I know that after four years of bear market at this point everyone has basically given up on gold and left it for dead. But I can say with 100% certainty that every bear market evetually ends, just like every bull market eventually ends.
We are so deep into the bear, and miners, especially junior miners, have been beaten down so far that at this point every intermediate cycle low has to be treated as a potential final low. We have another coming soon. Here are the charts:
While it is guaranteed that we will get some form of fiscal (read: tax cuts) stimulus around the 2016 U.S election and more monitary (read: QE) from China, Europe and Japan it’s obvious that the commodity super cycle is over, profits have peaked and the only thing left is for the mania or blowoff phase of the stock and equity bubbles. We play a strange game when we wade into these so called markets. Forward 10-Year returns on stocks and bonds are likely negative, as are gold and silvers forward returns barring a global monitary system reset scenario where bye we anchor gold and to a lesser extent silver as the basis of the system. The reset scenario is a low probability event while secular stagnation with fits and starts seems more likely. In this environment aside from trading in/out of asset classes as a trader the only way to win this game as an investor is not to play. ?
http://youtu.be/G4c5q8UjUz4
Yes hopefully we would get a bear rally sooner than later. A strong November into December, but then weakness will show up again.
We could go to 1250-1300 or even higher, but the bear will be back several times. A long tiresome bear …
Stefan, you mean gold bear market in USD. As long as gold holds 70,000 Indan Rupees per ounce and stays above 1000 Euro per ounce gold will be ok.
http://www.kitco.com/gold_currency/index.html?currency=brl&timePeriod=5y&flag=gold&otherChart=no
Gold up 36% in Brazil Reals for the last year and up 72% over last 5 years.
Gold up 8.6% in Canadian dollars for last year and up 2.45% in last 5 years.
Gold up 13% in Australian dollars for last year and up 11% in last 5 years.
Gold up 16% in South African Rand for last year and up 60% in last 5 years.
Gold up 27% in Russian Ruble for last year and up 61% over last 5 years.
Gold down .61% in Indian Rupees for last year and up 15% over last 5 years.
Gold up 7% in Euros for last year and up .13% over last 5 years.
Gold down .62% in Japanese Yen for last year and up 17% over last 5 years.
Gold down 7.5% in US dollar and down 22.75% over last 5 years.
I don’t understand why everyone cares about the USD price of gold. Americans don’t buy the gold.
Indians, Russians, Asians buy gold and the price of gold in those currencies is doing fine.
The price of gold in USD is just a reflection of a strengthening dollar, not a decline in price of gold.
I am Canadian and gold is doing great for last 2 years since bear market ended and Canadian miners doing great last 2 years.
Great post Mike, yes of course. I am Swedish so my physical is up a great deal since the Swedish crown is in a sharp decline against gold. However a declining Gold price in US affects my Canadian miners quite a bit.
Goldman Sachs through politicians in NY and EPA is attacking Big Oil after they dismantled Big Coal. Given enough time the mining companies are the next convenient target since they’re massive polluters and destroy the environment for profit. Barring a global economic collapse and reset of the present financial system back to a quasi gold standard gold, silver and their producers will continue to languish in their secular bear market. Emotion is the key in trading a bear market. We haven’t seen extreme pessimism in this space. Go talk to a coal mining company CEO and maybe you can see where this leg down is headed.
Capitalism is dead. Producers will give up. Chaos will rein. Who is John Galt?
You can’t compare coal with gold. Coal can be replaced with other forms of energy. Gold is money. What are they going to replace it with? Will Russia and China central banks dump all their gold for something else?
Maybe bitcoin or USD, don’t think so, lol.
I don’t know Mr. Savage things looked so good in October until the 200 then 50dma truncated. Gold has always puzzled me from a chartist perspective and looking at it from the weekly technically I see a continued downtrend to $1025 before yet another countertrend bounce which one couldn’t axtually label it a final bottom IMO.
Trends make you money and one could short gold but not me. The same story goes will crude a truncation is taking shape so perhaps the King dollar is telling their fate at the moment.
Bull trends to play: US dollar, US stocks and the Shanghai.
Bear: Bonds, Euro, Yen and commodities.
I’m short crude as of Friday (signal given Thursday).
Awesome analysis Mr. Savage and charting as always, Thank you.
David, you might wanna re-look at your energy charts and unwind your short some times next week??? Like it or not, historically, energy sector has been the strongest within Nov – Apr period. Therefore, i think your initial long on energy stocks are the correct one to hang-on to…not too late to flip them back on mate!!!
Food for thought (Nov 2014 thru April 2015): http://stockcharts.com/freecharts/gallery.html?s=%24wtic
You’ve finally caught on to the monthly charts. As I’ve said in the past, monthly charts will be the only way to confirm the bear is over or at least stop making lower lows.
The other point is prices can diverge for a long time and oversold can become more oversold.
Do u agree there are not many investors in gold. With easy money policies, they are gone.
What is left are speculators who have 30x leverage so $3,700 margin account can control about 100oz of gold.
Historically, there was only 2x leverage not 30x.
So, we will see attacks then short covering back and forth but no real money to end the bear?
I think this still pretty much sums up where GDX is going…. 🙂 (and no, MuffinTop, it’s not going up my butt either, lol )
https://pbs.twimg.com/media/CS571zjWsAA55Ol.jpg
Haha! Sorry Jay.. My ‘useless’ brain saw an opportunity for a cheap joke and took it 🙂
Next time there is a gap on GDX, buying above that gap is risky.
Bud fox
October 6, 2015 at 12:26 am
There is an open gap on GDX that will need to get filled.
http://schrts.co/9n0iUW
Reply ↓
William
October 6, 2015 at 2:17 am
If this is a “runaway” gap, it won’t get filled. Otherwise, it will…we shall see…
Reply ↓
Bud fox
October 6, 2015 at 3:14 am
These did not qualify as a Runaway gap because the volume barely broke yesterday’s volume. Volume should be much higher.
GDX is very predictable for filling gaps and currently has no open gaps.
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:gaps_and_gap_analysis
Wow, Mr Foxy, am impressed with the way you keep track with all the audit trails!….good job there.
Excellent post on GDX gaps, Bud. It was the reason I was bearish a few weeks ago.
Next time there is a gap on GDX, buying above that gap is risky.
Bud fox
October 6, 2015 at 12:26 am
There is an open gap on GDX that will need to get filled.
Reply ↓
William
October 6, 2015 at 2:17 am
If this is a “runaway” gap, it won’t get filled. Otherwise, it will…we shall see…
Reply ↓
Bud fox
October 6, 2015 at 3:14 am
These did not qualify as a Runaway gap because the volume barely broke yesterday’s volume. Volume should be much higher.
GDX is very predictable for filling gaps and currently has no open gaps.
It could be that I’m suffering from naiveté but I’m still very much a Gold Bull in the medium to long term. All the evidence continues to suggest that Gold/Miners are in fact building a base and have been for a while now.
Please remember that.. it always looks messy at the bottom and that’s when people panic — as seen on this, and plenty of other sites.
When will we learn to control our emotions so that we can start making some real money I ask..
the curious thing is nobody looks worried about Facebook or Amazon at 300 billion market cap. Facebook is pricing every user something like 300 dollars and Amazon 1500 dollars…foolishness of BUBBLES. Nobody seems to know that 40% of energy production in the world is from coal and natural gas…look at what prices are trading these assets…
Simply put follow rhe money.
yes but when facebook and amazon capitalize like the whole global mining sector (coal, iron ore, copper, precious metal, and so on…) there is something wrong in the mind of these who manage money…some ten thousands of worker which do not produce nothing compared to millions of people producing base materials for everyday life… commodities has gone down in such rovinous way because of derivative markets…this leads to all these companies to be in trouble…who manages money and put their customers savings in facebook and amazon leaving other sector to the fate decided by some banks are de facto damaging the economy beyond what is the normal contraction of the business cycle. just my opinion.
To me since the digital age we are in a new paradigm shift. Follow GOOG and FB IMO. Then AAPL, AMZN, NFLX and PCLN.
On 2/7/14 my core holdings were GOOG. AMZN, PCLN, NFLX, SUNE, VWDRY, WYNN and TSLA.
I I held I would’ve been a genius albeit WYNN was the only loser.
Simply put follow the smart money and institutions and don’t be a hero catching falling ttends.
Facebook is a bargain at current prices.
106 p/e on eps growing 3% yoy.
lol
IPO from Wednesday’s close +145.20%……. One would think this is just the beginning.
Laugh now and cry later just as I had the same ignorance when GOOG IPO’d.
That’s great David. I am working on a time machine right now. When I get it working I will go back and load up on facebook and goog!
Right now I wouldn’t touch them, especially facebook.
I use Google regularly but I know many people who hate it and refuse to use it.
I don’t buy Apple products and never will, don’t subscribe to Netflix but download their original shows on torrent. Don’t use facebook except for a fake profile to access some UFC content. Never used Priceline, maybe will in future. I love Amazon Canada, and shop their quite often but usually find cheaper prices from local stores with free delivery.
Can’t convince myself to be bullish on any of those stocks at current prices.
I’m probably getting ahead of myself.. but if Gold breaks July’s bottom, rallies back up and drops again into a DCL.. it could in fact be setting up for an inverse ‘Head & Shoulder’ on a weekly chart — another ‘potential’ positive for patient Bulls 😉
we are at price last seen seven years ago where gold should find an important supportive zone. if gold were expensive at 1900 per ounce, now we can say it is not expensive at all…during nineties it was at 500 per ounce and now much higher global consumption and inflation cumulated in decades are factors that justify more higher prices…I do not mention incredible debt loads added in these decades. But market are driven by … “people”
Gold — Short Term technical set up from ‘Daily FX’
http://www.dailyfx.com/forex/education/trading_tips/trend_of_the_day/2015/11/06/Gold-Price-Plunges-5-Years-JWew.html
until market starts “smell” inflation gold will go nowhere but down …
“market” is anticipating Tesla to sell a million of cars…but for the moment tesla is selling just 50.000.
market always anticipate, this is an old said.
but nobody is able to “smelling” actual or future inflation out there…
Careful with Tesla! This company is all hype and losing money. And it’s unfortunate because I really like what they’re striving for but their balance sheet is crapola.
Stansberry Research — I’m a Subscriber and have been for the past 5 years now — wrote an awesome piece on them last year highlighting all the reasons why you should stay away from them and should instead invest in BMW.
Below, the latest excerpt from the ‘Stansberry Digest’ — dated September 2015
“At one point recently, investors valued Tesla (TSLA) at more than $35 billion, roughly the same value other investors ascribe to BMW.
To put this in perspective, consider that Tesla sold $3 billion worth of cars last year, losing around $200 million in the process. These are cars Consumer Reports now says have “chronic reliability problems,” based on interviews with actual Tesla owners. BMW, which also makes electric cars, sold 2.1 million cars last year and earned almost $9 billion doing so. Its cars, by the way, have a sterling reputation for quality and reliability.”
To me gold puts in a doji on Monday, miners run up and gold tags 1127 on Tuesday. Good luck!
Tushar, good possibility. Everyone is bearish.
The decline in gold on Friday was due to awesome job report.
When the job numbers are revised lower will gold shoot up?
The answer of course is no. That is how easy it is to control the gold market.
David, you might wanna re-look at your energy charts and unwind your short some times next week??? Like it or not, historically, energy sector has been the strongest within Nov – Apr period. Therefore, i think your initial long on energy stocks are the correct one to hang-on to…not too late to flip them back on mate!!!
Thanks for watching my back William.
I don’t like the rise in the US dollar, crudes 50 dma failure and truncation of $45.88 (Thursday was a warning). Also CRB looking bleak.
Still mad at myself not cashing in earlier in the week. Dummy me.
Last few times gold was crushed to these levels, $BPGDM went to zero.
Today $BPGDM is at 34. I expected it to be much lower, but miners are not agreeing with this takedown in gold.
To add, I saw mfi inching up on Friday for GDX while it was down. Volume on GDX wasn’t quite similar to take down last November.
The job’s print was manufactured so the FOMC could raise rates in December and slow the economy. Profits have peaked this cycle, but that isn’t going to stop the “bubble” or “mania” phase. The FED thinks China’s Hard Landing is contained and monetary stimulus by the ECB and Bank of Japan can offset a 25 bpt increase and 25 bpts every other FOMC meeting until they get to 375 bpts before the equity market’s “bubble” or “mania” phase bursts. Mainstream or sell-side macro-economists think we’ll have 18-24 months time before the the next recession is confirm by the BLS. This is the consensus view at this point in time.
What they’re not predicting is an existential threat or shock that can disrupt “the game plan” and throw a monkey wrench, better yet, a tape bomb in the credit (bond) markets. The USD is a Monster, better yet, a wrecking ball that is about to crush $4.5 trillion of $ denominated debt. Nobody thinks that the USD is going to 120, but it is. Nobody thinks $WTIC is going to $10, but it is. Nobody thinks a massive wave of global deflation is going to sweep across the global economy, but it is.
The patient (indebted global economy) cannot be saved adding more debt. Times up, everyone (Smart Money) is taking measures to get liquid and away from the blowback, are you?
Jorgy and gold is going to ???
Drop to $875ish ibside the next 12 months. Until the FOMC has to cut rates after they raise them. Everyone but the FOMC knows they’re trapped, pushing on a string and the “end game” is hyperinflation, but that’s not going to stop them from raising rates, awakening the bond bullies and creating an systemic dislocation. Gold will go to $7500 to $45,000 but it’s going sub-$900 first. 🙂
I concur Jorgy, sounds very right!!
Gold priced in other currencies are up, in USD its very down. Who cares if in USD its down?????? Huh???!!! Which hole in the sand is ostrich trying to hide his head. Gold is priced in USD. If in that currency , it in bear market, it is in bear market.
Have you learned finance? Do you know there are ways to track investment returns. You are tracked primarily by the underlying price movements. That is attributed to your skills. But if you gain because of currencies, that is not attributed to you, but luck.
You wanna claim no bear market due to currencies , you want to bring currencies into the picture, then simple, just buy USD. Convert your CAD into USD, that will make you smarter
chris, I don’t own gold. I told you already. Stating facts is all and for some reason they bother you. Yes it is in a bear market in US dollars. Most of the people in the world aren’t from USA so it doesn’t affect them. Go to India and tell all the Indians to sell all their gold jewelry and buy US dollars, lol.
Keep buying US dollars and facebook, lol. Just looked up some Australian gold mining companies. Many have doubled and more in the last year. Stick your head in the sand some more and miss out on making some real money.
Funny though, when US dollar was down at .70, Americans were rushing out of the dollar and into gold and lots of silver. Now with the US dollar at .99 everyone is bullish on US dollar and hates gold and especially silver. LOL, that’s why most people never make any real money in the market!
USD is in a technical breakout, target $107.93 thus adding pressure to commodities which then should create an opposite trend change.
Mike is a very dangerous person. He kept harping gold is not in bear market. And said the top 2 oil producers is bottoming. But he dare not long gold, and dare not long the ABX, one of the 2 stocks he mentioned. He wants us to buy, while he owns some small Canadian mining companies. Small companies doesn’t represent the sector.
Like I said, if Dow drops to 1000 points its depression. But coffin sellers will enjoy bull run from from people jumping off buildings.
Mike? He is the coffin seller! Beware of him.
chris, you are ignorant and know nothing about this sector. I said in many other currencies gold is in a bull market. I said the 2 largest gold producing companies looked like they bottomed in Sept and may be forming inverse head and shoulders patterns. I don’t go long on stocks like ABX because any fool can buy ABX. I go long on mining companies that will at minimum double or triple my money with very little downside. I know the sector so I can pick the right companies. Guys like you have to buy ETF’s or whatever stocks are being pumped after the big gains have been made! You will never make good money in this sector so you should stay away. You will get burned like most people did after 2011. When the USD gold chart turns bullish and every chartist agrees the bear market is over then maybe buy some GDX with a tigh stop! lol
Nonsense crap. Go look at ABX, CDE etc during the true bull market then open your mouth
What after big gains then we buy. If it’s a bull, US miners will rally. Stop selling your coffins here
chris, my last post to you. You are obtuse. I never said ABX was in a bull market. CDE is silver producer mainly. I never mentioned silver. I am done with you because unfortunately for you , you can’t fix stupid!
Muke, would you be kind enough to share some of the names you are looking at?
Sorry, meant to say “Mike”
You are even more obtuse. It doesn’t matter silver or what. True bull us miners rally period. Who are you kidding. This shows you are a market illiterate. Go look at US miners during 2001 to 2011 bull, which didn’t rally, most rally. Even you buy 30% higher off the lows, you still easily make 10 baggers. So quit selling you bs here
Go look at ABX from 2001 to 2011. Or any gold stocks. You are like a torteise in a well. Do you know 90% of miners worldwide are dying. Yet you said gold not in bear market. Go explain yourself regarding when it’s a bull, we will buy US miners at highs??? You stupid? If bull, ABX rally from 7 to 100. Even if we buy at $10, after bullish chart, you mean we will miss the bull run. In the other hand, you selling coffin here could make one lose 50% if bear continues another 1-2 yrs. Imbecile. Period
When I said go look CDE ABX, I meant looking at them from 2001 to 2011. No one would argue that is gold bull run. During then they rallied. Now they are crashing . You said gold not in bear market. Of course you dare not argue with me. Bcos your lies are exposed, and you are caught pants down. I only dun want some innocent readers, new to gold investments, fall into dangerous coffin sellers like you
Who is mike? We dunno. But you know who is Jim Rogers? George Soros, Marc Faber, technical guru john Murphy from Stockcharts.com. Or the greatest gold bull john Paulson. Go ask them, if gold is now in a bear market. They will ask say yes.
Some of them are so wealthy, they will buy and hold even if it’s bear market, it’s an insurance for them. Yes, gold maybe go to to 5000, but maybe another 5 yrs. They can hold, but can many here do so?
Even Gary who promotes gold acknowledges that gold in a bear. A man of integrity is Gary. Coffin seller? Omg
http://stockcharts.com/h-sc/ui?s=%24NATGAS&id=p92224531240&listNum=5
If it’s a bear market, its a bear market. Natgas bear since 2008. During those drops, am sure there are some arguments that it’s not in a bear market, a bull is near. Many lost til broke believing in those shannanigans. Some imbeciles may even say it’s not in a bear market if you look at it with Zimbabwe dollars. Lol .
Wow…some moderations are needed for this blog, Gary!
I agree!
Gary
You said 1171, I imagine you meant 1071 since we are already at 1084? If your prediction is correct, where do you see GDX going? I have seen some who predict 18-19 and then a correction into the December fed meeting and then shooting up.
Your comments please?
Really love your analysis!!
I’m torn between two scenarios at this point. the last 3 weeks looks like a bloodbath phase. Those usually end in a final intermediate cycle bottom. Gold is the most oversold it has ever been on a daily basis so we could get a final ICL soon when this cycle bottoms. Or a bounce and then a lower low with a divergence in the momentum oscillators.
Gary, this is merely the beginning of gold’s blood bath!
This IC is not over, it is the last IC in this bear market of Gold (as I have already commented to David Silver below), but it is far from over.
Actually it will not end until USD finds its YCH in the conditions I’ve also already enlarged upon to David.
Deliberation is like watching a good soap opera ?.
with price breaking below 1100ish there is no one with a bullish view left for the short term.
I am bullish on gold short-term, i.e. until FOMC minutes the latest. I am bearish for after the FOMC minutes.
If further interest, pls see my comment for PAUL in the prior post of Gary – one of the last comments
….as USD begins its daily cycle decline and gold starts is new daily cycle on Monday (most likely during Asian trading, as I have already commented 2 days ago), gold may put its DCH at ~ 1130 –> that is my NON-tradable target.
NOTE: By “non-tradable” I mean that I highly expect to see it accomplished in its very whereabouts BUT that I do NOT recommend trading it because of RISK management issues. To have a market entry, I at least do and recommend going in ONLY when both high probabilities and risk management rules converge and even then …. only by resorting to effective position sizing just in case a fat-tail risk occurs.
GOLD WILL BE TRADABLE SHORT-TERM ONLY ON THE SHORT SIDE AFTER THE DOLLAR HITS ITS DCL AND GOLD SHOWS EXHAUSTION ARROUND 1130!
thanks…1130 seems too far from here…but who knows. a bounce will happen soon or later after this long bearish streak
reading on the web community 1000 threshold is widely considered a certainty
1130 is realistic simply because there are few gold bulls now in the market –> once people will see gold moving up on Tuesday (an print its swing low), many people will hurl in not to miss the “next big leg-up of Gold”.
On the other hand, as I have already said, that rush will prove short-lived and the vast majority of those gold bulls will eventually be branded with FOOLS’ GOLD tag
William and Alex,
Where do you see the USD going from here?
I believe she’s now in a technical breakout and going on three weeks of bullish signals hemce the topping of gokd and crude.
Technical breakout will take both to new lows inevitably.
It all makes sense now to me.
The inverse effect on the Yen and Euro is evident as well.
Exactly, as I said on Friday, now that yearly cycle of USD are clear (monthly swing high + weekly down-trendline broken = new YC on Aug25) it makes sense to me too.
With another strong jobs report in December + a FED hike on DEC16 market sentiment will be OVERWHELED BY USD-EUFFORIA-DRIVEN COMPLACENCY.
This I think will drive USD higher into new ground above the previous YCH of 100.72 for USX into late December but USD will start its intermediate cycle decline in early January.
To phase this movement out as I see it:
– DCL of DC#1 in this intermediate cycle by Friday Nov13- Wed Nov18 the latest
– DC#2 to produce a high above prior YCH of 100.72
– DC#3 will MARK THE BUBBLE PHASE FOR USD (gold’s nightmare)
– DC#4 to start in January will be left-translated, will fail and put its ICL in February.
It will be either the DCH of DC#3 in late December or of DC#4 in January to mark the top of the USD bubble-phase as well as the YCH of YC#2 –> which one will depend solely on the strength of January Empl.Sit report. It will have to be remarkable to fuel the mania into a higher upthrust for USD, though.
This move of USD into its bubble phase will also be blood-bath phase for gold –> we are not in the final intermediate cycle of this bear market in gold; it is good it is the last IC but it is gonna be horrendous 🙂
typo in the last sentence “we are noW in the final intermediate cycle of this bear market in gold” instead of “noT”
and this irrational phase in the usd what effects will produce on the stock market? because a strong usd is the real threat to further upside into the overvalued equities. or the downside is a rule just only for gold?
stocks can grow with USD no problem.
actually since July USD and SPX have been positively correlated throughout most of the time –> the YCL’s of both USD and SPX came on Aug24 and they’ve grown together afterwards.
Negative correlation has been only temporary and around job reports, beige book days, fomc minutes days.
I do not understand the rational thought behind “correlations”, I can see only the Power that be pushing higher overvalued stocks meanwhile suppressing gold , so easily sold to china and india for few dollars. nothing else.
http://www.usagold.com/cpmforum/2015/11/03/hedging-hal/