Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
Is a Deleveraging Event about to Unfold in the Stock Market? - 11th Dec 18
Making Money through Property Investment - 11th Dec 18
Brexit: What Will it Mean for Exchange Rates? - 11th Dec 18
United States Facing Climate Change Severe Water Stress - 10th Dec 18
Waiting for Gold Price to Erupt - 10th Dec 18
Stock Market Key Support Being Re-Tested - 10th Dec 18
May BrExit Deal Tory MP Votes Forecast, Betting Market Analysis - 10th Dec 18
Listen to What Gold is Telling You - 10th Dec 18
The Stock Market’s Long Term Outlook is Changing - 10th Dec 18
Palladium Shortages Expose Broken Futures Markets for Precious Metals - 9th Dec 18
Is an Inverted Yield Curve Bullish for Gold? - 9th Dec 18
Rising US Home Prices and Falling Sales - 8th Dec 18
Choosing Who the Autonomous Car Should Kill - 8th Dec 18
Stocks Selloff Boosting Gold - 8th Dec 18
Will Weak US Dollar Save Gold? - 7th Dec 18
This Is the End of Trump’s Economic Sugar High - 7th Dec 18
US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - 7th Dec 18
The Secret Weapon for Getting America 5G Ready - 7th Dec 18
These Oil Stocks Are a Ticking Time Bomb - 7th Dec 18
How Theresa May Put Britain on the Path Towards BrExit Civil War - 7th Dec 18
How easy is it to find a job in the UK iGaming industry? - 6th Dec 18
Curry's vs Jessops - Buying an Olympus TG-5 Tough Camera - 5th Dec 18
Yield Curve Harbinger of Stock Market Doom - 5th Dec 18
Stock Market Crashed While the Yield Curve Inverted - 5th Dec 18
Global Economic Outlook after Trump-Xi Trade War Timeout - 5th Dec 18
Stock Market Dow Plunge Following Fake US - China Trade War Truce - 5th Dec 18
Subverting BREXIT - British People vs Parliament Risks Revolution - 5th Dec 18
Profit from the Global Cannabis Boom by Investing in the Beverage Industry - 4th Dec 18
MP's Vote UK Government Behaving like a Dictatorship, in Contempt of Parliament - 4th Dec 18
Isn't It Amazing How The Fed Controls The Stock Market? - 4th Dec 18
Best Christmas LED String and Projector Lights for 2018 - Review - 4th Dec 18
The "Special 38" Markets You Should Trade ebook - 4th Dec 18
Subverting BrExit - AG Confirms May Backstop Deal Means UK Can NEVER LEAVE the EU! - 3rd Dec 18
The Bottled Water Bamboozle - 3rd Dec 18
Crude Oil After November’s Declines - 3rd Dec 18
Global Economic Perceptions Are Shifting - Asia China Markets Risks - 3rd Dec 18
Weekly Charts and Update on Equity Markets, FX Trades and Commodities - 3rd Dec 18
TICK TOCK, Counting Down to the Next Recession - 3rd Dec 18
Stock Market Key (Short-term) Support Holds - 3rd Dec 18
Stocks Bull Market Tops Are a Process - 3rd Dec 18
More Late-cycle Signs for the Stock Market and What’s Next - 3rd Dec 18
A Post-Powell View of USD, S&P 500 and Gold - 2nd Dec 18
Elliott Wave: SPX Decision Time Is Coming Soon - 2nd Dec 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

Bullish Sentiment Is In The Toilet For Gold

Commodities / Gold and Silver 2018 Aug 01, 2018 - 12:20 PM GMT

By: Avi_Gilburt

Commodities

For those that follow me regularly, you will know that I have been tracking a set-up for the SPDR Gold Trust ETF (NYSEARCA:GLD), which I analyze as a proxy for the gold market. I also believe that gold can outperform the general equity market once we confirm a long-term break out has begun.

While I have gone on record as to why I do not think the GLD ETF is a wise long-term investment hold, I still use it to track the market movements. For those that have not seen my webinar about why I don’t think the GLD is a wise long-term investment, feel free to review this link for my webinar on the matter.


When we look at overall indications within a market, we often look to highly visible signs of either an overheated market or one that is oversold. In the case of metals, we often look for strong signs that the market is at maximum bearishness, or at least enough to strike a long-term bottom.

When the market was striking its highs in 2011, the bulls were touting how the market would certainly continue through the $2,000 mark because “governments were buying gold.” However, back in 2015 and early 2016, I wrote several articles regarding the signs of a major bottoming in gold, such as when governments are selling gold. Remember “Brown’s Bottom?”

At the end of October of 2015, just as many miners had struck their respective lows, I was highlighting how Venezuela was selling a significant amount of its gold and that it could be a sign similar to Brown’s Bottom. And, not long thereafter, we read about how the Bank of Canada divested itself of all its gold.

Well, this past week, I think we saw a smaller degree indication of the negative sentiment in the metals market. Vanguard will be sending correspondence to investors of the Vanguard Precious Metal and Mining Fund stating that they will be renaming its Vanguard Precious Metal and Mining Fund to the Vanguard Global Capital Cycles Fund. The investment strategy will shift from investing 80% in mining companies, 20% directly in precious metals to 25% in mining companies and 75% broad global stock market exposure with an affinity for commodity-oriented companies.

Again, while this is not exactly akin to the news regarding Venezuela and Canada, it certainly is a major news event which evidences the deep negative sentiment regarding the metals complex. And, we see news like this near major bottoms in the market.

As far as the overall structure in GLD, I do not have any clear indications that a low has yet been struck. While silver broke those positive divergences I noted in my last article, the GLD has continued down in the weakness I noted can still take weeks until completed. And, even if we see a rally back up as high as the 118 region in the coming week or two, I still think we will need to see lower lows relative to those struck on July 19th before I would be able to turn immediately bullish again.

Support now resides between 113-114 in the GLD, with resistance at 118.30. I would want to see an impulsive rally begin once that support is struck. However, should that support break, it opens the door to an even deeper pullback towards the 105 region. Yet, I don’t see that deep a drop as highly likely at this point in time. But, I will continue to follow the clues left by the market in the event support is unable to hold.

The bigger patterns still suggest I maintain a larger degree bullish outlook on gold. But, until we have another break-out set up develop (which as I noted in my last article can still take us several months), I have to keep such bullish expectations in abeyance. And, as I continually warn my subscribers, stay away from leverage (options and 3X ETF’s) until the market confirms the breakout set up and the heart of the 3rd wave rally.

See charts illustrating the wave counts on the GLD.

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2018 Copyright Avi Gilburt - 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.


© 2005-2018 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