Wednesday, December 14, 2011

Gold Analysis from Shaza

Below is a quote and chart from stockcharts.com  I have changed my charting from Worden to SC. I find the new charts at Worden to hard to read on my Mac Air and lapstops in general. However, Worden has been an excellent product and I can not fault it otherwise...

GOLD IS BREAKING DOWN, but for how long? A look at an excellent chart from Arthur Hill.

"For potential support levels, note that a 61.80% retracement of the January-August surge would extend to the 1550 area. Also notice thatbroken resistance turns into support in this area. It is also possible that a falling channel is taking shape. A decline to the lower channel line would extend to the 1500 area by yearend. RSI, which is in the indicator window, will probably become oversold after today’s plunge. 14-day RSI has not been oversold since October 2008! "( stockcharts.com today)



35 comments:

mugabe said...

No one knows what's gonna happen but that chart is v short term to my thinking. I think that the decisvie breach of a ma support that has held for three years, what's more after a very big top, warrants looking bigger picture/longer term.

I could v possibly be proven completely wrong

Queenbee said...

Thanks for your comments Mugabe. You are right no one knows what's going to happen. Shaza do you want to do a chart that is 3-5 years that I can post?

Mr. Kowalski said...

Hi QB !! Weird today-- it rained all day in Minnesota; I can't remember a rainy day in December.

Anywho, there were a couple of upsetting signals today. The first was a report that Greece was hiring a bankruptcy firm-- this come after the collapse of Greek talks with creditors. The second, more disturbing was that Bernanke had a meeting today with US Senate leaders in regards to the European banking system, where he was told Senators that he was "very concerned" about the situation. Another, later piece of news is that Germany appears to be readying a rescue of Commerzbank. The moves in commods screams deflation-- perhaps increasing capital flight from Europe into USD ? Today's 30yr UST auction supports the supposition..

Mr. Kowalski said...

http://www.zerohedge.com/news/bernanke-very-concerned-about-europe

What me worry? said...

Why should I want to sell my gold for £'s FFS when Kyle says all those Euro banks need to be recapped and there is no money around other than the yet to be printed to do it with?

Also does not the Greek govt need a whole lot more money on the 19th and where are they going to get that from? It should be a really merry Christmas this year, especially as working in a British bank I am only due two days off this year, because I reckon Merv will make me happy and give me a few more days off while him and Osborne "sort things out"?

mugabe said...

Another take on gold from what looks like a long-term bull:

http://www.minyanville.com/businessmarkets/articles/precious-metals-safe-haven-triangle-pattern/12/14/2011/id/38392?utm_campaign=Newsletter&utm_medium=Minyanville+Digest&utm_source=20111214

theyenguy said...

In the age of deleveraging, a buy and hold strategy in stocks, such as the one by Barrons, that is Barron's 10 Favorite Stocks For 2012, will be utter disaster: its falling on a knife. The only prevailing forms of wealth will be diktat and the physical possession of gold. Guy M. Lerner of The Technical Take relates that gold is still in a bull market and presents the monthly chart of the gold showing it to be in an uptrend. Gene Arensberg of Got Gold presents the weekly chart of gold headed to support at $1,535. And Mitch Hammerstedt of Market-Foresight presents the daily chart of gold trading at $1,574 with support at $1,500. The fall lower in gold reflects speculative exhaustion and presents a buying opportunity.

mugabe said...

I tend to agree that this is a correction, not the end of the bull. This is more from a fundamental point of view (= debt crisis) as I think that technically it's prefectly possibly to argue both sides.

Techically, another way of looking at this move is as a measured move ABC down, which projects a target of 1416.

mugabe said...

I think the 1500 support is being touted by a lot of people (who are pro-gold), which is a good reason for it to fail.

mugabe said...

Here's a 5year chart of GLD (excuse long linky):

http://finance.yahoo.com/echarts?s=GLD+Interactive#chart4:symbol=gld;range=5y;indicator=sma%28150%29+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

As you can see, the correction with respect to the 150 day ma is so far very similar to the one in 2008.

This chart lets you see exact values for the bottom in 2008 and recent top.

Exact Fib retracements for this in GLD are:

140
127
114

gaw said...

Excellent chart work there Shaza and mugabe, thank you!

I can present any number of links to pro-gold sites who will assert, as they always do, that gold has nowhere to go but up. They may even be right, but I would consider a more authoritative source to be the ones who told you to sell gold at $1,950 or so, and wait for a lower price to buy back in.

The average goldbug site is no more credible to me than a MSM mouthpiect like Cramer - both tell to buy, almost all the time. If things were that simple, trading would be so easy that everyone would be doing it and making big money.

Merv Burak is still my pick for top gold and mining trading advisor, he just tells you what the market condition is now and what that implies, without emotion.

gaw said...

Barrons is good for bird cage liner, I saw that "article" and was moved to comment about it, but then decided, why bother.

Ignore all MSM sites for trading decisions, they are really only good for reporting things like company related news updates for a miner you might be trading etc.

Their market calls and "recommendations" are only good in a long term uptrending market, like the late '90s, IMHO, when a 'buy'n'hold' strategy will work for a period of time.

Until the market turns, which they will only tell you about long after it happens.

To me, the goldbugs and the MSM are just opposite sides of the same coin, both are locked into their views and consider no other outcomes as probable or possible. And they never admit when they are wrong.

There are a few exceptions to that rule, like everything, of course, but they are rare.

Keeping a clear head, and making decisions based on the situation as it is, and how it is evolving, is the only route to long term success.

gaw said...

And I used to be a full fledged goldbug, but grew out of it. I can agree with many of their macro arguments, but there will come a time this decade when their thesis will have run it's generational course, and they will have to make a turn to a new reality. Will they be able to do that in a timely fashion is questionable.

And there will probably be little time to do it, the price of gold will very likely peak at a blowoff top that won't hold for more than a few days, and then never revisit that price for another 20 years, just like last time out.

It will take nerve to sell your gold at that point, but if you want to protect your gains, you will have to see it and act on it.

And I am sure at that point most goldbugs will be calling for yet higher prices and telling you to buy more, and will be entirely wrong.

gaw said...

I am coming around to the view, agreeing with George Soros (ouch!), that the shadow Bankster system has in fact already collapsed, and been bailed out by the Fed etc - which has only temporarily stemmed the epic deflationary tide which is still going out.

They have printed, already, some $25-$50 Trillion, globally, and used it to prop the Banksters up, which has only resulted in zombification on a global scale. A massive deflationary collapse has been averted, maybe, but as we are seeing now, massive inflation (that would be "expected" from such actions) has not in fact materialized at all.

Watch the Koo link there (thanks for posting it Queen), and ponder what he says. He speaks from direct experience with very similar issues in Japan as we now have globally.

gaw said...

Whether I am correct or incorrect, the plain fact is we have several more years, at minimum, to run in this crisis period.

EUrocRatia has to finish collapsing, and getting their issues dealt with, and then it will be Japan and the USAs turn to go through what EUrope is seeing right now. China and Asia will see recession or worse too, as their export customers simply won't be able to buy the goods in previous volumes, until they work through their issues.

Which is the final period in Kondratiev Winter, when every issue will be addressed, one way or another, and excess failed credit will be purged from the system, likely in an ugly fashion.

Which is all necessary to complete a phase in the cycle of history, as Boom goes to Bust, laying the seeds for the eventual and inevitable next Boom.

Anonymous said...

http://www.ritholtz.com/blog/2011/12/griess-use-golds-300-day-moving-average/

"Ron Griess of the Chart Store suggests that the 200 day is the wrong technical indicator to focus on regarding Gold.Looking back to this run, he suggests the 300 day is the more supportive index:"

12 year chart there, he has a good point.

"The 300 DMA was $1,531.31 on Dec 14"

Note the '08 credit crunch period when gold dipped well below the 300 line for a while, in which case mugabes Fib retracement points will be in play, and the most likely turning point areas.

Mammoth said...

Not quite sure what the definition of a Goldbug is, but I consider myself one – albeit a practical Goldbug. (But not so practical to have sold any when it spiked above $1,900.)

Looking at my most recent purchase back on Feb 3 this year:

Spot: $1,334
Gold Eagle: $1,407
Gold Buffalo: $1,445
St. Gaudens $20 coin: $1,436

When compared to what they are selling for today, even despite the recent correction, these prices still do not look too bad.

Let's see if another similar buying opportunity presents itself as 2008 Part II moves along...

gaw said...

Don't take my criticism personally, I was referring to the overly numerous goldbug websites, who blithely give out trading "advice" (meaning 'buy, buy, buy') all the time, without regard to the consequences for readers who act on their advice.

They were much more correct a few years ago when gold was $200- $400, and as the price continues to rise they will be increasingly wrong, until the Bull market ends and they will be totally wrong for not selling.

If you bought gold a few years back at much lower prices, ignore everything I said above, and congratulations on your foresight, great call!

But for people who are thinking about buying now, or worse, already bought at over $1,800...you have to be more cautious.

And in any event, just keep enough mental flexibility to be able to recognize that nothing runs in one direction forever, and every Bull ends and turns into a Bear one day.

gaw said...

The reason I have such a problem with the goldbug sites is that they seem to refuse to recognize past history.

Study any very long term chart of any commodity, including gold and silver, and you can see they clearly tend to have a roughly 15-20 year run up, and then the same in reverse.

So unless you are planning to hold all through that 20 year correction, there has to be, inevitably, a time to exit stage left, and buy (gasp, shock, horror) stocks, Bonds and real estate, for that next part of the cycle.

Try and make that simple point on most goldbug sites and you will be rudely flamed out of the place, which only proves they are locked into a mental rut with no escape.

Exactly the same as the guys on CNBC who always tell you to buy Apple stock etc.

gaw said...

mammoth - you may be surprised to hear I am contemplating opening up a "gold buying"/coin/bar selling business here.

You seem to be very good with buying and selling the coins etc, so maybe you might think about doing the same there.

I figure: if all these people who are desperate for money to pay bills are selling their gold at discounts to scum like pawnbrokers for a low % of spot, I can offer a high % than most ans still make a good profit.

And keep a few of the nicest bars and coins for myself, while selling the majority at spot equivalent to a refiner, who will happily pay me in bars instead of ca$h if I want.

Seems like a no-brainer, what do you think?

gaw said...

http://www.macrobusiness.com.au/2011/12/france-is-next-2/

"France is Next"

"I posted back in July that I thought France would be next after Italy in the contagion breakdown because of its macroeconomic metrics. High levels of public and private debt, a long running negative trade balance and current account deficit, stalling industrial production, GDP and employment along with significant banking sector exposure to the periphery all add up to a fairly risky predicament. This is certainly not a country that could take on a strict austerity regime without causing itself some significant short-to-medium term economic damage because it is obvious from the metrics that the private sector has been borrowing from both the external and government sectors for a long period of time...

Last night the markets appear to have been spooked by statements by Sarkozy’s finance minister, which backed up the president’s own comments from a day earlier and appeared to be softening up the citizens of France for a coming downgrade.."

Zis cannot bee!!!

gaw said...

http://www.telegraph.co.uk/finance/china-business/8957289/Chinas-epic-hangover-begins.html

"China's epic hangover begins

China's credit bubble has finally popped. The property market is swinging wildly from boom to bust, the cautionary exhibit of a BRIC's dream that is at last coming down to earth with a thud.

t is hard to obtain good data in China, but something is wrong when the country's Homelink property website can report that new home prices in Beijing fell 35pc in November from the month before. If this is remotely true, the calibrated soft-landing intended by Chinese authorities has gone badly wrong and risks spinning out of control.

The growth of the M2 money supply slumped to 12.7pc in November, the lowest in 10 years. New lending fell 5pc on a month-to-month basis. The central bank has begun to reverse its tightening policy as inflation subsides, cutting the reserve requirement for lenders for the first time since 2008 to ease liquidity strains.

The question is whether the People's Bank can do any better than the US Federal Reserve or Bank of Japan at deflating a credit bubble..."

Mammoth said...

Don't worry GAW, I take none of it personally. Last weekend I sold two Silver dollars when I was a vendor at a holiday craft fair selling lovely Russian jewelry boxes.

Am thinking about running another ad about buying coins; last time I did that I ended up buying some very nice ones at a decent price. But right now I am more interested in accumulating (although flipping the not-so-nice coins is appealing.)

Definitly not advocating anyone to jump into PM's with both feet, so perhaps I am not a g'bug. I still remember on Turd's blog (TF Metals report, on the LH sidebar), back at the peak in April one newbie said she was considering buying a monster box of Silver Eagles and everyone - and I mean everyone - egged her on. I think the price was around $46k at the time.

Last time I checked, a monster box could be had for $16K. Yikes!

gaw said...

mugabe - "I could v possibly be proven completely wrong"

Maybe, but you won't really be "wrong" - no one can call every future outcome correctly.

When I make a trading idea point or discuss a chart, I may be entirely wrong, but I don't use absolutes like "It will, certainly" etc, as nothing in this life is certain, as we have all found out the hard way. Except death.

They key is having the mental flexibility to see things aren't going as planned, and make a course correction in a timely fashion.

So, to me, you are a very good trader who properly assigns probabilities to likely and less likely outcomes, and then you act on them.

Trying to be always right is for narcissists and people with weak egos who cannot abide being wrong.

But we are all human, and that included being wrong, and right, at various times.

We do the best we can with what we have. That's all you can do, and then don't agonize over every wrong. It's all just part of a balanced life, to me.

gaw said...

Mammoth - your last comment there demonstrates clearly the problem I have with most goldbugs ina glaring fashion, and why I am so harsh on them.

How do you think that poor girl feels now, having seen her "asset" fall $30K in few months. Ouch.

Fools egging on fools is one thing, but they will really hurt newbies like that girl, who don't have the experience to separate the tungsten from the real gold, so to speak.

If you are a veteran trader who takes a loss, well, you should have expected that was possible. But the younger and less experienced will blithely follow bad advice right over the cliff edge.

Giving out bad advice on the internet can cause major financial damage to real people.

mugabe said...

Goldf will either be higher or lower in three months time. I've had a look at the charts and it's a no-brainer. And you can take that to the bank!

mugabe said...

'Giving out bad advice on the internet can cause major financial damage to real people.'

Hear, hear. In the ends you have to make up your own mind, which a prcoess of education through making mistakes. You need to make sure that they're small mistakes! And if you're doing something based on emotion, the overwhelming odds are that it's a bad decision.

mugabe said...

I could actually see a case being made here for accumulating a smidgeon of silver. The main reason is that it's reasonably low priced -it's retraced about 70% of its giant move up- it may be putting it a low vis a vis gold, and it's sitting on support.

Just to be clear, I said a smidgeon, and if you're in the accumlating camp, not the trading one. There's not exactly blood on the streets for silver -it's not horrendously oversold on the weeklies- and there's nothing on the chart that's screaming a bottom. And I wouldn't be suprised at all to see it go all the way to its base, which is 40% down from here.

I will not be buying any as I've got enough exposure to PMs

mugabe said...

Der Spiegel on the OECD report on Greece:

“It found that communication among the country's 14 ministries was appallingly paltry. Furthermore, the huge number of departments within ministries — many of them consisting solely of a department head and others with just one or two subordinates — results in widespread inefficiency and lack of oversight.

"Administrative work is fragmented and compartmentalized within ministries," the report writes. "Ministries are not able to prioritize … and are handicapped by coordination problems. In cases where coordination does happen, it is ad hoc, based on personal initiative and knowledge, and not supported by structures."

Were such coordination even to take place, the report indicates that administrators do not have access to the necessary data, nor does such data exist in many cases. "The administration does not have the habit of keeping records or the ability to extract information from data (where available), nor generally of managing organizational knowledge," the report found.

The problems found in Greece's central administration, says the OECD, are the result of decades of clientelism and the sheer volume of the laws and regulations that govern competencies within the ministries. The report found 17,000 such laws, decrees and edicts.”

What me worry? said...

GAW

I owe you one for the Great Western tip sometime past (I am currently waiting for a sufficient tumble to get into Statoil and Singapore Telecom i.e. hard currency dividends with the prospect of some capital growth).
So I want to send you a copy of Jim Rickards "Currency Wars" for Christmas which may re-alter your views on gold. If you are interested Bee has my
e mail address

Rachman

Queenbee said...

Wow another fine day of premium comments. Mammoth I might call you a collector, but not a bug. Gold and Silver bugs have one track minds. TF does not buy and hold, he trades. His followers rarely do. I leave his sight up, but I do not go there.

I hope that newbee did not buy the monster box. They are too damn heavy to store unless you put them in the ground.

I echo everything GAW and Mugabe said today on the chart sides and I am glad you appreciated me putting up the video. Mugabe I looked at the charts you offered. Muy Excelente.

Time for everyone to be on their toes as now is not the time to be complacent. Stay away from KWN at least until January. I Listened to John Hathaway who was certain gold mining will take off as I lose 250 per day on TGLDX. Eric's guests will never tell you gold is going down. The only one I like is the owner of CMI a large silver and gold broker as he will tell you what is selling and what people are buying.

Celente is just a wingnut, but fun to listen to and he got caught in the MF Global mess. He always gave me the impression that he was taking delivery. Oops guess not. Happy Hanukkah!

My personal opinion on silver a while back was a low of 27-28 and gold at 1600. Well I was close, but they can go lower. I am neither selling or buying (even though I am salivating at the price of those mint sealed Buffalos) at least I had the sense not to buy at 1800.

My only down side buy is the Mutual Funds both down 10% and 100 ounces of silver at 40.00 down 25%.

In the scheme of things the US healthcare system is more likely to BK me than the stock market or PMs. At lease I can hide the PMs and the IRAs and 401k are in my name only.

mugabe said...

It will be interesting to see what Merve Burak says next weekend. Tony Caldaro has also said this today:
GOLD: For the first time in three years the price action in the Gold market has put us on the defensive. The current downtrend has declined far more than expected. We now have two potential long term counts. Will cover this in more depth in the weekend update.

Tony and Merve have the merit of being non-biased technical analyts.

From my own Fib/measured move down analysis, 1400 is looking to be an interesting area. That's 11% down from where we are now.

Queenbee said...

Mugabe 1400 sounds like a reasonable number, but then what? The hot money has left the sector and the cockroaches are looking for a place to hide.

Mammoth said...

Queenbee, unfortunately that newbie woman DID buy that monster box right when Silver hit its peak.

Although I still have much of my childhood coin collection, you may call me a 'Stacker,' rather than a collector.

Following Shaza's advice to not become too emotionally attached to one's investments is wise; otherwise one will miss the selling opportunitues.

Obviously, right now is not the time to sell, and if it is time to buy, we will only know this for sure at some point in the future.

mugabe said...

I'm not sure if it's the hot money or deleveraging. But whatever it is, it's leaving.

Gold, for me at least and I think for many here, is a special type of investment: insurance. This being the case, when do you sell the insurance?

a) When the crisis appears to be over
b) When there is some absolutely massive top.
c) Never

M answer is a combination of 1) and 2). The definition of a massive top is subjective, but i would contend that silver formed such a top a few months back (
I would contend that silver did have a massive top a few months back (up almost 200% in 8 months), as did crude in 2008.