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Peak Theories On Whether Gold Is On The Mend

Tyler Durden's picture




 

Peak Theories Research shares their latest technical observations on the gold price chart:

  • In complete contrast to my views on gold in January, I think there are strong technical reasons to think that we may, in fact, see gold move up in the near- and intermediate-term.
  • First, I now believe that gold’s trading action of the last four months was that of a complex Head and Shoulders pattern that fulfilled itself perfectly last Thursday.
  • Second, gold’s perfect fulfillment of that pattern came right above the 150 DMA which has supported gold in some of its other dramatic declines.
  • Third, this fulfillment also came on a Spike or even Pipe Bottom and this suggests that gold’s recent low of about $1,308 per ounce will act as a strong crux of support for a move up by gold.
  • Encouraging to all of these technical aspects was gold’s move above $1,348 per ounce yesterday and it is important that this level holds in the near future.
  • So long as it does, I am increasingly of the view that we’re likely to see gold trade up in the near-, intermediate- and long-term as is consistent with the primary bull market in gold.

Full report (pdf):

 

 

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Fri, 02/04/2011 - 08:56 | 934190 Paper CRUSHer
Paper CRUSHer's picture

Things are lookin' pretty dandy as I bought the ol' $1309 intra day low, liquidated my position this mornin' at $1350...jus' takin' a powder for a while.

Fri, 02/04/2011 - 12:32 | 935014 Math Man
Math Man's picture

I hope everyone took yesterday's gift and got out while the price is still high.

If we get an Egypt resolution over the weekend, it will be below $1300.

This rally is being sold big time.

Sell the f*cking rally!

Fri, 02/04/2011 - 14:53 | 935655 RockyRacoon
RockyRacoon's picture

Don't take too long a powder!

China gold buying "stuns" precious metals traders - demand unbelievable

The volume of Chinese citizens' purchasing of gold running up to the start of the Chinese New Year has completely stunned traders leading to big price premiums in Shanghai.

Lawrence Williams
February 3, 2011
www.mineweb.com
LONDON

Consider the following paragraph from London's highly respected Financial Times - a publication not usually prone to hyperbole: Precious metals traders in London and Hong Kong said on Wednesday they were stunned by the strength of Chinese buying in the past month. "The demand is unbelievable. The size of the orders is enormous," said one senior banker, who estimated that China had imported about 200 tonnes in three months.

Now China has already reported a five-fold increase in gold imports over the first 10 months of 2010 and if the estimate quoted above is correct the country may well be seen to have imported upwards of 320 tonnes in the full year which brings the total to within a hairsbreadth of Indian imports - and India has for many years been the world's largest importer of gold by a considerable margin. If Chinese gold purchasing momentum continues at anywhere near close to current levels it will soar past India as the world's largest importer of the yellow metal this year.

The FT quotes UBS gold strategist Edel Tully as commenting that not only is China on the fast track to replace India as the largest physical consumer of gold but that now the Chinese New Year holiday, which starts tomorrow, has already become significantly more important than India's Diwali Festival in gold buying volume terms.

What is perhaps being ignored by many investors who have been liquidating gold holdings in the U.S. in particular where there is a growing, but perhaps unwise, perception that the stock market is on a roll again, is the burgeoning, and seemingly accelerating, strength in Asian demand. As fast as investors are selling their gold ETFs in the U.S., the Chinese and other Asian nations are snapping up the physical gold which thus becomes available again.

Indeed in some parts of Asia, gold has been selling at a strong premium over and above the London price - as much as a $20 an ounce premium is being reported as applying recently in Shanghai, although now the Chinese New Year holiday itself gets under way the demand strength is expected to slip a little. Nevertheless Chinese observers expect buying to surge again once the holiday is over.

With China having been the world's largest producer of gold for the past several years now, with output rising each year, if we add this to the perceived import levels China will have consumed close on 650 tonnes of gold in 2010 - around 25% of estimated global mined production on its own - a remarkable statistic. China, India and other southeast Asian countries together will thus be absorbing around half of global newly mined gold output and for the moment this demand is not just rising, but rising fast, with the Chinese, Indian and several other Asian nations' growth rates rising at close to 10% per annum or more. Those analysts out there who continually harp on about gold's fundamentals not supporting current price levels, let alone further rises, seem to have totally missed this point.

Fri, 02/04/2011 - 18:15 | 936295 Math Man
Math Man's picture

China is buying gold because they have an inflation problem, just like the US did at the peak of the last cycle.  We all saw how that ended.  As the Chinese government continues to take steps to stomp out inflation, demand will decline, and so will Gold.  To expect the same type of growth from China in 2011 is asking for trouble.  The Chinese will make sure it doesn't happen. 

Fri, 02/04/2011 - 19:38 | 936427 dlmaniac
dlmaniac's picture

China, Russia and India will be laughing their rear off at whoever selling gold now.

Sat, 02/05/2011 - 18:00 | 937913 rocker
rocker's picture

Especially when the sell back to dumb Americans @ 5,000 a ounce.

Fri, 02/04/2011 - 08:57 | 934193 gigeze787
gigeze787's picture

Contrarian indicator?

Cramer: Gold Has Bottomed—Buy, Buy, Buy!

Cramer is likely speaking for GS who has now gone long AU (after receiving permission from B.B.) so they can suck in some more minnows and then grind them up on the way down in a few months.

Fri, 02/04/2011 - 09:03 | 934202 Snidley Whipsnae
Snidley Whipsnae's picture

Cramer = carnival barker... and, not the best at that profession.

I confess. I have watched his 'show' exactly once... couple of years ago. That was enough.

Fri, 02/04/2011 - 09:20 | 934233 TrihumpTheInsultDog
TrihumpTheInsultDog's picture

I dunno, I sold about a month ago when goldmiddlefinger said that he unloaded.

All we need is a buy from Reggie and we will know that all participants are locked in the elevator.

Fri, 02/04/2011 - 09:54 | 934391 tmosley
tmosley's picture

Hmmmm....

Another middelfinger sock puppet?  That guy was so incredibly inarticulate, I don't really believe that anyone would take investment advice from him.

Let's see some drive by trolling from you to confirm.

Edit:Member for


1 week 5 days
Looking more likely.  You haven't even been a member for a month.

Fri, 02/04/2011 - 10:14 | 934489 tizzleofdoom
tizzleofdoom's picture

Are you Tmo from PBN?

Fri, 02/04/2011 - 12:54 | 935111 RockyRacoon
RockyRacoon's picture

Thank you, Dry Hump Dog, for the valuable information.

Fri, 02/04/2011 - 09:08 | 934206 Treeplanter
Treeplanter's picture

Cramer is not always useless.  At the end of 08 he spent a lot of time pointing out which companies had low debt and paid dividends.  Unlike a lot of stock touters this boy is sincere to a fault.  And we already know the PM trend is up up up, maybe for the next decade.   

Fri, 02/04/2011 - 09:13 | 934214 Snidley Whipsnae
Snidley Whipsnae's picture

Old shrewish proverb... "The road to hell is paved with those that had good intentions"

Fri, 02/04/2011 - 09:15 | 934223 EscapeKey
EscapeKey's picture

He also helped a lot of people load up on Bear Sterns while it was collapsing.

Fri, 02/04/2011 - 09:21 | 934240 Snidley Whipsnae
Snidley Whipsnae's picture

+1...

A good shill knows that occasionally he has to let a sucker win one.

Fri, 02/04/2011 - 09:14 | 934219 EscapeKey
EscapeKey's picture

Who cares about Cramer, and who trusts a word coming out of GS?

Even Dancing with Stars is a more reliable indicator as to next weeks DJIA performance than either of those.

Fri, 02/04/2011 - 12:55 | 935120 RockyRacoon
RockyRacoon's picture

Oooh.  Oooh.   Is there an ETF for that?   DWTS maybe?

Fri, 02/04/2011 - 09:00 | 934194 satansanus
satansanus's picture

I thought we were still on the buy dzz on monday gold pop trade?

Fri, 02/04/2011 - 09:00 | 934196 Snidley Whipsnae
Snidley Whipsnae's picture

Charts, technical analysis, head/shoulders, blah, blah, blah, blee, blee, blee...

WTF... the Fed is providing unlimited liquidity to POMO in every asset class and these morons are attempting technical analysis???

Insanity... Remember the difinition?

Fri, 02/04/2011 - 09:11 | 934212 Treeplanter
Treeplanter's picture

We just witnessed a classic 52 week 1 2 3 top.  Could have taken some profits in the miners had I been paying attention.  Next time.  

Fri, 02/04/2011 - 09:15 | 934222 Snidley Whipsnae
Snidley Whipsnae's picture

I don't own any paper gold. I don't use leverage except in soft commodities and oil.

PMs ... physical only.

 

Fri, 02/04/2011 - 11:13 | 934723 Dr_Dazed
Dr_Dazed's picture

Gotta agree on this one.  Might as well be throwing a bunch of chicken bones in the dust and waving a feather around.  Whatever validity "technical analysis" may have had at some point has got to be dead in current manipulated markets.

Fri, 02/04/2011 - 09:00 | 934197 satansanus
satansanus's picture

we will need to see one of those ~3% flush days before the upmove resumes IMO

Fri, 02/04/2011 - 09:03 | 934200 Bay of Pigs
Bay of Pigs's picture

Abigall F. Doolittle? Who?

BTFD. Read Turd.

 

Fri, 02/04/2011 - 09:06 | 934205 Snidley Whipsnae
Snidley Whipsnae's picture

+ 1

In addition...watch this movie...

ZEITGEIST: MOVING FORWARD | OFFICIAL RELEASE | 2011

http://www.youtube.com/watch?v=4Z9WVZddH9w

No, these guys didn't get everything right... but they damn sure got most of it right.

Fri, 02/04/2011 - 09:52 | 934392 GetZeeGold
GetZeeGold's picture

 

Smells like teen Marxism.

 

Fri, 02/04/2011 - 11:34 | 934778 GoinFawr
GoinFawr's picture

Advising you to keep an open mind and change it if presented with new information...that's 'Marxism'?

Smells like you don't know what you're talking about to me.

Fri, 02/04/2011 - 12:43 | 935068 Hephasteus
Hephasteus's picture

All governments are interested in is creating some form of "worker paradise".

I think the best tact is for workers to create a "government hell".

Just make running the big machine so goddamn painful and frustrating nobody wants to try.

Fri, 02/04/2011 - 09:04 | 934204 BigJim
BigJim's picture

I'm long gold, both physical and paper. I hold the physical, and (attempt to) trade the paper.

I can understand the urge to look at the chart patterns - what else do we have to make our short-term decisions by? - but the degree to which the market is rigged is beginning to make me wonder if there's much point.

Fri, 02/04/2011 - 09:10 | 934210 Snidley Whipsnae
Snidley Whipsnae's picture

Before we looked at 'chart patterns' we looked at the entrails of goats... not a lot of difference when the Fed is conducting POMO in all assets.

Charts are like a religion to some. If it makes them feel better that they lost their azz based on sound technical analysis then let them be.

 

Fri, 02/04/2011 - 09:15 | 934221 Treeplanter
Treeplanter's picture

Yeah, the Fed screws it all up, makes timing dips and runs difficult.  But the charts still work, especially with the strong formations and if strong fundamentals are respected.  The Fed is not as powerful as it thinks it is.  

Fri, 02/04/2011 - 09:16 | 934226 Snidley Whipsnae
Snidley Whipsnae's picture

"Never fight the Fed"... When you use charts you are fighting the Fed. Think about it.

Fri, 02/04/2011 - 09:24 | 934249 tickhound
tickhound's picture

Technicals were a once worshipped, and some say accurate, ancient device of measurement used by the occult to predict the movements of the magic hand in the long since extinct rituals of free markets and true economic data. History Channel mentioned it during a segment of Ancient Aliens.

Fri, 02/04/2011 - 10:44 | 934623 Watauga
Watauga's picture

BigJim--Let's say you were in paper PMs (e.g., GLD and SLV), an announcement came out that the ETFs did not, in fact, own even 50% of the gold they purported to own, and they dropped instantly by 90% (while you, perhaps, eating lunch at a local steakhouse, celebrating a recent uptick in gold and silver).  Does that possibility concern you?  If so, why, and if not, why not?  I am still on the fence, waiting for what should be another 10% pullback in both gold and silver (only the crises in the Muslim world and the Fed seem to be preventing it), but when I get back in, do I go exclusively with physical PMs, or are the paper PMs safe enough? 

Fri, 02/04/2011 - 20:18 | 936501 DosZap
DosZap's picture

We are all in the same boat here, as far as PM's.

Outside of PM's, WHAT do you trust to retain value?.

Land?, anything related to paper is OK, if played with disposable.

But your NEST Eggs...............must be preserved.

FRN's no matter where they are on the USDX, are still worthless shit.

Seriously, what are you left with for insurance.

Fri, 02/04/2011 - 09:21 | 934237 Doctor sahab
Doctor sahab's picture

Gold. Bitchez.

Fri, 02/04/2011 - 09:25 | 934255 Snidley Whipsnae
Snidley Whipsnae's picture

+1

PMs rule in the long run.

And anyone that believes that 'The Fed is not as powerful as it thinks it is' better think again.

The Fed prints the world reserve currency in any quantities and for any uses that it deems necessary... Of course the current power of the Fed will not continue indefinitely... but, who is going to call a top on that one?

Care to show me a chart of the Fed top?

Fri, 02/04/2011 - 09:23 | 934246 TrihumpTheInsultDog
TrihumpTheInsultDog's picture

Hey can we get an article from Chris Martenson about gold? I wonder if he's bullish? Do the Peak Theory guys have free range chickens in their backyards?

Fri, 02/04/2011 - 09:31 | 934266 Snidley Whipsnae
Snidley Whipsnae's picture

"Free range chickens" are on the menu of most critters with two legs or four... and birds of prey.

Chris Martenson +1

Here is another one that has been right most of the time...

The German-Chinese World

Martin Hutchinson

http://www.prudentbear.com/index.php/thebearslairview?art_id=10499

Fri, 02/04/2011 - 09:35 | 934293 MiningJunkie
MiningJunkie's picture

The only CHART that matters is the chart which tracks the purchasing power (or lack thereof) of Federal Reserve Notes otherwise known as the U.S. dollar. If this debasement continues, it will not matter what your net worth is because a starving unemployed mechanic will come and take it from you. However, the good news will be that the Wall Street banks have become solvent, and the Packers won the Super Bowl.

Zimbabwe is lovely this time of year...

Fri, 02/04/2011 - 09:43 | 934341 Snidley Whipsnae
Snidley Whipsnae's picture

+1

How many economists have said "and not one person in a million realizes what is being done to them"?...refering, of course, to debasement of the fiat money supply.

 

Fri, 02/04/2011 - 09:51 | 934385 Gordon Freeman
Gordon Freeman's picture

I like PMs as much as most here, but this Peak "Theories" stuff is just drivel, and presents a king-sized target for critics of TA, which is a shame, because when used properly TA has utility

Fri, 02/04/2011 - 12:16 | 934951 Vint Slugs
Vint Slugs's picture

+1.

Read her profile - where are her creds?

Candlesticks - pictures for people who can't think.

Fri, 02/04/2011 - 09:52 | 934387 Gordon Freeman
Gordon Freeman's picture

sorry--double post

Fri, 02/04/2011 - 11:04 | 934688 chistletoe
chistletoe's picture

Abigail has been right more often than wrong the last several weeks now ...

Do you care what she says she uses, if it works?

As for me, I use "parascience", I rely on tea leaves in the bottom of my cup.

My tea leaves told me to buy on monday at the close, sell on tuesday at the close, and buy big  yesterday at 10:15.  So I will be going to Walmart this weekend and loading up on "constant comment" ...

Fri, 02/04/2011 - 11:42 | 934831 Vint Slugs
Vint Slugs's picture

Abigail has been right more often than wrong the last several weeks now ...

Yeah, like her call for a rally in the bond mkt.  Give me a break.  Where's Turd? 

Turd? Turd?  Let's hear it about the "complex" head and shoulders.

Fri, 02/04/2011 - 13:06 | 935177 FranSix
FranSix's picture

The fact that gold prices are bottoming in $U.S. at the 34-week EMA means that it has yet to really get going.  Most of the major runups have only had to reference the 13-week EMA before moving higher, and this is the case with most bull runs.

http://www.youtube.com/watch?v=Rfysyex_DAk

Fri, 02/04/2011 - 15:01 | 935686 Tigre Tigre Tigre
Tigre Tigre Tigre's picture

If they're looking for "complex HS" patterns, why don't they consider this rally is the right shoulder forming for another low before resuming the uptrend?  Momentum suggests that at least.

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