-- Posted Sunday, 4 September 2005 | Digg This Article
So northern neighbour Bob Mgabe has passed into law a new set of draconian measures. First there is the law to abolish freehold ownership of property. If the current ‘owner’ of the property suddenly does ‘own’ the property …. Who does ….. Bob Mgabe and his cronies??
Second there is the law allowing the Zimbabwe government to withdraw the passport of any person expressing opposition to the government. This is what happens when a two thirds majority is allowed to exist. A government can claim to be elected on democratic principles and then pass unopposed into law any legislation it feels like, irrespective of whether it is in the democratic interests of the society or solely in the interests of the ruling party and its cronies.
Bob Mgabe has played the rest of the world’s politicians like a bunch of idiots and South Africa in particular as the dunce of the class. These recent events magnify the necessity of our ANC government being denied a two thirds majority at the next election.
Last week the Metropolitan Police entered several restaurants in the suburb of Norwood and demanded that diners produce their driving licenses. According to police personnel this action may be repeated in other areas. Roll on George Orwell. Then there is the new section 51 legislation that forces all businesses to disclose all data on its business, products, client details etc. This is yet another Orwellian action. Although the legislation is being ostensibly carried out to obtain accurate business statistics it is yet another intrusion into the basic privacy of individuals that is supposed to be enshrined in the new constitution.
“1984” may be over two decades ago on the time line but the big brother literary principles of Orwell are alive and well and being practiced with vigor in Southern Africa.
Some two years ago I produced an analysis of the price of Brent Crude Oil when it was trading at sub $30 a barrel. I analysed that there was an upside target of $72 to75. This was once again treated with a large degree of scepticism. The oil price in New York has touched $70.85 with Brent hitting $69. At this stage I do not see much further upside for the oil price now that it is approaching my target area.
Conversely the Rand has ended its rally from R6.95 to R6.31 to the dollar. The next move on my data is for further weakness back to the R7.30 level. The Rand price of gold hit my oft stated short term target of R2950 and ounce and has reacted back to test the R2790 support level. There is still an unfilled count up to R3200 and I expect this to be achieved by the end of the year.
I attended a technical analysis conference last Thursday at which Robin Griffiths of Rathbones in London presented a global view of markets. His comments on China were most interesting. Whereas many analysts are expecting a slowing of growth he anticipates at least constant if not rising growth to continue. He bases this on the fact that China has now demographically become a large internal consumer of its own production and will not have to rely as heavily on exports in future. He expects the demand for basic resources to continue and that South Africa will remain in the forefront of the supply line with the obvious benefits to our resource companies and their shareholders.
Although gold had panic dip on Tuesday down to $429 it has merely increased the base from which the next bull phase will rise. The bigger the base, the larger the upside potential and the two year base across the $430 level is massive. This subtends a move well into the $600’s once the breakout above $440 occurs.
I am receiving all sorts of email detailing a head and shoulders top on the gold shares that has supposedly developed during the past few months. My analysis is the exact opposite.
“Gold Action” is a fortnightly commentary on global gold and precious metal markets produced by Dr. Clive Roffey, Johannesburg, South Africa, a leading professional independent commentator on gold markets since 1969.
| The recent short term strength of the Rand, due to dollar weakness has been ridiculously overdone. The move back to test the R6.20 level has resulted in a serious sell divergence as the RSI in the bottom frame has refused to confirm the new upside move. This is a selling area for the Rand and a signal of a major trend reversal. |
| The longer term Rand currency picture shows that the recent bout of strength is the right shoulder of a large head and shoulders reversal pattern. There was a Dollar buy divergence against the Rand last December for the bottom at R5.60 and the difference from the R6.90 peak is R1.30 to be added to R6.90 for an upside target of R8.20 for the Dollar. I rate the current trading area as a MAJOR reversal situation for longer term currency traders and industrialists. |
| Two years ago I detailed a long term count for the Brent Crude Oil price of $72 a barrel. It has virtually hit this target. But there are now sell divergences on both the MACD and RSI oscillators and I do not expect much further upside from this point. I am looking for a period of consolidation, not further price increases. |
| The Copper price has been locked inside a rising wedge pattern for the past three months. But the MACD and RSI have refused to confirm the new highs inside this formation. I am looking for a period of price correction with Copper coming back to at least $3450 from its current 3900 level. I expect a correction in most base metal prices. |
| Last weeks bounce in the $ gold price retested the major medium term resistance at $450. But it failed to break out and has pulled back to the short term support at $440. The overall data remains positive but a break above $450 is needed to confirm new upside counts from this pattern. |
| The $ gold price short term chart is shown with all the grouped oscillator signals from my proprietary trading data. Every low is marked by a green vertical and every sell by a red line. The last signal was a green buy and there is no sign of any grouping for a red sell. Thus I must conclude that there is further upside potential in the short term for the gold price that will push it above the critical $450 resistance. |
| The Rand price of gold has not yet indicated its next buy signal but it is very close at hand and I expect the signal to materialize towards the end of this week. A move above R2850 will trigger the next upside target to R3200 that will set the shares alight. |
| The trading signals for Platinum are shown on the same time scale as above for gold. The Platinum price does not react in the short term in the same cycle as gold, although there is a long term relationship. Platinum has also given a buy signal and is still likely to have a serious upside potential during the coming two weeks that should take it well above its recent $920 high. |
| The Silver short term trading details. A buy signal was given two days ago and this should lead to a substantial upside move in this secondary precious metal. The bottom line is that all the precious metals are giving serious buy signals on the daily data. |
| The $ gold chart with my Elliott wave analysis is detailed. The 5-6 correction has ended and the next upside count to wave 7 has started. This should take the price to well above $500 in the near future. |
| There is a strong correlation between the $ gold price moves and Fibonacci. The 1-2 occurred at the 50% level, the 3-4 at the 1.618 level, the 5-6 at 2.618 area and the next 4.236 count is at $555. It is also interesting to note that the 1.618 level also provided the support for the ‘a’ correction of my 5-6 count and that the 2.618 level has been a serious resistance level for the past year. Also note the support and resistance lines provided by Fibonacci during the bull run. |
| The first major correction of the new gold bull market is shown on the JSE Gold index. The past month has witnessed the first minor correction in big wave 3. In addition the momentum data in the bottom frame is starting to accelerate on the upside. This is a very strong bull market signal. A move back above 1800 on the JSE Gold index will trigger a massive buying spree from all the trend watchers as the index breaks out of its major downtrend. This is EXTREMELY BULLISH data for the next two years. |
| This is my Elliott Wave analysis of the HUI Gold bugs index. After the five wave classic urge from the 2000 low the market went into its first major correction that has formed the first major corrective wave in the long term bull market. The point to note about this pattern is that the ‘c’ wave has failed to break under the low of the ‘a’ wave. This signifies a very weak correction and heralds a strong thrust for the new wave 3 that MUST take the prices well above the top of wave 1. This is an extremely powerful chart for the next 18 months. |
| The Nikkei index may seem a strange bedfellow with precious metals. But it has just broken upside out of a major reverse head and shoulders pattern. This implies a powerful BULL trend for this much maligned economy. I like this market and investors should be taking profits out of the Dow and Euro markets and looking for investments in Japan. |
| I have detailed the major reverse head and shoulders pattern on the chart of the XAU index. For the past two years it has been locked into the sideways trading range of the first large correction in the long term bull market. This correction has formed the right shoulder of a major reverse head and shoulders pattern. In addition there was no sell divergence on the RSI indicating that there is still a lot further upside potential in this market. |
Dr. Clive Roffey
September 4th 2005
-- Posted Sunday, 4 September 2005 | Digg This Article
