Loading ...The Big Picture – It’s Still All To Play For
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.
Those triangles always keep you guessing. I say it breaks to the upside. Scary times.
Northstar, my guess is this triangle formation is probably the most widely watched formation by all market participants. One possible scenario that keeps ringing in my mind will be the final dreaded push down below the uptrend line creating a false impression of breakdown to capitulate all bulls and sucker in all bears before a reversal that will break decisively to the upside in a single move. That will create the maximum impact that will take both bulls and bears by surprise.
Thanks NS. I just wish it would make a decision. Go Gold 🙂
“I’m most convinced by the argument for a weakening dollar, topping (then falling) stock market”
I don’t quite grasp that argument. Japan and the ECB between them are printing fiat at a rate of almost $1Tr per year. If the dollar is to decline in any relative sense, then that usually requires more not less expansionary policy by the Fed relative to BOJ and ECB. There are few if any indications out there that this will change soon. On the contrary. The Fed still looks to tighten further.
As for the stock market … same story. Fundies don’t matter. Its all CB firehosing. EW is calling for a larger correction this summer, but it will be bought. The nonsense will continue. AND FINALLY, when liquidity does get pulled back on a global basis .. the metals take it on the chin just like everything else until rumors of a policy change begin to surface. Recall mid to late autumn of 08.
I agree perdo…my concern is the same…I really don’t get fundamentally or chartologically why there are so many certain of the dollar’s demise. I understand the cycles case and that may be the only wild card.
I hope it happens but hoping is not a trading strategy that has worked for me
🙂
Hi Pedro. I understand what you’re saying, and I certainly don’t dismiss it. I lean towards Graddhys very well expressed possible outcomes regarding currencies/commodities etc. As far as the SM goes, I rule nothing out, and recently bad economic numbers cause the market to rise just as much as good economic numbers. When half a dozen companies account for most of the markets moves and fundamentals don’t matter I’d be nervous.
And nobody thinks of dollar as other side of oil? If oil to fall. Declining oil exporters revenues will create dollar demand.
I expect the ECB to start tapering within the next 6 months, with whispers beginning ASAP. They have been easing at an amazing rate for quite a while now and all good (or terrible) things come to an end. With respect to the FED, how can you be so sure that they continue to tighten? If the data continues to be poor, GDP projections will come back to earth and job growth can easily reverse. The US is due for a recession.
Also, economic instability can strengthen the YEN irrespective of BOJ easing as a result of it safe haven status. Strange as that is…
Hi Pedro, Interesting you should mention the Autumn of 2008 as that is the big drop on the HUI chart I have posted a few times. In the lead up to that period we had a 160 point plus rise in the HUI, which was preceded by some choppy sideways action. If that repeats we will see a big rise this Autumn peaking in the Spring and a big fall starting at the end of the summer 2018.
Thanks for the post
Looks like big moves are coming in $Gold and I hope it is to the down. The world where the Gold is $5,000 is not gonna be fun place to live
Gold went from $300 to $1900 in 2011. But the world was still the same.
Exactly – gold at $2000-$3000 would be perfectly reasonable, and I’m sure the world won’t stop turning.
I believe TA says that the further into the apex we get the greater the chances of a downside breakout. Note in the bottom chart indicates next spring as in 2018 – I’d agree IF we haven’t broken the apex on the upside by then (I’m looking at a log chart of the same touches and see that if Gold holds 1225+ past June of THIS year – that will be bullish). We’ll know sooner than later.
YYZ – It does seem that in this chart pattern, upside breakouts usually don’t wait until the apex closes. If we get that far, as you say, the odds of a downside resolution are higher.