If one looks at a longer term chart of the last two years it’s very clear that gold is being capped at certain levels, and those levels are slowly forcing gold lower and lower. Each one of these manipulation zones are being defended successfully and that has some serious connotations going forward.

This all started right after the announcement of QE3. Gold was driven below $1700 and held below that level for 2 months. This got the ball rolling so to speak, it broke an intermediate cycle and started the bear market. Of course we all remember the call by GS to sell gold short followed by the premarket attack on April 12  that took out the stops below $1520 leading to a waterfall decline. That had to be one of the most blatant cases of manipulation in market history. Without a doubt gold completed a final ICL on Apr. 16. The May retest was the beginning of what should have been a recovery from the manipulation and a resumption of the secular trend.

apr. breakdown

But then something happened. As gold tried to rise above $1400 we saw repeated attacks to keep gold below that level eventually leading to another waterfall decline in June down to $1179. In the process this created a 33 week intermediate cycle. A full 10 weeks longer than normal. The natural ICL occurred on week 23 at the April bottom. The manipulation to prevent a new intermediate rally above $1400 added a full 10 weeks to the cycle. And let me say that having observed these cycles for over 10 years I can say without a doubt that a failed intermediate cycle in decline never stretches an extra 10 weeks. Most of the time they bottom a bit prematurely as the selling pressure tends to exhaust itself quickly.

1400 level

So a manipulation zone had been established between $1400-$1430. The next intermediate rally out of the June bottom was capped right at that $1430 level. The zone had been successfully defended. This then led to another stretched intermediate cycle. Again having watched these cycles for years I can say without a doubt that two stretched and declining cycles in a row isn’t a naturally occurring event. The powers that had created this bear market were trying to run the stops below $1179 and in the process they stretched a second intermediate cycle.

first manipulation zone

The next blatant manipulation of the gold market occurred right after the Sept. FOMC meeting. Gold was immediately taken down the very next day creating a daily cycle that topped on day 1. Never in history has a daily cycled topped on day 1.

Sept. fomc

This established another manipulation zone at $1375. The intermediate rally out of the Dec. 31 bottom poked above that $1375 level for 1 day before it was turned back down. Another manipulation level was being successfully defended.

march top

We now we have another manipulation zone that has formed at the top of the recognition day on Juun 19 at $1320. Other than just a few days above that level the zone has been defended and it has now broken the intermediate cycle.

new manipulation zone

What is concerning is that every one of these manipulation zones are being successfully defended when challenged. That would suggest that the next intermediate rally is unlikely to get above $1320 for more than a day or two before it too is turned back.

goldAt this point it has become painfully obvious that once a manipulation zone is established the powers in the paper market can defended them, and each one of these zones are occurring at lower and lower levels.

I think traders need to recognize this fact and adjust their trading accordingly. One can only go long the sector at an intermediate cycle bottom, and once that rally approaches a manipulation zone get out and stay out until the next intermediate bottom. As this pertains to the gold market right now it would suggest that we aren’t likely to see $1320 recovered quickly.

I honestly don’t know what it’s going to take to break this pattern in the gold market. If two ongoing wars isn’t enough to drive gold through the $1320 suppression zone who knows what kind of black swan event will have to occur to trigger a resumption of the secular trend.

For now I have locked up our gains in the metals and I’m going to continue to sit on the sidelines until gold gets into the timing band for the next intermediate bottom, and that isn’t due for another 7-12 weeks.

If we see a manipulation zone challenged and broken, that will be our clue that gold is ready to trade freely again. As of right now that would mean a sustained move above $1320. If that were to occur that would get me off the couch and back into the market. If not, then I will wait patiently for the next buying opportunity in 2-3 months. So far the SMT has made good money buying these intermediate bottoms and exiting when gold pushes into a manipulation zone. But until the manipulation has been broken, a buy and hold strategy is no longer an option as each one of these zones is occurring at lower and lower levels as the powers in the paper market try to keep the bear market alive.


  1. Dave

    Gary. First of all, thank you for your thoughts and prompt analysis.

    Will by your opinion ‘forces’ try to attack the lows again or will the gold move up and down in the range 1275-1320? What is your opinion on GDX?

    If we look at seasonality in gold, september is best time to attacj the 1320 and brake above for good.

    This would corespond with target of 2045-2055 in SPX for larger degree correction in stock market.

    1. gary Post author

      I can’t say if they will succeed in breaking gold down out of it’s range. A big clue will come if they can take it below $1240 as that would create a failed intermediate cycle.

      I don’t put a lot of stock in seasonality, I just watch the daily an intermediate cycles. If the intermediate cycle is in decline, like it is right now in gold, then gold can continue falling even though seasonality is positive.

  2. James


    Do you feel that Oil is also being manipulated at these lows or it making a natural cycle low here?

  3. Jorgy

    It’s good to hear that you and what’s left of SMTers have booked profits and are having a great year. I’m glad you’re not drawing red line to da moon and are willing to let price action dictate direction and not your bias’. Bias, that’s what got you former SMTers blown to smithereens with the leap trade and many other wipsaws. Nobody knows what comes next, nobody.

    P.S. Don’t take it personally, but when Gary, Rambus, Poly and their crowds get bearish, I start to get interested. Too many people think that gold’s toast given the left translated daily and an intermediate cycle topping (or has it) in a couple weeks? Don’t be surprised if gold breaks upwards as the $USD prints it’s daily an weekly swing highs in the next week or two. The miners have showed a tremendous amount of relative strength last week and my be providing a clue that gold is going higher and the $1179 and $1180 “double bottom” is going to hold!? :-$

    1. gary Post author

      I’m definitely watching the miners, and they are acting well. If they can continue to hold up while gold completes the move down into this daily cycle low that would be a big plus. The big hurdle will be whether gold can break through the manipulation zone at 1320.

      1. gary Post author

        The easy money right now is in the stock market as the Fed will protect the market into the final taper in Oct. and probably beyond into the holiday season. This is the opportunity for the Nasdaq to test 5000.

        Surprisingly sentiment is relatively subdued despite the S&P knocking on the door of 2000.

        In the last two weeks we booked an 11% gain using leveraged funds as stocks came out of that intermediate bottom.

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