Goldtent TA Paradise

Quest Rare Minerals

and Lico Energy Metals

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Patience is a virtue, they say.

Until it doesn’t ! All on track with an adjusted bottom rail following recent price action. The wedge still rules 😉

$1246 is my first target – I’m very confident we’ll hit that this week. If we break above that $1280 and the top rail is in our sights. Less confident we’ll break that on the first attempt. We might very well see another retrace to the bottom rail and a final blast out. One thing’s for sure. The clock is ticking.

Gold recently corrected 5 or 6%. Big deal. We could fall much further and the long term picture would still remain very bullish. What’s important is that we don’t drop out of the long term wedge/triangle. It goes back such a long way that (in my view), it’s really the dominant pattern at the moment. A break upwards, through resistance at about $1280 would put the bulls in the driving seat, with a pretty clear path ahead to some impressive gains. I’m watching the markets closely for hints as to which way it’ll be. Right now, I’m most convinced by the argument for a weakening dollar, topping (then falling) stock market, and multiple other factors which may, once again, light the fire under PM’s (especially the direction of interest rates, and the likely political turmoil ahead). Just worth a quick mention that silver fell much harder due to its historical COT commercial short position. This won’t last and the rise in silver price (in my opinion) will be all the more impressive as a result, outstripping gold by some margin. The miners impressive strength in the last few days portends well for the immediate future (just as their weakness was an early sign of trouble a few weeks ago).

Hang on everyone, this could be one hell of a ride.

With fingers hovering on the sell button, I’m trying to be a bit smarter. Hopefully not too smart 😉 We’ve just broken some key technical levels, moving averages and support lines. The indicators are generally at a point where you’d expect some sort of bounce. I’ve had a closer look at the William %R.

It currently stands at -97.49 (on a scale from 0 to -100). On the chart below I’ve indicated every other occasion its been this low since 1997. On EVERY occasion a bounce of at least 25 has occured on the HUI and more typically around 50. The period in 1999/2000 displayed an extended period of repeated very low values, but if you look carefully, each time the indicator got below -95 there was a quick 10-15 point bounce (equating to about a 20% move). This happened repeatedly on the way to the eventual bottom. What do I conclude from this ? If we don’t get a 25 point plus move to the upside very soon (and more likely around 50 points), it will be the first time that has happened with the Williams %R indicator this low since at least 1997. That has to be pretty strong evidence a bounce is ahead. That could put us back above moving average/trendlines etc. The question would then be, is that just a ‘dead cat’bounce. Comments please….

Edit: Chart updated

The miners seem to have been somewhat ahead of the curve (pardon the pun). Gold has just broken down from it’s more recent symmetrical triangle. Golds longer term triangle from the late 2015/early 2016 bottom has support at $1150ish. The HUI symmetrical triangle goes all the way back to that bottom nearly 18 months ago, and it’s just about resting on that support line now. Another 5 point drop in the HUI and, for me, I’m out until we hit those lows again, or see some convincing evidence in the charts that this is really a bull. Another 5 point drop and the bull looks to be on life support. I’m lucky, I got in at HUI 120, so I’m sitting on a nice 50% profit. No way I’m going to hold on all the way down It’s been a tough lesson, and I did take some profits on the way up, so I may be up about 60% altogether. Could’ve jumped earlier, but this ain’t easy.

I’m an optimist at heart, and can point to many reasons why we should rebound out of this mess and surge to new highs. However, once the charts are broken, they’re broken, and it’s hard to argue with that. If we see GDX down to 8 or less, $5 silver and $700 gold, I suspect I’ll be back (if there are any miners left solvent).

This could be it. Up and out to prove the bullish case, or fail at $1240 to set up a date with $1150 (or less).

Gold price, its 50 week and 100 week moving averages are all about to collide at $1250…

HUI is currently just above 186 – that’s getting very close to my 183 ‘line in the sand’. Gold dropping into the $1250’s as well. Could we see the triangle bottom rails being tested today ?

Very interesting to see the mood in the tent right now. Some are looking up, but, I think, many more are looking down. I’m trying not to be an eternal optimist, and I certainly do take all the bearish views on board. Having said that, I do find Graddhys work on the dollar compelling, and the fundamentals (to me at least), do seem to support a rising gold price (negative real rates especially). You could look at the following HUI chart and be very concerned…

If you ‘zoom out’ a bit though, things look a lot less concerning…

If we fail at the 183 area, I would turn bearish in a heartbeat. If not, it’s super-bullish. The equivalent chart for gold shows that it’s smaller triangle hasn’t broken to the downside yet, and it’s larger triangle has support at around $1150.

So how’s this for a possible scenario – gold drops to the $1240 area taking it to it’s support level. In the process, HUI drops to the 183 area, taking it to major support. That really would be the point at which we find out if this has all been a mirage, or whether we truly are in a new PM bull. That time is fast approaching.

Finally (and apologies, but I can’t remember who to credit for posting the first chart previously), these are partly what’s behind my optimism.

1) Cycles – The bottom of the ‘red’ cycle marks the beginning of a new upleg. The bottom of the ‘green’ cycle marks a top. Both are indicating a new upleg getting underway.

2) Similarities to 2008 – here I’ve pulled together some charts from my recent posts.

Brutal, but reasons to remain hopeful – indicators are at levels traditionally associated with an upturn.

Simple chartology

So far, no dice

Both plays on the electric car battery industry. QRM has been a bitch, Lico not so much. Both charts look ready for a move upwards, but time will tell. Catching the bottom is difficult with these things, but the upside potential is enormous. Worth a small dabble, in my view.

Something is going to have to give. And soon.

http://www.zerohedge.com/news/2017-04-21/soft-data-bloodbath-manufacturingservices-pmi-plunge-below-trump-election-lows

I have the probability of imminent breakout (blue) at 20%, a small drop then breakout (red) at 50%, a big drop then rise and breakout (purple) at 29%, leaving a very small 1% probability of a return to the old lows or even less (black). I may be able to raise that last probability to 5% or so, if I hear a convincing fundamental case. I know Harry Dent has been calling for $700 gold for a while. What are your thoughts ?

We all know this, but it’s good to keep reminding yourself (especially bearing in mind the post by KenS). If $1240 fails, the larger (orange) symmetrical triangle comes into play. If that happens, we’re looking in the $1150-$1160 region for final support. If that were to fail, price would plunge to the old lows and maybe further. I strongly believe this won’t happen, but you have to be aware of ALL possible scenarios.

History doesn’t necessarily repeat, but it often rhymes, and we can learn from it. Some of the following gold chart (2008-2010) looks very, very familiar. It certainly shows how these symmetrical triangles/wedges USUALLY play out. What do you think ?

Edit: Charts added to compare and contrast…

2008:   2017: 

It’s hard to know where point 1 is, but I don’t think it makes a massive difference. It’s blue point 3 that’s going to keep me awake at night…

As per the gold chart I posted, this may well resolve in a bullish way. I think it probably will, but I’m wondering if there’s another way of drawing the triangle/wedge.

Drawing the wedge to the Trump Spike seems to fit best now. We’ve been rejected at the top rail, and it appears we could see as much as a $40 drop. The miners have been hinting at this with their crappy performance. All is not lost though. We could yet see a classic breakout of this bullish symmetrical triangle/wedge. They usually (but not always), break to the upside, with a continuation of the bull. You can see from the chart below that everything is aligned for the final decision point in the next couple of weeks. If the bottom rail breaks (assuming its not a false breakdown), I would get out fast (that would be my strategy anyway).

I’m currently positioned for ‘option 1’, but ready for option 2 if that’s what we have to face. One headline/quote/hint of armagedon could turn the chart either way at any point, but that final decision point is coming fast.

and gold doesn’t seem interested…

…yet

I posted about this one the other day, when it went up about 30%.  Their move into Lithium is really getting investors excited. It’s up another 21% today, and it’s still not even caused a blip on the long term chart. I’m certainly planning to hold this one for the longer term.

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Following my earlier post with some words of caution about low trading volumes, COT positions, and possible smack-downs, here’s something that could point to a bullish outcome.

And the last year or two zoomed in

OK, so far so good, but what’s next ? I think we’ve all been following the huge triangle formation in the metals and miners. The HUI has made a clear, unequivocal breakout. $Gold might have. I say that, because it depends how much importance you attach to that huge ‘Trump spike’. Here’s a chart to show you what I mean, and also to show you what to watch.

So rejection at the upper rail, currently around $1290 opens up a drop to the blue support rain again, currently around $1240.

A couple of things to think about here. Firstly, we’re approaching Easter. Trading volume will, no doubt, start to fade. This is traditionally an ideal set up for a smackdown. Could we see a ‘mysterious entity’ dump the equivalent of several months global silver production onto the market. This brings me onto my second point – the COT position in silver. The specs are massively long, and the commercials are massively short. In fact, I think the numbers are record breaking. In that position, there can only be one winner. Here are the figures as of April 4th, courtesy of Goldseek…

If the specs win, the commercials will soon start to panic and cover their short positions. If that happens we get a big spike in the silver price, almost certainly taking it to $21-$22, perhaps more. If the commercials get another helping hand, well, we all know what that means – it’s happened so many times before. Blatant manipulation of the markets. My personal view is that a smackdown is quite likely. Probably not enough to kill the bull though, and with each passing month/year it’s going to get harder to orchestrate these manipulations as price discovery begins to move to the Far East, along with the vast majority of available, above ground metal. Coupled with the slow demise of the petro-dollar, global conflict is, sadly, likely to put a strong floor under metals prices.

Now we need to hold gains into the close.

My thoughts are on the chart