55 thoughts on “CHART OF THE DAY

  1. gary Post author

    Now that we have a nice strong trend going in the metals, traders and analysts everywhere will now start trying to pick a top. That’s what human nature does, and that’s why it’s so hard to ride a trend.

    Traders say they are waiting for a trend to develop before they buy. Then when the trend does start they don’t trust it and start trying to pick tops.

    Humans are funny animals πŸ™‚

  2. Paul

    Yes looks like we are off but with a great start like this I would imagine we get a retrace down before the next big move up.

  3. Stefan

    My friend told me in mid September that there was a crossing between a horisontal trendline and a downsloaping trendline on 5th October so expect some action. He could not tell me if it was up or down at the moment. Bcos the trend was down before the crossing I went all in in miners, so far so good πŸ™‚

    However this is NOT the start of a new bull !!!

    Fibonacci is used by every trader/investor in the world so it works ok, and fib is based on math.

      1. JoshuaF

        Agree 100%! This still has much more juice in it as well. Whether this is a bear market rally or the start of a new bull, at this stage I don’t care. I got on board, scared shitless when gold was trading around 1080.

    1. tom

      I was a floor trader at CME for 10 years. I knew/know some of the best traders in the world. Your statement “Fibonacci is used by every trader/investor in the world so it works ok, and fib is based on math.” is total BS.
      Sorry Bro.

      1. Stefan

        #Tom

        I am just a weekend warrior in trades but bcos every trading studio has auto-fib level I thought all traders used it and it’s based on simple math. Fib is presented in the gold chart sorry that you dont see it I guess your friends aint that good πŸ˜›

        Sorry moron!

  4. Dave

    How’s this any different than June 2014 & Jan 2015?
    Eventually you’ll get it right. If this rally fail, I’m sure it’s the same excuse. The “manipulators” are holding it back.

    1. gary Post author

      First off there isn’t even any question anymore regarding the manipulation of the gold market. Fines are already starting to be paid. But I think the banks have accomplished their goal and driven gold down far enough to create one of the most destructive bear markets in history. The juniors are down 90%.

      The bigger the bear, the bigger the bull that follows it. This has always been my theory for why gold was forced into an artificial bear market.

      The banks were trying to create the setup for one of the largest bull markets in history.

      They managed to force the XAU all the way back to the 2000 lows. I think they are probably done and ready to let the third and final phase of the bull market begin. We’ll probably stop seeing these middle of the night attacks for the most part from now on.

  5. David Silver

    Good to see thus far we have 2/2 non believers right out of the gate of what is transpiring right before us (I.e. message topic).

    Let the good times roll.

  6. Andrea

    Great job Gary! What about next scenario? I think rally could last until february top. Then a large spring correction in 2016… and up again.

    1. gary Post author

      It won’t last that long. The intermediate cycle is already on week 11. At most it probably has 5-8 more weeks before the intermediate top.

  7. Jorgy

    I’m a believer and went full strength long (unfortunately unleveraged) last Friday and caught all of this weeks move. I’m going to trim on some of the big gainers next week (i.e. the gold/silver miners that ripped +/- 30% this week) to buy someone the miners that only moved up +/- 5% this week, but I’m definitely not going to loose the bulk of my position. Now that the USD’s IC trend line has been broken I’m excited to see if we get a multi-week or 6-8 week rally w/o a pullback leaving shorts and non-believers in the DUST or behind! ?

    1. gary Post author

      That was a secular bear. this is a cyclical bear and an artificial one at that. The fundamentals have to change for the secular bull to end, and I doubt central banks are going to end their QE programs anytime soon. We are going to have to have some serious consequences before they will shut down the printing presses. By that I think we need to have a rolling currency collapse including the dollar.

      Once we get to the brink of destroying the currency then they will be forced to see the error of their ways and choose a different path.

      1. Johan

        Hi Gary,

        I am a bit startled that you keep seeing this great relationship between QE and gold prices and inflation and “destroying a currency”. QE 1-3 obviously didn’t push gold prices through the roof. I have started to understand why QE is not inflationary. First of all there are two pieces to inflation, the amount of money and the velocity of money, and clearly the velocity of money has gone down with QE, simply because by trying to lower rates they are pushing on a string as there is no demand for more borrowings, banks just deposit the funds with the Fed, ie velocity goes dows. Secondly and maybe more importantly bonds are really money, ie you can easily use bonds for collateral and get cash, so what is the difference? There used to be a difference when this was not possible, but nowadays the difference between bonds and cash is very small. So this is why QE is not really inflationary. And gold is not low due to manipulation, it is low because the market prices it low, just like commodities in general, where gold is no more or less than the other ones.

        1. gary Post author

          First off you need to quit listening to the nonsense that Armstrong writes. QE1, 2 and 3 were massively inflationary. Oil went from $31 to $110. Gold went from $680 to $1900. Stocks went from 666 to 2100. Housing, insurance, medical costs, education & food all went up massively.

          Any central bank can create inflation any time they want, they just have to be willing to destroy the currency . It just depends on who gets first use of the money as to where the inflation appears. If you throw it at banks then asset prices will rise becasue the banks will push the liquidity into risk assets. If you give consumers first access to the money (remember the tax rebates in 2008?) then commodities will go up in price.

          Inflation is an increase in the money supply. That always causes inflation but if you define inflation only as a rise in commodity prices and not as a rise in stocks, bonds, insurance, education, etc. then yes you can make inflation disappear by disallowing the things that are inflating.

          1. Johan

            To be honest I am very impressed with Armstrong and I will continue to be influenced by his thinking. So if central banks can create inflation with QE why don’t they? Look at Japan for the last 20 yrs, but look at the US too. I think we have inflation as long as there is demand for more loans, when there is not we have a deflationary problem. I also think stocks is better inflation protection than gold.

        2. Bill

          I guess you’ve not glanced at the money supply indicator… Were at decade lows . Also there is inflation, indfkation in things you need, and deflation in the things you don’t .

      1. William

        I think energy stocks “should” play catch up soon since WTI has broken above its weekly channel since 1980s. Weekly prices, once broken its downtrend, consolidated and gone back up, they usually don’t flip-flop and go down again…

        Ganbatte!

  8. Dan

    And you consider yourself contrarian with these headlines? This will my last post on this blog for a while, you won’t hear me bitching for a while anyway. For the record, SCREAMING from the rooftops bearish, last chance to cut risk before a deflationary bust the likes of which no one alive today has seen.

    Why And How I’m Buying Silver Again
    GLD, SLW, SLV β€’ Thu, Oct. 8, 11:18 AM β€’ Christopher F. Davis β€’

    Don’t Be Fooled: A Stealth Bull Market In Gold And Silver Is Underway
    GLD, SLV, IAU β€’ Thu, Oct. 8, 1:05 PM β€’ Money Metals Exchange β€’

    Regulators Could Cause The Price Of Gold To Rise
    BCS, BNS, DB β€’ Thu, Oct. 8, 4:40 PM β€’ Power Hedge β€’

    Gold Stocks Enjoy Major Upside Breakout On Extremely-Cheap Fundamentals
    GDX, NUGT, GGN β€’ Yesterday, 3:18 PM β€’ Adam Hamilton β€’

    FOMC Prediction-Inflation Mismatch Boosts Gold
    GLD, IAU, PHYS β€’ Today, 6:11 AM β€’ FX Analyst β€’

    1. gary Post author

      Like I said, traders will now start trying to pick a top right as anice trend is developing.

  9. Raj

    Gary, what makes this move different from Dec. 2014? The chart and all the indicators look the same, and yet the GDX continued downward.

    Thx,

    Raj

    1. gary Post author

      Gold is starting to act like a bull market climbing a wall of worry rather than a bear market rally trying to get traders excited quickly.

  10. Hong Bang

    Hi Gary,

    Thanks for the Update !!!

    The daily cycle on day 21 now, so we may see the correction near term. The last daily cycle lasted 34 days and the UP is about also 21 days.

    Do you think we have to wait another cycle to see 1200 $ / ounce

    Thanks

    1. gary Post author

      Probably yes, but I should note that the dollar cycle is only on day 15. It should have 5-10 more days before bottoming and that could allow gold to rally longer than most expect.

  11. AlexP

    Gary, mind that USDX will reach its DCL in the next days, arround Oct13 (now that YCL is off the books until Dec, Oct13-15 will at least produce a DCL).
    That USD DCL will put a DCH in gold for sure next week.

    JOHAN FROM SWEDEN, you will have a last chance to dump your USD longs about 10 days from now as USDX will move into its DCH in the next daily cycle!!!

    I’m not sure though whether this DCL in USDX next week will put a HCH or DCH in stocks…since RUT made a lower low at the end of September, maybe it will be a HCH (half cycle high).

    1. gary Post author

      Alex.
      The last dollar cycle was a bit short. This one could be a bit long. Currentyly at day 15. It could be 10 or even more days before the dollar forms it’s next DCL.

      1. AlexP

        Yes, Gary , you’re right: it can go longer and the other DC was 18-day short.
        But post-QE DCs have tended to be shorter and more importantly, now there is a negative correlation btw USD and SPX of some -0.75 for the last 10 sessions (10 is a better parameter for correlation computation after FOMC minutes than 20 or 40), which is huge!
        Stocks are also short-term exhausted and should put also a HCH next week –> simply there isnt room for USD to break lower for too much into this DC πŸ™
        that’s my opinion

  12. Johan

    Hi Alex,

    thanks for this!:)

    But seriously longer term (I am trying to be long term with USDX) don’t you think it is a great long-term buy? For me everything points to it…, I am waiting for a deflationary bust…?

    Best,
    Johan

    1. gary Post author

      Bernake proved in 2009 that he could stop deflation in it’s tracks with his printing press. I don’t know why anyone even bothers to listen to the deflation wackos like Armstrong and Dent anymore.

  13. Hong Bang

    Hi Alex,

    Please share your view about current gold daily cycle. We are in day 21 so maybe the Top is next week?

    Thanks

    1. AlexP

      Yes, I do think gold’s DCH is next week.
      This was the 2nd reason for which I killed my long UGL position on FOMC minutes evening – always selling into strength, even if too early
      (the main reason though was the need to be 100% into cash to revise my trading framework –> DCL instead of YCL in the dollar next week and potential change of stock market character from bear into bull as 50dma got thrust and daily cycle upper band too).

  14. AlexP

    as far as I see things, as i also wrote the other 2 days, it will be excellent to go long USD sometime in December as USD finds its YCL.
    So, this winter will be a mainly USD-bulls’ one πŸ™‚
    But after that, as the end of January will get close and February starts in earnest …. being long in USD will be a sheer act of heroness — as we all know heroes are very attractive people but they usually turn bad.

    As to beyond the winter, I agree with Gary: greenback down, gold and stocks up in a strong positive correlation.

    Fundamentally, you are right about deflationary pressures, K-wave is in its end and it cries for deflation, but Central Banks have chosen a different path from history (we are here in un-charted territory): relieving debt as percentage of GDP via oney printing as a solution in accelerate the process of FINANCIAL REPRESSION.
    I advise you to read this woderful IMF paper:
    https://www.imf.org/external/pubs/ft/wp/2013/wp13266.pdf
    At the bottom of page 9 you will see …

    O know it is hard to get rid of well-founded thoughts which become pet-ideas but … that’s the road towards ruin. I know because i’ve been there 3 times wiping out my capital (on one of the occasions I trippled my equity in 3 days by scalping crude oil futures !!! …but I lost it all eventually on pet thoughts)

  15. Johan

    Hi Alex,
    Flod for thought, really! Timing is everything, so I will definitely incorporate your view in my thinking. Much appreciated!!
    Johan

    1. AlexP

      yeap, while this autumn is to prove mostly good for gold and stocks (a higher high has been put in nyse composite to add to the bullish thought for stocks) , winter will come in very frosty for both bulls.
      rom the fundamental angle, it will come as fundamentals in US and China/Japan will deteriorate and for some time moarkets will see central banks behind the curve but, with each additional bullish piece of evidence for stocks, I doubt we will see lower lows there –> that weakness will be used by money managers to add to their positions.
      I will do the same πŸ™‚
      – sometime arround Oct20 I’ll initiate my pilot buys in stocks (after reviewing the quality of pullback days – small volume and shallow retreats) ,
      – maybe increase my stakes as earnings season moves forward,
      – start dumping it on full strength of the market inthe 2nd half of November through early Dec
      – if the Sep-Jan intermediary cycle for stocks proves right translated –> I WILL START BUYING DEEP INTO THAT WEAKNESS to as much as 90% of my equity (10% cash) by the end of February before the next earnings season

  16. Johan

    …but what about Europe, isn’t Europe the real basketcase causing USDEUR liftoff for the longer run, target 0.85?

  17. AlexP

    you’re welcome, Johan!
    it is the US economy that has started to show the first signs of totally unexpected weakness while the euro-zone, for better or for worse, has shown investors ability to tackle and [at least partially] manage its problems, that even with clumsy dancing betwen leaders, they’ve managed each time to find some common action (most of the times with Merckel’s fist in the mouth, but in the end soccer game is played on the number of goals).
    In other words, recent fundamental data shows slightly more relative strength of EU-economy than that of the US. I underline the word “recent” because 2 months ago indeed the US economy looked marvelous

    1. Tushar

      Alex, I am expecting Gold to be around $1176 on this Tuesday and then back down into sharp and short correction. Let’s see if it materialized that way but if that’s DCH for it, how long would be the wait before hopping in again for a ride to $1220? Please share timing info if you have insight into it. I am thinking that as a sharp correction for only a couple of days but then immediately pick up the trend going into next week by 10/21 for the Gold to move towards $1220 as after that (10/22 or so) it will sure be sold going into Indian Diwali festival which is in the first week of November (11/05). Thanks much!

    1. Tushar

      Those some have been calling bottom regularly every year, sometimes twice a year ever since 2011 top without fail! It’s like a good renewal period that allows them do that every six months.

  18. tulip

    Gary- can you please explain HOW they disallow ‘the things…..?’
    Inflation is an increase in the money supply. That always causes inflation but if you define inflation only as a rise in commodity prices and not as a rise in stocks, bonds, insurance, education, etc. then yes you can make inflation disappear by disallowing the things that are inflating.
    thanks

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