Short Term Gold Direction – CHART OF THE DAY

Short Term Gold Direction

I’m watching the triangle trend line today as the ECB meeting has the potential to decide direction in the currency markets. This, in turn, will likely influence the short term gold direction. If it takes the euro down and the dollar up, then gold will likely break that trend line and I will sell the remaining 25% position and get on the sidelines until the next Intermediate Cycle Low in May or June.

After rallying 85% now is not the time to buy mining stocks for a short term trade.

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74 thoughts on “Short Term Gold Direction – CHART OF THE DAY

  1. Alexandru Popovici

    100% agreed.
    ECB to scale in its monthly QE by EUR +10 bln to a total of 70 per month: USX and stocks up, gold down into IC decline.

  2. Chris

    I think gold correction will last til next week. How low? Possibly even below $1200. Even if it doesnt go so low, I think next week is the time to buy gold.

    1. Gary Post author

      It’s 14 weeks into an intermediate cycle. One has to be careful buying this late in an intermediate cycle. I wouldn’t sell short, but I wouldn’t be buying right here either. If you have held all the way up from the bottom I would start scaling out and taking some profit off the table.

      The next great buying opportunity will come in May or June at the next intermediate cycle low.

  3. Alexandru Popovici

    yes, Chris, this is the most likely scenario.
    but there is a significant probability that the FED will hike its rate again on Wed – a potential event barely digested by Lady Market, so that USX would gain turbo power if the event occurs while gold…

  4. Brent

    Thanks Gary. My miners got driven low last year, but I held on and am up as much as you say this year.
    I see what you mean about May/June now.
    It’s just so hard to have $5,500. per person more TFSA space per year to invest, and have to wait when we all know a day of reckoning for currencies is coming.

  5. Ralph Wiederzane

    Why don’t your stick to your plan of holding for the next 4 or 5 years? I understand the temptation to book profits around intermediate tops but is this a change of strategy overall and you will be doing the same at all intermediate tops, or will you plan to hold long term again?

    1. Richard

      Gary follows a framework of cycles.
      I work with levels. HUI 185 to 150. If this truly is an intermediate bottom/bull market, 150 should hold. Then if 185 confirms the breakout, the HUI will surge quickly. I will remain 100% of my allocation long mining shares and will very likely go to 200% soon. These are long term positions of which some are in the black and some in the red. A surge above 200 HUI would put all of these back in the black. If this is a bull market, the dips will be bought aggressively. If it is an intermediate bottom, these have a nasty habit of running quickly to the upside and then terminating, leaving many buying shares right near the top.

      The problem is that if these pull back in here slightly and you believe it is an intermediate top and sell, then they surge higher, DO YOU BUY BACK IN AT HIGHER PRICES OR CONTINUE TO WAIT? Where do you draw the line to repurchase at higher prices? Then you finally cave and purchase at higher prices and the market again pulls back lower than where you sold originally. Then what? The problem for me is this becomes very expensive.

      1. Ralph Wiederzane

        I agree with you, in fact playing it the same way though I am not yet at 100% allocation, I’m sitting about 80% right now and looking to buy more. It’s made much easier by the fact we’re up so much already, luckily having bought most shares close to the lows.

  6. Stefan

    I bought my favorite miners in August and sold a couple of weeks ago. Since then I’ve jumped in and out of DUST a couple of times.

    The B-wave correction is tricky to get timing wise, and I do not want to miss the explosive C-wave following the B-wave in a month or two.

    however, after the C-wave we are turning back into the bear bcos THIS IS A BEAR RALLY !!!

    FOMC next week, maybe they are going to smack Gold again,

  7. Walt

    Still long s&p for the past 4 weeks w 98 % of my money . And in Dust since GDX $20.4
    W 2% of my money . Holding both and watching closely

  8. Ralph Wiederzane

    It amazes me that the ECB will print more than 80 billion a month more than they already create, and people still think paper currency is worth anything more than zero!

    1. Richard

      The problem is what else is there than paper currency? That represents the nation. But yes, it is truly amazing. What’s even more amazing is that people, as a whole, don’t seem to be too concerned.

      It is like the government’s stand on education. College is expensive, so let’s create programs that help students pay the high tuition. Instead they should be asking “why are these prices so high.” By making loans available to students to pay the tuition, the universities continues to raise the prices because they know people will pay for them and accept them. So to me, the currency in theory, has minimal reduced value.

      This is the final behavior before deflation sets in and it will because none of this is sustainable.

  9. Stevie

    The affects of these CB moves are starting to have less of an effect on the market. If we close red today, that’s a very bad sign going forward.

  10. Gary Post author

    The dollar is surging and the euro dropping. That should mean the euro has started an intermediate degree correction. However gold is not dropping. As a matter of fact it has almost completely reversed the early morning selling which just proves my point.

    It was never the strong dollar that drove gold down into a bear market. The strong dollar just made it a little easier for the cartel to attack gold. And I’ll say it again, the establishment no longer wants to control inflation, in fact they desperately need some commodity inflation so I just don’t think we are going to see many more premarket attacks on the metals. The powers that be would prefer gold to move higher and drag the rest of the commodity markets with it.

    1. Gary Post author

      Never, never, never short a baby bull.

      People have to make the mistake on their own though. No matter how much I try to help them from making the same mistakes I made.

  11. Ed

    IMHO, It is deeper rate into negative rate is driving gold price up this morning.
    ECU also gave a cover for FED to not raise interest rate next week.

  12. Walt

    That’s right Stevie ,
    I haven’t liked S&P action the last 4-5 days .
    Gary thinks this is a DCL in stocks , so ,
    1965-1975 s&p should hold , but I’ll sell if that’s taken out to downside . Could start another move down

  13. Walt

    WTF w the dollar move in the last hour .
    Clear protection of the euro with their heavy duty easing today . Concerted effort to keep up the front of stability

  14. Al

    Gold and silver are reacting how they should to a dilution of one of the world’s big currencies and negative rates. This non-manipulated new market is going to take some getting used to for me if this is indeed the end of the shenanigans:)

  15. MurmurHudson

    Euro & gold prices recovered. GDX reversed up. I’d follow price actions, not news.

  16. Gary Post author

    Currencies are a bitch to trade in the middle of a currency war. You never know when a central bank will intervene, or when the market will intervene to break a manipulation. We saw that with the yen last month.

  17. Gary Post author

    Governments all over the world are fighting to prevent economies from falling into recession. The single most powerful tool in that fight is to keep stock markets elevated.

    I would not fight the power of the printing press.

  18. Ed

    Another form of recency bias. “Don’t fight the FEDs.”
    Well, they have bazookas with no rounds.
    Negative interest rate is inhumane, unnatural and destructive tool to undermine very core of economic liberty and freedom of people.
    If we don’t have guts to correct these criminal behaviors, the law of nature itself will do that for us in due time.

    1. Gary Post author

      Yep the same thing will happen that’s happened over and over for the last 16 years. A bubble will form and then pop.

  19. klo

    Booked some profits in miners last Friday and this Monday but then once I was in the money couldn’t help myself and totally reloaded the miners at better prices. I look at it as a modification of old turkey. Took a chance and improved my dollar cost but will never ever trade against the primary trend. No shorting gold and silver here. The riskiest thing I did was sell some longs and take myself out of the market for a few day. I am back in with full long position in miners and even if things totally collapse from here I am doing a little better than old turkey.

    I think there may still be a big up move in the miners before the long heralded ICL. Silver is the mystery. Didn’t really participate in the rally much yet (Though many silver miners are already doubles off the bottom of Jan 19) If silver spot gets going now many of the silver miners might still double from here before we get a sizable correction.

    Gary’s rule #1: Never short a baby bull. Rule #2 might be think long and hard about getting out of position. It might be tough to re-enter.

    1. Gary Post author

      I would point out the main reason to go Old Turkey is to move to the capital gains tax rate as opposed to earned income. If you trade in and out you defeat the purpose of holding Old Turkey.

  20. Alexandru Popovici

    I did what I hadn’t thought I would: I AM TRIPPLE-LONG GOLD via UGLD bought with gold at 1266

    1. klo

      Wow Alex. Cahonas! I think it’s going to make money. Even the staunchest bulls have been saying enough rally already.

    2. MuffinTop

      Why in the world would you buy a triple leveraged Gold fund this late in the game dude?? You shoulda waited for the next ICL [due in May according to Mr Savage] before loading up!

  21. Alexandru Popovici

    ๐Ÿ™‚ Hi, guys!
    yes, Lady Market’s moves are fantastic! She’s the best, most unexpected dancer in the world!
    She took me and my emotions all by surprise but …happily she did not surprise my trading strategy and particularly much staunch risk management rules.
    And since I am a slave of my own rules …what else could I do ?! i shed my emotions and just followed my rules’ marriage with price action ๐Ÿ™‚

    1. Richard

      yes, spx should not be revisiting 1985 again. But then again, the march ES roll is underway and the market always does silly things especially at the beginning.

  22. Chris

    My believe is that US market is ok at least until April earnings of the FANGS. ie, market will be supported by NDX. Google earnings should be good. Because when you go watch youtube, there is plenty of ads. This only happen recently. Their earnings is on mid of April

  23. Alexandru Popovici

    Walt, I haven’t liked stock market’s action either, so that I’ve covered my:
    – short of T-bonds,
    – longs in stocks except one NSA position of 12% of portfolio.

    Thus, I am 8% 3x-long in gold and 12% long NSA stock, rest of some 80% is cash.

  24. Gary Post author

    Martys computer can’t get anything right. Gold was supposed to top and the euro was supposed to crash.

    Hmm maybe it’s because Socrates is nothing more than a scam.

    1. Gary Post author

      We’re just trying to put in a half cycle low. It’s still very early in the daily cycle.

  25. Hillarys Cattle Futures

    Looking like the FED’s gonna need to inject triple shot of Heroin next week to keep the stock markets up.

  26. Alexandru Popovici

    cast away the last NSA position; I am 92% cash.

    I am pretty much convinced a higher high will come in stocks before rolling into a daily cycle decline but it is not worth riding it.
    Besides, my leader stocks that I am trading may quite well roll over deep while broad indexes produce the bull trap.

    I am not even sure we are in a new bull stocks market but I would give 51% that we are in a dead-cat bounce due to an overheating US economy.

    1. Richard

      Anything is possible, but why not let the market confirm a bull market before guessing after 1 year of distribution? So until an effective bottom, I would give the market a 98% chance that it remains in correction from the rally from 2011/2012.

      1. Gary Post author

        I trade based on cycles not on charts. The big boys can make the charts say whatever they want them to say. If it was easy to make money trading off charts then every Tom, Dick, and Harry would be a millionaire.

        This is why the chartists always get it wrong at major cycle bottoms and tops.

        Based simply on the current length of the 7 year cycle there is no way we are starting an extended bear market. I also think the PPT probably aborted the final crash phase that would have taken the 7 YCL down to 1600. The stakes are too high to allow that to happen.

        So maybe we get a half cycle low here and maybe we don’t. The FOMC meeting is next week and fading the market ahead of those hasn’t worked in 4 years.

        I’ll say again that the market has to go at least above 2060 just to break the intermediate trend line. Once it does that it’s going to be within spitting distance of the all-time highs.

        If we take out the all-time highs then the 7 YCL is over and a new 7 year cycle is beginning. There’s no way that tops in less than 3 years.

  27. ndmaster

    Gary- at what levels are you interested in buying biotech, if none is owned right now? IBB or whatever index or ETF.

  28. klo

    Abandoned my IBB purchased last week and my just this morning purchases of XBI and LABU. The long term chart of the SP500 looks like a perfectly impenetrable parabola. Either it’s more topping and we haven’t hit the 7 year cycle low yet (remembering the aborted over the weekend dive/save by the PTB sev weeks ago), or once we do pierce the overhead resistance we really crack-up and fly!

    Sticking with mining stocks especially loaded with silver. On the miner’s long term charts this whole bull action of the last 2 monts is just the tiniest little blip sign of life after a 5 year thrashing. It’s like 1974 all over again, Bachman Turner Overdrive…Ba, ba, ba, Baby You Ain’t Seen Nothing Yet!

  29. victor

    Gary, ” If we take out the all-time highs then the 7 YCL is over and a new 7 year cycle is beginning. Thereโ€™s no way that tops in less than 3 years.”
    How it possible in that all around financial wreck? with all this madness debts?… , 3 yr bull? in that case gold should be suppressed …., but looks like it’s quite opposite – big inflow into gold we see…
    I don’t know… I’m expecting SPX 1600+ this year…

  30. JT Marlin

    Love the good work, Gary. Please keep it up. Your cycle tools are a great addition to the TA world. I find it hilarious that guys flipping 50 lots from their parents’ basements are always trying to call you out. I’m surprised that you even respond, but you do a great free service here.

  31. Chris

    Alexxxxx…. u are a bitch u know!!! And a Hot one. Look at your Gold. Buy high goes higher. Good catch;) What a flexible trader u are. From wanting to short to 3x long !! lol

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