Category Archives: Gold

EWI’s Gold Report

Guess who’s been getting bullish on gold?

Swiss reject holding more gold – should you? (Your Free Gold Report Expires Soon)

Only a few days left: A special report on gold — available exclusively to you from an organization we trust — will expire for good at 5 p.m. Eastern time Friday, Dec. 5. If you want to read this Gold Report while it’s still free, please follow this link now.

As gold hit new lows last week, Swiss voters prepared to reject a measure that would have required their central bank to hold a portion of its assets in gold and repatriate 30% of central bank gold stored in Canada and in the U.K.

Many analysts and investors took the referendum’s failure as yet another bearish sign for gold, and gold indeed fell leading up to the vote (as most experts expected the measure’s rejection). But come Monday, the yellow metal rallied back above last week’s highs, turning all the talk about the referendum’s bearish impact on gold into mostly wasted breath.

Elliott Wave International’s Chief Market Analyst Steve Hochberg warned about this scenario in his Monday, Nov. 24, Short Term Update, six days before the Swiss vote:

“The financial media is increasing their focus on the November 30 Swiss vote that would require the Swiss National Bank to double its gold reserve holdings. Speculation is high as to whether the measure will pass but I think the outcome is largely irrelevant.”

You see, if you ask Hochberg and his colleagues, the technical case for gold’s next big move was already made LONG before the first Swiss ballot was counted.

On Nov. 11, Hochberg and his colleagues Robert Prechter and Peter Kendall teamed up for a rare joint issue of their Elliott Wave Financial Forecast and Elliott Wave Theorist publications. Together they laid out their case for the next big move in gold.

“Why should I care?”

Because Hochberg, Prechter and Kendall have provided laser-precision forecasts for the biggest turns in precious metals over the past few years. They were virtually alone in calling for a bear market in gold back in 2011, when everyone thought gold was a buy. Now that gold has dropped 40%, and gold bugs are bugging out, they report the near- to intermediate-term picture has changed, and a new, BIG, countertrend opportunity in gold is dead ahead.

We want to help you prepare for this opportunity, so we have arranged for you to read their latest analysis in full — for free.

But because this move in gold may happen extraordinarily fast, and we have received special permission to share it with you here, you will have just a few days to access this report  — again, it’s 100% on us! — before it goes back behind the paywall of EWI’s Financial Forecast Service.

You have one final week of free access.

At the end of this week — promptly at noon Eastern time Friday, Dec. 5 — all non-subscribers will be locked out of this free special report on gold for good. Only the in-depth, expanded, premium version will be available.

So if you want a quick, two-page update on a BIG developing opportunity in gold, please follow this link for immediate access to your free gold report now »

Simply click the above link, follow the quick steps, and you will have a free, printable version of the report on your screen in a few moments.

P.S. If you own gold and you are considering reallocating the metals portion of your portfolio, please take a few minutes to read this two-page report now. If Hochberg, Prechter and Kendall are right on gold, as they have been over the past few years, you’ll be glad you did. Follow this link to learn more about the report.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

Perspective on Gold

I bought this position in GLD for my daughter’s custodial account at 64.50 a share and have been compelled to leave it alone for profit recognition/tax reasons.  Gold (GLD), in such a terrible bear market for so long now is still up nearly 80% since purchase.

gld

I can at times be as guilty as the next guy of out thinking myself.  This account has precluded me from doing that with an asset I consider a long-term value (well, gold, not necessarily GLD).

I know, I know.  Harry Dent says 250 to 400/oz. is coming.  But I don’t have a crystal ball and I am not going to trust his.

Huey, Dewey & Louie

huey.dewey.louieLooking around the gold sector at some of those who have tried to keep ‘em bullish all the way down.  The peddlers of hope are irrepressible.

Huey writes that gold stocks are well supported by the enormous expansion in the global gold jewelry business.  In fact, according to Huey Western mining stock shareholders stand to reap substantial reward from the relentless growth in gold jewellery demand.

Do you hear that?  Not just have an end put to their misery but if they will just hang in there a while longer they will be in line for a substantial reward… all due to a supposed fundamental underpinning that has nothing to do with the investment case for gold miners… and is not nearly the best driver for gold either.  Keep bafflin’ ‘em with bullshit Huey.  All the way down… unbelievable.

Dewey is getting excited about the Switzerland gold vote.  This has less to do with a fundamental case on gold than Huey’s constant hair brained babbling about Modi, Indian Weddings, China’s demand and whatever else he throws at the wall that sticks.  Dewey recently got some serious play at MarketWatch and indeed is often seen in the mainstream media.  He also sells gold.  How convenient.

As to the Swiss vote, if it goes positive any hype driven upside will not last.  If it goes negative as I think it might, any downside based on that would be bogus as well.

Louie (who I have never heard of before but works with a key silver figurehead who I have heard a lot of) is going on about the streams of gold leaving Western vaults and heading east.  Yes, it’s the old China demand thing.  The same China demand thing that we had to ignore in 2013 and 2014 to our benefit.  Unfortunately, people who keep grasping at these straws laid out by promoters keep finding disappointment after the hype wears off.

A peak in bullshit was during the summer with all the Ukraine/global geopolitical tensions hype.  They will try to find anything to promote a bullish case for gold.  Ebola?  That was a low point as someone I thought reputable allowed himself to get tangled up in a headline about Ebola being the thing that would finally drive gold and silver prices.  It’s a sickness with this sector.  It’s dumb, dumber and dumberer.

I have tried to lay out some signs to look for with respect to the propped up US economy and even further propped up stock markets.  Gold is not going anywhere until economic signals start to come in (it’s why I posted about something as boring as the Semi sector’s book-to-bill ratio).  Some signs are coming, but not nearly to the degree needed.  Meanwhile, these clowns with their theories that have long-since been discredited, ply their trade.

Now of course, as we have been noting all along, technicals may precede a full fundamental engagement and so technicals I shall continue to use.  There is improvement and being a long-term gold bull I’ll keep on it every step of the way.

But what we will do is real charting (i.e. charting that does not pretend to predict the future), that explains the positive and negative probabilities; not this charting I often see that portrays what the chartist wants it to portray.  Huey actually wrote that “silver bulls need to put on their cheerleading uniforms, and cheer for a breakout.”

You can’t make this up.

[edit]  It is not lost on me that on the internet the delivery of easy to digest content is king.  I sometimes get propositioned about mutually beneficial relationships and what it takes to really rake in the eyeballs.  I get advice like you get X% more opens if you put a shiny picture of gold in an article (seriously). 

I get asked to write bullish things about silver to mutual benefit (i.e. I’d be positioned as a ‘featured’ writer on a given website).  Yes, a lot of the sites you visit that have featured writers – as if they are above the other writers – is simply because those writers took a deal of some sort. 

I have even been labeled an “expert” (which I find a little embarrassing) simply because I write a lot, I guess.  There’s a lot of bullshit out here on the internet folks.  A ton of it.  As I try to become better at marketing my services, I am constantly faced with making decisions to avoid this crap.  Not that there is really any decision to make.  Integrity wins ultimately or else we are all just bunch of tools.

I’ve written the word “bullshit” a few times in this post and that speaks for itself.  Information may be free but it is well massaged and thoroughly evaluated for its potential… to sell something… to somebody.

Goldzilla

godzilla“History shows again and again how nature points out the folly of man”  –Blue Oyster Cult, Godzilla

I would have written off the gold sector long ago in its ongoing bear market had I thought for one moment that gold’s utility as insurance against the acts of monetary madmen/women in high places had been compromised in any way.  On the contrary, the monetary metal is simply having its price marked down in a bear market while its value, especially given its current price and all that has gone on in the financial system over the last 3 years remains just fine.

Indeed gold, an element dug out of the ground for centuries, once as money and now as a marker to sound money systems will one day be shown to be a calm oasis from the fallout to global monetary shenanigans currently ongoing.  At least it would be an oasis to those who have valued it as such.  It is going to feel like a giant dinosaur (minus the kitsch value) ripping through a city built on paper to the multitudes who have taken the bait on the current too big to fail global inflationary operations.  They will fail.  Timing is the only question.

Despite what many are compelled to believe by aggressive (read: maniacal) global policy making that has turned down to up, right to left and symmetrical to asymmetrical, gold is and has been a lump of monetary value just sitting there, waiting out a phase where monetary policy is working seemingly as intended, to impoverish the working and saving classes and further enrich the asset ownership and investment classes.

I have gone hard on the gold “community” for a few years now because I watched in real time as the dark clouds gathered against the honest money relic and those bullish upon it.  The narrative never changed for many of the most high profile gold “community” leaders and spokespeople, and in the modern financial markets that simply will not do.  In the past, even during the previous bull market, I have likened being a gold investor to being at war.  You are at monetary war in support of ideals and a sense of what is right vs. entities that manipulate and control markets toward desired outcomes.

And do you know what?  They have won every damned battle since 2011.

The most brilliant move made by the US Fed in targeting gold (either directly or as part of the fallout) was Operation Twist, which came on the heels of gold’s flirtation with the $2000/ounce level.  Op/Twist very simply was designed to “sanitize” (the Fed’s word, not mine) inflation signals by selling short-term T bonds while buying long-term T bonds.  It was brilliant, evil and awe-inspiring all at once; genius.  Simply manage paper and digital entries in the bond market so that a long relied upon macro signal (the relationship between short and long-term Treasury yields) will at once show a financial system under diminishing stress (yield curve decline) and a lack of inflationary expectations.

So the US Federal Reserve had the balls to literally paint the macro by turning the out of control 10yr-2yr yield curve (an important gold fundamental) down, sanitize inflation (a less important but sometimes very relevant gold fundamental) and best of all, keep on inflating… and inflating… and inflating… with ongoing ZIRP and QE3 as the global macro pull of deflation put Goldilocks on US markets 24/7 and 365.

Gold bugs would have none of this and why should they?  The average gold bug (the real people, not the pitch men and promoters) is driven by this thing we call honesty and a sense of morality.  To anyone with half a brain and not incentivized to look the other way (like probably 90% of the financial services industry), these macro parlor tricks are ephemeral and will not only not succeed, but one day be looked back upon as a scourge upon future generations.

The problem is that gold is so simple (as a monetary anchor) that eggheads feel a need to make it complex (the old ‘baffle ‘em with b/s’) and those with agendas feel a need to pile on, for example, schooling us over and over again in the media about how gold is a poor “inflation hedge”, when that is not its only utility; not by a long shot.

The post-2011 period has been a veritable Wonderland of possibilities for the printers of paper, enterers of keyboard digits and those who follow their breadcrumbs.

Further, the leadership of the gold “community” have been shown to be little more than dogma spewing robots firmly set in their ideology when maybe what was needed was a more even handed approach that could have helped legions of gold devotees avoid some very unpleasant interim situations before Goldzilla finally rises up and wrecks the cities around the globe made of paper and digits.

The gold sector is rallying as we expected it would from the 2008 lows and a capitulation of at least moderate degree but has not proven much, technically.  Similarly, the fundamentals are not yet fully baked for the sector (ref.  yield curves, gold vs. stock markets, gold vs. certain commodities, intact public confidence in policy making, etc.).  These things will change either sooner or later, but for years now imposing our will upon the market has not worked.  Sit back, relax and let Goldzilla do his thing.

I write the above in the style I used to write as a ‘for free’ public writer (as opposed to the more technical stuff I need to see to now with NFTRH) to hopefully add a level of perspective to the conversation going forward.  The macro is going to change.  It always does.

Gold Sector Review

Below is a summary of some of the aspects we follow in NFTRH to gauge a future investment stance on the gold sector.  It is much more complex than simply hearing dogma that seems to make sense and then holding on for dear life…

Inflation

The hype is dying.  10 years of inflation hysterics have gone down the drain even as global policy makers pull out inflationary bazookas and use them at the slightest hint of economic trouble.  The BoJ’s recent action was just the latest and most striking in its timing.  Global markets were bouncing within correction mode and the Yen had just pinged a key resistance level.  The BoJ then blew the Yen up with policy designed to at once reward risk takers and asset holders and mercilessly punish the Japanese people, renowned for the ethic of saving.

But the global inflation is dying despite these periodic bazooka blasts.  The US Fed as much as admits it wants inflation.  More accurately, it will do anything to stave off the next deflationary impulse because when that takes hold it is going to unwind the system, and they know it.  Why on earth do you think noted Hawk James Bullard was trotted out the moment the stock market took a routine correction in October?  Here Jim, get out there and eat that mic and calm them down.

Gold is not about inflation and in this cycle it, as a squarely risk ‘OFF’ asset, is about the opposite, the deflationary unwinding of the inflated excesses which now are no longer clustered in commodities and global markets, but in US stocks and the balance sheets of certain corporations set up to benefit.

In a dis-inflationary environment, which is the preferable one for the gold stock sector, the pain comes first and the rewards for those left standing come second.  We have not exited the pain phase for gold bugs and most people still think ‘no inflation, bad for gold’ when they should be thinking ‘no inflation… that means eventual deflationary impulse… bad for the economy and stock markets and one day, from the ashes good for the gold sector when and only when gold out performs other assets positively correlated to the economy’.

tip.tlt

Goldilocks has been in play in the US as the global dis-inflationary pull has dropped the TIP-TLT ‘inflationary expectations’ gauge lower.  At some point Goldlilocks will morph to something less benign for the economy and for stock bulls.  But it has not yet.

Macro Fundamentals

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Gold vs. S&P 500 (big pic)

[edit]  Adding the daily view of GLD-SPY from this morning’s NFTRH ETF update.  I’d say some progress is being made here as GLD-SPY threatens to join several other indicators in a macro phase.  The trend is still down, but this is impulsive stuff.

gld.spy

For all you gold vs stock market sports fans, here is the big picture view of gold measured in S&P 500 units.  Though the stock market is making bearish technical signals and indicators are flashing a counter cyclical warning, the best that the Gold-SPX monthly chart can say at this moment in time is that MACD is getting interesting, RSI has a positive divergence and momentum to the downside by a Rate of Change (ROC) is slowing down.

The macro is changing in a big way, but we continue to note the poetic justice that would be satisfied if gold fills the 2008 ‘fear gap’ before resuming a bull market vs. SPX.  Given the damage that the US market is incurring, this could be satisfied with one final plunge with gold declining faster than the SPX or it could happen by other means.  Or it could not happen at all if MACD furthers its signal.

But it looks like we are grinding around, leaving one macro phase and entering another in the coming months.

au.spx

The Most ********* Chart in the World; Gold vs CCI

I find it kind of lame when someone puts up a chart with a heading like ‘The most bearish/bullish/important/profound, etc. chart in the world’.  Here we cue memories of a funny post at some website with “the most bearish gold chart in the world” back when gold was well down in the triple digits.

Look, chart guys are proud of their charts and proud of their analysis, I get it.  I think highly of my own work.  But I don’t think highly of hype (as if you haven’t gleaned that by now) so I’ll just robotically remind you that this chart, the most ********* chart in the (financial) world, is in a big picture uptrend and never stopped being in one.

au.cci

The number of characters in ********* actually fits at least 2 good descriptors I can think of for the above.

Gold: Short-term Pictures

Gold vs. Oil is rising; a condition that mining operations would like to see continue.

gld.uso

Gold vs. Stock Market is slightly elevated; a condition that gold sector investors would like to see continue.

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Gold; a Simpleton’s View

First off, if you have an interest in the price of gold and have not already done so, I highly recommend you check out Steve Hochberg’s 2-part Elliott Wave video presentation on gold (disclosure: free sign up to Club EWI brings a small commission to yours truly ;-) ).  With all his zigs, zags, waves and patterns he ends up at the same place I do with my simple version.  I may use less cluttered methods, but I find this stuff very interesting.

With markets at a key juncture, the US dollar over bought (but bullish), the precious metals, commodities and increasingly, global markets over sold but bearish and US stocks acting as if October 2014 could at least recall memories of October 2008, I want to try to weave all this together around the simplistic monthly chart of gold, which is the asset that would provide liquidity for asset market refugees if the macro really were to get very negative.

It is important to simplify folks.  Gold is not going to go up because of Modi and Indian Wedding season.  It is not going to go up on China demand and it is most assuredly not going to go up because the US stock market is going up, as if it were simply an asset class that got left out of the party.  Commodities actually would have a better chance at that than gold.

Gold is going to go up (at least in relation to most assets) when confidence in policy making starts to wane… period.  I am going to keep this simple monthly chart on radar going forward because it has long-since broken the Triangle and it is a gauge on the macro.

gold.monthly

Shorter-term data points indicate that a bounce is very possible if it has not already begun.  But the Triangle pattern and distance from support to resistance measure to 1000 +/- and what I find more interesting than the raw chart is the idea of closing out the misery of 2008 in a final declaration that policy making has succeeded (in cleaning up the disaster created by previous policy making leading into 2008).

Markets are often poetic and they are even more often ruthless, as this one will probably be toward those caught revering or worse, taking for granted, the job Policy Central has done post-2008.  When gold is ready to bottom, we would then likely start finding out the details of just how damaging the current clean-up of previous damaging policy has been.

What to Look For

If silver begins to lead gold and there is a bounce in the sector along with commodities it would be a counter-trend play.  Read more into it than that at your own peril.  Further, if you hear the usual suspects coming out with Indian Weddings, China demand or worse, the end of the world talk about the US stock market, be very careful (unless gold is above 1400 at such time, which is doubtful any time soon, and US stocks are completely broken down).  If things get bullish near term please keep your tender gold bug heart steeled against the promoters who cannot wait to sound the call once again.

While we are managing what was a fully expected decline in US stocks this October, we should be aware that it feels just a little bit scripted.  Ooohhh, it’s October!  Ha ha ha… the corrective activity in the stock market could ultimately be a healthy thing to reset the over bullishness that made every stock jockey with a couple well-known symbols look smart.

Another possibility is that the stock market bull really is over (there are some beneath the surface indicators we follow that are bearish) and that gold has not finished leading  the way down amidst a deflationary pull.  So we should also manage each market on its own and in consideration of its individual role in the macro.

Going back to gold, its simple big picture chart is bearish until it either gets above the Triangle’s nose at 1300 and/or rises above 1400.  The time seems about right for a counter trend bounce (watch 1247 as initial resistance) to embolden some in the gold “community”.  But a renewed decline to 1000 +/- would likely be a time to get very bullish because not only would a very relevant technical juncture be attained, but the poetic justice of closing out the 2008 economic and market disaster could represent a psychological critical mass where confidence in policy makers – tops out.

Hulbert HGNSI & Gold

Mark Hulbert checks in with some not so great news for gold bulls.  Do you know what that news is?  Gold bulls are alive, well and ready to call a bottom at the drop of a hat.

Gold market sentiment takes a big turn for the worse

According to Hulbert…

“On the contrary, we now know — courtesy of the HGNSI’s jump late last week — that gold timers’ bearishness was only skin-deep, and that they stand ready to become bulls again at the drop of a hat. True bottoms typically are accompanied by bearishness that is much more stubbornly held than that.”

This does not necessarily reflect on the gold market’s ability to take a counter trend rebound, especially since the reading below was taken on Thursday, before the big price drop on Friday and according to Hulbert, even after yesterday’s upside HGNSI was at -34%.  I think that what he did not like seeing is how readily gold timers jumped bullish trying to be ‘the guy’ calling a bottom.

I think a rally can get going off of 1180, but bigger picture there very well could be some unfinished business; namely the business of killing off anyone who would be bullish on gold’s price*.

hgnsi
Hulbert HGNSI, from MarketWatch.com

* An important distinction as always is gold’s assigned ‘price’ vs. it’s long-term ‘value’ in a system of remotely managed inflation operations by authorities world wide.

CNBC on Gold

As Fed Looms, is Gold’s $1200 Support Vulnerable?

What kind of FOMC week would it be without some gold obsession in the headlines of the mainstream media?

Gold may drop to $1,200 an ounce, possibly breaching the key support level, thanks to a resurgent U.S. dollar and higher Treasury yields on expectations that the U.S. Federal Reserve could signal tighter policy this week, CNBC’s latest survey of strategists, analysts and traders shows.

Says who?

“In the shorter term I believe gold tests $1,200, trades as low as $1,190 or so, after which the bargain-hunters will come in and move the price back to the $1,240 to $1,250 level,” said Anthony Grisanti, President of GRZ Energy in a September 15 commentary. “Geopolitical has been quiet and all major economies are easing one way or another. And that makes the Greenback the strongest buck on the block. My bias for gold is lower.”

Oh, says Anthony Grisanti.  Okay.  Well even just mentioning “geopolitical” disqualifies Mr. Grisanti because it has nothing to do with gold.  But for the sake of argument, gold has already lost support per this alternate chart I am using due to stockcharts.com being on the fritz this morning.

gold

See that low at a nice, crisp 1240?  That was a loss of support.  Before that gold dumped out of a Symmetrical Triangle, targeting below 1200.  I am flying naked here without stockcharts.com, but I don’t recall any notable support at 1200.  The strategist wouldn’t be talking about ’round number’ support just to fill some headlines on FOMC week, would he?

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