Gold

[Skol]

Bobcat says:

""""There you go again - throwing up your historical graphs as though they are relevant for today's decisions..."""

I'll go hunting for some graphs that predict the future then, maybe I'll consult a psychic.

[Bobcat.]

'Wisdom' in hindsight is really not wisdom at all, Skol. Anybody could take any graph of any commodity and compare it with some other tradable product or index to rubbish the views of people looking ahead (with a view different to your own)...

...but again you are driving with both eyes on the rear view mirror. That's fraught with more peril than driving with both eyes on the road ahead, glancing up every so often (only occasionally) to check what's on the road behind for an historical perspective.

[Hoop]

Posted on 7th April 2014........... Another chartists view...http://blogs.stockcharts.com/chartwa...houlders-.html

Erin Heim from Stockcharts has noticed a bullish reverse head and shoulders pattern could be forming...The right shoulder looks like it could formed with the 1277 low...He stresses the fact that the pattern hasn't yet completed and needs to now break through the neckline to complete the pattern..as always, patterns can break down at any stage. However if the neckline is broken ~1392 (same price as high point resistance line {see above post}) the pattern is formed and has a very low failure rate and a 74% chance** of reaching its target closing price 1587 .... (1382 - 1187) + 1392

Still early days but the technical signs are promising.

**http://thepatternsite.com/hsb.html

The last 2 months Summary

Back to my 24th March 2014 post#7057 I noticed a slight upswing of the coppock indicator...this indicator detects the beginning of bull cycles..it was early days back then.

On 27th March 2014 I posted a medium term chart showing a layman's paradox a bullish golden cross occurring during a bearish trend change...2 signs now showing a bull calf has been born and the bull/bear fights begin..I thought 1250 could be the limit of the fall.

On 6th April I posted #7161 that 1277 was the low point and a slow rise to as high as 1392 to test a major resistance..on its way to this first goal (1392) gold will suffer set backs..

On the same today reply post #7163...A flattening out of the downward EMA200 adding evidence to a dying or dead bear cycle.

Post #7166 says Erin Heim from Stockcharts is noticing a forming of a bullish bottom Head and Shoulder reversal pattern ..another signal to confirm a new bull calf.

8th May Post #7404 An updated chart showing bull cycle progress (coppock) well off its highs but failing to break out higher...This is a typical signature of phase 1 Bull cycles as most investors are still negative and the volatile bull/bear fights continue..except an alternating of positive and negative signals as well as numerous golden/death crosses..A new 1267 (1270) support added above the 1250 support...Young Bulls take time to mature...Bull cycles don't rely on time they always move forward through their phases never move backwards but their progress forward can stall..remember the low of 1188 should be the bottom if it is a new bull market cycle...Trading stops should be set here and the higher lows are used as stock accumulation points.
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Question: Why the above Summary??????
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Answer: People have bad memory retention..they remember the historic dramatic bits such as the 1188 low and their logic biases attached to that... however the uneventful less dramatic but equally important situations are not as the personal bias filters out these events and hence not retained in memory...The cyclic reversal point from bear to bull goes mostly unnoticed hence not retained in memory...Phase 1 Bull market cycles are times of bear worries which is considered bear cyclic stuff..and up to date situations has the investors focus and when the price dips after a rally most assume (today's focus+ retained memory bias) it to be another bear rally(sucker) and the price to will drop to a new low...This new low doesn't materialise in a new bull cycle....When the price suddenly moves upwards at the end of bull cycle phase 1 it is usually a very large rally and the bull catches many investors by surprise...

Therefore My Summary is to jog investors memories of the less dramatic reversal events that happened in the recent past.
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So......is the sudden drop to 1256 and close at 1259...bad news..of course it is ..short term TA sell signals was triggered in mid march and medium and longer term sell signals followed....

The good news if you believe in baby bulls, the bottoming out for the next rally is near...but..the old memory retention is a problem and we will always remember the echo of theTA analysts sell cries from a week or two ago..but at 1259 the situation could be different and not retained in memory.

So...Is the bear cycle is back in business...No!!!!

...Unless there is a new loss below 1188 the Phase 1 Bull gold cycle will still be alive and will progress to the sudden uptrend stage the bull cycle is not time dependent, so patience is a virtue.

Is Phase one Bull is useless as a buying point???...No

...keep accumulating at the low points there will be a few of them (1270 1250 1220). stop/loss just below 1188 ..maximum loss with a "turning pear shape" failure (low odds of happening) about -8%...rewards far outweigh risk...You will be "in" and maximise capital profit when the bull suddenly grows horns and takes off..(remember the formed H&S pattern promises a target of 1587 (74% chance of happening once formed)

The first chart below is the long term chart showing the advancement of the new bull market..The short term dive in gold prices have had not effect on the advancement The coppock indicator is now definitely showing a new bull cycle....A bullish H&S pattern is forming and is so far seemingly symmetrical...If the symetrical H&S forms to completion the left side will mirror and predict the right side (note the sudden fall on the left side may predict a sudden rise on the right side up to ).

The second chart is the medium term special event is the showing of the Bollinger band squeeze predicting a downturn ...the short term trading [shorting] effected the predicted outcome...
The selling activity weakens the bull and strengthens the bear in this shorter term fight and it may see the grey BB worm turn downwards a tad to retest its primary down trend line..I expect the test to fail and prices bounce up from here (Bull Cycle assumption)
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[Skol]

'Wisdom' in hindsight is really not wisdom at all, Skol. Anybody could take any graph of any commodity and compare it with some other tradable product or index to rubbish the views of people looking ahead (with a view different to your own)...

...but again you are driving with both eyes on the rear view mirror. That's fraught with more peril than driving with both eyes on the road ahead, glancing up every so often (only occasionally) to check what's on the road behind for an historical perspective.

All you have to do is ask yourself who's been right and who's been wrong. I've been right and you've been wrong and I expect that gold and silver will continue their slide, so you can 'trade to it'.

http://www.cnbc.com/id/101711736

[Bobcat.]

All you have to do is ask yourself who's been right and who's been wrong. I've been right and you've been wrong and I expect that gold and silver will continue their slide, so you can 'trade to it'.

Well actually Skol, we have both been right and wrong...at different times. You were negative towards gold mid 2013 when many PM digger stocks flew up over 100% from late June to October; and again you were very negative December through March this year when PM digger stocks rose up more than 75%. Those are not bad returns but of course you ignore them because they are inconvenient truths.

There IS money to be made trading around the volatility we have seen in the price of Gold. Timing of course is always important and I for one don't always get that right...but I'm working on it...and trading accordingly.

A question: Do you never buy stocks in companies producing the commodity you spend so much time commenting on?

[Bobcat.]

So......is the sudden drop to 1256 and close at 1259...bad news..of course it is ..short term TA sell signals was triggered in mid march and medium and longer term sell signals followed....

The good news if you believe in baby bulls, the bottoming out for the next rally is near...but..the old memory retention is a problem and we will always remember the echo of theTA analysts sell cries from a week or two ago..but at 1259 the situation could be different and not retained in memory.

So...Is the bear cycle is back in business...No!!!!

...Unless there is a new loss below 1188 the Phase 1 Bull gold cycle will still be alive and will progress to the sudden uptrend stage the bull cycle is not time dependent, so patience is a virtue.

Informative post, Hoop - thanks. I really must invest in a decent charting tool. What do you use?

[airedale]

Nice chart Hoop, I have seen an estimated Fibonacci low of $1160. That may or not happen, but if it does I won't be surprised. It looks like the SP is forming a stage 1 basing pattern. A good time to be a buyer.

[airedale]

And following my last post, GOR has just posted good news.

[Skol]

After the 1980 crash gold took 21 years to bottom out, so presumably the goldbugs are in it for the VERY longhaul.

[Skol]

Skol, are there any books out there detailing the rise and fall of bubble like gold and dotcom? As a historian I'd find it fascinating to get a daily, inside view into the mindsets and lead ups to these events. Either there are some out there or I'll have to write my own on the next big one (whatever it may be!)

I've got;

Contrarian investing
Gold Bubble
The Black Swan
Reminiscences of a Stock operator
Manias, Panic and Crashes
Extraordinary Popular Delusions and the Madness of Crowds (1841)
Ponzi's Scheme
Tomorrow's Gold
Freakonomics
Superfreakonomics
Annals of Gullibility

There's lots of books, Amazon have plenty, I find the subject fascinating, there's almost always a bubble somewhere and you can watch psychology in action. Some of them involve a large section of the population like the Albanian Pyramid Schemes that ruined the economy similar to Tulipmania.

http://en.wikipedia.org/wiki/Pyramid_schemes_in_Albania

The mischief people get up to with their money is hilarious, but they almost always end in ruin for the participants unless you're in the minority which get out in time, I guess the temptation of easy money is hard to resist.
It's not limited to any particular class of people either, even the rich and educated get cleaned out, I've seen lots of bubbles and ponzi schemes in my lifetime and there's always another one on the horizon.
A friend of mine got cleaned out for every last cent in this one - against my advice. They've got silver tongues and are very credible, they prey on the gullible and the greedy.

http://www.nzherald.co.nz/business/n...ectid=10631530

Michael Bradley is now deceased and Jackie is doing a few years porridge.

I was living in Canada for a few months and this one ended in ruin for many.

http://en.wikipedia.org/wiki/Bre-X

Lots of Aussies went broke in this one:

http://en.wikipedia.org/wiki/Poseidon_bubble

Porter (gold will be $10,000 by 2012) Stansberry is having a conference in Dallas atm where he'll be preaching to the converted.

http://stansberrydallas.com/

I think gold's got a long way to go down yet, but the goldbugs swear black and blue that they're right and everyone else is wrong, much of it looney manipulation conspiracy theories, but an expensive lesson nevertheless. They obviously think they're much smarter than Bernanke or Janet Yellen, but I can tell by their writing they got their education from Zerohedge, the Silver Bear Cafe and of course the gold scamsters like Peter Schiff, Jim Rickards and Mike Maloney et.al.

A calculation using an inflation calculator based on the price of gold around 1900 indicates the current price should be around $500 and silver $7.50.

Cheers