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Ira Epstein's Gold Report

 -- Published: Thursday, 15 May 2014 | Print  | Disqus 


Gold seems to have temporarily ended the slide that began on March 17th with prices peaking at 1392.2. I am not of the opinion that the current formation is bullish, but until 1277.7 is broken itís no longer bearish.

Hereís a list of factors impacting gold right now:


India has held new elections and the results will be known on Friday. A new government will hopefully be friendlier than the old administration in terms of allowing gold imports that donít have outrageous import fees. Gold is part of the Indian culture. Itís normal to buy and store gold and give it as a gift at weddings and certain times of year. The government did not want money going into gold so the government curbed gold imports, causing internal pricing to go through the roof. I look for a change in the current gold policy.


As Iíve said all along, the Ukrainian situation is highly unlikely to become a driving force for gold prices. Neither Russia nor Russiaís European trade partners have stomach for war. Yes, sanctions will put in place, but they wonít have the teeth that the US wants. Rather, theyíll be there to let Russia know bigger sanctions can and would take place if Russia were to get too aggressive in land grabbing, but the reality is that Russiaís already got what it set out to get, the Crimea and other areas wonít come as easily as that did. Provinces in the Ukraine will most likely end up leaving Ukrainian rule if the May 25th presidential election doesnít bring the country together, but I doubt that will come with an invasion of Russian troops. Come to think about it, even the Crimea didnít see widespread troop invasions.


Inflation is still not an issue. Mario Draghi and the board of the European Central Bank were able to convince world Foreign Exchange Markets that they meant business when they said the board was unanimous in instituting new polices to drive down the value of the Eurocurrency in June if the economic data didnít improve. The latest ZEW Index which measures German economic conditions came in shockingly bad on Tuesday. This was the fifth consecutive month this index fell and the steepest drop since May 2012. While German economist say the index isnít pointing to the German economy doing much more than stalling a bit, donít believe that response as Germany is suddenly ďunderstandingĒ the need for the European Central Bank to act in June and has signaled that Germany wonít stand in the way.


U.S., German and British government bonds plunged in yields on Tuesday. The yield on the 10-year U.S. Treasury dropped to as low as 2.523%, its lowest level in more than six months while German 10-year bund yields fell to their lowest level in a year. Japanese 10-year government bonds offered a yield of 0.6%, the lowest in the developed world.


After 117 years, London's silver fix will be set for the last time on Aug. 14. The fix as itís commonly known has been set daily at noon via a conference call involving representatives from Deutsche Bank AG, HSBC Holdings PLC and Bank of Nova Scotia. Thereís plenty of issueís surrounding the London gold fix, but for the time being itís staying as is.


Gold and gold and silver fixes are under scrutiny by the Commodity Futures Trading Commission and the U.K.'s Financial Conduct Authority.


Expect the London Metals Exchange and the CME Group to come up with proposals for alternative methods to the London Fix.


Seasonal Charts


The chart below was in my last Gold Report. I included it since my analysis in terms of market timing by using the lines on the chart have proved correct. Now that weíre halfway through May, Iíve included a second chart below this one that shows how I think gold will act in June.



New chart for Mid-May through June




The price break the seasonal chart depicted has taken place. Gold sold off roughly $100 an ounce from its high and now seems to be caught up in sideways action. All three scenarios, the 30-15-5 year patterns all chop around more than trend from mid-May into late June. In the latter part of June prices tend to start another price break into the begginning of July.


Monthly Chart



QT PriceCounts are a unique study included in our MarketCenter charts. You are welcome to sign up for a free trial to MarketCenter Charts by clicking on the link below or copying this link it into your web browser and signing up that way.  


QT PriceCounts are a price projection tool. The theory behind QT PriceCounts is not difficult to understand. QT PriceCount objectives are calculated off an initial leg of a new trend, and assume that the initial leg of a new trend by itself can project one or more objectives in the direction of the new trend. There are specific rules that tell you when the objectives are nullified, which we want to send you.


We have a very helpful information sheet on this study. Itís full of chart examples and rules that explain in detail the theory and use of this study. To receive a free copy, simply e-mail us back by clicking on the link below.


Please send me the PriceCount Study information.


Please include your name and phone number when the return e-mail pops up.


As you can see on the Monthly Chart, the first leg down began on September 11, 2011. The first leg was completed when prices recently dropped to 1241.7, the first downside target. It remains to be seen if other legs will be met, but given that this study resembles Swinglineís, until 1392.6 on this chart is taken out, the remaining PriceCounts remain active.


Weekly Chart




I am not focusing on QT PriceCounts on this chart. Rather, letís focus on the arrows on the above weekly gold chart which come from the Swingline Study, an indicator I created to display in a very specific manner previous highs and lows.


The Swingline Study pattern is now one of lower highs and higher lows. That means something is about happen as prices are narrowing in but that the market is not trending at this point in time. In addition to the narrowing in, prices have been trading against the 18-Week Moving Average of Closes for approximately 4 weeks.


Momentum which is shown using the Slow Stochastic Study on the bottom of the chart is pointing down.


I interpret this chart as being neutral, but getting ready to breakout. Breakout points are 1314.2 to the upside and 1272.3 to the downside.


Daily Chart



The Daily Chart does not have a trend in terms of Swingline action. The Swingline Study, depicted by the arrows on the above chart has a lower low and higher high. Making matters even more confusing is that the market is just sitting against its 18-Day Moving Average of Closes.


This chart is also having trouble staying over the 18-Day Moving Average of Closes.


A breakout point on this chart exists only to the upside as that would develop a chart pattern of higher highs and higher lows. The number that has to be taken out to get bullish is 1309.2, as long as 1277.7 is not taken out first.


If 1277.7 is taken out, there would not be a chart pattern to trade off of as youíd have a higher high of 1309.2 and a lower low.


Objectives at this time donít matter as the market is searching for direction more than anything else.




As seen on the Seasonal Chart, gold can stay more or less sideways into the early summers. I donít see inflation or the Ukraine moving prices higher. What could help the market would be if stock prices corrected sharply as that might move traders into whatís termed ďsafe havenĒ plays.

The Yen rose today off the break in US stock indices along with the slowdown in growth in the EU and in the US according to the latest data releases today.

If prices breakout to the upside, Iíll do my best to issuing a buy signal to my subscribers.


To become as subscriber, simply clicking below or copying this link:           



Call 1-866-973-2077.



Disclaimer: This publication is strictly the opinion of its writer and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is taken from sources believed to be reliable, but is in no way guaranteed. Chart data is courtesy of LGP-IraCharts. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Futures and Options on Futures trading involve risk. In no event should the content of this market letter be construed as an express or implied promise, guarantee or implication by or from The Ira Epstein Division of The Linn Group, Inc. or The Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are not indicative of future performance.

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 -- Published: Thursday, 15 May 2014 | E-Mail  | Print  | Source:

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