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We have had some good bullish cases presenting here and some good bearish cases .
We are all focused on the Dollar. But the real action is in the HUI and other PM Indices.
I’ve been waffling and posting bullish and bearish charts But here is what I really think .
That move last year was Really Powerful. 200% in HUI in like 6 months. That was the birth of a Baby Bull
That cannot be just a short covering rally…that was an explosion of pent up energy.
Moves like that don’t happen in a Bear Market IMO
However looking back at the Great Bull Run of the 2000s we can see similar moves and their Fibo Corrections
There are two over there on the left which look very similar to this present consolidation.
We have been consolidating that wild move for 9 months now.
One of the potential fractal consolidations on this chart was 9 months the other 15 months
So what I really think is happening here is a consolidation which could end in say 3 to 6 months.
Somewhere in the last half of this year…I am leaning to September before PMs start a real impulse again
We are probably in for some fits and starts along the way.
As long as the 62% Fibo area holds I will hold this view. If you look back the impulse moves both
up and down are short compared to the chop Zones.
Markets are sideways much more of the time than they are impulsive.
They call them chop zones because many traders get chopped up trying to play the wiggles.
Welcome to the Zone.
Good luck to all
OK I will take on these comments. But first I emphasize that I of course don’t know what lies ahead. But this is a session of sorts in trying to conceptualize what is happening here.
First let’s put some numbers on this, last years rally was indeed a 188% romp. One could classify it as a mini cyclical bull market, however I choose not to, instead I classify it as an Elliot Wave A-B-C counter cyclical correction within the context of an ongoing bear market. I prefer to classify it as such since it fits into the over all narrative of the processes that we are in. We have seen this below chart before and it shows all the BMR’s since the bear began. All remarkably the same 38%. I have made the point before that by Jan 2016 things were so bombed out and gloomy that there were no more sellers to provide fuel for the bear to go any lower. Up until then Mr. Bear used his trusty 38% BMR tool to suck them back in and get them all lathered up again. Once recharged he could turn them all into sellers using them as supply to power the market down to new lows. Having executed this plan 5 times all ready investors finally wised up. You know “fool me once but don’t try to fool me 6 times” So Mr. Bear’s playbook required for him to bring out the real big guns. The A-B-C counter cyclic correction. And you know what? it worked like a champ. It even got a crusty old bear like me back into the game with enthusiasm. But. looking back now I see the grand plan. Mr. Bear just needed to reload his gun, and he did it marvelously.
http://stockcharts.com/h-sc/ui?s=%24HUI&p=W&yr=5&mn=6&dy=0&id=p19143670676&a=513530231&listNum=59
So this addresses the point that last year was indeed a bit more than a short covering rally. It was an 8 month counter trend move which enabled Mr. Bear to recharge the bear market.
If one wants to go real big picture I see the grand scheme of this super bull market actually beginning with the demise of the London Gold pool way back in the mid to late 1960’s. The monetary conditions were set with the Bretton Woods monetary regime in 1944. The USA abused this arraignment for 25 years by essentially printing money in a supposed gold backed monetary regime, That led to pent-up forces which were released with the end of the London gold pool. The confirmation of this was the closing of the gold window on August 15 1971. (a euphemism by the way since it was an abrogation to a legal contract) This let the dogs out which set the stage for the powerful bull market of the 1970’s. As we know big moves need long term consolidations and this one lasted for 20 years 1980-2000. The next leg up in this super bull market was the 10 year 2001-2011 bull powering gold from 254-1921. Guess what happens after that kind of move? That’s right a consolidation process. That’s what we have been in since 2011.
Do we have to go 20 years like the last time? Answer: no. No because the pace of monetary debasement is accelerating. My guess is 6 months to 2 years to go then we resume the next upward bull market. Ultimately the next leg up I believe will be the big one. The final leg up reflecting the full breakdown of the monetary regime which started in 1944.
So you see when viewed from the “Grand Scheme of history” I don’t think its appropriate to classify the 2016 thing as a bull market. Sure technically one could but I think it does not serve our purpose to really understand what is going on here. Let’s call it an A-B-C counter cyclical correction within the context of a cyclical bear market.
I had an exchange with Capt on this last year that Elroy had mentioned his CTR or papa BMR. Then he took some off the table but, I was hesitant. Recent Dec I doubled up my stack. The well followed analyst on SA are also bullish on this new bull. Of late I mentioned to Gabe Dec 2015 could be the end of higher degree IV as it didn’t exceed 2008 low.
I relooked at Bradley and it was spot on last year. Then I recollect WDGant cryptic when time is right price will correct. Time refers to market psychology and Bradley had them. And I think to myself the Capt did right. This papa bear will fool us with all sorts of distractions.
Capt’s presentation has water under the bridge. He tested the bear love hug last year and escaped. This year it might be a dead hug. I watched the Bradley closely last nigh on VIX, Metal and SPX.
I am 80% sure the huge bugger is gonna do a final crushing hug or maybe two. I watch the $ cycle and remembered rambus 975 gold just as price retreated after Trump.
There is still confusion but, I am not taking my chance as my stack is wobbly high. Before it falls by papa bear, I am planning to take all off the table before I kick my back. So yes I lean bearish till it breaks up higher than 1500 this summer. Even if it does, I will still sell. 1483 is the line IN the sand.
Thanks Plunger. I like your theory, makes good sense.
I also like this fractal potential though.
188% vs 38% deserves some note.
Anyhow as I said in the post if the Fibo support on this move holds
I am remaining in the baby bull camp. If it goes then we have a problem.
Watching this chart !
I feel obliged to disagree somewhat.
1. I believe that standard thinking is in fact that long-term bear markets are punctuated by dramatic and often extreme up moves. Last year’s up move is, I would think, entirely in keeping with the hypothesis of a temporary release or countermove in a prolonged down. [In making this comment I note that I expect the PM markets to go up, and possibly dramatically so, from around here. I have made a bet, significant for me, in exploration and development PM stocks.]
2. You did not decisively state but did imply that the market is chopping. True, we’ve been chopping around a bit for a few months, but I am not sure that this particular chart allows for a diagnosis of chopping in that it isn’t focused enough on the time-frame in question to show it.
A comment on when chopping stops: I am hardly a significant TA amateur much less an expert, but I do not know of a good methodology that allows for predicting with any reliability when a period of chopping is likely to end or when it is starting to end. In the past I spent many hours with lots of data on many spreadsheets trying w/o success to find methods that worked fairly consistently. One can see that an epoch of chopping has ended after it has ended, but TA-after-the-fact, from which examples are quite easy to supply, is not necessarily so useful in making decisions. Anyone know of a reliable method to know when chopping stops in real time?
To put the gold market in historical context, if I may, here is a chart of the gold price over the last 100 years. As mentioned in the preamble for the interactive chart, the series is deflated using the CPI with the most recent month as the base. On this scale the 2011 gold peak is on par with the 1980 gold peak. Today’s placement has often been compared to 1976, when gold was about to launch its parabolic ascent. One might wonder if a more accurate comparison might be 1982 or ’86. Honestly, I don’t know which, if either, is correct. I was so gunge-ho for the bull, but looking at this chart it does seem to me more likely that more down side is in store for the PMs. However, I remain open minded and will follow the chartology.
http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
Thanks for posting that chart. I did see that each of those bull markets corrected back to a “mean” of 400 or less. Could it be different this time?
Thanks Fully. As you know I do refer to this chart on a regular basis and I really like the story it tells. I can also see the other side of the coin, but I am going with this chart as showing the way forward for now, mainly due to the fact that gold miners are so low in value and many are producing at around $800, so unless the price of gold falls significantly, they will rise sooner or later and there will be takeover opps in the small producers and explorers, which is where the big money will be made.
AISC has gotten well down to the 700s largely due to low energy prices meaning fundamentals are closing in, which means higher metal prices can be capped. Short term I am bullish. 6 months down bearish. Longer term no idea … yet.