Goldtent TA Paradise

If we’re going to bust through resistance, it needs to happen soon. If not, we’re likely to see a $100 drop in gold price, and another test of support. I would suggest the probability of a breakout at this attempt is finely balanced. The long term indications all suggest to me that an eventual upside breakout will occur. However, a break below support just above the $1200 area is NOT rated as impossible. In my view it’s a very low probability (less than 10%). An upside breakout now, or after revisiting support is (in my view), rated at over 90%.

The breakout following the 2008 pullback was accompanied by TRIX turning up and TSI having a bullish crossover. Of more interest to me though, is the current very low, but bullish, up-trending TRIX and TSI. We’re in a similar position to the very early days of the last bull, with enormous upside potential. Just where you’d want to see these indicators if we are about to commence a major bull run.

As always, time will tell.

I’ve posted this very important PM indicator a few times. I thought I’d show you an update. We’ve clearly broken out and left the bottom behind us. Applying an angle of ascent consistent with previous cycles takes us to the top rail and therefore the gold top in (drumroll please)…..2026. This ties in perfectly with Spocks expected ‘K Wave Peak’ in 2026.

So if we look at the log chart of gold, it looks to me as if we just closed above the neckline. It’s very close, and other scales/software may show us just on, or even below it. The next week or two will tell us all we need to know.

Much clearer though, is the (very bullish) fact that we are now through the long term resistance from the 2011 top.

Cycles purists won’t like my next chart, because, I’ve merged the dollar and gold cycles and fiddled about with them a bit, in order to make a more general point. There is a relatively short ‘time zone’ at these cycle lows, where gold finds a low, and the dollar finds it top. As far as this current cycle is concerned, that has just happened. This implies a lower dollar and higher gold going forwards.

To finish off with, I’ve taken a closer look at the dollar chart, and applied some lessons from the past to see where we’re likely to be going.  Fascinating to see how the moving averages behave at the dollar top and how our current position compares to the last 2 dollar cycles. Our timing in the cycle is perfect, the moving averages and TRIX are about to confirm beyond any reasonable doubt that the dollar is in a bear market. Our angle of descent is similar to past occasions and if timings are similar, we should see TRIX bottom in early 2019, taking us to around 65 on the dollar index (where the red descending line finds itself at the TRIX low early next year), followed by choppy action and a final low of 55-60.

A final comment. The lower highs and lower lows on the dollar index indicate a dying currency. Either we see the trend turn up in the next cycle, or the dollars world reserve status is coming to an end.

From a poster that I’m going to miss, ‘synced moves’ are taking place now. There are several ways of looking at the gold chart. My bullish bias has been entirely down to my acceptance of the relevance of cycle theory. I know Surf is the expert, but I’ve been using forms of cycle theory in my job as a meteorologist since 1987. Pretty much everything on planet Earth that lives or is part of a natural or man made system (plants/animals/weather/climate/global financial markets) has a discernible cycle. To ignore that would be foolish.  There is more than one way of viewing the recent price action in gold. Some show that we broke out a while ago, others show that we may be in the process of breaking out now. A few more dollars from here and however you slice it, we will have broken free from a very long term trend line on an absolutely massive wedge. Support currently in the $1220 region (that’s just a rough guide from the chart below).

and if you’re wondering what forces are at work – just look at where we are in the cycle. Examine the now positive and up-trending indicators like TRIX. The bottom red line turned from resistance to support at the start of the last bull run. All these years later and it’s providing important support. The down trending resistance line from the 2011 top has been broken to the upside on the log chart.

And whilst you’re wondering if gold might go to $800, take a look at the dollar chart and explain to me how you could view it as bullish…

If gold goes to $800 and the dollar climbs back to new highs it’ll be completely unprecedented at this point in the respective cycles. We’re fast approaching the point of recognition (as gold reaches the psychologically important $1400 and the dollar sinks to new lows). In my opinion, it’ll be at that point when money starts flowing into the mining sector and we see the mining indices playing catch up.

As an aside, after all the recent unpleasantness, I feel somewhat uncomfortable on this site, and will probably post much less frequently. I’m not wanting the sort of ‘debate’ that took place recently to happen to me. I prefer somewhere where all views and opinions are welcome, as long as they are backed up by charts that make sense and a polite turn of phrase.

But the dollar could rally considerably from here and gold could drop $50-$100. The miners would be left for dead if that happens of course, with many returning to their all time lows. Amazing when you consider that we’d still be looking perfectly healthy and normal on the gold chart. As I’ve said several times, this thing isn’t going to come alive until that neckline is broken to the upside. With rising rates, gathering inflation and a faltering stock market, I firmly believe the stars are aligning for gold. Whether we drop as far as the charts say is possible, I’m not sure, but my sense is that we’ll be clear of $1400 in the next few weeks (by April/May). I still expect to see $1500-$1550 this year.

Cryptos are taking a massive hit, the stock markets had a tough couple of days and the dollar is staging a slight bounce, and as you saw in Graddhys post, bonds and yields are at a turning point (assuming you agree, but of course, you may not). So where does that leave PM’s ? Looking at the chart below, I still think we’re in the time frame for a breakout above the long running resistance line in the next few weeks. Support is down near $1200, so a drop to that level is certainly not out of the question. Those of us holding mining shares would need a change of underwear if happens though. After looking at the HUI chart, I have no idea just how low it would drop, but I don’t want to find out.

As I’ve already said, I have a strong ‘gut’ feeling that the miners aren’t going to get going until we see that clear breakout, with a move north of $1400.

It’s interesting that the angle of ascent from the start of the move to now, is the same as it was when we built out a very similar chart pattern in the 2007-2009 period. That lasted about 2 years as well. Are we about to breakout and see the angle increase like last time ? Depending on the chart and scale you use, the angles are different, but they match (then and now). Anyway, I just find it curious, and can’t see why it would repeat exactly the same, but we’ll see I guess.

https://www.zerohedge.com/news/2018-01-31/yield-curve-crashing

Lots of posts and only zero to 2 comments on many of them. Where’s everyone gone ? Perhaps I should turn the lights out 😉

If we assume the bottom red line is going to provide support through to 2026, and use some simple trigonometry, this is what we get…

Zone 1 is a dead cert in my view. If we return to the upper red line the numbers seem ridiculous. This is a log chart, so a straight line from bottom left to top right represents an exponential, parabolic move. You can see that in the price action leading to the 2011 top. All speculation of course, but a bit of fun. Alternatively, the dollar moves to new highs and gold plummets to $800.

It’s picture perfect (so far).

Here are a few of many resistance/support lines. I’ve concentrated mainly on horizontal supports, and there is a little give one way or the other when deciding where to place some of them…

The ‘bull trend’ would be maintained, even if we fell all the way back to the lower black line. However, if this is real, as I believe it is, we should see an acceleration of the trend developing.

There’s no getting away from the fact that the miners are much slower off the mark this time around…

I’m quite surprised (but very happy) to see all the bearish sentiment and caution. The miners have lagged during golds latest $100 move up. Frustrating, but I’m confident they’ll get the memo soon. How did gold look at the start of the last bull run ? Take a look…

And how does it look today ? Well, you guess it, just as good. Even the percentage gains are very similar…

It takes time for the young bull to be steady on his feet, but soon he’ll be running 🙂

I was going to take a look at where we might expect gold price to drop to if we are indeed at the start of a new bull. After Redlabels post, I decided to have a look at how the 20 and 50 month simple moving averages behave. I’m happy to say that everything is progressing according to the script. 20 MSMA is somewhere around $1270 at the moment. Of course, as price rises above this, it will drag it upwards. Here’s how it looked at the start of the last bull in 2001…

and here’s how it’s looked over the last 16 years or so…

and for a close look at where we are right now…

One chart…

Edit – As each cycle comes along you can see the relative value of the dollar declining. This is the slow death of the world reserve currency taking place in front of our eyes.

I’ve taken another look at where gold price might be expected to go by the time it peaks in the mid 2020’s. I’ve used the log chart. Why ? Because we’re ‘measuring’ the value of gold in dollars here, and dollar ‘creation’ is taking place at an exponential rate. Just take a look at the chart for US National Debt. The lower range of possibilities on this chart gives us something around $3000, whilst the upper range takes us 10 times higher than that ! Not much of a forecast you might think, but it’ll become clear if the higher target is a possibility as we go along. If we were to break the old highs either this year or next, for example, I’d say these higher numbers come into play, with several years of rising PM prices in this 16 year cycle.

As far as the mining indices go, I took a hurried, late night look at it yesterday, and messed it up by putting support lines in the wrong place. Stupid error, but having looked at it more closely, I’ve realised that the final target is pretty much anybodies guess. It is almost certain to be many multiples of the current values. HUI is currently just above 200, and needs to jump to around 280 to be where it was the last time gold was $1350. From there we should expect to move past 600 and if gold moves to $3000, what do you think is reasonable ? and what if we get $5000, $10000, or more ?

Here’s the chart…

I’ll take a break now. It’s been a long day, and I could do with a drink 😉

As promised…

300% in 6 years isn’t as crazy as the cryptos, but an average of 30-50% per year is pretty respectable.

EDIT – THESE ARE WRONG TOO ! I’M HAVING A BAD DAY, LOL. I’LL POST  SOMETHING SENSIBLE IN A MINUTE 🙂

Please don’t laugh. If this comes off, we’re looking at almost 600% gains…

GDX and HUI to follow.

EDIT – IGNORE THIS. I MESSED UP. I SHOULD’VE TAKEN MORE CARE. LINES ARE WRONGLY PLACED !

As the old saying goes, history may not repeat, but it rhymes. That’s especially true of financial markets. They’re governed by human behaviour, investment cycles, peaks/troughs and above all, a degree of mathematics. All very interesting, but so what ? Well, it means that we can look back at earlier investment cycles to get clues about where we’re going in the next few months/years. This works less well for day to day trading, because there’s all sorts of ‘low level noise’ which can cause short term ups and downs. For example, a political event or statement of some kind. All of that just amounts to ripples in the ocean though, and they’re drowned out by the larger forces at play.

In the modern monetary and financial era (post Bretton Woods, and more importantly when you’re talking about the dollar, post gold standard in the early 70’s), there have been 3 complete dollar cycles. We’re currently in the 4th. we can look at the 3 previous cycles for clues. This is what I’ve concluded…

1. Once the dollar loses the MA(200) on the weekly chart, that’s it – lights out, look out below.
2. There is an initial plunge of the order of 25 %, followed by sideways to down price action for a number of years. I’m wary of the smaller drop in the late 70’s for various reasons, even though it was accompanied by a huge spike in gold.
3. The dollar index spikes down another 15% or so to its final low, again, paying less regard to the late 70’s cycle
4. At the same time (unsurprisingly) gold takes off
5. MACD and TRIX on the gold charts confirm this is happening NOW
6. Golds target in this cycle is a minimum of $1900, but likely a good deal higher. I’m unsure how high at this point – some of my work suggests the $2500 area, but $6000 and $9000 keep cropping up.

Here are the charts. Look at what happened in 1977, 1985 and 2002. Then look at what’s happening now…

1977

1985

2002 and today

One of my old charts in the post below, prompted me to do a bit of an update. Looking much the same (toast).

As gold makes another move up, I thought it would be worth looking back at some of my bigger picture charts. Similar (in essence and in terms of general direction) to Graddhy, Spock, Surf and others. They might be useful to you, they might not, and they do offer more than one eventual price target. Many of them are months old, but they do seem to be on track. Hope you find them useful 🙂

Gold breaking out…

Dollar breaking down…

As a reminder. This is what comes next…

First things first though. Lets clear $1400 and my first target is somewhere in the $1500-$1550 range.

Heading in the right direction for goldbugs…

Another view of the gold chart. There really are a million ways of looking at it (the vast majority look bullish to me)…

I can quite easily see the eye is drawn to that 20+ years of sideways action and the two red triangles/blue boxes, and you could ask why not another 20 years of gold prices going nowhere. Cycles suggest continued upward momentum, and national debt/stock markets/silver-gold ratio and a long list of other things suggest it would be very hard to avoid an inflationary event and rapidly rising PM prices in the next few years. Others disagree of course 😉

3 Charts to illustrate the point…

As the penny drops, we’re going to simultaneous resets taking place. Stock markets worldwide are heading for one hell of a correction at some point. All of that inflation (in the everything bubble) is going to spew out into the real world. Commodities are set to surge as the cycle takes hold. This will bring price inflation in tandem with the rapidly decreasing purchasing power of the dollar. The shit is heading for the fan at a pretty fast rate now. You might want to duck.

So guess what ? PM’s are going to shine. All this patience and waiting is going to pay off between now and the mid 2020’s. Lots of excellent discussion and charting on this site should guide everyone through it. There will be sizeable pullbacks on the way (worth taking profits). I expect to see king dollar lose another 10% or more, gold $1550, silver low to mid 20’s, HUI 300+ all in 3-6 months.  This is where it starts to get interesting 🙂

Especially for Fully (glad to hear your Ass has thawed out nicely btw).

Glass half full, and taking a broader, ‘big picture’ view…

I saw this in an article yesterday…

So we all need to be really worried, because QT (rising rates) means that gold is dead in the water. I’m calling bullshit on that. Forgive my hand drawn overlay, but I did it very carefully, and stretching back to 1975 there are plenty of occasions when rising rates have coincided with rising gold price. Their chart only goes back to 2007. What it doesn’t show is that from 2004 to 2007 rates rose from 1% to over 5% and gold advanced from $400 to $700. The same thing happened in the late 1970’s and mid/late 1980’s. The same thing is happening now.

Rising rates aren’t always good for gold, but they often are. We don’t need to think that QT will be bad for gold. Between 2000 and 2011 gold rose from $300 to $1900. During that period we had rapidly rising rates, rapidly falling rates and prolonged low rates.  I hate it when writers make the facts fit their agenda. You always need to look back through 2 or 3 full financial cycles before you can even begin to draw conclusions.

By combining traditional TA, careful use of indicators, and cycle theory, we can develop a level of confidence in the overall trend on a timescale of months to years. Here are 3 charts which do just that:

1) TA

2) Indicators

3) Cycles

Does this mean it’s impossible for something to happen which takes the price of PM’s down ? Not quite, but it’s all about probability and confidence levels, just like my day job. Right now, my confidence level that PM’s are heading substantially higher in a new bull market are high (above 90%). Many here are aware of this, but the investing public and big institutional money are distracted elsewhere. That’s a good thing at this point in the cycle. Contrast this with the stock market and cryptos. Hang on to your hats – the next few years into the mid 2020’s could be pretty wild.