Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Global Warming (Assuming You Believe In It) Does Not Affect Gold

Commodities / Gold and Silver 2018 Oct 18, 2018 - 12:26 PM GMT

By: Avi_Gilburt

Commodities

When the market, represented by SPDR Gold Trust (NYSEARCA:GLD), broke down below 117.40, and then followed below the next support in the 114 region, we were hyper-focused on the 109 region. Thus far, that is where GLD has bottomed out (in overnight action). From there, we were expecting a rally, and the market has not disappointed.

For the last two weeks, I have been outlining how the metals complex was bottoming out and setting up to rally to a minimum target of 116.25 in the GLD. But, if you read my analysis carefully, you would know that I am viewing this rally as a corrective rally, until the market is able to prove otherwise.


That means that as long as we hold the resistance I cite in the various products I track, we are setting up a decline into the end of the year. In fact, this decline will likely wipe out any vestiges of bullishness that may still be hanging around in this complex. And, when bullishness completely washes out, then we are ready for a major rally to take us beyond the highs struck in 2016.

In the GLD, I had the 116.25 level as the minimum target for the rally for which I was calling for the day before the rally began. On Thursday, the GLD struck a high of 116.04. So, I apologize for being off by 21 cents – so far. But, as long as we hold over 115, we can stretch as high as 117 next.

However, there are two levels you should now be watching whether you are a bull or a bear. As long as we remain below 118.25, I am looking back down to the 109 level, and even as deep as the 105 level in GLD in the coming months. And, an impulsive (5-wave structure) break down below 115 will signal that we have begun that decline. Alternatively, should the bulls be able to take us strongly through 118.25, then we have a strong signal that the bottom is in place for the GLD, and we should be heading back up towards the 121 region post haste.

I have to warn you that I have a strong leaning towards this only being a corrective rally, setting up a final decline. While I am certainly quite cognizant of where I change my leaning, for now I am looking down more than up. But, rest assured that should the market tell me otherwise, I will be listening quite intently and acting accordingly. And I suggest you maintain enough of an open mind and understanding of the non-linear nature of the market to do the same.

Now, I have to tell you that while I thought I heard it all when it comes to gold analysis, I stand corrected. Friday, I read an article that actually claimed that global warming will be a proximate cause for gold to rally: Global Warming Will Help Push U.S. Deficits (And Gold) Higher.

The main premise in the article suggests that deficit increases through global warming effects will cause gold rallies.

Personally, I have written many times in the past as to why one must stay away from correlations. You see, many make the mistake of assuming correlation is akin to causation, and that is simply a fallacy that can get you into trouble.

If I were to assume that correlation is akin to causation, then I would conclude that we need to see more drownings in Kentucky in order to cause the marriage rate to rise.

Source: http://www.tylervigen.com/spurious-correlations

If I were to assume that correlation is akin to causation, then I would conclude that we need to lower the imports of crude oil from Norway even further in order to lower the deaths of drivers killed in collisions with railway trains.

Source: http://www.tylervigen.com/spurious-correlations

If I were to assume that correlation is akin to causation, then I would have to conclude that we need to lower the US spending on science, space and technology in order to lower the number of suicides from hanging, strangulation and suffocation.

Source: http://www.tylervigen.com/spurious-correlations

Lastly, for those that believe we are experiencing global warming, you will be quite pleased by a positive result thereof. When you look at the chart below chart, it is abundantly clear that a rise in temperature has reduced the pirate population in the world. So, while many of you may point to various negative implications of global warming, please realize that it has made sailing our seas much safer.

Source: Venganza.org

Are you starting to see my point?

Moreover, pointing out one or two periods of time wherein we experienced a large rate rise in deficit spending coinciding with a rally in gold does not mean that it was the cause of said rally in gold.

In fact, there are many times where we experienced large percentage increases in deficit spending without a resulting rally in gold. Moreover, there are other points in time that evidence a rally in gold despite falling deficit spending. And, one can glean these from the author's charts.

I mean, let’s just look at 2018 where we supposedly had a budget deficit that grew by 32% relative to the prior year’s deficit. And, what happened to gold in 2018?

Or, does the increase in deficit spending have to be related to only global warming effects? Could that be why 2018 saw a down year in gold with a strong rise in deficit spending?

Yet, the author provides no evidence that the rise in deficit spending that supposedly caused gold's rally during the years upon which he relies was related at all to global warming. In fact, there is no evidence at all that supports any relationship between global warming and gold rallies.

So, at the end of the day, I am still quite confident that tracking and investing in metals based upon sentiment is a much more reliable perspective than basing it upon budget deficits.

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.


© 2005-2019 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