by Bill Downey     Price Analysis of Gold and Silver
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Technical Analysis Trading Gold, Trading Silver/ analysis By Bill Downey providing key turning points & charts for investors and speculators in Precious Metals Trading, and Precious Metals Markets

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Bill Downey, of Gold Trends.net, LLC, is an Independent Investment Analyst with over twenty years of study. YOU SHOULD NOT TAKE ANY MATERIAL posted on this WEBSITE AS RECOMMENDATIONS TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED. Do your own due diligence. No one knows tomorrow's price or circumstance. The author intends to portray his thoughts and ideas on the subject which may s be used as a tool for the reader. GoldTrends does not accept responsibility for being incorrect in its speculations on market trend or key turning points that it may discuss since they are at best a calculated analysis based on historical price observations.

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  • 31 Mar 2016 3:29 PM | Bill Downey (Administrator)


    The cycle chart is busy but don't let it throw you. All we have done is add the MEDIUM TERM cycles into the usual cycle chart you see. The Green is the ideal week for a turn and the Yellow is the WINDOW for a standard deviation required for cycles. Nothing works EXACT. Otherwise, the Greeks would have conquered the grain markets long ago.

    The short term blue cycle favors higher prices until April 7th (plus or minus 72 hours). That is a bit above a 70% confidence factor. I've HIGHLIGHTED a cycle FAILURE/INVERSION in November to show it can happen. It has not happened in 9 turns and we're at the end of the quarter and at a medium term point. IF GOLD IS VERY STRONG it should be able to hold 1215-1222 on a weekly basis. Since 1207 is the low any failure there and your looking at the potential of 1190-1200. The bottom line is that for the moment, we can trust the blue cycle with 70% odds. Remember, there are no absolutes. If gold does rally and gets above 1245, then the potential to move to 1272-1307 even to 1322. If we begin to fail here, and move below 1207, it would introduce the potential of a cycle failure/inversion where 1190-1200 reside at the channel line marked support. If price were to move inside the 2016 uptrend channel then it opens up 1122-1172.


  • 22 Mar 2016 11:31 AM | Bill Downey (Administrator)

     

    Why the Coming Debt Bubble Will Burst

    When will we know the bubble is bursting?

    INTEREST RATES !!!

    Interest rates rise for only 2 reasons - GROWTH (Confidence) and FEAR (Lost Confidence)

    We will know the bubble is bursting when the chart below violates the trend lines to the upside. We have now completed a Fibonacci 34 years from the top.  Price has been dancing up against the upper line for almost two years.   But it s coming !!

     

    Here is the chart with the last FEAR move in rates............and gold went from 400 to 875 during the rise.  This is proof that gold can rise during interest rate hikes.

    Today's news:  (Already at the state & territorial level in USA).

    Debt Default Watch = Puerto Rico will ask U.S. Supreme Court to validate law that lets it cut billions of dollars from what it owes in debt.

    Pre-Debt Default Watch

    Philadelphia is trying to introduce a 3 cent tax per ounce of soda. The excuse is that “sugar” is bad for you so they have only the best interests in mind for society. They expect to get almost $100 million annually. The city is dead broke and has a 22.5% tax on parking and 8.5% tax on hotels. 

    This latest “soda tax” means a 2-liter bottle of soda typically costs $1.50, but the tax would amount to $2.04, more than the cost of the actual bottle. The cost of a 12-pack of soda would nearly double to more than $8.

    Summary of what it means...........

    EVERY DOLLAR REMOVED BY GOVERNMENT FOR TAXES IS LESS TO SPEND FOR REAL GOODS WHICH IN ITSELF IS WHAT IS CAUSING DEFLATION --- IN OTHER WORDS PEOPLE HAVE LESS AND LESS TO SPEND ON GOODS.

    The problem is not Commodity Inflation ---- its government taxation and regulation that is churning out higher costs !   The proof is in the chart below (Commodity Prices).   We actually reached 1976 price at year end 2015.

    So now the government will try and sustain the price of oil & probably commodities.   The reason is simple.  If they don't stop the price collapse, the emerging market debt (which is 60% in US Dollars) will DEFAULT.  That is also why they are so DESPERATE to have the US dollar lowered.  

    Perhaps a secret deal may have been forged at the last G-20 meeting in Shanghai in March 2016.    In 1985 the Plaza Accord (G-5) did just that - a coordinated effort to lower the US dollar.   Did the Banksters just implement the Shanghai accord? 

    The double top at PAR 100 is the banksters last stand.  Right now the USD is still at a support point, but just barely.  The next support line is near 91-92.  The Central Banks are aware that a higher dollar = DEBT DEFAULT (on all money borrowed in US Dollars)

    How close are we really ?  While there is no exact date,  odds favor it is near.  But what can we learn from the past ? 

    Tomorrow's News:

    Sovereign Debt is What really brings down the House !!!

    Misplaced Confidence In The ECB - Lessons From John Law's Mississippi Bubble

    Submitted by Alasdair Macleod via GoldMoney.com

    Last week, the ECB extended its monetary madness, pushing deposit rates further into negative figures.

    It is extending quantitative easing from sovereign debt into non-financial investment grade bonds, while increasing the pace of acquisition to €80bn per month. The ECB also promised to pay the banks to take credit from it in "targeted longer-term refinancing operations".

    Any Frenchman with a knowledge of his country's history should hear alarm bells ringing. The ECB is running the Eurozone's money and assets in a similar fashion to that of John Law's Banque Generale Privée (renamed Banque Royale in 1719), which ran those of France in 1716-20. The scheme at its heart was simple: use the money-issuing monopoly granted to the bank by the state to drive up the value of the Mississippi Company's shares using paper money created for the purpose. The Duc d'Orleans, regent of France for the young Louis XV, agreed to the scheme because it would provide the Bourbons with much-needed funds.

    This is pretty much what the ECB is doing today, except on a far larger Eurozone-wide basis. The need for government funds is of primary importance today, as it was then.

    In Law's day, France did not have a central bank, such as the Bank of England, managing the issue of government debt, let alone a functioning government bond market. The profligate spending of Louis XIV had left the state three billion livres in debt, which was the equivalent of 1,840 tonnes of gold. This was about 85% of the world's estimated gold stock at that time, at the livre's conversion rate into Louis d'Or. John Law would almost double that by June 1720, with unbacked livre notes issued by his bank.

    Today, the assets being overvalued for the governments' benefit are government bonds themselves, but the principal is the same. There is no need to use a separate, Mississippi-style vehicle, because there is a fully functioning government bond market.

    Banque Generale created the bank credit for France's upper and middle classes to buy Mississippi Company shares, driving up the price and making yet higher prices a certainty. Law had set up a money-making machine for those with a modicum of wealth, but the ten per cent down-payment required to subscribe for Mississippi shares made speculation available to the servant classes as well. The result was virtually everyone in Paris was caught up in the speculative fever, and Mississippi shares increased from the 15 livres deposit to 18,000 livres fully paid at the peak in June 1720. The term "millionaire" dated from that time.

    Today, the ECB is doing things a little differently, creating money to buy government bonds from the banks, enabling governments to continue to spend without the threat of a funding crisis. Basel III banking regulations, which exempt banks from having to apply a risk weighting to government bonds, ensures that the bonds are also in great demand as collateral, further guaranteeing that the banks will continue to buy them.

    However, in common with Law's scheme, the ECB needs new suckers all the time to keep the market from stalling, so the ECB is extending the scheme beyond sovereign debt by buying up investment grade bonds as well. And since it can conjure up money out of thin air, it will also pay the commercial banks interest to borrow from it, ensuring the yields on all bonds purchased with this finance will continue to fall in line with negative interest rates.

    As was surely the case in 1720, the expansion of credit is commonly believed to be a very good thing, as necessary for the welfare of the Eurozone states today as it was for France three hundred years ago. But don't be fooled. For the scheme to continue, more credit has to be issued, and more bonds bought to stop the bond bubble from deflating. That is the real reason behind the ECB's action. And because it cannot be continued for ever, that is why ultimately the bubble will pop.

    The Mississippi bubble came to an end when France ran out of sufficient buyers to keep it inflating. There always comes a point where the temptation to cash in some profit to buy those other things long desired, such as a country estate and a smart Paris residence, becomes too great to resist. And when the Mississippi bubble lost its mojo, the selling escalated. By late 1720, the Banque Royale, as it had been renamed, faced angry note-holders unable to redeem them for specie. Once the run started, the whole scam rapidly imploded.

    It seems extraordinary that in economics, wishful thinking trumps reasoned analysis and common sense so often. The fallacies that have brought the ECB to implement its delusional policies are broadly the same as those in which John Law believed. In both cases, they started by assuming that the state has a duty to ensure money and credit are freely available, unchaining the population from the constraints of free markets. In both cases, their beliefs inevitably adjusted as a result of problems that subsequently arise as the by-products of monetary expansion. And in both cases, yet further monetary expansion then became the only solution to apply as a cure-all for the problems themselves. Unsound money has come to be deployed simply to keep bankrupt governments going.

    We should put to one side all other reasons, justifications and excuses for what has happened, because it was the French state that employed Law to run its bank, and the Eurozone governments that created the ECB. The servant always serves the master. Banque Royale succumbed to a run, while the ECB is still nursing a banking system, that on a reversal of the asset bubble, will almost certainly collapse. In this respect, the ECB is not quite at the Banque Royale's tipping point, but it is edging closer.

    Everyone in the Eurozone believes that the ECB is all-powerful, because to believe otherwise is unthinkable. This was also true of Banque Royale, until it faltered. It was not a loss of confidence in the bank that was responsible for the collapse, it happened as a result of the difficulties encountered in sustaining the bubble. The lesson is that it need not take a loss of confidence in the ECB to start its destruction.

    Let's imagine for a moment, that the bond-market bubble ends and prices start to normalise. We know that it won't take much to create losses that will wipe out the capital of some critically important commercial banks, but we like to think the ECB is on top of this problem. Very few people seem to be are aware of the crisis that falling bond prices would create for the ECB itself.

    The ECB's equity capital at 31 December 2015 was €7.74bn, supporting a balance sheet of €256.645bn, a gearing ratio of over 33 times. The wider euro-system's accounts, where the asset purchases accumulate, has capital and reserves of €98bn supporting a balance sheet of €2,872bn, a gearing ratio of 29 times and rising. As a rough guide, an interest rate increase of less than two per cent, to as little as one and a half per cent, would undermine the value of bonds and related risks at both the ECB and in the euro-system, to the point where they would require further capital injections. For some context, if the yield to maturity on a five-year bond rises by 2%, the price falls roughly 10%.

    Now we are getting to the truth as to why the ECB's debt bubble must be sustained. It is no longer to support economic growth. A deflating asset bubble will take down the ECB and the wider euro-system, just as the Mississippi bubble took down Banque Royale. And in both cases, the confidence vested in these institutions is reflected in the purchasing power of the money they have issued.

    It may not be long before foreign holders of euros begin to visualise Mr Draghi in a full-bottomed wig, lace jabot and long velvet coat. Their problem will be looking for safety, because the ghosts of eighteenth-century monetary economists can also be imagined at the helm of the other major central banks. In John Law's day, the solution was simple, as the private banker, Richard Cantillon showed. He cashed in early, selling livres for gold.

    Cantillon, who was the equivalent of today's investment banker, not only punted the Mississippi bubble successfully, but he loaned large quantities of fiat livres to the wealthy in Paris, taking in Mississippi stock as collateral. Before the crash, he had the prescience to sell all his own stock for gold. It is said that he also secretly sold all the collateral he had had pledged to him, again settling for gold. Cantillon then removed himself across the border to Italy with his stash of Louis d'Or to await developments.

    After the crash, he returned, and demanded repayment of the outstanding debts from his clients. Cantillon probably became the richest commoner in history, and immensely unpopular in Paris to boot. Rather like the investment bankers of today, he made his fortune while nearly everyone else was impoverished.

    We cannot say for sure what will trigger the end for the ECB and the euro. It could be a member state, like Italy, Spain or even France, running into financial or political trouble. It could be the threatened break-up of the European Union, if the Brexit polls swing in favour of Britain leaving, and the blow that it would impart to European unity. The Muslim immigration problem is often cited as a threat to the European project. It could be developments on the other side of the world, perhaps China driving up commodity prices, leading to future price inflation in the Eurozone, so leaving Eurozone bond markets exposed to the threat of rising interest rates.

    Equally, it might not be an identifiable event. Rather like the Mississippi scam, it could end when the Eurozone's bond markets just run out of steam.

    Is gold reacting because it is time?

    "We are in the window for change"

    Gold Medium Term

    Gold has broken out of a downtrend and many are calling for the bear market end.  If this is so, then gold must move above the TWO BIGGEST RESISTANCE lines in current striking distance and that is the Fibonacci 38% retrace at 1280-1290 and the April 2013 CRASH LOW at 1322 when over 600,000 (100 ounce) contracts changed hands.  A monthly close above 1322 favors a test of 1400 as the next great resistance.

    Gold Short Term

    The next cycle turn is due Marc 23rd (plus or minus 72 hours).   Just keep in mind that on average, 3 INVERSIONS occur yearly.   You can see the last INVERSION on the chart where the BLUE CYCLE TURNED INTO A HIGH...........and price got decimated.  Keep that in mind.  There are no absolutes in markets --- only odds.  On the shorter term, support is the 1233-1243 area and then 1217-1222 & 1190-1200.  For now the upper channel line is Price resistance (1288).  If we close above there, then look for 1305-1325 next.

    Silver Long Term

    History shows that Silver participates in all gold rallies.   This looks like the spot to now watch if silver gets stronger than gold.  That's what we need to see. 

     

    Silver Long Term Chart

    We posted this on Twitter on December 3rd ---- to buy silver at 14.06.   It was the exact week that gold bottomed at 1050.   We also posted this buy at 14.34 on the website.  The only other long term trend line is at $8.00.  We won't rule out a test of that area, but should it come, one should close their eyes and buy another round of silver with both hands !!!

    Summary

    The "window" for the gold turn has been Oct - 2015 to June 2016.  That is when gold is most likely to bottom.  We have stated this since last September on our website updates.  So far the Dec low at 1045 meets the criteria.   We won't rule out another wave just yet,  but if we get above 1322 on a monthly basis, odds favor the bear market is over for gold and silver.

  • 21 Mar 2016 12:09 PM | Bill Downey (Administrator)




    If Gold is to Rally, History Favors Silver to Follow;

    If gold is to rally, history favors that silver has to follow.   A look at the last 22 years shows this is where silver usually takes its cues and begins to appreciate more than gold.  Is there any fundamentals that suggest higher prices?



    Investors seem to already be aware that silver prices are cheap relative to gold as you can see by this chart below by Smaugld.  A surge of buying in the last six months has come into play.

    But there is one other thing worth noting about silver.



    China's Silver Grab

    By Sean Brodrick

    Working very quietly, China is taking the reins of the global silver market, which is one more reason the price of silver is likely to move much higher.

    Behind the Scenes

    A major Chinese bank just became an official participant in the London Bullion Market silver price - the group of banks that matches buy and sell orders to set a daily price "fixing" for silver.

    The bank is China Construction Bank. According to CME Group, this leading Chinese bank will officially join existing participants HSBC, JPMorgan Chase, The Bank of Nova Scotia, Toronto Dominion Bank and UBS as the entities that set the price of silver.

    CME Group is involved because it provides the electronic auction platform on which the silver price is calculated or "fixed."

    "China Construction Bank is delighted to be the first Chinese bank to become a participant in the Silver Price auction process in London," Mr. Gu Yu, general manager of the financial markets department at CCB, said in press reports. "This further builds on our combined efforts to boost renminbi liquidity and products in Europe."

    At the same time, CCB says it will help develop a futures contract for physical delivery of silver in London. But this contract won't be denominated in British pound sterling, euros or even the U.S. dollar. Instead, it will be priced in renminbi, China's currency.

    So, for those keeping score, that marks the first time that physical silver can be bought and sold in London (or in any global market) in China's currency.

    Soaring Imports

    Why is China doing this?

    "China's silver imports recently hit their highest level in four years," Eric Fry writes. "Most likely, the Chinese are stepping up their silver purchases as a way to protect themselves from the risk that their currency, the renminbi, will continue to lose value against the U.S. dollar."

    And sure enough, China's silver imports are soaring.


    China's silver imports have grown for three years in a row. They're still not back to the levels China saw before its financial crisis. But China's investors are buying silver hand over fist as a way to beat that country's draconian capital controls. China's laws limit annual overseas transfers to $50,000 per person.

    Fearing that their currency could be devalued further, Chinese investors and consumers are working around this rule every way possible. That includes buying silver to store wealth... or sometimes to easily transport wealth out of the country.

    Sure, the IMF declared China's currency to be an official reserve currency last November. That puts the Remnimbi on a more even standing with global powerhouse currencies such as the dollar, the euro and the yen. But it is fundamentally overvalued, and many analysts fear a sudden devaluation of 10% to 15%.

    More Bullish News

    The Chinese aren't the only ones interested in silver. Holdings in the silver ETFs tracked by Bloomberg are expanding rapidly. Through Monday, inflows totaled 474 metric tons since the beginning of the year. That reverses almost all of last year's outflow of 524 metric tons.

    And silver coins are flying off the shelves. From the start of the year through last week, 12 million U.S. Silver Eagles were sold. That's nearly 25% higher than during the same period a year earlier.

    This level of silver demand is being called "unprecedented." February sales for U.S. Silver Eagles were the highest the mint has ever seen.

    Meanwhile, on the supply side, a big squeeze is developing. Global silver mine production is expected to fall in 2016 by as much as 5% from 2015. This would be the first drop in mine production since 2002.

    So, put it all together and things are looking bullish for silver prices.   (JUST KEEP IN MIND THAT GOLD MUST FOLLOW THRU HIGHER -  GOLDTRENDS)

    Good investing,

    Sean Brodrick

    For The Non-Dollar Report

    GoldTrends (Charts & Outlook)

    Silver Short Term Outlook

    Silver enters this week with 1st support near 1565-1575 and then 1520-1535.  Any move down to 15 or 14.50 should be considered a good buying opportunity.   IF silver moves above 16.40 resistance, then the 17-18 barrier would become the next target.  Remember, gold must keep its rally going if silver is to make waves higher.


    Silver Long Term

    On a long term basis we made our 1st silver buy Physical recommendation at 14.06-14.36.  Odds are highest that one of these two trend lines is where the low will happen.  We've already hit the Uptrend line and significantly, it was at the 200 Month Moving Average.  I personally have bought physical silver in December and March of this year.   We cannot remove the potential of silver reaching the down trend support line should the current recession turn into a full blown depression.   But if that were to happen, I would certainly add to physical holdings in the 12-10 & 8 area to complete my physical buys.  While there are no absolutes in markets, having some physical silver makes sense in the years to come.  

    Gold Short Term Outlook

    From a wave perspective, the best fit seems to be we have completed 5 waves.  Keep in mind the best fit is not the ONLY FIT.     As long as gold is above 1222-1232 the short and intermediate term trends are still up.   On the upside, as long as we remain below 1272-1287 then this wave count below will remain accurate and would allow a correction to deepen if we move below 1217-1222 on the short term.   The ideal place for a trade would be the 1172-1182 area in gold or near 1150.

    Summary - marking choppy wave patterns is much tougher than clear impulse waves as in the 1st and 3rd wave on this chart.  Watch that 1217-1222 and up to 1233 area.  That's 1st level support and then the 1172-1200 area as a 2nd level area to watch.


    Gold Cycles

    Short term gold cycles favor a low March 23rd (plus or minus 72 hours) thus we are now in the window.   

    The tricky part this time around is the Medium Term Cycle window is open (yellow).   We can argue a high has been made and a pullback towards support near 1200 or all the way down towards 1150 can still develop.  That would mean this coming blue cycle would produce a low, and a bounce but would be a weak one that would lead to a lower price at the next RED cycle (around April 21st) but keep in mind, this is speculation on our part.  

    The other side of the coin is that gold will remain strong, and will bottom this week by holding 1217-1222 or even 1232 as support.  That's the strong scenario.  The normal scenario has gold reaching near 1200 and the weak scenario has gold moving back to 1150-1175.

    For now watch either 1217-1233 or 1190-1200 area for two best places for a low this week.

    What we don't want to SEE IS A HIGH FORMED IN GOLD THIS WEEK (Inversion).   That would put a lot more bearishness intermediate term on the cycles we watch and at the moment WE CAN'T RULE THAT OUT.   March 23rd has the potential to be an explosive day in markets.  Keep that in mind.


    Gold Medium Term

    Most evidence supports a major turn attempt to end the bear market is in process.  Gold has done the first thing correctly by bottoming at the Fib 50% retrace near 1050.  Now it has reached the 38% Fib retrace (1280-1322).   This is where we would get another confirmation that the lows are in.  From a momentum standpoint, that TRIPLE GREEN UPTREND LINE is where gold (above it) resumes is long term momentum.   In other words, it becomes key resistance if gold can conquer  1280-1322.


    Bottom Line

    Watch silver for gold clues, and consider buying some physical silver at the prices we discussed in the report. 

  • 16 Mar 2016 2:04 PM | Bill Downey (Administrator)

    FOMC minutes today


    The Federal Open Market Committee (FOMC) last told us in December via its dot-plot forecasts that it anticipated the Fed-Funds Rate being raised four times this year. Now, due to economic uncertainty, NIRP discussion and market turbulence, the market has completely priced that prospect out. Fed funds futures indicate there's just an 8.5% probability of that happening, and investors believe there's just a 50% chance of the Fed hiking in June and 75% chance it only hikes once and not until December.

    But economic data has improved somewhat, though it is still mixed. Importantly, the employment situation (as they report it -- not how we feel) is strong, with 4.9% unemployment and nonfarm payrolls growing robustly at last check. Also, inflation seems to be ticking up, with the Fed's favored inflation gauge, the Core PCE Price Index, rising 0.3% in January. 

    We don't think it's enough to support gold but it is enough for the Fed (continue saying) to hike rates. Those are the two mandates for the Fed, seeking full employment and healthy but not excessive inflation rates. Moreover, indications are that economists foresee 1.9% GDP growth for Q1. 

    To some extent, this is not the sort of scenario for NIRP, but rather a window of opportunity for the Fed to normalize monetary policy and store bullets for the next financial crisis or recession.  

    We don't believe the statistics they tell us are really indicating a robust economy, but it doesn't matter what we think, rather what the street thinks.

    I expect when the Fed presents its dot-plots Wednesday, it will show it still expects to raise interest rates 2 to 3 times this year. That is significantly more than the market has priced in. I believe that will result in a higher dollar, which in turn should give a headwind to gold prices (potentially) today & possibly into Monday.   I say potentially because I believe that higher rates are good for gold but it will be a good opportunity for the COMMERCIAL Short positions to push gold towards 1200.

    Support is either 1217-1222 ---- or 1185-1200 at the lower 2015 uptrend line and could be as deep as the 2016 upper line at 1162-1172.  The next short term blue cycle low is Mar 23rd (plus or minus 72 hours) so we are nearing the gold window for a short term low.   Just keep in mind that this is a medium term cycle.  We thought that the potential to rally into the 23rd was possible last week but it looks at the current moment that we're going to move lower into that next point.   ANY CLOSE ABOVE 1280 means we are heading higher to 1302-1322.  The strongest support is the area near 1172-1182 and that right now is where we would look to buy gold. 


  • 08 Mar 2016 4:54 PM | Bill Downey (Administrator)


    The short term traders greatest enemy is trying to pick tops and bottoms on their trades.  

    There are more losses generated in trying to pick tops and bottoms than all the other losses combined. If that is so, then it is the main reason why 85 to 90% of all traders end up losing their account money. 

    This is not to say that there aren't times that one should look for a bottom or top, but the idea of trading them as a strategy is the single biggest reason of incurred losses.  There was an old saying the professional trades used to use when the Chicago Board of Trade first became the main trading hub of the grain markets.

    "Top pickers and bottom pickers become cotton pickers."

    When we think about it, trying to pick a top or bottom is about the most arbitrary thing one can do.  How do we know its a top or bottom before one occurs?  

    Trying to pick tops and bottoms is arrogance at its best because it saying "i know more than the market knows."  "I am smarter than the other traders are."

    Sure, the market lets you pick SOME tops and bottoms.  Just enough to make you think it can be done enough to yield a profit. But it's only really enough to lure and ADDICT you to it. At that point you are set up to think you're smarter than the market and that's when the market lets you have it by proving you wrong more often than not while systematically taking away your trading capital.

    There is only two things that picking tops and bottom satisfies.  The first and foremost is EGO.  And the 2nd is selling newsletter and trading subscriptions.

    The 2nd is only so because THE CROWD DEMANDS IT.  This is the reason why all the newsletter advertisements don't show their trading performance to lure new subscribers, they publish the TIMES THEY SUCCESSFULLY called a top or a bottom.  

    The sad fact that picking tops and bottoms does not mean MAKING PROFITS.  Those who pick tops and bottoms are usually the biggest losers overall for the simple reason they keep doing it until they are finally right for once.  Unfortunately, the other losses when they were wrong add up to more than when they are right and eventually they end up losing all their capital and their subscribers.  

    How many times have you heard the so called metal guru's (who are really salesmen for metal) tell you that the bottom is in.  Most have said so 10 or 20 times since 2011.  And it stands to reason they will pick the bottom on the 21st call and you can be assured that all the advertisements going forward will say --- WE PICKED THE BOTTOM.  And they did. But they lost all their clients money doing it over the past 5 years.  

    The 2nd biggest reason traders lose their capital is because they OVER TRADE. They just always have to have a trade going.  If you always have to have a position on, your most likely ADDICTED to trading.  Even though you don't know it, that means your doing it for the Adrenalin rush and not for making money.  The markets always gives one what it really desires.  KNOW THYSELF. 

    But this discussion is for another time and post.  Let's look at the last silver trade we did on the trading page.

    First things first.  A TRADE is not a long term investment.  If you look at our recommendations, we have made only 1 INVESTMENT recommendation in the past 5 years for Silver.

    We published this chart on Twitter at 14.06 silver and on our signals trade page and gold report when silver was 14.34 for our ACCUMULATE position.  At the time silver was at two long term trend lines and at the 200 month moving average.  Continue to hold this position and add should silver go to 10-12 dollars.  


    On our short term silver trade, the chart below shows we entered at the 233 hour moving average at 15.08, and sold it when after a double top appeared, silver then proceeded to break the upper trend line at 15.62.  We did not pick the top or the bottom, as our main goal was to try and extract some money on a short term basis. When silver shows us another high odd set up,  we will trade again.   




    In summary,  short term trading is not about picking tops and bottoms, but trying to extract a profit during a short term move.  

    Trading is not investing so don't think you can trade an investment.  On the investment side, we've initiated an accumulate for silver at 14.06 and 14.34.  You're best bet is silver coins pre 1964 as they are the lowest in premiums and are most recognizable should they need to be used during a crisis.  They are also still recognized as currency, and thus should have the lowest potential for government confiscation.  

  • 26 Feb 2016 9:18 AM | Bill Downey (Administrator)

    Launch GoldTrends.net    

    The high that occurred on Wednesday at 1253 made a mess of the cycles,  It is possible that a Cycle Inversion could have taken place where we have the potential that the blue cycle made a high instead of a low.  The window closed last night and the only way we are going to know that ITS NOT A INVERSION is if gold rallies above 1253-1263.   The bottom line is that we need to be very cautious here.  Lets go to the next chart.  




    The other reason I'm concerned over these next two weeks is that on the seasonal chart below, the latter portion of February to middle of March on average is a weak time of the year and as you can see, its prone to producing big sell offs.  Not that IT ALWAYS sells off,  but it does so more often than not.  




    Finally, Silver is not acting well at all as it moved from 1490 to 1560 but has now given up almost all its gains. Its very close to losing support at 1502-1507 and could fall back into the channel where a move lower to 1480 and even 1460 could take place.  Not only that, but the green 200 hour moving average has moved above the blue 89 hour and until silver can close back above those averages, the very short term trend is vulnerable to a selloff.





    Lastly, the G-20 meets Friday and Saturday and there should be a lot of discussion about a lower dollar.  In other words, this could be a fake out before some announcement.   

    Is that why gold is still above the very short term moving averages and the 89 hour average is still above the 233 hour.  Perhaps gold is reluctant to sell off in lieu of the G-20 and what could happen where silver is not affected the same way.  We just don't know for sure.  It's best to be cautious in short term outlooks.  The potential for lower prices can't be dismissed..  




    BOTTOM LINE ---- BE CAREFUL as there's a lot that's not right at the moment and we need to be suspicious.



  • 23 Feb 2016 4:00 PM | Bill Downey (Administrator)


    Gold Short term

    We tested 1190 so far on this pullback but nothing more. Then we shot up to 1240, only to come back to 1202 before the move back to 1222 area. Support remains near 1180-1190. As long as we stay above 1205, the overall short term trend will be up. A close below 1205 and odds favor we test the 1180 area. On the upside, if we get above 1228, then there is still resistance at 1235-1240 and then 1255-1265. A MONTHLY CLOSE ABOVE 1255 would be big for the continuance of the upside.


    Gold Short term Cycles

    The next Cycle is due Feb 22nd (plus or minus 72 hours). That means that odds are 70% that gold will begin to move higher again after Feb 25th. The last cycle began early and finished right near the post 72 hour period. Any pullback to 1180 this week would be viewed as a short term buying opportunity.

    In summary, gold has burst into the 2015 uptrend channel and as long as we remain inside the channel the trend is up. Odds remain the upside action is in play as we make what looks like another blue cycle low.


    HUI

    Medium Term – Neutral

    Medium Term Moving averages – 122 – 126

    Intermediate Term Moving averages – 146-138— Bullish.

    The intermediate term trend remains bullish since Jan 28th and the medium term trend has moved to neutral as of Feb 1st. As long as we remain above 120-129 on a weekly basis the medium term has been neutralized.

    Support is now 144-150 and 120-126. As long as we are ABOVE 129 trends remain up. Any pullback to 140 should provide strong support. Any close above 166 would favor we are heading for 180-185 next. The trend remains UP.


    Long Term Gold Stocks

    On a longer term basis, the chart below shows the entire bear market in gold stocks. The current downtrend line is perhaps the most important line of all to take out. This would show that the current rally’s momentum is reversing the huge selloff. This is a massive bullish flag formation. But it needs the follow thru now.


    Gold Medium Term

    Long Term Trend ~ Bearish since Oct 2013 @ 1361

    Long term Moving averages 1224 – 1312

    Medium Term Trend ~NEUTRAL

    Moving Averages 1117-1126

    The big news technically is the dual downtrend yellow line got taken out and prices exploded to just under the 38% retracement area in gold. That is the last resistance on the weekly chart until the 1309-1322 and then near 1400.

    As long as we remain above the moving averages (1117-1126) the uptrend that started in 2016 remains in play. Since April of 2014, we have listed at the top of the report that we need a monthly close above 1255 in order to come out of bearish mode and move to neutral. The weekly close was 1247 so far in February (intraday was 1263).

    PULLBACK SUPPORT IS THE FIRST YELLOW LINE AND WE SHOULD SEE OUR FIRST SUPPORT ATTEMPT THERE near 1180-1200. IF we hold that dual yellow line, gold’s upside will still have potential for a total medium term trend change.

    In summary, the top dual yellow line is support, in between the lines is neutral and a close BELOW THE LOWER DUAL YELLOW LINE will put KEEP the bear trend in gold still in play. Look for the upper dual yellow line to provide SUPPORT and then we’ll see if gold can mount an attack back above 1255.



    Dow Jones (US STOCKS)

    US Stock Market – Medium Term Trend has moved from Bearish to Neutral.

    The US stock market is trying to climb back to the broken support lines. It would take a monthly close above Dow 17300 to neutralize the downtrend that is underway. On the downside, a monthly close below Dow 15300 would favor the next down leg has begun. Unless we get a miracle rally to month end, the Dow goes from bullish to neutral on the 29th if we are below Dow 17300.



  • 19 Feb 2016 2:14 PM | Bill Downey (Administrator)

    Gold encounters tramline resistance


    From John C Burford


    Now that gold has zoomed up by $200 off its $1,050 December lows, it is grabbing major headlines. Gold mining shares, which were shunned two months ago, are back in fashion. Isn't it curious how quickly sentiment can change?

    As a measure of market sentiment, I have shown charts before of the position of hedge funds in the futures market in terms of their holdings of long and short futures and options. Remember, the Comex gold futures market is the leading arena for price discovery – and the hedge fund group is the major player.

    I have stated many times that hedge funds are herding beasts – they are primarily trend followers, not contrarians. If they spot a definite trend, they will jump on it seemingly regardless of the dangerous waters that lie ahead.

    That means after a trend develops, hedge funds will, as a group, accumulate either long or short positions in the trend's direction. Then, when the trend turns, they are caught with a maximum amount of wrong-way bets. In gold, they have been adding bearish bets all the time during the downtrend last year. That is, until the trend change in December.

    And individual traders, who are not herders, can use this priceless information to our advantage.

    Here is the updated sentiment chart as measured by the Commitments of Traders (COT) data. Remember, this is not a survey (as is the Daily Sentiment Index that I often quote), but real money on the line. This is the ultimate commitment to express your views.


    chart courtesy www.elliottwave.com


    The blue line represents the net position of hedge funds (managed money) with respect to their long/short futures and options holdings. In December, a most unusual event occurred – they held a net short position (the record on the chart).

    For speculators, this is an all-time record level of bearishness.

    Just admire the coincidence of the highs in the market with the highs in the blue line. If an intelligent Martian landed and saw this chart and knew nothing about gold or trading or the futures markets, wouldn't it conclude that money can be made by shorting at the highs and buying at the lows as indicated by this COT data?

    Yet most hedge fund managers are oblivious to this rather obvious relationship. Maybe they are just not as smart as many believe. In fact, that is certainly true – otherwise we wouldn't have a chart, such as the above, to guide our trading.

    But in the main stream media at least, hedge fund managers are seen as very wealthy magicians who can conjure up millions for themselves in the markets.

    Today, I will show you my interpretation of the twists and turns of the gold market since the December lows.



    My blue lines are trend lines drawn against the minor highs, and every time the market broke above them that was a clear buy signal.

    My red wave 3 contains its own mini-five up and the spike high to the $1,265 high is my purple wave 3. This week's decline off it is my purple wave 4. Now, fourth waves can be very tricky affairs as.

    Wave 4 could morph into something more complex and even decline a little more before bottoming. But when wave 4 does terminate, a rally should take the market to the purple wave 5 high above $1,270.

    How does this fit onto the bigger picture? Here is the weekly chart going back to 2012:





    The $1,050 December low was the final fifth wave down off the 2011 top, and the rally since then is part of what should be wave 1 of a five up. I have excellent tramlines drawn (that amends the wedge conjecture in my 10 February email) and the spike high to $1,265 has bounced off the upper tramline as it hit resistance.

    If the market can break above that tramline, it will send a strong bullish signal and the masses of buy-stops placed above the highs that are arrayed along it since 2013 will be touched off – with explosive effect.

    But a word of caution: hedge funds are moving rapidly to the bullish camp (see first chart), so large sell-offs become much more likely. Traders beware!

    Until next time,

    John C Burford


  • 17 Feb 2016 12:55 PM | Bill Downey (Administrator)
    Launch GoldTrends.net    



    Everything has changed so far in 2016 for gold.  Instead of selling off after an NFP report, it didn't.  Instead of selling of going into an FOMC meeting, gold only pulled back for one day and it took off higher again.  Instead of selling off during Humphrey Hawkins testimony by Yellen it rallied from 1180 to 1260 over the next 24 hours.  Last but not least,  the last few years when China would close for their new year, the control boyz would press prices lower.  Again the opposite happened and gold rallied right thru the week.  When a market begins to do the opposite of what its used to doing it suggests that things have changed for trend.  While its not a guarantee we need to be alert when the next Options Expiration comes up at the end of the month, and the next NFP report as well as Fed FOMC meetings.  If the same thing happens, it will be another clue that the bear market is over.


    Support is that red channel line near 1190 and then the 1172-1182 area and then hear 1155.   Odds favor 1190-1195 or 1172-1182 will be this weeks low.






    This very short term chart on gold shows first support at 1190-1195 (Fib 38% re-trace) and that area was touched on Tuesday.  

    The 2nd support area is 1167-1172 (Fib 50% re-trace) and that is the area with the strongest support.  

    Resistance is the blue moving average near 1217 - 1222.





    ON the daily chart below here again we see the 1172 area showing it as a strong support area where the 2015 downtrend line crosses with the uptrend channel.  Price is now in 2015 territory and  that's another reason bullish development.




    Short term cycles

    The last blue cycle bottomed a few days and that happens once in a while. But the rally lasted right up until the last few hours of the  cycle window.  Here is yet another indication that gold (at the moment) is strong.  If this remains the case it's possible that gold will hold the 1190 area instead of moving to 1172.   Since the window for a turn doesn't open until Friday and the ideal day is not until Monday for a turn, I'm hoping gold will test the mid-channel line near 1180 and possibly break it by a little to test 1172.  That 1172 area is a YEARLY PIVOT NUMBER so it should offer strong support.  The other lower line is near the 1160 area but we don't expect it to be tested this week.

    The next cycle turn is due Feb 22nd (Plus or minus 72 hours).  That means the window for a turn opens Friday and will last thru next Thursday.  In summary, the intermediate term trend remains up in gold and as long as we keep making the lows on the blue cycle, the odds favor the trend remains up.   What we don't want is an inversion where we start making RED CYCLE LOWS.  That rotation is usually associated with a market that rises during counter trends and not the main trend.   The last ROTATION to a blue cycle low was right at the bear market lows.  As long as we remain with blue cycle lows, the odds favor the trend remains up.





    Silver 

    Silver has support at 1502-1510 and then at 14.80.  One of those two points should be this weeks low.   Resistance is 15.39-15.49 and 15.60.



    Is the bear market over ?

    We had Dec 2015 - June 2016 as our window for a bear market low and Dec or March as the two most likely months for a turn.

    For a price range we had 850-1050 as the zone where a low was most likely to occur.

    Decembers low was 1045.  That means that gold has met the requirements in price and time to bring an end to the bear market.

    Gold must close above at least 1130 on the last trading day of the February in order to move the medium term trend from bearish to neutral.

    More importantly we need to see a weekly and monthly close above 1255 to confirm the medium term trend is no longer bearish.

    Since April 24, 2015 that has been the number to watch on our reports for the medium term.   (Last week's close ws 1247).


    Bottom line is that there are many indications that the bear market is over for gold.  So far, we've gone from bearish to neutral.

    We still need to see a weekly and monthly close above 1255. 

    The key development is the dual yellow downtrend line has been exceeded and not it becomes support.   Resistance is the Fib 38% area from 1270-1288.  Its the last resistance until the 1322-1360.    The TRIPLE GREEN LINE IS THE BULL MARKET UPTREND.  Once gold makes that line support, odds are strong the new bull market into 2020 will be underway.  Finally, for the medium term trend to go back to bullish the blue moving average (1120) must cross above the red average (1130) with price above both on a monthly closing basis.



    In summary, the trend has gone from bearish to neutral, and as long as we are above 1120 on a monthly closing basis, odds are strong that the bull market has resumed.   Let's see what happens into month end.   (We have been above the moving averages 6 times during this bear market but have never closed above them on the LAST DAY OF THE MONTH.    So we want to see that (1130) and also 1255.



  • 16 Feb 2016 8:55 AM | Bill Downey (Administrator)

    Gold Medium Term

    Long Term Trend ~ Bearish since Oct 2013 @ 1361

    Long term Moving averages 1224 – 1312

    Medium Term Trend ~From bearish to NEUTRAL IS WE CLOSE ABOVE 1132 in February.

    Moving Averages 1120-1132

    The big news technically is the dual downtrend yellow line got taken out and prices exploded to just under the 38% retracement area in gold. That is the last resistance on the weekly chart until the 1309-1322 and then near 1400

    As long as we remain above the moving averages (1120-1132) the uptrend that started in 2016 remains in play. Since April of 2014, we have listed at the top of the report that we need a monthly close above 1255 in order to come out of bearish mode and move to neutral. The weekly close was 1247 last Friday (intraday was 1263).

    PULLBACK SUPPORT IS THE FIRST YELLOW LINE AND WE SHOULD SEE OUR FIRST SUPPORT ATTEMPT THERE near 1180-1200. IF we hold that dual yellow line, gold’s upside will still have potential for a total medium term trend chance.

    In summary, the top dual yellow line is support, in between the lines is neutral and a close BELOW THE LOWER DUAL YELLOW LINE will put KEEP the bear trend in gold still in play. Look for the upper dual yellow line to provide SUPPORT and then we’ll see if gold can mount an attack back above 1222-1238.




Technical Analysis :: Gold & Silver

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