Goldtent TA Paradise

The current dollar cycle appears very different to the last 2 now. Worryingly the indicators are now moving into negative territory on the long term chart below. This did not happen during the last 2 cycles. We have a major distortion here and you can see the effect it’s having on PM’s. It pains me to say it, but the outcome I viewed as low probability is starting to come into view.

We need a very rapid dollar ‘collapse’ and a corresponding price explosion in PM’s. Without that, the charts will be very clear – the 15 year gold cycle is going to be very weak, like it was in the 80’s/90’s, and we’ll probably see price bouncing between $1000 and $1400 dollars for many, many years to come. Could we be about to see a very, very big move ? All of my recent posts have stated the case to support a move up, but, as I said, the possibility of that not happening is increasing with every passing day.

The emerging market situation, combined with Russia/Iran/China/India/Germany all stating their desire to circumvent the dollar in international trade, not to mention the ‘Trump factor’, lead me to believe that some huge volatility lies ahead.

Bearing all of this in mind, I’ll continue to keep a portion of my wealth in the PM sector, regardless of short term price action. Risks (in my view) are increasing.

I’ve been following the gold/silver ratio posts. Here’s my contribution…

I haven’t been posting too much lately. That’s partly due to the fact that nothing has changed since my last post in terms of my expectations, and partly due to the fact that we recently got a new puppy, and he’s been taking up most of my spare time. Anyway, you know me, I like to keep things as simple and straightforward as possible, and a good visual can speak a thousand words. I’ll post more when Spud settles down a bit, and PM’s start their next major move…

Notice how the next accumulation zone will set up an enormous inverse head and shoulders pattern. Once that’s complete, things could get very, very interesting indeed.

The following chart clearly demonstrates the fact that the move in 2016 was a ‘false start’ a bit like the one we had in 1999. This fits in with the ’rounded bottom’ chart I posted previously. At the major 15 year cycle lows there is an extended ‘accumulation’ period. If you’re smart, that’s the time to buy. Once the breakout occurs the new bull market is on. There are then numerous further pullbacks and opportunities to add, until finally, at the cycle peak, we reach the ‘exit’ period. You’re probably thinking that’s great in hindsight, but how do you know in real time when the bull starts and ends ? The stocharstic is very useful here. It bottoms in the 5-10 range at major lows, but what’s more important is the break back above 30. If you’d bought at that point in the last major bull, you would’ve got in at around $260. If you’d bought the initial surge in 1999, all the gains were given back, but it wouldn’t have mattered – It was a major 15 year cycle low (like now), so the bull was on its way. The ‘exit’ comes when the stocharstic falls from above 90 to below 30 . If you’d done that during the last bull cycle, you would’ve got out at about $1600. I realise that’s not perfect, but you would’ve banked a 600% profit on gold and much more on the miners. This is going to form a major part of my strategy going forwards into golds next bull market (assuming we’re going to see a significant price appreciation during this cycle). If we break down below $1050, the gold cycle would appear broken, and I really don’t rate that as very likely.

We’re currently range-bound in the current 15 year cycle low accumulation zone. $1050-$1400 is the range, so we need to look for the stocharstic to hit the 5-10 range (currently 18), then rebound and break above 30. Final confirmation comes when gold breaks above $1400. Until then, it’s all noise.

I’m seeing all sorts of funny shapes and patterns and stuff – I’ve been staring at this shit for too long…

A few of my holdings have seen some decent moves so far today :

Golden Minerals +19%

Lico Energy Metals +16%

Orvana Minerals +11%

Nexus Gold +7%

Millrock Resources +5%

Energold Drilling Corp +5%

Pershing Gold +5%

Things are looking a bit better, but we’ve still got a mountain to climb

It’s all in the chart – we’re at a critical point here…

Especially the silver chart with fractal

http://www.marketoracle.co.uk/Article62944.html

I’m sure that’s a song lyric. Anyway, the following chart summarises the bull/bear case. The failure of indicators like TRIX/BB Width to replicate the sort of moves we saw back in the 1980’s tends to suggest that the move into 2011 was just the start of a much, much bigger move. On the other hand, there is an argument that says we have to wait 20 years…

Well, this is all very interesting isn’t it ? Doom and gloom abound in the PM space. The dollar is behaving in a way that it didn’t in the last 2 major cyclical dollar downturns. Is the dollar going to carry on rallying ? is gold going to $1000 or less ? After seeing a chart on Twitter by ‘TheHedgelessHorseman’ I thought I’d have a closer look at the late 90’s/early 00’s. Lets start with a straightforward gold chart…

Pretty straightforward isn’t it ? The last major, cyclical bottoming process took place during the late 1990’s and early 2000’s, so I drew up some charts for gold and the dollar to compare…

History doesn’t necessarily repeat exactly, but it can be a good general guide as to what you can expect. It will take a while longer, but at this stage, I do believe we are still very much on course to complete the bottoming process. This will only be confirmed by a break above the horizontal resistance zone though.

Taken from Twitter.

In my native currency things don’t look so bad

Meanwhile, in Turkey…

Pretty crucial for the PMs at this point. Here’s an update to my chart on the sidebar.

Energy Fuels +9%

Golden Minerals +8%

Uranium Energy +7%

DDD Systems +6%

UR Energy +5%

Plus plenty of others I’m holding are up 1 to 3% today. Overall, my holdings have gained 1% in the last 8 weeks, whilst PMs have tumbled. I guess it shows the value of diversification. The Uranium sector in particular has saved me from a sizeable loss these last few weeks.

Simple chart…

As per Norvasts comments, we’re forming a Yearly Cycle Low in gold. Yearly cycle lows do a very good job of resetting sentiment.  The following chart should give some hope if you’re feeling depressed. Gold to $1000 or less ? I really don’t think so.

Roll up and get your platinum at fire sale prices. Everyone is running for the doors. Of course they are, price is plunging, with no end in sight. Wrong. There is an end in sight, and it’s very close.

Platinum has led gold at times, and if you think gold is in the doldrums, just take a look at $PLAT. SPLAT would be more appropriate. It reached over $2200 dollars before the GFC, and never regained that level before commencing the decline into the next major cyclical low. That’s exactly where we are now – seemingly making some sort of double bottom. Regardless of the chart pattern

it seems pretty clear to me. 1) We are at or around the major 15 year cycle low 2) Stocharstic and other indicators are close to making a turn.

I can see another $50 or so downside, and well over $1000 upside. This is the time to think about slowly accumulating selected miners. Sibanye are one of the platinum producers on my watch list for example. I wouldn’t go all in, just yet, but add  small positions on weakness with a main investment on a confirmed break above resistance. Those are my tactics, but you need to formulate your own strategy. It feels ‘wrong’ but buying when sentiment is terrible is exactly the right thing to do.

And any other cycles experts. I’m trying to understand cycle behaviour in recent years. There’s a very clear and reliable decline into year end over recent years. My preferred outcome was to have some decent upside for the next few weeks before a decline into year end and a breakout next year. Thoughts on the apocalyptic chart below ?

I’ve had a closer look at this, and taken more time drawing the curved bottom and rectangle. When drawn carefully (unlike my previous post, which covered a much larger time period), we are reaching the curved support now. Both the upper and lower black, double ended arrows are exactly the same length, and the blue curved base is symmetrical either side of the late 2015 low. This is a scenario I’ve revisited a few times, and it’s still in play. A break above the $1400 area, sets up a possible rapid move to $1800. I wouldn’t rule it out as a possibility.

This is a huge chart pattern, over many years. I don’t believe we’re going to see a complete PM collapse in the face of a rising gold cycle and falling dollar cycle. Starting to feel like I’m very much in the minority, but this is how I’ve been seeing it for a while. $1180 to $1195, followed by a rally. Could we go lower ? Possibly, looking at the chart below. If this is simply a long and drawn out bottoming process (huge base forming within a huge bull flag), the eventual breakout could be enormous. I’m not sure I’d get excited just yet though. We have a 3 year cycle low due at the end of the year. I’d favour a rally to the upper resistance around $1335 over the next few weeks, into September and maybe early October. A higher low should follow around the end of the year. It’s looking increasingly likely that 2019 is when the fireworks could happen.

There are 2 main, alternative scenarios 1) We crash and burn, or 2) We blast much higher, much sooner. I’d rate my favoured scenario above at about 75% likelihood, and alternative 1 at 5% and alternative 2 at 20%. That’s how I’m seeing it at the moment.

I drew these support lines VERY carefully, by zooming in and making sure they were in exactly the right place. The most important one, on this log chart, goes all the way back to 2001. The implications of moving below it would be dire. The dollar is refusing to roll over at the moment, and has now broken above the right shoulder in a move that spells possible trouble for gold. If the dollar powers higher from here, gold could break into clear air and freefall. I don’t believe this will happen, for all the reasons I’ve posted in recent days. All indicators, sentiment readings and cycle positions are pointing to this being a major low for gold. It has to prove itself – not in the next few months, or the next few weeks, but days.

Truly nail biting stuff if you’re positioned in the PMs.

Just the chart…

I’m seeing so many articles calling for a resumption of the gold bear market now. Lots of $1050 ‘double bottom’ calls and ‘gold to less than $1000’ type pieces being published. As a contrarian indicator, this is good, but only if everything else stacks up. If not, then we may indeed be heading much, much lower. I’ve posted articles that show why the cycle analysis points to dollar down, gold up for years to come. I’ve shown COT data and managed money charts showing we’re at an extreme (highly supportive of an imminent turn). I’ve stated that I think we could see a short spike to below $1200 (maybe $1180-$1195). Now I just want to look at a very simple gold price chart, with 3 clear, unbiased indicators. Stefano Bottaioli on Twitter uses these, and I think they work really well when you combine the 3. When they all hit the sort of lows that they are currently at and then turn up, it’s a strong buy signal.

Charts are full of patterns, many of which are conflicting, especially in the short term. I find it useful to remind myself of the big picture at times like this. The larger the pattern, and the more reliable it is (historically), the more likely it is to continue. Of course, the Dollar/PM/Commodity cycles could break. This is analogous to the weather over the last 10/100/1000 years. During any given week, it can get warmer or cooler, wetter or drier. That does not change the fact that as the weeks go by, we will be heading towards Winter and seeing an overall decline in temperatures (in the northern hemisphere). The seasonal cycles continue, regardless of daily and weekly ups and downs. This is caused, of course, by the planets orbit and tilt in relation to the Sun. In financial markets, the cycles are caused by investor behaviour/psychology, with supply and demand a big factor along with a thousand other factors which cause the smaller daily/weekly moves.

Anything is possible. However, I’m of the opinion that global power is leaking away from the US. This is causing a steady decline in it’s cycle amplitude. I’m not sure yet what this implies. From a scientific point of view, the dollar is becoming less volatile (more stable), with less difference between its peaks and troughs. This is the opposite of the current situation in the global climate system, where we seem to be seeing greater extremes, trending towards a ‘runaway’ warming until Planet Earth heats dramatically and natural systems/cycles collapse or feedback loops kick in and begin to stop the heating (e.g. melting ice causes cooler oceans causing increased cloud and lower temperatures). This may well have taken place on Mars (but natural systems were unable to reverse the effect), perhaps caused by a large meteorite strike. Anyway, I digress, China/Asia/India wield greater power than ever when it comes to commodities, trade, PM production/accumulation and sheer numbers of people. Together, I believe they will increasingly circumvent the dollar as a means of trade. The dollars declining influence is clearly visible when you examine all 3 of the post 1970’s (modern monetary system) cycles. From my point of view the chart is pretty clear in what it’s telling us…

It’s true that approximately 50% of those who responded to the sidebar poll are either fully or partially invested in PM’s but you’d expect that on a site that (by and large) is ‘pro’ PM’s. We’re just individuals – a tiny, tiny fraction of the investment going into PMs. Me personally ? I’m not pro PM’s. I’m pro buying at cyclical lows and selling at cyclical tops. I’m as confident as it’s possible to be, that $1050 was golds cyclical low, and that we will get a sizeable mid cycle correction into 2023, and that we will peak in the mid/late 2020’s. At that point, I will no longer be pro PM’s. How you trade in and out is up to you and your risk tolerance. My strategy is to add to my position at major lows on the way up, like the one we’re experiencing now. Others will trade daily/weekly moves, but my confidence levels at shorter timescales are lower.

Anyway, back to the main point of my post – gold sentiment. From a recent post on Zerohedge…

We all know what happened the last time the ‘managed money’ hedge funds were this bearish.

So many gold bears and dollar bulls now. The COTs are perfect, the indicators are perfect, Bollinger bands pinched, gold cycle and dollar cycle are lining up for bull and bear moves respectively. The final pieces of this jigsaw are (in my view) slotting into place. The way everything is aligning, I do believe we could see something like the early 2016 move. If I were new to PM miners, I would see this as a chance to get a second bite of the cherry.

Just look at the hedge fund short position in gold. It’s at historic levels.