Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 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