Goldtent TA Paradise

Will It be a simple, clean burst out into the fresh air, or will gold struggle to reach terminal velocity ?

Why ? Because the gold cycle is in its UP phase until 2026, and the dollar is in the DOWNWARD part of its cycle until roughly the same time.

For those that didn’t read the link in my last post, this is the whole point at this stage in a gold bull. Initial surge, then sideways grind (the wall of worry’). A healthy bull cannot proceed without it. Selling pressure needs to be all but exhausted, for the next phase.

This may, or may not, be the real deal breakout I’ve been expecting, but either way, we are in a gold bull and dollar bear for several years now (in my opinion).

It was writren in 2006, half way through the last gold bull. History is the best teacher of all

http://www.zealllc.com/2004/au3stage.htm

Edit: written in 2004

As the dollar breaks support, I’m expecting the PM rally to resume in ernest. Not long to wait now. This month or next.

Bikoo dropped this link in an earlier post, but I think it deserves a post of its own. Well worth the read https://www.goldmoney.com/research/goldmoney-insights/why-a-dollar-collapse-is-inevitable

History teaches us many things. It seldom repeats exactly, but patterns and rhythms exist. Ignore them at your peril. Unless a very well established pattern is about to fail, the dollar has just signalled it’s in bear mode. the 50dma has crossed back below the 200dma. Going back through this, and the last 2 dollar cycles you can split each cycle into 3. Each is clearly labeled on the following 2 charts going back the 1960’s. It’s as simple as green-orange-red, green-orange-red, green-orange-red. You get the idea…

This chart pattern is literally shouting dollar bear at you. If you can’t hear it, you need to get the wax out of your ears. Can the dollar reverse and go up ? Yes, but only if this sequence is blown out of the water. Looking at the US fiscal position and its currency I just don’t see that happening. My opinion ? This pattern is happening for a reason. It’s not random, but symptomatic of global currency trends. Do your own research. Don’t accept anything without questioning and checking it first. I still haven’t seen or heard a single argument that accepts this historic pattern and explains why it wont follow the same descending path as the previous cycles.

In response to EagleSeagles interesting post and link, I thought I’d take a closer look. Here’s how gold and the 10 yield have been getting along…

Now the US 10 year yield minus the German 10 year yield, versus gold price…

The trouble is that I can’t find this comparison of these yields pre 2008. Even so, you can see the relationship is sometimes positive and sometimes negative with gold price. The same goes for the CRB index…

In my view, the Tom Bowley article, whilst interesting, is fatally flawed. It doesn’t prove a causal link. Even over this ridiculously short timescale (since 2008), the CRB and gold price movements are not always in sync with the US/Germany 10 year yield difference. In order to even begin to draw a conclusion, you would need to find data going back through a minimum of 3 economic cycles. I’d be particularly keen to know how it looked from approx. 1995 to 2008. So far there is nothing in this data to show that commodities or PM’s are heading for a drop or that the dollar is heading back up in any meaningful way. I’m not saying that can’t happen, just that this information isn’t robust enough to support any conclusions at all.

It looks to me as if Libor-OIS rising is just what we need. It did the trick last time…

The numbers are the dollar price of gold. Sorry for the terrible scribbles.

EDIT – Chart corrected

All this debate about whether the PM’s are really in a bull market or not is going to be settled when this chart resolves itself. Up or down ? Place your bets now please…

Will it, or won’t it ?

Still looking good to me. Rising after a backtest of the breakout.

Again, it’s all in the chart…

The chart says it all…

The bull flag breakout, I posted has failed…

But the larger triangle formation is still valid. If we don’t break out this week, we could see a drop of $50 or more…

This isn’t the first time we’ve been at the start of a gold bull cycle and seen this chart formation…

And there’s still one piece of good news. The breakout is still holding on the daily chart…

Lets see where we close the week. I’m off for a nightcap 😉

What a shocker, but the week isn’t over yet. First up, support looks to be in the $15.95 region. Anything more than a short, sharp spike below that, and I’ll be a) very surprised, and b) shitting my pants. Here’s the chart…

Assuming I don’t need a trip to the dry cleaners, this chart shows a similar set up in the past…

However, looking more closely, I think we need to go back a few years, closer to the start of the last bull. It makes sense, that if we really are in those early stages, we may have been in a similar position back then. Guess what ? We were…

The similarities are striking, wouldn’t you agree ? The apex in my first chart closes up in the Summer. Interestingly, the dollar is hovering just above a key technical level (the 200 day moving average). Simultaneous moves are looking to be on the cards, in several markets. This is a key point, and a classic ‘point of recognition’. If and when we cross those thresholds, some very big moves will follow. Just look at the chart above. Silver nearly doubled in value very quickly. Hi ho Silver 😉

I haven’t seen too many (if any) charts that show clearly how, why and most importantly, when the dollar is going to die. My view – no later than 2033. It appears to me that the dollar will fail during its next cycle. Either the dollar is dead by then, or it will be reborn. The status quo cannot continue (and I’m not talking about the quirky British rock group who had their heyday back in the ’70s).

As I’ve said before, cycles are all around us. Some are relatively stable (for now), like the seasons and the tides. All are terminal though, eventually. What often happens is that a cycle becomes unstable, breaks down, collapses the system, and a new one is reborn out of the ashes. There are too many to mention, but think volcanoes, earthquakes and hurricanes. Pressures build up, a cycle starts and builds towards a massive release of energy and destruction, and the whole thing goes into a quieter phase until the cycle builds again. A human life is also a cycle. Birth, growth, maturity, decay and death.

Now that I’ve cheered you all up, consider the mighty dollar. It certainly isn’t the worlds first reserve currency, so why should it be the last ? There are multiple signs that its dominance is drawing to an end. This is obviously a massive deal for investors. Knowing when this is going to happen puts you one step ahead. I think it’s becoming clear where the power is shifting. The petroyuan is now trading, and gold backed currencies are highly likely in China and Russia – just look at how they’ve been accumulating gold in recent years. If reserve status moves east, the implications for PM’s are beyond anything we’ve seen in the last 100 years. Sounds dramatic doesn’t it ? But just think for a moment…For holders of gold/silver in the west, what do you think will happen to the value of your holdings when measured in your local currency if the dollar loses reserve status and global trade deals are no longer settled in dollars. What would be the implications for US debt/inflation ? That’s a whole different discussion. For now, lets just look at what the chart is telling us, and let it sink in.

So it’s game on – gold has broken out on the weekly chart below, with the descending green line support at around $1300.

However, the monthly chart below is very different, and we’re a long way from breaking out of that one. This is primarily due to the lower starting point at the 2011 top resulting in a much shallower slope.

The bull flag I posted previously (as Fully has just shown), either didn’t occur, or has been aborted – depending on your charting software and how you place your lines. Either way, it’s concerning.

In contrast to the bullish case, here’s a look at a bearish possibility…

On the face of it, we could be looking at a sideways grind for at least 15 years. I’ve posted many, many times explaining why I don’t think that’ll happen, but here’s one of the biggest reasons. Time.

And finally, another look at my new favourite indicator, the one, the only, the Ultimate Oscillator 😉

Come on now gold, don’t let us all down 🙂

Edit: ‘2016 top’ corrected to ‘2011 top’. Oops.

This looks like a game-changer to me. Never mind inverse head and shoulders, necklines etc, gold (on this log chart) has broken out of a wedge formation going back 18 years ! This at a time when the dollar cycle peak is behind us and the gold cycle peak is ahead of us in the mid 2020’s.  The masses are clueless, but we’ve been expecting this since the gold cycle bottomed over 2 years ago. Unless something goes badly wrong (something I’ve missed), and if we close above the support line at the end of this week, I’m as close to certain as I’ll ever get, that big moves are coming this year rather than next. The next stage of our young bull looks as if it can’t wait. Silver is likely to explode higher quite dramatically, and the miners could double by the end of the year. I’m still expecting the dollar to plunge another 8 points or so in the next 4 to 8 weeks.

Now zoomed in…

The $2500 target may be a little conservative, especially if the new petroyuan decimates the dollar (which is quite possible).

If you think that’s possible, it might be worth reading this. Its been common knowledge for ages, but now it’s here

http://www.zerohedge.com/news/2018-03-25/petroyuan-futures-open-over-10-billion-notional-trades-first-hour

Especially if we get a bullish monthly close next week. Let’s see if this move can be sustained.

Bull flag breakout ?

…some way to go yet

Ensemble Forecasting. It’s something we use as a matter of routine to help us forecast what is LIKELY to happen with the weather several days ahead. The way it works is that you take all the known CURRENT weather data (globally). That means current, real time observations of temperature, humidity, air pressure, wind speed and direction and a lot more. Not just at the Earth surface, but all the way up to the top of the atmosphere, using satellite sensing techniques, aircraft data, weather balloon data etc. We then run it through the computer model and project it forwards one hour, 6 hours, 12 hours, 24 hours, a week etc. That gives you one possible future forecast. We then ‘tweak’ the input data,because we have an incomplete picture of current conditions. We don’t have data for every inch of the planet (just wherever the data recording instruments happen to be sited). We then run the model again, and get a different forecast. We do this many times, getting output that shows us all possible future weather outcomes several days ahead. Most of the time the forecast for city X is broadly similar under most of the possible future outcomes, but the further ahead you go, and the more ‘chaotic’ the atmosphere happens to be at the start (during stormy Winter weather for example), the more chance there is that there are several possible future scenarios.

An example might be that out of 100 predictions for London next weekend, we get 70% dry, sunny and cold, 20% warmer with rain, and 10% heavy snow. At that point, we suggest the most likely weather next weekend is dry, sunny and cold, but hint that there is still a degree of uncertainty. The important bit is to run the whole process again 6 hours later and see how the odds have changed, and to keep doing that because confidence levels always increase as the event approaches, and begin to point in the correct direction.

It’s exactly the same with trying to make financial predictions, except, instead of gathering weather observation data, we’re gathering evidence from a massive array of sources (all the indicators I showed you yesterday, plus many more, COT data, bond yields, the dollar, cycle data, interest rates, and so the list goes on). It’s vitally important to learn what it is that each piece of data may, or may not, be telling us. For example, interest rates. Gold can go up or down as rates rise. Real rates are more useful, but you need supporting evidence. It’s no use if only a handful of data is suggesting gold will rise, you need to ‘build a case’. That’s what I’m trying to do. If an indicator is not predictive on its own you need to look where all the others are pointing.

I’m not too concerned with short, or even medium term moves, as long as the long term support line on our new bull holds (somewhere in the low $1200’s). I’m accumulating PM stocks and plan to exit in about 7-8 years time (I may try to time the top after our next move to the $1450-$1550 area and take some profits).

I’ve shown many, many pieces of the jigsaw in my posts – dollar cycle, gold cycle, CHF/USD ratio, real rates, COT, and yesterday, a whole load of indicators. There’s one I haven’t used much in the past – the Ultimate Oscillator. It was developed by Larry Williams, and is a measure of buying or selling pressure. I spent a bit of time looking at how it behaved in the last 20 years or so. The chart is below, with my notes on it. I think it’s worth careful consideration, and is certainly another piece in the puzzle.

I think we’re going to see a sharp move up in gold price soon. There could still be some downside (maybe $30-$50), but the clues are there in the technical indicators. This is what I’m seeing (notes on each chart should explain everything).

It may come across that I’m a bull, no matter what, but I’m not. This is my honest interpretation of what I’m seeing. It could be completely wrong, of course, but it’s my honest view.

Everything is looking fine. Try to be patient and relax. Unless one of these indicators breaks down, history is telling us not to worry.

The PM doldrums continue. Here’s a gold chart. Nothing too major jumps out at me except that we’re doing just fine, despite miners tanking. My money is still very much on a bullish resolution. The big question is when…

Are getting ridiculous. Gold goes up. HUI goes down. Not good at all 🙁

With the dollar sitting on a multi year support/resistance line, and gold simultaneously trying to push through one, we’re on the verge of a simultaneous resolution which may well be explosive in nature. The third chart below shows two of the indicators for gold (I needed to maximise the size of the gold chart to show everything properly). The balance of evidence suggests a dollar breakDOWN and a gold breatOUT is underway. As I’ve said before, a dollar bounce and gold drop are quite possible here, but the primary trend SHOULD be dollar down, gold up.