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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  • 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.



  • 10 Feb 2016 10:26 PM | Bill Downey (Administrator)

    Silver Long Term

    The very long term price of silver suggests that the Handle on the "cup and handle" pattern is just about complete. The bear market low should be where this dual support line resides. Accumulation of silver has been suggested since the 14 area and is still recommended.

    Chart from Kimble Charting Solutions with a few tweaks from Goldtrends.


  • 05 Feb 2016 6:34 AM | Bill Downey (Administrator)


    Gold Short term price and cycle Forcast

    Gold Short term

    On our last website update to subscribers, we discussed if 1115-1119 holds it would indicate strength and the 2nd spot to watch support would be 1105-1109. We discussed that as long as we held one of those two area’s that the short term would remain bullish. We got to 1109 and turned up. Wednesday took out the 1133 resistance and now we are at the last resistance area (1154-1164) before the 1190 area. Note there is a minor resistance at 1172-1176 as well.

    The big development was the push out of the uptrend channel and the momentum channel now rules. As of Thursday, we have arrived at the 2015 uptrend line and now we see if that area holds gold. Look for 1154-1160 to be resistance on and then we have the NFP report on Friday morning. This could be a catalyst for a push to 1190 in gold. But it could also engage the short term cycle TURN coming due starting Friday and into next week. The new support levels are 1129-1138 and then 1117-1122. In summary gold has increased upside velocity and the short term trend remains up, but time to be cautious short term. If we bust through 1165 then 1190 will be most likely target.


    Gold Short term Cycles

    Our last website update to subscribers stated a 70% odds favored higher price into Feb 8th. We also said any close above 1133 would be our confirmation. That has come to pass.

    We gave support at 1095-1110 and the low since then was 1109. Thus our last support range was also fulfilled.

    The next cycle date is Feb 8th (plus or minus 72 hours). That means the WINDOW for a turn opens on Friday and extends to next week (Feb 11th). THE NFP report on Friday will either push us to 1138-1143 or past 1160 and higher to next week (1190 area). Odds are 30% that this coming cycle can get a CYCLE INVERSION. That would mean higher prices for 2 more weeks !!!!

    We should look for a turn but to beware that this RED cycle is one of only 4 this year that HAS the HIGHEST INVERSION POTENTIAL. RSI on chart is also in overbought territory. If the bull hasn’t turned back up --- then a pullback is not far off.




  • 02 Feb 2016 8:01 PM | Bill Downey (Administrator)

    Chart of the Day: A “Silver Rush” in Chin

    By Eric Fry
    January 30, 2016

    Sometimes, if you can’t get to a party, you’ve got to bring the party to you. This approximate philosophy seems to be inspiring a surge of silver buying by the Chinese.

    Since the Chinese government is making it difficult for its citizens to take currency out of the country, many Chinese nationals are bringing a “better currency” into the country. They are buying silver hand over fist.

    Silver_Rush-550

    China’s silver imports recently hit their highest level in four years. 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.

    During the last five months, the renminbi has fallen more than 5% against the dollar. This loss of value, combined with China’s collapsing property and stock markets, has triggered a massive “capital flight” from China into various offshore assets.

    A whopping $1 trillion has fled the country during the last 12 months, according to estimates by Bloomberg Intelligence. That’s about $770 for every man, woman and child in China!

    Capital_Stampede-550

    Because so much capital is fleeing the country so quickly, the Chinese government has stepped up its efforts to block the exits.

    The laws and regulations that were already on the books limited annual overseas transfers to $50,000 per person. But for many years, wealthy Chinese have used a variety of tactics to maneuver around this limitation.

    The government is now making the game much more difficult.

    Bloomberg News provided the following insight into the Chinese government’s latest efforts to prevent capital flight:

    • Increased scrutiny of transfers overseas – Some Shanghai banks have recently asked their outlets to closely check whether individuals sent money abroad by breaking up foreign currency purchases into smaller transactions and to take punitive action if violations were discovered, according to people familiar with the matter. Each person can send $50,000 abroad annually, so large sums can be transferred by utilizing the bank accounts and quotas of a range of individuals, a tactic known as smurfing.
    • Outbound investment quotas frozen – China has suspended new applications under the Renminbi Qualified Domestic Institutional Investor (QDII) program, which allows yuan from the mainland to be used to buy offshore securities denominated in the currency. It has also refrained from granting new quotas for residents to invest in overseas markets via the QDII program.
    • UnionPay debit card clampdown – New measures were introduced in December to crack down on illegal China UnionPay card machines, which were suspected of being used to channel funds offshore via fake transactions, most notably in Macau casinos.
    • Underground banking clampdown – China busted the nation’s biggest “underground bank,” which handled 410 billion yuan ($62 billion) of illegal foreign exchange transactions, the official People’s Daily reported in November. The Shanghai branch of the State Administration of Foreign Exchange said last week that it will crack down on illegal currency transactions, including underground banking.

    Perhaps these new government tactics will slow the exodus of capital over the short term. But capital controls rarely succeed over the long term. To the contrary, they are an ominous warning sign – the reddest of red flags. They announce to the world that it’s time to get local currency out of the country as fast as you can, and then swap that currency for hard assets offshore.

    But since that is easier said than done in China, some Chinese nationals are doing the next best thing: They are importing the hard assets from offshore and using their local currency to do it.

    So far, the recent surge of Chinese silver buying has not sparked a corresponding bounce in the silver price… at least not yet.

    But interestingly, the last time the Chinese ramped up their silver buying was in 2009 and 2010 – several months before the silver price rocketed from $15 an ounce to $50 an ounce.

    So if past is prologue, there might be a great big silver bull market heading our way.

    Cheers,

    Eric J. Fry
    For The Non-Dollar Report

    Gold Short Term

    The NFP report on Friday will most likely be the event of the week for Gold.  

    Resistance is the 1130-1138 area and then 1142-1146.  Most important is the uptrend channel and the momentum channel in short term gold is meeting at the 1130-1138 area.  A Friday close above 1143 would put price just above the uptrend channel and open the potential for the momentum channel to continue tracking gold price.  A close below 1115-1117 would take us out of the momentum channel and expose gold to retest the 1090 area.  There's also support at 1101-1109.   The bottom line is things might remain quiet in gold on Wednesday and Thursday in anticipation of the NFP payroll report on Friday morning.  The short term trend remains up.  A close below 1101 would turn the trend neutral.  


    Gold Medium Term

    Weekly gold arriving at the moving averages (1117 Blue and 1139 Red).  We need two weekly and a MONTHLY CLOSE above both to go from Bearish Medium Term Gold to Neutral.   Neutral is not bullish, but it ain't bearish.  The Dual Yellow trend line's upper end is the 1172-1222 area. Look how there is almost no resistance above the Dual Yellow lines for quite a distance. A monthly close above 1255 would be a significant event.  It takes a monthly close below 1033 in order to extend the bear market lower.  Odds still favor the low is either in Dec 2015 (Armstrong 51.6 month cycle) or March/April 2016 (A Fibonacci 55 months from the high).  So far, December has been the lowest price at 1045.  If the bear market in gold is over, it needs to take out the Dual Yellow trend line on a monthly close for further confirmation. 




Technical Analysis :: Gold & Silver

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