LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Fortuna Silver: An Incredible Value Play
By: Dave Kranzler, Mining Stock Journal

COT Gold, Silver and US Dollar Index Report - December 13, 2019
By: GoldSeek.com

Beware Gold-Stock Downside
By: Adam Hamilton, CPA, Zeal Research

Japanification, Deflation and Backwardation in Gold & Silver and Base Metals
By: Darryl Robert Schoon

Precious Metals Update Video: Gold has found a home here
By: Ira Epstein

Asian Metals Market Update: Dec-13-2019
By: Chintan Karnani, Insignia Consultants

As The Financial System Melts Down Gold And Silver Will Soar
By: Dave Kranzler

Blowing Bubbles for Fun and Profit
By: Gary Christenson, The Deviant Investor

A Missing Motive
By: Ted Butler

When Will GDX Break-out?
By: Jordan Roy-Byrne CMT, MFTA

 
Search

GoldSeek Web

 
Gold Market Update

By: Clive Maund


-- Posted Monday, 21 December 2009 | Digg This ArticleDigg It! | | Source: GoldSeek.com

Gold behaved as predicted in last weekend’s update - it rallied into the middle of last week before plunging on Thursday and then ended the week with a modest upturn. Thursday’s plunge involved a sharp break below our important parabolic uptrend channel, and although the break was not by a decisive margin and gold rallied Friday, this sharp drop has bearish implications.

We can see this latest action on the 1-year chart on which we can also see that although gold has broken down from the parabolic uptrend, it has yet to breach the “last ditch” support of the lower boundary of the parallel uptrend channel, which is shown as a dotted line. Until that happens a significant bounce is possible particularly as it is now quite deeply oversold on a short-term basis, as is clear from its RSI indicator and stochastics and in the vicinity of its rising 50-day moving average. In the situation of a continuing intermediate uptrend we are now at a classic “buy spot”, and even if, as we believe, the intermediate uptrend has now reversed, it would be quite normal for a bounce to occur here although in this case it will turn out to be a trap. If the lower boundary of the parallel uptrend channel shown is decisively breached it will be a signal to close out all long positions, as such a break will call for a initial drop to the strong support at the top of the 20-month trading range, which starts to come in at about $1030.

Some observers are comparing the current reaction to the mid-trend correction that occurred half way through the powerful uptrend of late 2007 and early 2008, that we can see on our 3-year chart, which took the form of a continuation Triangle, but there is an important difference, which is that the steep advance preceding the Triangle in 2007 did not blow out above the top of its channel, as occurred on the recent near vertical advance. The recent event was a blowoff top which normally marks the end of an advance.

Many “bugs” cling to the idea that gold is set to rocket because the cartel controlling the gold price is about to be smashed, and are deluding themselves that the recent powerful breakout by the dollar is just some blip or aberration.

That’s not the way it looks to us - this dollar breakout, which we predicted well in advance as demonstrated by the chart from the 29th November update which appears below, looks like the real deal, and the dynamics behind it are believed to be as follows…

Big overseas Treasury holders such China and Japan are believed to have “strong-armed” the US in the recent past behind the scenes and essentially said “You either quit undermining your currency and defrauding us with your zero interest rate policy or we are going to dump them, big time, and collapse the Treasury market.” The Treasury market is the “aorta” of the US, which involves swapping essentially worthless paper for the goods and services of countries that are dumb enough to buy them, thus allowing the US to live way beyond its means running continuous massive deficits. It is viewed by the administration as infinitely more important than the stockmarket, which is small in comparison. It is thus clear that if it is necessary to sacrifice the stockmarket by raising interest rates to rescue the Treasury market, then that is what’s going to happen. The rising Treasury yield curve, which has recently become very steep is indicating that rate rises are in the pipeline. Smart Money has already got wind of this and has been stampeding to close out US dollar carry trade positions, hence the breakout and sharp rise in the dollar, and the plunge in gold. The ordinary Joe sat rustling his newspaper hasn’t got the faintest idea of what is going on as usual. Given the magnitude of the US dollar carry trade positions that have built up this year on the back of unprecedented negative real interest rates in the US it should be obvious that a intensifying stampede out of them could easily drive a massive dollar spike, perhaps considerably larger than the one we saw last year, especially given the precarious condition of many countries in the European Union. In this situation commodities and the stockmarket will be trashed.

Those of you who may be deluding yourselves that the dollar’s recent rise is just a countertrend blip might like to reflect on this article in The Wall St Journal titled Net Assets in Bullish US Dollar ETF Go Vertical in December . The point to appreciate here is that this asset buildup is not occurring at the end of a move, but rather at the start of it, and is thus a proxy for very high volume on the dollar breakout, indicating both that it is genuine and that the dollar is destined to go MUCH higher.

Finally, the idea that Big Money is going to be defeated by the “little guy” led into battle by his favorite cheerleaders and gurus is naïve and fanciful. We never try to beat big money because they have access to the best information, the information that really matters and they pull the levers and call the shots - instead we aim to “ride on their coattails”. Take a look at the latest COT chart above on which we can see that the Commercials, who are by the way very patient, are still running big short positions in gold. This chart implies that gold could have a long way further to fall.


-- Posted Monday, 21 December 2009 | Digg This Article | Source: GoldSeek.com



Web-Site: CliveMaund.com



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.