Goldtent TA Paradise

in the interests of a fair, balanced picture, we can look at it this way…

…maybe not tomorrow, but it’s coming. When it breaks, all hell will break loose. Go ahead – buy the dip.

I don’t care what the prevailing view is. The chartology is fantastic. Could it be wrong ? Yes. There is always a chance that a long established cycle can be broken. This is a game of predicting the future though, and it’s a case of weighing up the probabilities by using past evidence. Exhibit A…

It doesn’t always follow, but considering where we are in the dollar cycle and how close the TRIX is to going negative, on this occasion, I do believe the negative divergence is signalling a long term top. I expect the dollar to drop hard. Soon. I know this probably isn’t a popular view, but it’s what the chart is telling me.

So far, so good. No guarantees, but this is my current, favoured, most likely scenario. There are many other scenarios of course, and the PM bears will laugh at this. I see a huge, bullish, flag, with a near perfect consolidation at the bottom of the flag. If my thesis is correct, the move up, and out could be very quick. I’ve drawn up some charts to illustrate my thinking. Bull flag going all the way back to 2001. Bullish indicator crossovers all over the place at the end of a pretty convincing, near symmetrical bottoming process. I’ve projected some horizontal resistance lines that we need to break through, but the power of the cyclical nature of markets should start to win out here. As I said, no guarantees, so we need to look down as well as up, but let’s see what the next few weeks bring.

Some charts of Gold, King Dollar and CHF/USD. This is starting to get very interesting. It’s progressing well enough to support my bullish position in the PM space, but it needs to go further, much further before anyone can get excited. There are some very good views supporting the bearish position in this sector as well, so it’s all to play for.

I hope Surf doesn’t mind me reproducing this (I’ll take it off if he does). It’s freely available via Google (from last year). It helps answer the point Fully made about how much trust you can put in cycle theory…

High prices in the mid 2020’s ? Inflation ? (I know, I know, but in this case I’m just meaning goods/services priced in dollars increasing more rapidly), Falling dollar index ? I certainly believe that ‘heartbeat’ is discernible in the dollar as well…

Dollar and golds roughly 15 year cycles fit into the 50 to 60 year cycles above. They’re all interlinked. Could the links break ? Could the dollar soar ? Nothing’s impossible, but, for me, it’s a question of probability. In my view, the odds favour a falling dollar.

The dollar is …

I’ve done some more work on the dollar chart I posted yesterday. I’m a weather forecaster. I’m used to pattern recognition and spotting cyclical behaviour. Every living thing on our planet displays predictable cycles, and that extends to systems that have been created by us i.e. artificial systems as opposed to natural ones. I’m not saying it’s impossible for a cycle to break. Of course it’s not – a system can become chaotic and collapse, but until then, it has a discernible rhythm, if you care to look.

I know some may laugh at the following chart, but I’m going to stick my neck out and say that the dollar will bottom somewhere in the 60-65 region in 2023. I would expect gold to peak 2-3 years after that, as it has in the past. This is a forecast based on current data, using the past as a guide. Any forecast looking this far ahead is going to be subject to an element of uncertainty and future revisions. Nevertheless, this remains my best guidance at present. Please accept it as it’s intended, not an arrogant, guaranteed prediction, just my honest, considered opinion.

Just the chart…

This overall view covering the big picture gives me plenty of reason to be cautious here…

Bearish crossover on the STOCH plot suggests a (possibly very big) move down is imminent. At points, 1, 2, 3 and 4 we fell 80% or more. That would target the red support/resistance line at a value of about 1 in a year or two. As is often the case, the shorter term view tells a different story, which could lead to a turn up, a bit like the one that occurred at point 2…

So, is this a bull, or just radioactive bullshit ? If the fundamentals (recent mine closures and rising Uranium prices) count for anything, it’s hard to see a sharp drop. If this is indeed a real bull, the next year or two could make those invested in the sector very rich indeed. We shall see.

Well, maybe I went a bit overboard with all the support/resistance lines, but there are some very long term and important ones on there (marked in red). The ’rounded bottom’ theory is still valid and recent price action is encouraging.  The current COT position means that any further significant upside price moves could trigger a self sustaining short squeeze with each tick upwards forcing more to bail and cover. That could easily see us return to that critical $1400 region. I’ve said it before, and I’ll say it again, even though it’s obvious – that’s where any potential new bull will be born. It’s pretty much just noise until that point.

I’m going to let the charts speak for themselves. Especially the last one. I don’t know what the catalyst will be, but I believe the dollar is exhausted and will fall rapidly now. Perhaps a realisation that we’re nearing the end of this rate hike cycle and we haven’t even got close to escape velocity.

OK, so you’ve seen a few posts about Uranium lately. I think it deserves a closer look in terms of the charts, so I’ve picked 3 out of my portfolio for you. Energy Fuels up 115% since I bought it,  UR Energy which is up around 50% since I bought it, and Denison Mines which I’m up about 20% on. I’m going to post the charts in pairs. First the long term price action, then the more recent bottoming action and possible breakouts. This is a highly volatile market. The downside risk is maybe 50-75%, and the upside potential is several hundred percent.

Energy Fuels

UR Energy

Denison Mines

When this market pops, it’s like a nuclear reaction. I believe we’re getting close.

Over recent weeks, gold has been forming a wedge or triangle pattern. These can be halfway patterns or reversal patterns. The clues are there to show us which. Firstly the COT’s  are primed for a short covering rally which could potentially prove to be the long awaited turning point. Cycle theory says that we are in a new 15 year gold cycle, having bottomed in late 2015. That implies we are in a new bull, so all downside moves should resolve upwards to give us new highs. Also, at this point in time, the various chart indicators (on the appropriate timeframes of weeks/months) can pick out the price highs and lows very well for us. They’re shouting at us right now, saying this is a low, and we are already turning up…

I don’t often post charts of individual stocks, but this one is up over 100% since I took the plunge. The chartology is fascinating, and the potential during a uranium bull market is enormous. It could turn $1000 into $100000 in a couple of years if we see history repeat. I’m not predicting that of course, but even a very modest 10x would be nice, and entirely possible.

This long term pattern is also now complete on the log chart of gold. Everything seems to be coming together and telling us to expect a sustained move to the upside.

Our pattern has been morphing and maturing over the last several months. This looks perfectly acceptable to me…

So says the theory. I believe we’ve reached the end of this very long and drawn out process now. If you’ve been bearish on PM’s, I really think this is the time to turn bullish. We’ve made our second higher low since the $1050 bottom, with highs being capped in the $1400 region. This has created an enormous rounded base, consolidation pattern. with beautiful symmetry.

Think again. Interest rates are rising steadily now. Then there’s this https://www.zerohedge.com/news/2018-09-25/us-retailers-warn-trade-wars-will-unleash-unavoidable-price-hikes-holidays

is going to bite the dust if we don’t move up (fast) today or tomorrow…

During a ‘post bubble contraction’ ?

If you buy into the idea that 2016 marked the major cyclical low, and think the channel in the chart below is valid, then, maybe, just maybe. You’ll notice the 3 indicators shown on the chart are all hitting the kind of low values that usually mark a major turning point. The exception was 2012 to 2016, but that’s not surprising, because we were heading into that major cycle bottom. That meant that the indicators remained at very low values for a long, long time. I don’t believe that will happen now, as we’ve passed that cycle low and have tagged the bottom, support line. If this chart is valid, we could be about to see miners, double, triple and more over the coming few years. In fact, a gain of 500 to 800% is possible. How amazing would that be ? Maybe I’m dreaming but, the chart looks quite convincing to me.

On the move again

When looking at a selection of indicators, they can appear to suggest something different, depending on the length of time you are looking at. On a short time frame of just a year they can be giving a high or low reading that’s ‘out of sync’ with the longer timescale view. That’s just because shorter term volatility is common regardless of whether price is generally rising or falling. As the trend continues though, you start to see the indicators coming more into line, until eventually they all line up during a major low or high. Here’s what I mean…

The 5 year view gives more clues…

and this is backed up by looking back nearly 20 years

Could we move lower ? Of course, but the indicators are giving us a clue that we’re well positioned for an upturn here.

Nothing will change until/unless we breach that $1380-$1400 area. You could say we’re in a bit of a ‘danger zone’ at the moment. Any significant move lower, will open up $1050 and a double bottom possibility. A move below that would bring up the question of a long term PM bear market. Those outcomes are (in my view) extremely unlikely during this phase of the gold and dollar cycles. Anyone can draw a line pointing up or down on a price chart, based on individual charting techniques, but it’s not until we see confirmed price action through key technical levels that we can begin to have some confidence in our scenarios. This is one way of visualising where we’re at…