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
Stocks Correct into Bitcoin Happy Thanks Halving - Earnings Season Buying Opps - 4th July 24
24 Hours Until Clown Rishi Sunak is Booted Out of Number 10 - UIK General Election 2024 - 4th July 24
Clown Rishi Delivers Tory Election Bloodbath, Labour 400+ Seat Landslide - 1st July 24
Bitcoin Happy Thanks Halving - Crypto's Exist Strategy - 30th June 24
Is a China-Taiwan Conflict Likely? Watch the Region's Stock Market Indexes - 30th June 24
Gold Mining Stocks Record Quarter - 30th June 24
Could Low PCE Inflation Take Gold to the Moon? - 30th June 24
UK General Election 2024 Result Forecast - 26th June 24
AI Stocks Portfolio Accumulate and Distribute - 26th June 24
Gold Stocks Reloading - 26th June 24
Gold Price Completely Unsurprising Reversal and Next Steps - 26th June 24
Inflation – How It Started And Where We Are Now - 26th June 24
Can Stock Market Bad Breadth Be Good? - 26th June 24
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Investors And Analysts Know Nothing About Gold

Commodities / Gold and Silver 2018 Nov 16, 2018 - 09:45 AM GMT

By: Avi_Gilburt

Commodities

There were several developments in the gold market last week. First, we heard of another trader who has pleaded guilty to “manipulating” the metals market. And, everyone is up in arms again about how gold was manipulated to drop from $1,921 to $1,040 during 2011-2015.

And, yes, they are all again saying “ah ha – you see, we were right.”

But, as I have said so many times before, what this trader did was akin to a paper cut in the market. And, to claim that these types of actions caused the market to drop from 2011 to 2016 is akin to claiming that a paper cut caused the market to bleed to death.


Specifically, it was noted that this trader pleaded guilty to “spoofing.”

This trading strategy was admittedly intended to inject materially false and misleading liquidity and price information into the precious metals futures contracts markets by placing the Spoof Orders in order to deceive other market participants about the existence of supply and demand.
The Spoof Orders were designed to artificially move the price of precious metals futures contracts in a direction that was favorable to Edmonds and his co-conspirators at the Bank, to the detriment of other market participants.

But, as the courts have highlighted in all these “manipulation” cases, these small degree manipulations occurred in both directions. Please read that again. These small degree manipulations occurred in both directions. So, if you really believe you have found another smoking gun to believe you were manipulated out of your profits due to the 2011-to-2016 market decline, think again. If you would like a more in-depth discussion about this issue, I have addressed it in the past here.

Next, I recently read an article claiming to provide us with the holy grail as to what to look for when a bottom is being struck in gold. And, what amazes me is why these same analysts have never been able to recognize the bottom or top in gold in the past despite their holy grail. Rather, they are always certain that lower levels will be seen when we bottom and are equally certain that higher levels will be seen when we are at a top.

There is one thing that will alert you to a top or a bottom, and that is extreme sentiment. That has been the only consistent factor that has alerted investors to a top in the market, or a bottom in the market.

For example, based upon my sentiment analysis in 2011, I said that “[a]gain, since we are most probably in the final stages of this parabolic fifth wave 'blow-off-top,' I would seriously consider anything approaching the $1,915 level to be a potential target for a top at this time.”

And, then in 2015, I wrote:

As we move into 2016, I believe there is a greater than 80% probability that we finally see a long term bottom formed in the metals and miners and the long term bull market resumes. Those that followed our advice in 2011, and moved out of this market for the correction we expected, are now moving back into this market as we approach the long-term bottom . . . We are now reaching our ideal target region, and the pattern we have developed over the last 4 years is just about complete. . . For those interested in my advice, I would highly suggest you start moving back into this market with your long-term money . . .

And, yes, this was all based upon extremes in market sentiment, and not some form of reasoning or manipulation.

In fact, back in the last quarter of 2015, we opened a Miners Model Portfolio, and began adding some of the major mining stocks at the time, such as Barrick Gold (NYSE:ABX) within the $7 region, which then rallied to more than triple our entry less than a year later. And, even though we have had a two-year pullback in the ABX, it is still almost double of our initial entry. How many assets do you own today that are almost double of the price you paid for it two years ago?

At the end of the day, reason or manipulation is not what you need to be concerned about when it comes to gold. Rather, you need to be watching for extremes in market sentiment. That will tell you when you buy and sell.

And, if you would like more information on how we track market sentiment, feel free to read the series I wrote about it: "This Analysis Will Change The Way You Invest Forever," listed on our site as "Elliott Wave Intro Series - Parts 1-5."

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.


© 2005-2022 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