39 thoughts on “CHART OF THE DAY – $XAU

    1. Gary Post author

      Miners are on day 40 of their daily cycle. They don’t usually last more than 45 days. So I’m going to say we get our bottom by the end of next week. That should get everyone bearish and set the stage for a rocket launch to test the summer highs in March.

        1. Gary Post author

          At the moment there is virtually no chance of a rate hike in March. 17% to be exact. I don’t believe the Fed has ever hiked rates with the odds less than 75%.

          1. Jrasta2386

            We will find out …Im buying various Gold equities once HUI hits 210 and stink bids at 199 For the undercut

  1. Pedestrian


    Canadian dollar is rolling over. Bad for oil and bad for commodities in general. Tells me USD is going higher. Ozzie and NZ dollars also set for trending declines. Can’t any of you people see this stuff? Another commodity rout looks assured even as markets are set up to wobble next week. Anyway, silver is doomed over the next while and where silver goes gold usually follows. So therefore miners will sell off with commodity currencies and metals as they pull back.

    1. Gary Post author

      Once the 5 day RSI reaches oversold that is the buy zone for miners.

      The XAU is going to at least retest the summer highs during this intermediate cycle. Almost no one will end up making any profit from the move though.

      1. Pedestrian

        What makes you so sure the RSI-5 will not stay down once it arrives there?

        During last November and December the RSI-5 was stuck in oversold for a month and a half as gold kept selling off. On the XAU the RSI-5 remained below 50 for five months from Aug through Dec 2016 and XAU lost half its value during that time period.

        Oversold is not a guarantee that its a good time to buy. You need more information than that.

        Some fundamentals help. For example a hot dollar is a gold killer. And rising interest rates are also not beneficial for gold at this time. So a burst bond bubble will send gold reeling and the dollar soaring.

        I don’t presume to know if the Fed will raise rates again but they said they plan too several times this year. And if that happens gold is going to get hurt. The trajectory of the falling bearish gold channel argues against your idea that gold can retest the recent highs.

        That is impossible unless gold breaks out of its channel and does turn bullish. Because the channel is falling the next best price must by definition come in lower than the prior low to remain within the channel.

        Anyway, I don’t need to look further than the silver chart which is a barometer of economic health much like copper. And it says we are going to hit a speed bump soon. Can you tell me though when was the last time you saw gold diverge from silver for any serious length of time?

        On that basis alone I can conclude gold is going down.

        1. Gary Post author

          The dollar has gone down every time the Fed raised rates and gold has gone up.

          Based on history if the Fed raises rates that should kill the dollar and light a fire under gold.

          During the last bull market gold went parabolic to $850 as interest rates soared to over 15%.

          When rates are rising bond prices are falling. That would mean capital is coming out of the bond market and moving into other assets (inflation). One of those assets should be gold.

          I know markets can remain irrational for a long time. But they can’t remain irrational forever. At some point the natural laws of the universe have to regain control. Pure and simple. Central banks have printed trillions and trillions in currency units. There has to be a reckoning at some point. That reckoning has to include a bursting of the bond bubble and a very high inflationary period.

    2. WallStreetJesus

      Regarding oil – the commercial traders are the most short oil they have ever been. Even more short than when oil was above $100.

      I have heard nothing on CNBC but people pumping higher oil prices.

      Who knows if these commercial traders will be right when they place the biggest bet in history…..


      1. Pedestrian

        Exactly Jesus. And the Commercials are also net long dollars so they expect another commodities bust to be associated with a strengthening currency. They are also short gold, platinum and copper but extremely bearish silver. If they position that way and we know we are still in a gold bear market then that’s good enough for me. They are the professionals after all.

        1. Emptyness

          That’s not correct: The Commercials are short USD-Index and strongly long 10 Year US Treasury Bonds. Both together is very bullish for gold.

  2. Option Trader

    I see the same thing that Gary sees as far as flagging with the miners. They are flagging at major MA’s and appear to be digesting their gains. Bullish
    GLD and SLV look even more bullish to me on the longer term chart patterns.
    Although not a desirable day for the metals, nothing has been broken and no reversals took place.

    Nothing appears bearish to me. Next week will give us better direction.

        1. Pedestrian

          Too late. I already responded on the prior thread since I was a little stunned by the purchase. I was only trying to be helpful. Anyway, its your money. Throwing it away doesn’t affect me one bit so have at her.

          You might want to take note that the daily MACD’s on gold, silver and platinum are at the very top of their ranges and rolling over. In an earlier post I wrote about my objections to the use of 50 and 200 day crossovers but in the case of the MACD it is an excellent indicator of trend and momentum since it uses smaller time frames.

          Its fine with me if you all want to stay bullish metals and keep the good vibes flowing but it cannot hurt you to have inconsistencies pointed out if it helps your trading. I sure as hell don’t come here to send anyone astray.

          In other words, its the straight goods with no agenda and no bias.

        1. Pedestrian

          I know the RSI-5 on BAC has been oversold all week and is turning down. I know stock markets are going to be red for most of next week. And I am pretty sure you are sensitive to criticism even though you are posting anonymously on a public blog where you should anticipate people will answer you from time to time.

          Try not to get hung up on that because it will only distract. I would have preferred if you came back with a good argument on why Bank of America is a great buy right now.

          1. terrywg


            Cut him some slack! He bought TWTR calls a day before a 15% drop so he must really be hurting right now.

            Btw, you don’t think we’ll see a deeper sell-off in gold?

          2. Pedestrian

            Yes. We should see more selling. I’m not 100% bearish though even if I come across that way some days. I just don’t think gold made an acceptable bottom yet. Like there is unfinished work to be done. So I can’t climb aboard the bull train until conditions are met or until we get a real breakout on this 5 year bear.

            The big theme in the background though is the dollar and it’s worrying to say the least given how disruptive it may become should the appreciation continue. Fundamentally and technically the dollar has a long way to go yet and I don’t think any of us will like what we see if it cannot be restrained.

            The question I ask myself is why I even need to be invested in gold if dollars are going to be more potent. In May of 2011 the dollar bottomed after having fallen steadily for almost 12 years. During that long period of the dollars fall, gold rose. That was the period of the second great precious metals bull market of the last hundred years.

            And during the years since the dollars 2011 bottom gold has steadily fallen as the dollar appreciated significantly and ensuring the gold bear market had no opportunity to end.

            So it does not take a degree in physics to understand that should the dollar rise another 20 to 30% as the charts suggest that gold will suffer in dollar terms or that commodities will continue to remain depressed and under pressure.

            We need to always keep this central idea at the back of our minds no matter how much squealing is coming from the gold retards who see the ghosts of a resurrected bull market near the gate of every graveyard.

            So from a practical and pragmatic point of view we really cannot entertain significant upside in PM’s until the dollar has run its course and that is where our attention should be directed.

            And that means gold investing should be done opportunistically since its primary direction remains down. And it also means that long positions should be avoided due to the risk they entail. Rather, if we concentrate on buying and selling the inevitable bounces along the way the experience will be both more rewarding and assuredly more enriching.

            Unfortunately for gold buyers a strong dollar implies deflationary headwinds and continued depressed prices. Too many are jumping on the bandwagon of impending inflation but I just don’t buy it. And neither does the market or interest rates would already be far above where they are.

            So yeah, I see a bounce coming for gold once we finish this price correction. But I also think its one that should be sold at the first sign of upside exhaustion. Between now and then just ignore the pathetic bleating of the bugs. They will have their day.

            If their accounts survive long enough to enjoy it.

  3. Gary Post author

    Remember, if you are going to buy breakouts during an intermediate advance, don’t sell into corrections. Wait until the larger intermediate cycle is ready to top. Buying high and selling low is how one loses money during a rally even though they have the correct trade on.

  4. MegaMind

    if you get big red candles like we did few months ago…miners could easily drop 15% and still be in a bull market based on daily charts… that should reset sentiment and bull will be stronger than before…

  5. HomerJ


    If you are expecting a drop, then why the options buying spree? Why let a week of decay eat into them combined with a price drop?
    Would i not be a much better idea to buy at the bottom, which you expect at the 5 RSI oversold signal?

    The Quest 2 GDX calls are down 20.5%
    GDX calls are down 10% & 12%
    SLV calls are down about 5% due to lower volatility

    1. Gary Post author

      This is why I buy lots of time value so I don’t have to time perfect entries.

      Of course we would all love to have a crystal ball and time every trade perfectly. (we would all be billionaires).

      If I have to weather a few days to get to through the rest of the DCL then so be it. If I’m correct and the next daily cycle sees the miners test the summer highs then those positions will be up 300-400% even though we may not have gotten a perfect entry.

      And I could be wrong. If the euro reverses on Tuesday and starts back up then I will have only missed the bottom by one day. Remember the surprises come to the upside in a bull market, and all timing mistakes get corrected. So I’m not worried if I entered a couple of days too early.

  6. zkotpen


    Did you see my comments from the previous post (or was it the one before that?).

    Friday’s price action in metals & GDX continue to look like the end of a bull-trap.

    Pretty much the same conclusion as yours, though I reckon we arrive at them by different means. Also, my analysis gives zero meaning to news stories, though I realize they often play a role in timing.

    I think Surf & I are both pointing out — I explicitly and he implicitly — that Gary’s new daily cycles are actually intermediate cycles. I point to Nov 9 as exemplary — though I agree, your examples are more of the same: Gary’s new and extended daily cycles are behaving more like intermediate cycles, as you point out. That’s because they are intermediate cycles!

    Gold’s move down from 1244 to 1216 was a zig zag, which is enough to form a daily cycle low in and of itself. Only problem is, the bounce out of 1216 looks mighty corrective to me — like a bull trap.

    1. Pedestrian

      I don’t know Z since I am no expert on this kind of cycle count. I will just take Gary’s word for it that he sees a half cycle low. Not even sure if Surf and Gary are using the same method so I can’t weigh in on that discussion.

  7. ARends

    GLD has more influence on spot gold, they both have bounced on the good resistances 200MA and fib at same level! $ shoulder turned at good fib for drop. JPY also bounced at good fib resistance long. I do not see a futher drop from those fib & resistances.

    Here are a few things a person need to understand! Gary says this in less words. Why is it a contrarian trade and how to trade this rigged market. You need to understand this key fundamentals that drive banks in the trade, I believe!

    I agree also with Gary sentiment is key drivers for manipulation considering the banks rake in $ and create the noise for short term traps that need to be understood as the risk, considering technicals in the short term…That why ..Remember its a rigged market..think like the riggers/banks. Medium term and long term sentiments drive direction and noise of technical movement is additional short term traps…therefore called rigged.

    If you think in those term trades you will get screwed 70% of the times looking at the technical noise as it will always turn against you, looking for trading on confirmations!! Furthermore, By the time you think Ok the meduim term trend is confirmed (thinking like most traders/sentiment, like most others sentiment it will be going for good correction catching you.

    The bottom line is that Gold will screw you with technicals because the bank wants the majority money (sentiments direction, countering the stream) in the trade….that’s what Gary is teaching the contrarian view, that’s the banks outlook. The machines create the noise of traps with tech.

    So these are the constant factors for the confidence of the trade that needs to made. The foundation to the trade stay in the phycology that all you can bank on is with the major trend sentiment. The objective influencing sentiment with continual traps in weekly noise….you need to get the logic to have the confidence for the trade in the meduim-longterm .

    They want you to focus on the noise, in..out, wrong, scared, loss, wait , mis the big moves and increase risk. So your indicators that work best then would be , sentiment and old turkey. ICL and cycles timing help you maximise with ETF.

    Some tools only work in certain environments bottom line. JPY, DXY possibly help speed/drag in periods and deeper/shorter corrections, but direction of bull will stay on sentiment.

    I believe in its as provin strategy understanding the key drivers for confidence in the PM trade.

    1. Strike

      Emptyness – Thanks for the link to the new Roy-Byrne post. I’m a fan of his. He’s been cautious for a while but now he sounds more bullish than Gary. Interesting.

  8. Strike

    I am also a fan of riskier asset outperformance in early stages of upmoves heralding good times ahead. He emphasizes that in the article.

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