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
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
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Let's Talk About Gold

Commodities / Gold and Silver 2015 Jul 20, 2015 - 03:03 PM GMT

By: Gary_Tanashian

Commodities

For what seems like forever we have been mechanical in managing the precious metals because they have been bearish; period. This has been based on short and long-term technical indications and incomplete macro fundamentals. Gary the robot has had no difficulty whatsoever holding this stance despite Gary the human's unwavering view that the value of gold is in its insurance and long-term retained value qualities.


The precious metals took a hard bearish turn last week and that is the best news I have seen in a while because the complex has been locked below important resistance (failed support) for some time now and the sector usually completes its severe corrections and bear markets with a bang, not a quiet whimper.

We have noted that despite a 4 year bear market there have been too many perma-bulls doing what they always seem to do in dispensing reasons (rationalizations) for the hopeful herds (which had not yet been exterminated) to be bullish. China demand, Indian Wedding Season (AKA the "Love Trade") and world-wide gold jewelry consumption have been put forth as bullish fundamentals.

Indeed, one new promotion is that gold as part of the 'fear trade' is a thing of the past. Those who consider gold as insurance against negative financial events are merely anachronistic has-beens says this new school. Well, today the fear sits squarely in the belly's of those who bought this promotion [edit: this Monday morning, with media-fueled negative hype on full blast, it settles deeper still].

Gold has been contrary to what has been going on in the US and now, some global stock markets; namely gold has been bearish and risk 'OFF' while stocks have been bullish and risk 'ON'. That is in large part due to the fact that commodities have been bearish as well and there has been no overt inflation problem - according to financial markets (conveniently disregarding the creeping cost increases happening throughout the services economy) - and so an 'inflation trade' has not been a component in the global bull atmosphere.

This is all about paper and the value that market participants currently see in that paper. Stock certificates, mortgage documents, the debt of distressed and non-distressed entities alike... it's all good because risk is 'ON' and it will remain good as long as risk remains 'ON'.

Gold is dropping hard. We have a measurement of 960 by an old weekly chart we used to review back when gold was attempting (and ultimately failing) to break some important upside parameters. A failure of those parameters loaded some downside targets that includes the big support shelf from 2008-2009 around 1000 .

What I think may be happening is that risk 'OFF' is blowing off to the downside even as risk 'ON' either tops out or prepares to blow off to the upside. Fantasies about gold being able to rally due to US employment growth (and inflation), European economic growth and love having broken out in China and India are being proven wrong.

There are no easy answers and those put forth to date are proven wrong. Gold holds a mythical spell on humans because humans posses fear and greed in great amounts. I once again hearken back to people asking me "how's your gold letter going?" and my answer that seemed to fall on deaf ears... "it's not a gold letter."

It was a letter that was super bullish on gold at its launch in Q4 2008. It is written by a person who values gold to this day, 4 years into a bear market as much as he did in 2008. But the obsession with gold is a human thing, or a human history thing. There is no denying gold's historic role as money and medium of exchange. It seems to have been hard wired into the collective human consciousness.

Are we in a great new era, the one that severs the ties to this historic relationship and sets us on a course to digital mediums of exchange amidst government spending and debt accumulation with no bounds? Well, talk about promotions.

Gold is in a bear market because greed and naïveté' with respect to modern policy making are in bull markets. We sit, wait and understand who we are, who Janet Yellen is, who Mario Draghi is, who China Central Planning, BoJ, BoC, RBoA are. We understand that gold is an instrument outside the system and right now it is the System über alles. Long-term gold bulls need ultimate patience and perspective on all of this.

The above was instigated by last week's bearish activity in the precious metals complex, which was significant in finally breaking to new depths, and an email I received from a website reader pointing to some gold-bearish material in the financial media.

We will continue to manage the precious metals, and with the hard down last week we will tighten the focus in weekend reports and in updates at the website. While the lowest targets are still quite a ways off, it is time to be managing closely.

For now however, let's address the reader's email. This gentleman thought I would find the following headlines at the Wall Street Journal interesting. He is right. These are the first two articles under the 'Commodities' menu at the WSJ as of Saturday, July 18.

From a contrarian's perspective, this is the kind of stuff that is going to help empty the still over-bullish side of the boat (after it capsizes) and temporarily break the gold obsession that is hard wired into so many people (it's just a pet rock, after all). Here we have to remember that when the MSM trumpets, it is selling headlines. Who buys the headlines? The public. Who is always wrong at important turning points? The public.

We will move forward through what is finally becoming an interesting time in the precious metals. Extremis could well be setting in for the sector, as noted at Biiwii last week. We have worked long and hard for this opportunity.

NFTRH 352 then went on to update the nuts and bolts of the technical, macro fundamental and sentiment situations.

Subscribe to NFTRH Premium for your 25-35 page weekly report, interim updates (including Key ETF charts) and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com.

By Gary Tanashian

http://biiwii.com

© 2015 Copyright  Gary Tanashian - 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.

Gary Tanashian 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