63 thoughts on “CHART OF THE DAY

  1. Gary Post author

    Look at the change in character. During the bear market this kind of rally in the dollar would have crushed gold. This time gold is just consolidating. Even a sharply rising stock market isn’t taking gold back down. With every negative possible the best the bears can do is keep gold going sideways. Once either stocks stumble or the dollar stumbles gold will produce the last leg up in this intermediate cycle. If both stocks and the dollar stumble gold will go to $1400 which is the target for the pennant pattern.

      1. Gary Post author

        It will outperform once it breaks out of the cup and handle pattern. The gold silver ratio is at 82. That needs to come way down.

    1. Anthonyo

      Yes, something is keeping gold afloat now, it almost an intervention in reverse.
      To me, it is still to suck in all retail investors and traders only to pull the rug from under their feet at the peak and take gold down to $1040 or below again into May/June.
      Bull markets don’t act vertically up when they start off.

  2. Richard

    Gary,
    Agree with you on the gold and I think what you are observing regarding the dollar and stocks rising is indicating that something is going on under the hood. Stocks rising is a function of an oversold market. The quality of the rally has been very poor.
    Everything rising together from 2009 was a reflation trade which was supported by the economic data.

    Gold holding 1,225 is important. If all metals were rising together, I would be more optimistic with your forecast for across the board rising prices; however, gold rising is indicative of trouble, not necessarily a reflation.

    Now, gold has had several “flash crashes.” Do you believe in a “flash smash?”

    1. Gary Post author

      I’m seeing gold bounce off the upper pennant trend line as would be expected during a consolidation but I’m not sure what you mean by flash crash.

      1. Richard

        Sorry Gary, I was referring to the long term bear market in gold, the flash crashes that took place in 2013. Can gold simply “smash” higher, beyond what most people are believing, i.e. right back up to $1,400 or $1,500? By smash I mean 50 to 100 gain per day.

        This would be a “smash” out of this pennant right back into the rectangular trading range from 2011 – 2012, in a matter of days.

        1. Gary Post author

          I think gold was setup to do that until the PPT short circuited the rest of the ICL in stocks. Now it’s probably more likely to be a grind higher IMO.

          1. Anthonyo

            Wrong Way Louise Yamada? Yeah, she is most always dead wrong. Nothing she said in the past on CNBC has come true. She has more of a “Dog & Pony Show” value for CNBC to make their broadcasts seem technical and not boring basically.

          2. Anthonyo

            “Legendary”? Yeah Louise Yamada is only a legend in her own and CNBC’s mind. And the sheeple who get impressed with stale old technical analysis method sthat in today’s manipulated modern markets are not worth much. Yesteryear’s T.A. just does not work now in modern markets. And she is a good example of antiquated analysis relic.

        1. carlos

          Whatever the case, it will be huge! The technicals are setting up beautifully. I’m just amazed how nice and smooth gold looks long-term. And our lousy fundamentals will add all the gas to the fire. It’s a perfect combo in the making!!!

          1. Duncan Smith

            “it will be huge”, you hope!! Don’t get me wrong it could be huge, it could also fall to deflation. Be open to both possibilities.

          2. carlos

            You always have to be open to any possibility. But the probabilities for the coming disaster fundamentally are on the side of metals. We couldn’t have a better friend then today’s Federal Reserve!
            The perfection of the long-term Gold chart is not one you find often. It’s consolidating smoothly so far. It will be interesting to see how the chart will build itself out in the next 2-4 years. Speaking of Gold, I can’t even imagine how Silver will react. Oh my goodness!!!
            Yes anything can happen Duncan. We’ll find out soon enough.

          3. Anthonyo

            Yeah Huge, the disappointment of ones holding the bag after the manipulators driving gold up to suck in retailers pull the rug from under their feet will be very Huge!
            This ain’t no beginning of a sustained bull market in gold. Think again.

          4. carlos

            So Anthonyo, Are you saying that Gold will not rise for a very long time or not at all? What time frame?

          5. Anthonyo

            I am saying gold, more likely than not, has NOT bottomed yet and this here rally although huge is a flash in the pan. We may get lows into May/June or sooner again after all the retail wide-eyed trailers get on board the false bull.
            Gold is just not ready for Prime Time …YET.

  3. Huckleberry Finn

    PMs are so overvalued compared to oil.
    People keep mentioning the Gold:Silver ratio of 82. Well I got a couple of ratios for you.
    The Normal Gold Oil ratio is 15. Making fair price of Gold $500. The “normal” Gold:Silver ratio is 1:60 making fair silver price around $8.33.
    So why would anyone buy the PMs based on ratios is beyond me.
    Oil much better play here and sentiment is much nastier.
    I think Oil will cross $50 while Gold struggle to cross $1,300.

    1. Bill

      There’s that ever lasting $500 dollar gold call, Ill have to pull up some 2006/7/8/9/10/11/12/13/14/15 Gold $500 calls from other forums….

      Besides ” Fair ” price is what the MARKET is willing to pay not what your emotions or your short says.

      1. Huckleberry Finn

        True.
        So I am saying the market will in the future pay a price that makes more sense from a historical perspective. Just as when everyone thought this time was “different” and the Gold oil Ratio went to 5.5 in 2008 and we had a brutal reversal, well this one is the other direction and it will “brutally” reverse as well.

    2. Gary Post author

      Yes indeed oil needs to make up for some lost time. However it could take oil 5-8 months of basing before it’s ready to launch. That can happen after a particularly destructive bear market. It just takes awhile for buyers to come back to the market.

      1. Richard

        Yes. Many were overlooking the 5-8 month basing process. As the oil remains low, the equities must play catch up; however, they are buying the majors up again today. New money is going to wait it out until the dividends are cut.

  4. Anthonyo

    Gary,
    Very good charts and the blue highlighted ‘everything goes up together’ region…But the blue shaded was a time period of QEs THAT is WHY everything went up together due to QEs.
    Now, we are in a rising rate environment set by baboons otherwise known as the Fed.
    Hence, different ball game this time around.
    For all we know, the head baboon may decide to hike rate sin March even.

    1. tulip

      if you read adam hamilton Anthonyo and others….
      gold goes more x and the dollar down… when they raise rates.
      Take a look at recent yrs….back to 2006 & prior yrs..
      A .25 raise is not too challenging..

      As far as the base metals — you think the chinese are buying…???

    2. Gary Post author

      The last rate hike triggered a $200+ rally in gold. Who knows how high it could go if the Fed hikes again.

  5. Anthonyo

    1) The price of gold in the futures market is sagging relative to the price of gold in the spot market.

    2) The price of silver in spot and the futures market is sagging relative to the price of gold in the futures and spot market.

  6. james moffett

    Gary — nice chart and cycle comparisons. So are you overweight or long stocks?

  7. Stefan

    I’ts wiser to look at the gold bottom from 1999-2001. In 2008 Gold was not in a new bear, it was only a correction on it’s way to a blow off top. After 2011 a new bear was born, or it’s getting old but it still has a couple of years left.

    Isn’t it really simple just look at inflation, do we have great inflation? No, it’s stagflation, we need real inflation in order to trigg a new bull. We are not there yet.

    Mike Maloney has a point when he talks about great deflation before a potential hyper inflation. Look at global debt in general and US debt in particular. We need a reformation of all global debt. Before reformation we will see a deflationary crash, we are not there yet. After the deflationary crash it’s time for gold to shine.

    This rally is not impulsive enough to be counted as a restore of the bull, this is just another bear rally.

    1. Anthonyo

      It takes a group of baboons in our Fed to hike rates into deflation.
      Agreed, gold is just not ready for Prime Time yet.
      This “spiked” rally will end badly.

  8. Walt

    Gary might be right w his gold call , but , it makes sense that the most deceptive bear market rally would precede the real rally to start . We’ll soon see .

  9. angus

    since 1970 the gold cycle has been 10 years up and 20 years down i think their is a 1500 touch coming but maybe not this year.

      1. Bill

        Very much true, we are way out of the History books when it comes to finance as well as investing…those days are long gone.

  10. Ed

    I am just curious. You guys always talk about $GOLD but rarely talk about gold silver miners. Do you guys actually purchase physical gold coins? Any problems with shipping or insurance may buying one at time. Or are you just buying options and futures or GLD IAU etf?
    Currently all my IRA accounts are in GDX, so tired of watching all those fluctuations in individual miners. I am kind wondering what are the some of investment vehicles.

  11. Walt

    Gary ,
    Is the volume in gold consistent with an A wave rally out of the D wave bottom you are calling in Dec 2015 ?
    Shouldn’t it be really big , break neck volume out of a D wave bottom at the start of an A wave . Or is that not important anymore ?

  12. Alexandru Popovici

    Victor, you’re welcome! Let’s see its result after market ๐Ÿ˜‰ and how it reacts tomorrow first in pre-market bidding and then at opening ๐Ÿ™‚ I hope I’ll have again the opportunity to buy in FULL STRENGTH as I love it ๐Ÿ™‚

    I am turning away from metals and getting focused on investing in stocks instead.

    I also took a pilot of 9% of total portfolio in HA – Hawaii Airlines.
    trasporters in general are moving great.
    Good luck, my friend!
    A

  13. Don

    Hindsight analysis is a wonderful thing for those who never want to be wrong about what has already happened. Going forward is all about ???????

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