Reference the recent post using monthly views of HUI, Gold and Silver. It is linked above for review. Today I have taken the updated gold chart from that post and marked it up with a (blue) line showing gold’s current price. Note the strategic small Symmetrical Triangle. If that lower Triangle breaks down, gold is done. If not, we grind forward. The original post gives upside and downside targets.
First off, I want to acknowledge the passing of Robin Williams here on this site that almost never (aside from Friday afternoons) goes off topic. Considering Williams’ passing along with that of Philip Seymour Hoffman, there is now a gaping hole in the artistic landscape. It always seems so stunning when brilliant people die too young, especially when it happens in ways that we might think could have been avoided.
Back here in the looney bin, here comes CNBC wondering about why gold cannot “find the vigor usually associated with rising fear” with respect to ongoing geopolitical strife. You know, the more I read the mainstream media, the more I believe the writers just need to churn out the info bites. Some might think it is all planted disinformation but I think it is just the watered down Zombie that is the MSM having to make quota on information, and the greater the pap quotient the better for easy digestion by millions of eyeballs.
Gold vs. Silver is coming around to the preferred fundamental plan, with a nice little pattern (this one however, is open to debate, fundamentally)…
Gold vs. Commodities is breaking a bullish flag…
Gold vs. Crude Oil is in a bullish pattern, but not above the neckline. This one is important to the miners…
The monthly chart updates the situation in gold vs euro and tells a little story.
You see, once upon a time millions of Knee Jerks came flying into gold in panicked response to a credit meltdown in the weaker components of their union. The first of these monetary refugees created ‘fear gaps’ and the last of them, the unsustainable blow off top. By then, the gold mini hysteria had gone global and gold – all those unhealthy holders in tow – was cooked for a coming bear market.
Now gold vs euro is in the finishing stages of what looks like an Inverted H&S bottom after poking down and closing the open gap in 2013. The left side Shoulder did this and then the Head rammed down even deeper just to make sure. Now we have Portugal and all those low quality bond yields that were until yesterday showing a clear lack of respect for risk management.
People never change. They herd, they over intellectualize and they take too much to heart what other people say, without realizing that other people have agendas. Charts on the other hand, simply tell stories over time and space. This one has an interesting story.
Over the last 2+ years of a cyclical bear market in gold I have not seen much, if anything, of Jay Taylor. When I first came along to the gold sector in 2002 there was Jay among several other standbys writing about the precious metals. Some of them I very much respected too.
Taking this article at face value and without prior judgement we’ll parse through it and see what we have…
Martin Weiss put out a very interesting piece tying together various rising political tensions in the Ukraine, tensions between Japan and China in the East, and rising tensions in the Middle East with rising levels of inflation. Again, I think my Inflation-Deflation Watch [IDW] is telling us that whether it makes sense or not, we are now starting to see a breakout in inflation, at least in terms of overall asset prices.
Off to a bad start Jay. Martin Weiss, are you kidding me? His articles would not be complete without the obligatory pictures of angry Arabs and burning oil derricks. Ukraine? Geopolitical tensions and inflation? Is that the sustainable case for gold? Your IDW is telling us that inflation in terms of asset prices is breaking out? Inflation has been breaking out ever since the biggest part of the stock bull market engaged in 2013 and that inflation has fed directly into stocks not gold.
This chart needs no mark ups. Very simply, gold needs to follow the miners (already crossed) and cross MACD up and then take out the area where the Bollinger Band mid point meets the (red) EMA 45. Combine these with a green RSI over 50 and AROON going 0+ and you’d have a genuine bull market in gold.
This chart will be stored in the Public Charts list linked above so you can follow its progress any time.
The real price of gold, as adjusted by commodities is making some nice baby steps toward rebounding. Here is a picture of the gold ETF vs. certain key commodity ETF’s and markets, that show the progress of what would be the most desirable condition (a rising real price) for a healthy gold bull.
And then of course there are other notable measures like Gold vs. Stock Markets. Here is the progress vs. SPY and EZU…
Here is the weekly chart of gold that NFTRH has been working to for several weeks now. The thumbnail at right shows the cluster that gold needed to blast through to get bullish. Check. Gold had positive divergence by MACD and kept its AROON uptrend. These finally resolved bullish this week.
Here is another chart we’ve been using to keep track of gold’s big picture in Euros. The fear and angst of the Euro crisis has been closed out with the gap fill. That is another way of saying that the legions who became instant gold bugs in the Euro Refuge Knee Jerk Sweepstakes have now been… how do we put this? Let’s think of a nice sanitary word… processed. The knee jerks have been processed and the investor base cleaned out.
Much the same has gone on in the US, although the process has been much more drawn out, commensurate to the intensity of the US financial crisis and ‘great recession’ that the average person and conventional analysts happily package as being in the past. Just keep that ZIRP going there Janet. That’s the biggest tell right there. A healthy economy, record stock markets and employment and manufacturing zooming upward and still… ZIRP out into 2015 or… ?
There is a case for gold as there has been since 2000.
I’ll try to limit the harping. If the gold ‘community’ wants to get revved up on this, let ‘em.
As for oil, it is “seen” topping 116 on the geopolitical conflict.
Why 116? Who knows with these guesses? They just pull ‘em out their a$$es.
The ‘gold and oil’ crowd is liable to get really worked up on the events in Iraq. I only continue to ask that readers filter the pumpers. Gold and oil rising together – amidst geopolitical strife – is not a material long term fundamental for the precious metals and especially not so for gold mining companies.
So if you’re long (as I am) keep yer head screwed on straight, okay? A selling opportunity is probably upcoming.
[note] The site’s server is wonky again and it is due to a supposed upgrade by the host. They tell me the glitches will be worked out soon. They tell me that… apologies if you are experiencing any effects.
They are getting excited again, the gold ‘community’ that is. On the big bounce in GDXJ (juniors) especially, there is talk of bottoms, new up legs and even the potential Inverted H&S NFTRH has been charting since before I even heard of it anywhere else.
This may or may not be the case. NFTRH has been on the IH&S for many months now and I’ll be damned if the ‘callers’ are going to co-opt our theme. But insofar as Iraq has anything to do with anything, it’s ‘buyer beware’ on this hype.
Here GoldCore weighs in…
Why, they even have a cute Power Keg pictured with a long wick laying next to a couple of match boxes labeled ‘War’ and ‘Chaos’.
To be fair, they do mention an actual potential fundamental for gold in that “the US recovery may be stalling”, but you know the ‘community’… it is going to pitch whatever is inflammatory enough to get the troops motivated and pumping.
I would venture a guess that a sizable chunk of the gold ‘community’ wants war and it wants Chaos because it wants to be right and it wants to get back up on the soap box with a booming I TOLD YOU SO!!. Again, not so much talking about GoldCore as the usual barkers. You know who they are.
But this crap has nothing to do with gold’s fundamental backdrop. I think many readers of biiwii.com know my view on that and on the b/s that so readily gets stirred up on the internet when it comes to gold, which is a simple and enduring monetary value asset.
The bear market has driven home to me just how many pitch men and charlatans a good chunk of the ‘community’ are; stumbling all over each other to make ‘the call’ and not giving a damned about how said call – coming straight out the wrong orifice – can affect regular people, who maybe depend on ‘analysis’ they read in their decision making.
So today’s deprogramming and debriefing is this; if you are bullish on gold you’d better be bullish for reasons other than what is going on in Iraq as gold and oil pump together.