Goldtent TA Paradise

Big drop dead ahead…

Although a pullback to $1350 in Gold would’ve been nice, this appears to be a bull flag. As such it could breakout at any moment and surge another $150…

Is a move into the mid 200’s imminent ? My confidence in the longer term is growing…

The indicators in the chart below take a long time to move. It’s a bit like steering an oil tanker – inputs on the bridge take a long time to have their full effect. This particular ship is moving in a different direction now…

New rules apply, now that we’ve turned…

I’d like to see a $50 pullback here, creating a bull flag of some sort. That would give us the ideal launchpad for the next assault…

It goes without saying that if price action drops below the ‘bowl’ my scenario would be completely different. I’m pretty confident that won’t happen now though. Looking at gold globally, this is very much a bull market. Gold is reflecting the terrible state of global financial systems. Watch the Gold/Silver ratio very carefully as well. I think silver is likely to massively out-perform gold in the next leg up.

Here is a barometer…

As a weather forecaster I use them quite a lot. The barometer is constant, but the atmosphere around it changes (the air pressure goes up and down). The barometer just sits there and measures it.

Here’s a gold coin…

as a PM watcher, I use them quite a lot. The gold coin is constant, but the financial atmosphere around it changes (FIAT money is being constantly created). The gold coin just sits there and measures it.

One MASSIVE difference. The global atmosphere is on a ‘gold standard’. It’s a closed system, with no net gain/loss. This means that the atmospheric pressure can only fluctuate between a fixed low and a fixed high. The global financial climate is totally different. As long as it’s possible to manipulate our currency, with no fixed reference point, with constant money ‘creation’, there is only one limit to it’s value – ZERO.

Lets see how our gold coin ‘barometer’ is measuring FIAT money around the world…

Just look at the Japanese Yen – it looks like something massive is brewing there. New all time highs in AUD, CAD, INR. GBP close to new all time highs, and the others have all broken out of their respective basing patterns. Make no mistake – This is a global event. It’s unfolding right in front of our eyes, and the implications are profound. Gold isn’t rising. It’s just sitting there, doing what it’s always done. Global finance is under extreme stress. Banks are on the brink of collapse. FIAT monetary systems are showing signs of fundamental problems. This could end up being much worse than many are expecting.

Edit: If we are ‘here’, we might expect a pullback to around $1350, before advancing to at least $1550

This is a broad representation of what I’d expect to see, without any particular price targets.

Despite todays seemingly good jobs report and the subsequent retreat in PM’s, the bullish look to the chart hasn’t changed. We need these consolidations and pullbacks to maintain a healthy bull market move that can be sustained. I will be watching support/resistance levels in gold, silver, DXY, miners very closely in the coming days and weeks. For now, here’s a quick look at gold and HUI…

…is distinctly different to Parabolic Chucks, but that’s the beauty of this site – lots of differing views and opinions. Anyway, this the way I’m visualising price action over the last 30 years or so, starting with a close up of the bearish wedge I’ve been following…

Putting that into the context of the last few years…

and finally, looking even further back to take in the previous Dollar cycle…

I’ve positioned the grey ‘cycles’ very subjectively, and not exactly where the precise cycle tops and bottoms are – it’s just to convey a broad ‘theme’, i.e. my conceptual model representing the overall themes (topping, basing, breakout and breakdown levels, support and resistance zones and overall cyclical forces). A break above about 98.5 would get me thinking differently.

Todays payroll numbers and Fed interest rate expectations will likely determine whether we make further progress or whether the ‘bowl’ is still in play as shown below, with a trip back towards $1300 gold…

Edit: We got very good jobs numbers, and the market has spoken. I’d expect to see approx. $1300 again as a result.

I like to look back and learn from the past. It’s hugely important when it comes to trying to predict future weather and climate. It goes back to that old adage – history doesn’t repeat, but it often rhymes. We’ve broken through the key $1360-$1400 level and appear to be pausing here and creating a bullish chart pattern, ready for the next advance. We’ve been in a similar position many times before, but perhaps the most comparable and recent occasion was when we were breaking out into the major bull run from 2000 to 2011. During 2002/2003 gold climbed a ‘ladder’ out of it’s years long basing pattern (just as we appear to be doing now). The ‘ladder’ took us up approximately 15% before we fell off and were caught by a new ‘bowl’ basing formation, which launched us into the next stage of the bull run. What if something similar were to take place this time ? How might it play out ? The cycles guys will probably hate this because I’m just putting forward a ‘general idea’ without trying to line up the weekly/monthly cycles properly. I’m afraid it’s just my style – I’m not at all concerned about the precision of short timescale moves. I just want to try and capture the overall ‘direction of travel’. So please forgive me. I fully accept the validity of cycle analysis, it just frustrates me (except on the much longer timeframes of course).

So this was 2002/2003…

There are many other (perfectly valid) ways of looking at this price action and visualising it. This is just my own ‘conceptual model’ – how I like to view and analyse it.

If things were to pan out in a similar way this time around, this is how it might look…

When giving a forecast (weather or financial), you need to have at least one conceptual model, at least one outline of how you think things may develop. You then need to constantly review, adjust and, if necessary, develop new models. View it as a bit of fun if you like. It’s one of many possible future outcomes, but, crucially, it is based on lessons from history, which often rhymes…

Edit – support on our ‘ladder’ is around $1400. Silver appears ready to surge higher. BUT, and it is a big but, todays US payroll figures are likely to be a deciding factor. A significant miss may be needed to take us higher. I have no way of knowing what the figures will be of course – the charts above seem to be suggestive of a big move up, and therefore a payroll miss. If not, we’ll probably fall off the ladder 😉

Waiting for a clear signal…

It may take a while, but based on this Nickel ETF, a resolution may be approaching…

I used a Zinc ETF for charting purposes – couldn’t find any other Zinc related chart that went back far enough.

The long term trendline needs to hold, and the ‘bowl’ may extend to the right if the bullish wedge needs more time to build out, but it looks long term bullish to me…

Hello Goldtenters, I hope you’re all well, and happy Independence day to our American members. I’ve taken some time away (spent some  time relaxing with loved ones at Lake Garda in Italy), and following some very kind messages, decided to begin posting here again. Things had been pretty stressful for quite some time, so maybe my tolerance levels were low. Anyway, enough of that – perhaps I should start with a recap of my last few posts. I had been making a lot of noise about gold breaking out of bullish chart patterns in currencies all around the planet and left you with this for gold…

and also this bearish chart pattern for the dollar…

As we all know, gold in US Dollars has since rallied over $100 and the bearish rising wedge for DXY has broken down…

The Gold/Silver ratio is doing the same thing it did in the early 2000’s at the start of that huge bull-run (rising). I expect it will reverse before very long, and I’m enticipating a rapid move down as silver plays ‘catch-up’. That should create an ‘around the apex’ type move. A backtest is likely in due course as gold approaches its cyclical low sometime around (EDIT) late 2023 into 2024…

Targets for gold in the next few months/years are difficult, but I would not be at all surprised to see us somewhere between $1550 and $1750 towards the end of this year, and pushing towards new all time highs next year (after all, we’re seeing that happen now in most global currencies). In addition, Trump is openly talking about lowering the Dollar https://www.zerohedge.com/news/2019-07-03/trump-says-us-should-join-great-currency-manipulation-game-devaluing-dollar and Russia/China are getting serious about de-dollarization https://www.zerohedge.com/news/2019-07-03/memorize-term-de-dol-la-ri-za-tion Put the two together and you have a weakening US Dollar which is becoming slowly less relevant globally. Anyway, whatever your view, the Dollar is heading towards cyclical lows in coming years, whilst Gold is moving towards cyclical highs. Following the confirmed breakout in gold (and monthly close above my $1400 ‘psychologically important level’ ), we need to start thinking with a bullish mindset (always keeping downside support in mind). Just take a look back at how gold progressed from 2000 to 2011…

I’m sure the cycle experts will be able to pinpoint where and when these bullish consolidations will take place because they form according to cycles on shorter timescales which I must admit, I find very difficult.

Here’s a very broad view of where we may see gold move over coming years…

Taking the Fib ‘zero level’ at the start of the bull run in the year 2000, and setting the 2016 top as the ‘1’ level, we can see some important price interactions at the various Fib levels (highlighted by orange elipses). I’m merely speculating at the targets, using some guidance from the Fib levels going forwards. However high we get in the next year or two, I’m expecting a large correction into (Edit) 2023/24. A more dramatic and rapid ascent into the peak in the late 2020’s (perhaps 2028) is where I plan to hang up my hat and step aside. I hope to be with you for the ride until then.

EDIT – As a result of comments on a previous post. This was my last post on this site. I’m very sorry.

This tends to suggest we are in the very early stages of a PM bull market

Evidence is mounting. The breakdown from the bearish rising wedge is becoming more evident. Unless it rips higher tomorrow, the signal is clear, and I would expect the next major cyclical leg down to be underway.

And if you want to learn more about bearish rising wedges https://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:rising_wedge_reversal

What makes this even more significant is that it coincided with the bullish breakout of golds descending wedge. It also confirms the ’rounded top’ I posted for the Dollar, and the ’rounded base’ I’ve been posting for many months now. Additional evidence comes from the approaching major cyclical low for the Dollar and the fact that Golds major cyclical low is behind us (2016).

A move back up into that wedge for the Dollar or below $1220 for gold will change my outlook.

and I’m still thinking a smash could happen at any moment, BUT this is how we’re progressing. Will we get the $100+ move I was suggesting ? Around $70 so far…

No matter whether you are a PM bull or bear, this is certainly getting to a very important point

One condition of a true gold bull market is that it needs to be in a bull with respect to all currencies. The world currency unit has broken out into a full blown bullish move.

…in the Eurozone. Banking crisis is brewing. Italy is forked.

You may remember my caution yesterday. The daily chart hadn’t confirmed the breakdown. Well, to my eye, it has now.

I recently suggested we could see a $100-$200 move in gold https://goldtadise.com/?p=444548

The bullish descending wedge has broken out and STOCH/MACD are advancing. The move has given us around $65 so far and we’re fast approaching a critical zone for gold bulls

Please take this simply as my point of view. It’s not a prediction, just a statement about what is happening at the moment. We could reverse and see DXY at 120 and gold at $700 in the next few weeks/months. I view that as a very low probability. I will only start to consider that as a significant possibility if/when gold falls below $1220. I’ll repeat. Nothing changes fundamentally until we break overhead resistance or support. I have no agenda, or bias. I’m just sticking with the evidence thus far as I see it. I’m quite prepared to change my view as the evidence changes. Only a fool refuses to accept what is in front of their eyes.

EDIT – Will there be some sort of attempt to smash price back down or are we going to see short covering ? If the latter occurs, we can probably forget about resistance levels, as price slices through them in a ‘reverse symmetry’ fashion. In that scenario, former resistance would quickly turn to support. This is getting interesting now.

I first started reading Goldtent during the final run up to the 2011 top (a friend and colleague showed it to me). I learned a lot about how useful/helpful chartology and especially cycle analysis can be. Many expected the fun to carry on, but the cycles said lows were due in 2008 and 2016. We all know the rest.The problem with being online is that I don’t know you, and you don’t know me. That being the case, I always give people the benefit of any doubt, and if they don’t seem open to a healthy debate, I’ll just move on. In climate science and forecasting I’m very used to this. The whole climate debate is clouded with cheap headlines and false data on both sides of the discussion. Science seems to be so mistrusted as a result. In fact, I’d go so far as to say it’s becoming cool to pretty much ignore and mock scientific research and advice. So many times I’ve been told by someone online that I know nothing and they have all the answers when it comes to changes in global climate. EVERY time it has turned out that they can’t even explain the simplest examples of atmospheric dynamics in the town where they live.  How can you hope to grasp global climate if you don’t even know how to explain the basic building blocks of the argument ?

Why am I telling you this ? First – I have very thick skin and am very used to angry response online (I don’t retaliate). Second – it seems some here are questioning my motives.

Sometimes I’m right, sometimes I’m wrong. 100% accuracy would be a neat trick, but using my science background does seem to help me. The main thing I’m trying to bring though, is an ability to present my thoughts in a colourful and easy to understand way. My current work specialism requires clear communication with emergency responders, both in written and verbal format. I’ve spent time broadcasting on local TV and radio, as well as the odd appearance on national TV. My previous job involved briefing RAF aircrew on weather conditions for low level sorties across the UK, so clear communication and hazard identification were essential.

Here’s an example of a chart I posted last October…

and this is what then happened…

I’m not always right, but on the other hand, I don’t shout about my successes either.  I stand accused of ‘talking my book’. Not a phrase I’m very familiar with, but it suggests I have underhand motives.

This is my position (and has been since we bottomed at $1050)…

1 – 2016 was the 8 and 16 year cycle low for gold

2 – The last 6 years has been a drawn out basing pattern (the bowl I’ve been drawing on all my charts)

3 – A break below $1220 region negates my thesis.

4 – A break above the $1350-$1400 resistance zone puts us firmly in bull territory.

5 – GSR may well rise further if (like last time) gold rises faster than silver for a little while. However we are at a historically high point already.

6 – Rising stock markets are common during a gold bull, so nothing to be frightened of.

7 – The rate hike cycle is done. More monetary madness is coming.

8 – The dollar is in a cyclical decline and will break down from the bearish rising wedge.

9 – Gold will break up from its bullish falling wedge (this has now happened).

10 – Gold will break out globally (this is happening now).

11 – Gold in USD will join the rest and break upwards (I have high confidence in this, but ALWAYS acknowledge the possibility that I am plain wrong).

I seldom post charts on individual stocks because they are each subject to very specific controlling factors. When I do, it’s because I feel they have something important to add to the debate. I make these charts regardless. If I were to stop visiting this site, I’d still be drawing them for my own use and posting on my Twitter feed. Humility is important here because weather forecasting and financial forecasting can make you look very foolish. The trick is to be able to spot when your predictions are going off track. So far, I don’t have any reason to question my overall view. As I’ve said so many times, a break below the base of my bowl, and especially the $1220 area will turn me bearish. This isn’t a competition to prove who’s right, it’s an attempt to use everything we all know collectively to inform our investing decisions. Please question everything I write, and if you can, present an alternative view (with charts), so that we can all benefit.

As always, thanks for reading.