49 thoughts on “GOLD TECHNICALS

  1. mike trike

    Thanks Gary. Every poster at Goldtent is now bearish, at least in the short term. Avi and all the EWavers are all short term bearish right now as well. Will they all be right?

    1. Gary Post author

      Hard to say. They were all bearish at the bottom in January and even into February and we know how that turned out.

      If we do have an undercut low I think it will be finished by next week.

      At every ICL I’ve ever seen the vast majority are bearish and always looking for lower prices no matter how low it has gone. That’s why none of these guys ever catch any of these bottoms. Technicals tend to fail at ICL’s.

      1. wazcam

        Hey Gary. Will A break above 1260 be enough to confirm the next wave has begun?

        I am leaning to your thinking but have seen a lot saying we are due a final wave down and a period of consolidation there this week. How likely do you think that is before the trend resumes?

        1. Gary Post author

          I believe gold has to go above 1268 to form a swing low. That would be the first confirmation that the YCL has formed.

    2. s29

      The last couple of weeks the Gold market had vicious selling attacks. This was not normal selling from traders who want to get the best price. Again it was manipulation from either the banks or forced deleveraging (Maybe Deutsche Bank needed some money). Nobody can predict precisely when these attacks stop.

      1. victor

        … suckers, that how they think about us…, they want traders to bleed out until we gave up exhausted…, that’s how ICL is…, Hold on guys…

  2. Gary Post author

    I’ve covered this before. These are indeed manufactured moves by one or two big banks. They can do this because the position limit rules are no longer enforced. I think they do it to run stops and trigger massive selling events , not to keep gold contained. This allows them to scoop up a ton of shares and ounces without running the market up against themselves.

    In a free market if they tried to enter big positions it would cause price to escalate higher forcing them to buy at higher and higher prices. So they create the stop run to bring a lot of liquidity into the market and they scoop up those shares at the bottom and get big positions ahead of the next big rally.

  3. duckwhorocks1

    It has nothing to do with manufactured moves.
    When sentiment gets so lopsided it has to go to the other extreme.
    That is why many of us saw this coming…not because we are in bed with the big banks.

    At this point though the risk for a bounce is more than the downside potential, so shorting here is fraught with danger. As for buying, just like I have been right for the last 2 months in which Energy stocks have outperformed Gold stocks by over 40% (+20% vs -20%), I am going to be right for the next 10 in which even if Gold stocks rise, they will be decimated on a relative basis by oil stocks.

    1. Gary Post author

      We’ll have to disagree on the manufactured moves. That has been a pretty standard practice for years now as it allows big money to enter big positions without moving price against them.

      We’ll see whether you are correct about energy stocks. I tend to think they are going to get dragged down along with the stock market over the next several weeks as stocks are signaling an intermediate decline has begun.

      1. duckwhorocks1

        By manufactured move if you mean stop runs then there is nothing special about that and that will explain the last final flush out and not the decline from 32 – 22 on GDX.

        My call on energy stocks vs gold stocks is over 10-15 months. I wouldn’t be surprised with some retracement of the ratio after a 40% ass kicking. You can right down this call for an exact interpretation. OIH will be up 30 or more % from here vs Gold stocks over the next 12 months. The mid cap energy (APA, DBN, EOG) will do just as well. I am not using XLE because it as too dominated by the mega cap stocks.

        1. Gary Post author

          Of course not the reason for the drop from the highs. I said months ago that miners were too stretched above the mean and would need to either trade sideways or correct before they could deliver another leg up.

          I’ll take a burrito bet on the next 12-18 months. I’ll even go as far as to say the miners will double anything OIH or XLE do during that period. I think there is little chance of OIH doubling in that time while I think GDXJ or GDX could double from here in the next 4-5 months.

          They are still ridiculously cheap compared to the price of gold. A standard Gold:XAU ratio historically has been 4 or 5 to 1. It’s currently at 15.

          Just to get back to what has historically been a “cheap” valuation the XAU would need to rise to 250 even if gold didn’t add another penny.

          That would be a 212% gain from the current level. And that would still be too cheap compared to historical norms.

          The bigger the bear, the bigger the bull that follows. And miners just suffered one of the most destructive bear markets in history.

          1. duckwhorocks1

            Lol Gary. You keep betting Burritos but you never pay up.
            Where is mine for the USD/JPY call?
            The GDX call?
            The Gold call?
            The energy stocks screwing GDX call?

            Gary you should focus on cycle analysis.
            When you come out of that and try fundamental analysis you say such stuff like ” A standard Gold:XAU ratio historically has been 4 or 5 to 1. It’s currently at 15.”
            Everyone in the business has been espousing that.
            And all will have their butts handed to them.

            HUI is just a number based on price. It does not take into account market cap of equity or debt. Since 2001 Gold shares belonging to the HUI have on average tripled their share count and quadrupled their debt. Adjusted for that Gold shares are more expensive than at any other time in history.

            I dare you to actually refute this article, rather than spewing the same rubbish every other Gold bug does.

          2. Gary Post author

            I thought the dollar yen was you 110, me 90. It’s at 102. No decision yet.
            I don’t remember what the GDX or gold call was. I thought gold would make a marginal new high before the intermediate correction. I guess you thought it wouldn’t. In that case you were correct.

            We still have 12-18 months for the gold stocks/ energy stocks to play out so it’s way too early to tell right now.

            So far though even after a big correction the miners are up 100% from their bear market bottom and OIH is only up 43% so there’s no comparison. The energy stocks need to rally huge just to catch up to miners after they’ve already corrected big. If miners just retest the recent highs the energy stocks will have no chance of ever catching up.

          3. duckwhorocks1

            The USD/JPY is at 104.06 and from 101 so far I got the direction right.
            I correctly called 22 GDX and Sub $1,250 Gold when you were calling for $1,360 Gold and sideways consolidation.

            I was not talking from the bottom. This is the first time I mentioned OIH and I mentioned energy stocks 2 months back since then they have creamed Gold stocks.

            Care to comment on the HUI-Gold ratio and why just the share price and not market cap matters?

          4. Gary Post author

            Well of course over the last two months energy has outperformed. Oil has been moving up out of an ICL and gold has been dropping into an ICL. Duh.

            That’s like cherry picking the 1980 to 2000 period as proof stocks always outperform gold. However if one starts at 71 when gold was released to trade freely then gold has massively outperformed the stock market.

            We’ll see how they both do going forward as gold comes out of it YCL and oil continues it’s rally.

            I expect the ratio will still return to the norm despite more debt. Why? Because miners have become lean and mean after the bear market, they are now set up to expand profit margins massively during the third stage of the secular bull market.

  4. Don

    Gary, I have much more confidence in your cycle work than any kind of “wave” analysis. If I wanted to follow waves, I would follow the self pro-claimed expert on the subject, Avi Gilbert who I believe is just a professional huckster when it comes making predictions using the Elliot Wave mumbo jumbo. Analysis that covers every possible outcome so as to appear to be always right, is effectively useless .

  5. Don

    BTW, I agree completely with your conclusions with respect to the gold market. In fact, I think you may understating how high and how rapidly gold will go up. An all out war with with Russia would probably see gold go up astronomically, well, at least until until New York is vaporized. I guess that might be when we will discover just how much our ‘paper’ gold is really worth.

    1. AmantedeTeclas

      There won’t be a war with Russia as long as Putin is on the helm.

      Marin Katusa and the news is just selling panic.

      The Russians don’t want war. I studied the conflict around the Ukrainian civil war very closely and came to the very clear conclusion that the news has been so deliberately manipulating that I lost the last little bit of trust I had in it.

      The majority of the Russians love their president and they don’t love him for provoking a war with the West.

      Just my 2 cents.

      1. victor

        Amantede stop bringing this bs to this forum, theres lots of Russian/putin lowers forum on the net post over there please….

        1. AmantedeTeclas

          It is no BS, just my opinion and it may be flawed. You don’t know who I am nor where I am from.

          Didn’t mean to start a conflict and don’t want to get to political. It doesn’t serve anything or anyone.

          So, I apologize if I provoked anyone with this statement.

          I do have to state, however, that I also wanted to make a statement against scaremongering.

          Peace out Victor.

  6. duckwhorocks1

    Here is another intelligent person who actually looked into the numbers rather than parroting the same stuff.

    In October 2002, Goldcorp had just 182.2 million shares outstanding, a share price of $9.99, and a market value of $1.8 billion. But the company needed to raise more money. So from 2005 to 2012, it issued another 628.4 million shares.

    That’s almost 3.5 times as many shares as it had out in 2005. In other words, your original share lost 71% of its value through dilution.

    Investors still made money in Goldcorp over that period… just not as much as they should have. The share price is now $43, so you made 338% over 10 years. As we discussed earlier, that’s an annualized gain of about 15.9%. Not too bad.

    But consider this… The company’s market value actually grew 1,869%, or 34.7% per year, over that period. That’s more than twice the annualized return… and that’s how dilution stole from your investment.

    1. AmantedeTeclas

      Rick Ackerman just cited Cam Fitzgerald in order to lay out a theoretical market downturn.

      The reason is the steep drop of platinum prices. He thinks that the platinum market, which is dominated by professional traders and less so by emotional retail traders, has been showing too steep a drop.
      This is signalling an economic downturn.

      It may be a warning sign. Does anyone know more about this platinum price drop?

        1. AmantedeTeclas

          I don’t know what You are referring to exactly. But still platium producers operate at big losses and the metals is very scarce. However, it lost much more in % then gold during this correction.

      1. Pedestrian

        It is indeed a warning sign. Platinum is in shortage right now and that is expected to worsen as investment in new mines has been falling for some years. Does it not seem odd that platinum prices would decline in the face of shortfalls of product? So we should probably appreciate that this price crash is a deflation warning and that the so-called precious metals bull market might not be quite what the bugs claim it to be. Secondly there is the aspect that new car sales have peaked and will now decline in most major markets. So platinum may be a leading indicator that the market smells trouble coming and speculators are raising cash to prepare for better opportunities as they arise.

  7. Dreamer

    I know we talk technicals here but the global economic and geopolitical fundamentals keep getting weaker and worse.

    Record public sovereign debt
    Record private debt – (business and consumer debt)
    Record derivatives amount
    economic data put out keeps getting weaker (multiply it by 2 to probably get the real data numbers)
    Yellen desperate and talking about running a “high pressure economy”.
    DB and Euro banks are really insolvent with massive job cuts.
    Wars and rumors of wars.
    Syria in the crosshairs and the U.S. blaming Russia for everything.
    Empire State mfg had fouth straight miss, this morning -6.8 (consensus was -1…….horrible
    Pension funds can’t replenish at zero rates and losing bigtime.
    Central Banks around the world buying stocks and ETFs.

    We have total insanity of every kind in the U.S. and in the world. (the list is much longer but I stopped)

  8. Alexandru Popovici

    got back long treasuries earlier today with a pilot position after having been stopped out on Friday.

    1. Gary Post author

      They are back at the levels that triggered a bottom in May. So mildly bullish or at least not terribly bearish.

    2. duckwhorocks1

      Much better than 2 reports back but the small speculator is adding positions on the way down which usually is a contra indicator. Another nice bath to $1,220 should do the trick in resetting sentiment.

      The long position on Silver is out of this world, even after the decline. I don;t all of it will be covered but another 25,000 contracts at least before a durable rally can develop.

  9. duckwhorocks1

    “I expect the ratio will still return to the norm despite more debt. Why? Because miners have become lean and mean after the bear market, they are now set up to expand profit margins massively during the third stage of the secular bull market.”

    Lean and mean?
    1) The average break-even all in cost of production was $350 an ounce in the year 2000.
    Now it is north of $1,100. How is that lean and mean?
    2) The total Gold ounces produced by HUI companies per share is down 75% since the year 2,000 due to endless dilution and still falling.
    3) Their lean and mean is just superb help from two categories
    a) Lower Oil prices which account for $400 of their per ounce costs
    b) Lower non-USD denominated wages due to strong USD.

    When oil prices return to $80 that should add about $250 an ounce to their costs.
    A weakening USD will add another $100. Sending their break even to $1,450. You gonna love those negative $250 an ounce gross margins when we see that 15:1 ratio again.

  10. rayalex123

    Gold and oil move together long term, so oil prices will essentially become irrelevant to the mining companies.

    Moreover, higher oil prices trigger higher inflation outlooks, which cause more investors to buy gold and miners as an inflation hedge.

    1. duckwhorocks1

      True. But medium term oil has a lot of catching up to do.
      For those thinking about $5,000 Gold, and other such fancy numbers, ask yourselves if the world can tolerate $325 oil.

      1. rayalex123

        It could not, and no one is suggesting that gold and the miners will go up forever. The bubble phase will end for various reasons and they will then crash. It’s all about timing.

  11. AmantedeTeclas

    Platinum made no new low yesterday. Instead it performed a minuscule head and shoulder over the span of two days. It is now thrusting upwards coming out of a rounded bottom.

    Silver shot upwards with a strong and long candle this morning and surpassed numerous internal and external peaks of this down-consolidation.

    In other words: Breakout in Precious Metals!!! 😀

    That may be it… Or maybe it will be a false breakout. Place Your bets.

      1. Pedestrian

        Don’t marry it though as its only short term oversold. It could bounce all the way back to just shy of 1000 dollars and the falling trend would still be intact so I would agree with you but be ready to bail once it hits resistance inside that trend.

        1. Pedestrian

          Amantede, platinum is among the top targets for acquisition by Rick Rule in various forms because its so damned rare relative to gold and future demands combined with current shortages could send it stratospheric. So I don’t want you to think I am dissing this metal by any means. Just playing the current technical pattern is all. I think Rick said it should be selling closer to triple its current prices to make economic sense. There is pretty much zero above ground stocks because it all gets used as soon as it is produced. Currently it is considered a strategic metal by the US Military and in a time of war that means some existing users might not be able to acquire it easily. It could in theory come off the market altogether given its tiny annual production numbers. So keep an eye on what it does next. If it jumps and breaks resistance at 1000 then hold on for more upside. If it falls even lower its unquestionably a buy as it bottoms if you believe we are heading into a global conflict. The upside to this metal should be substantially greater than golds at the end of the day. And yet it gets so little attention from the crowd.

          1. AmantedeTeclas

            Pedestrian, I thank You very much for sharing this information about it’s status as a strategic metal with me.

            I have studied the supply-demand fundamentals of the PGMs in detail in the past but didn’t consider that.

            Thanks Pedestrian and Duck for sharing all this valuable information.

            I would actually hold it longer-term. It is just that I am skeptical if the price could be influenced by paper-platinum markets as it has been the case with silver, the maybe most manipulated metal of all.

  12. Alexandru Popovici

    full long position in treasuries.

    tomorrow I’ll re-open my SPX-short position –> the dead-cat bounce signaled when SPX was 2117 is about to end.

    1. AmantedeTeclas

      Thanks for sharing this idea, Alex. I also got long treasuries, just with a small position, though.

  13. Goldlion78

    Long time reader, first time poster. Miners looking great today. Looks like Gary could be right about the turn being over by next week. Thoughts?

Comments are closed.