold didn’t possibly make a final bottom back in November, and is leading the CRB’s 3 year cycle low by a couple of months just like it did in 2009. As a matter of fact, the weekly chart of the HUI is exhibiting a number of bullish patterns.

Notice how the recent correction has formed as a bull flag instead of the usual close back below the 10 week moving average, and acceleration downward that we typically see during an intermediate degree correction. As a matter of fact the miners tacked on 4% this week and closed back above the 10 week moving average. Several of the majors like Newmont and Barrick Gold have broken out to new highs. That is a bit unusual during an intermediate degree decline. Usually once the mining stocks lose the 10 week moving average it doesn’t get recovered again until after a final intermediate bottom forms. Also notice that the recent low held support at 180.

I think next week is going to go a long way towards clearing up whether we are just looking at a weak bounce out of a daily cycle low, to be followed by another leg lower, or whether gold may have just printed a slightly shortened intermediate cycle low (I’ll explain in a minute). If the HUI can close strongly above 200 by next Friday, and survive the employment report I’m going to start leaning in favor of the short ICL scenario.

Now let me explain what I’m looking at as it pertains to gold and the possible short ICL. To begin with my preferred scenario is still the bearish one where gold rallies just far enough to break its cycle trend line and then continues down into an ICL in the normal timing band for that event (still 5-6 weeks away). In this scenario resistance in the 1250 ish zone would turn gold back down. That 1250 zone is going to be an important milepost this week. If gold makes it through that level then the short ICL scenario is going to gain a lot of traction.

Now for the bullish scenario. As most of you know in order to confirm an ICL an asset has to break its intermediate trend line. Surprisingly gold did that, at least marginally this week. Granted this could mean that the intermediate decline has only just begun, and after a weak bounce gold will continue down into a final ICL in the normal timing band for that event, complete with a bloodbath phase. Or… It could be that gold dipped just far enough to complete the broken trend line requirement, and then formed a shortened intermediate cycle low.

This could turn out to be the case as the dollar starts to move down into its own intermediate cycle low in the weeks ahead. If gold resumes its normal inverse relationship with the dollar then it could be that gold printed a short ICL and the low probability bullish scenario will come to fruition.

So next week I want to see how gold handles resistance at $1250, and how quickly it gets there. If gold were to reach that $1250 level by Tuesday or Wednesday it would increase the odds of breaking through that resistance zone. But even more important I want to see how the miners perform next week. If the miners end the week with another 5 to 7% gain, and survive the employment report, that is indicative of a new intermediate cycle rally beginning, rather than a counter trend bounce in an overall intermediate decline.

So a word of caution, I don’t want to get everyone’s hopes up too much, and definitely do not start buying call options willy-nilly, as the bear scenario is still by far the most likely outcome. Shortened ICL’s are rare, but they do happen from time to time. That being said, the miners are not acting like they have before during intermediate declines and that warrants at least a small bit of cautious optimism. Like I said, a small glimmer of hope for the long suffering gold bulls.

Click here to follow my daily reports next week as it could be a pivotal week for gold.  

Gary Savage
The Smart Money Tracker

Gary Savage authors the Smart Money Tracker and daily financial newsletter tracking the stock & commodity markets with special emphasis on the precious metals market.

© 2015 Copyright Gary Savage - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 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