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The Prechter Gold "Buy" Signal Has Been Triggered
The recent decline in Gold has not only caused mayhem in goldbug-land (especially those holding mining stocks), but also brought deflationists of all stripes – with, not surprisingly, Prechterites at the forefront - out of the woodwork shouting $400 Gold from the rooftops. Funny, all I remember is a deafening silence at $1200. Emboldened by the recent decline, Mr. Prechter has predicted a 40% decline in Gold prices from here. For those not in the know, Bob Prechter has been forecasting declining prices for Gold all throughout its decade long bull run. For example, in March of 2006 when Gold was about $560 he said, "Gold is in the final stages of a speculative surge…technical factors, in conjunction with a complete wave pattern and sentiment, point directly to a decline to at least $460 and probably close to $400". It reached $730 in May and closed that year at around $650. In 2003 Alf Field – who beat Prechter at his own game forecasting Gold prices much more accurately than him using the Elliot Wave Principle – wrote, "In mid 1999, when the gold price dipped towards a low of $253, Bob Prechter forecast an extended rally in the gold price that would be followed by a final decline to below $253 to a low point approaching $200…he forecast (at the start of the move) that the peak would be about $360 and he recommended short sales in gold after the price moved above this level in February 2003. He now believes that the market is on its way down to new lows below $253". Gold closed that year at around $430. What would have happened if you took his advice and shorted Gold at $360? You would have gotten reamed, that’s what. Ironically, for all his blathering about "sentiment" and being "contrarian", Mr. Prechter has become a great contrary indicator for the Gold market. His long term stock market forecasting isn’t that great either (yeah, I know he’s made 4-5 correct predictions in the last 40 years), but we’ll leave that aside for now.
For those with a long-term horizon, the picture hasn’t changed at all and should keep buying the dips no matter what. But buy physical only and in your personal possession. I cannot stress this point enough. Even if you are a short term investor and like to trade/speculate you should keep a stash of physical not-for-sale and keep adding to it regularly. Think of it as taking profits in Gold instead of Federal Reserve Notes a.k.a. dollars. Now, for those of us inclined to speculate on the POG (Price of Gold), let’s take a look at the evidence and try to figure out where we are and where things are headed in the short term.
Is the Present Upleg Over?
Gold has had two major uplegs since its bull market began in 2001. Both have occurred during the seasonally strong period of September – May timeframe. Both occurred after long periods of consolidation lasting more than an year. The first one took us from about $450 to $730 – a gain of 62% and the second one took us from $700 to $1030, a gain of about 47%. The 50 DMA was barely breached in both of those uplegs. This present upleg has occurred in the same timeframe, but has given a rise of only 22.6% so far. It has also breached the 50DMA as well as the 100 DMA, although the latter has been breached only by a blip so it may be a false breakdown. In the past breaching of the 50 and the 100 DMA has signaled the sure end of the upleg but this time I suspect it may be different. “Why?”, you may ask. Well, first of all the rise has been piddly compared with the huge preceding 18 month consolidation. In fact, it’s barely visible in the log chart, when in fact the fundamentals have never been better for the Gold price, especially with Central Banks becoming net buyers instead of sellers for the first time. Secondly, I think too many people were looking at the past uplegs just like we are and were expecting the 50 DMA to hold, which is probably why it didn’t. Thirdly, the $1000 level was a huge resistance level, so the price retesting it should not be much of a surprise. Fourth, the US government has a record amount of debt to sell this year, which is why – as also speculated on ZH recently – it appears that they have green lighted a (what they hope will be) a managed selloff in all risk assets so as to hold down interest rates. They are playing the "Bonds-Stocks yo-yo" again, or at least they think they are. What they are forgetting is that Gold is increasingly becoming a wild card. Instead of going to either bonds or stocks, capital may flow into Gold – the real money - thus causing the "yo-yo" to collapse and trashing Treasuries, the dollar and stocks – all at the same time. Also, too many people are expecting a repeat of 2008 where everything went down including Gold and the dollar/Treasuries rose which is also a strike against the same exact scenario happening again.
Gold Daily Chart:
The bull run envisaged in the last update materialzed, but is far from over in my humble opinion. As evident from the chart $1075 which was resistance previously has become support now, as happened with the $1025 level. Gold appears to have put in a double bottom at $1075, if it holds i.e. Option expiration shenanigans definitely have a lot to do with many of these unexpected “corrections”. From what I have observed while trading futures, I gather that there are some pretty huge buyers/buyer at that level. When the price reached $1075 during Friday’s trading, the buy orders just kept coming and coming. Also, my sources indicate that there is heavy physical buying interest in Asia at these price levels and premiums have surged.
RSI and MACD are pretty much at the same levels they were when the price hit $1075 back in December, so no bearish divergences there albeit the Slow STO is exhibiting a small positive divergence. The Golden cross mentioned in the last update remains intact, a plus for higher prices.
The COT Situation:
This Friday’s Gold futures COT Report is definitely positive. Commercials covered a lot of shorts. They reduced their short positions by 22,734 contracts in futures for a net short position of 248,618 contracts. The last time we saw a lower net short position than this was at the beginning of September when it was 216,708 contracts, and has declined by almost 20% from a high of 308,231 when the price was $1226. The current net short position might likely even be lower since this data is as of Tuesday and the price has fallen even lower since then. Apparently, the bullion banks…er…”commercials” know something we don’t.
Also, small speculator net long positions reduced – always a plus since they tend to reach their lowest levels at bottoms - by a substantial 15,484 contracts from 52,178 to 36,694, a level last reached at the beginning of September when it was a net long of 32,207 contracts. This represents a decline of 31% from the peak. Interestingly, the small speculator net long positions reached a peak not at the high of $1226 (49,167 contracts), but at the January high of $1160 (53,146 contracts).
The US Dollar Situation:
The US Dollar has mounted an impressive rally, and if we look at the weekly chart the technicals definitely look positive with a rising RSI and MACD along with price (as they do on the daily chart). It has breached the 200 DMA resistance level accompanied by increasing volume in the US Dollar index bullish fund UUP. The 78-80 is also a significant long term support/resistance level, so until the dollar convincingly breaks past 80, we should look at it for what it is – a countertrend rally in a bear market. All the major moving averages are sloping down which is definitely a negative.
While the dollar could easily go either way from here, contrary to popular wisdom, even if the dollar rises, it does not automatically mean that Gold will fall as we witnessed at the beginning of ’09 when they both rose together. It was not a one-off event either. It has happened previously at the end of 2005 when Gold broke out of the $450 level. To be fair though, the decade long relationship between the US Dollar and Gold is definitely inverse. In my opinion, the issue is not as cut and dried as “Dollar up, Gold down” as the deflationists would have you believe. The dollar index can be a pretty misleading indicator as it can go up both on account of world capital flooding into the dollar as a “safe-haven” trade as well as other countries debasing their currencies faster than the US. In the latter case everything (i.e. stocks, commodities, Gold, etc.) can keep going up right along with the dollar as I believe was the case in 2005. Moreover Gold and the dollar are not the only assets competing for capital. We have stocks and commodities as well – the so called risk assets. In 2009 we saw Dollar going down, risk assets going up whereas Gold remained essentially flat. If and only if the dollar and Gold are the only two assets competing for capital we can say “Dollar up, Gold down”. To add to the confusion, most people tend to lump Gold with risk assets and when they say “Dollar up, Gold down” what they really mean is “Dollar up, risk assets down”. What they don’t realize is that Gold is in a separate class by itself. In fact, Gold is what people think the dollar is today i.e. money. The dollar is just a poser - a mass delusion, if you will. As more and more people wake up to this reality we can expect old correlations breaking down accompanied by increasing volatility as is happening now.
Capital today is trying to find a safe haven as we move along this deflationary depression. Initially of course some capital is expected to flow the dollar’s way since it has been the world reserve currency for so long (thus causing a rise in the dollar index), but as more and more people realize the sorry fundamentals behind the dollar and discover Gold as the true safe haven, Gold’s rise will in no way be impeded by the dollar. In fact, at some point, I expect even commodities to outperform the dollar (but still underperform Gold) as the illusion of dollar being “money” breaks down.
Gold:SPX Ratio
The bullish divergence highlighted in the last update played out (although not to the extent expected) and after rising from September through November to reach a high of about 1.10 it fell to around 0.95 in December. It has started rising again signifying that Gold is set to outperform the stock market once more. RSI and MACD are rising again and supportive of such a move. As we progress through the Gold bull this ratio will be in an uptrend. The 1.0 area which was resistance previously has turned into support. The ratio broke out of 1.0 at the beginning of 2009 and after an year long consolidation/retest and looks set to resume the uptrend.
The Gold-Stocks (Non)Correlation
Now after watching Gold rise along with stocks through the better part of 2009, many people believe that it will crash along with it as happened in 2008. What most people forget is that Gold completely decoupled from stocks from November 2008 till April 2009, at one point even moving inverse to it. What happens is that there are two sets of people buying Gold – strong hands and weak hands. Weak hands just play momentum and buy whatever is going up. They don’t really know much about Gold’s fundamentals and sell at the slightest sign of trouble. All the correlation junkies ala “Gold goes down when the dollar [index] goes up” also fall in this group. Thus during the initial downdraft in stocks weak hands panic and sell outnumbering buyers therefore causing the price to fall. As price reaches bargain levels, strong hands who are aware of Gold’s fundamentals i.e. know exactly what Gold is and why they are buying it, step up to buy whatever weak hands are selling putting a floor under the price. In fact we saw signs of such a floor (and Gold decoupling from stocks again) on Friday as the stock market got pummeled while Gold held its ground at $1075, even moving up towards the close of the session due to heavy buying at those levels. Now while it may not have bottomed out yet, this indicates that we are not very far away from one.
Gold has its own fundamentals driving the price having nothing to do with the stock market. In fact, I believe that Gold will see some of its greatest gains when stocks are being pummeled. People will see Gold holding its own amidst crashing stocks (and other paper assets, even commodities) and panic into Gold and out of stocks as happened in February ’09 when stocks were crashing and Gold was rocketing. The price will not really rocket (no, what we saw in November ’09 wasn’t it) until the bullion bank shorts ala JP Morgan get crushed and in their fear the herd might just run over them. Never underestimate the power of fear.
Gold:Oil and Gold:CCI Ratio
Although Gold has not really outperformed crude since February’09 and the ratio has remained in a tight, albeit historically normal, range of 13-16, it has started to rise again. MACD is rising and supportive of such a move. Although the ratio did rise to above 16 in Dec’09, I believe that the bullish divergence between price and MACD referred to in the last update has yet to play out fully. Another spike up is definitely in our future. Let’s also take a look at the Gold:CCI ratio which compares Gold to other commodities in general. After spiking from Sep’08-Feb’09 it has been consolidating till date and looks ready to spike up again. MACD and RSI are rising steeply now, after having remained in a sustained uptrend through the long period of consolidation thus supporting such a move.
Since this is a deflationary depression in terms of Gold (and NOT the dollar) and we should look for Gold to not only significantly outperform crude and stocks but other commodities in general and hence both of these ratios to be in an uptrend. In fact, if you zoom out on these ratio charts, you’ll see that MACD has been in an uptrend all throughout the “Hope ’09” rally. Also, the spike up and ensuing consolidation looks suspiciously like a bull flag. What this tells us is that Gold has been quietly consolidating against all the “Hope” and “Recovery” assets such as stocks and commodities ready to rocket up again. The spike to $1226 in November was just a small taste of things to come. In fact, I think that the coming spike in Gold will be a sight to behold and will surprise even the most hardcore gold bugs.
Strategy
Long term the strategy remains buy the dips as Gold is in a bull market which is far from over. Short term we can expect volatility but $1000 should hold, although we are seeing increasing signs that we just might be at the bottom (including sentiment in the PM community which appears to be terrible right now – at least from the comments I’m seeing on various blogs) and just doing a second retest of the last breakout at $1075. If you are not leveraging, buy at will. If you are, make sure you have enough margin to hold your position even if price dips to $950-$900 just to be on the safe side since the bullion bank gold manipulators are adept at performing "bucket shop drives", as the famous Jesse Livermore called them.
The $1000 area - where we are right now - is a great risk reward point for those who are leveraging as you are only risking a possible $100-$180 move against you compared with almost unlimited upside potential. From being a massive resistance zone, it has turned into an equally massive support zone now that the price has broken out. Consider it a gift from your government.
Mr.Prechter wants you to choose this:
Over this:
What's it gonna be?
Disclaimer: Long Gold. What did you expect?
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the DXY made a move from 74 to 80 and gold dropped about $100...yawn. So much for the crash.
Gold is past-peak, supply is declining. For those who don't believe in Peak, check helium which hit peak supply in 2002 (even Douchinger accepts this because he's a diver). Declining supply backstops price.
Paper is what is facing the crisis, especially debt paper. The future is declining oil, declining gold, declining helium, declining god knows what else. It's a future of contraction. Not gonna be the real production to pay the interest on these notes. Therefore, paper must be discounted.
www.campaignforliberty.com
Gold and silver and the platinum palladium stuff too
Don't forget the canned tuna and the ammunition to protect it all.
Sorry, those post were not meant to anonymous. I guess I have done too many drugs to log-on properly.
Gold money doesn't take away the power of the rapers of the past 2000+ years. They have out-thought you GG, and will take the extra power that they extra crave.
Prize freedom, not gold. If gold is freedom, then I am right with it, but I cannot see how that it helps to give the royal families and the historical war mongers like George Bush's before (insert favorite historical character here), your backing.
I am Dry Drunk (mad as hell).
How does the fact that we own physical gold help your so-called royal families? The idea is that there may be a domino-default across the globe, crashing all fiat currencies. The first step up from eggs-for-salt bartering in that case will be money exchanges using silver and gold.
Wow, like Precther is an enemy of Gold and Freedom? Pure jealousy GG.
I'm sick of all these experts saying gold is money, blah blah blah.
The free market will decide what money should be. Competition amongst currencies will make us truly free. And technology plus substances plus ideas will make a new truly brilliant money.
With "The Powers That Be" owning 80%+ or all the gold and the US has tungsten bars, will GG worship those gold woning arseholes? Sucking on their cocks, like the brainwashed MK-ultra babe he is?
Give me Precther any time.
Just stating the facts as they are. Prechter's horrible forecasting record in Gold is there on-the-record for all to see.
OK, Precther did write those things. He was sure that gold would go under $200. He still burns that candle.
But you could have put in his stop loss levels. His advisory losses are not great.
Precther is one of the few guys that can predict the future. He has been working on socionomics and there are many good cocktail stories there (e.g. skyscrapers and crashes). Deflation is a mood. He is right about that. And the mood is changing. Consumer debt is falling off a cliff. Yeah, but he was always too quick, too fast.
His mistake was that he thought the government would become deflationary sooner. But it is happening now. Bernanke's reconfirmation confirms this, the opposition at a huge peak in the stock market is highly unusual.
But don't forget, freedom is more important than Gold. I think zero hedge should have a cash competition. What would be the best money?
I'm glad a posted that. I actually like GG heaps.
How about it ZeroHedge? 10,000 units of the ultimate currency. Just create it!
What can the internet do? How many brilliant brains are hooked into ZH?
What currency fits the criteria of trust, and does not allow the rich to control it?
ZH can invent them, so my feeble attempt is silver fills the bill. Too heavy and hard to protect. The super rich get weighed down.
This is partly why silver was always the common man's currency.
But there is so much brainpower at ZH. Why not make the competition? Help create the best money, ever, that will last centuries!
I am Dry Drunk
good to see you back, gordon gekko. thanks for the thoughtful analysis.
My pleasure.
So you own a little gold. But the "Powers That Be" own almost all of it. Rhodes and the UK Crown stole so much from Southern Africa. All through the ages they have stolen it and killed all witnesses over the years. (Caesar in Gaul, Nazi's in Eastern Europe, Japan in Asia, US all over the world.)
We get a gold-back currency, we fulfill their desires.
Instead, we need freedom. The invisible hand will solve all the problems of currency, though right now we have no idea as yet what this is exactly. There are indications. Octopuses hunt the squid.
Gold is not the slam dunk you think it is. Slavery is the key issue. Yes, we are slaves now, but gold money will make us greater slaves.
There is a bigger box you have evolved to GG, but DD thinks you are still in a box.
Yes, buy gold during a massive ABCD down....
I think the article was well done, but gold gets a bounce before it tests 1k and then figure out if the bull market is over. *yawn*
As for Prechter... he's a genius but has gotten too lost in his "guru" status. But I will say one thing, he doesn't ignore the indicators of sentiment like so many other technicians.
No. If you haven't bought any Gold yet, you need to buy some right now. The risk at this time is to be out of the market (i.e. the Gold market, not stocks), not in it. If you already have some, then you can possibly afford to wait a bit, but this is a good point to start scaling in.
in 1996 and 1997 I was new to all this, and pessimistically convinced myself that I had missed the boat on DELL, because it had risen about 2X from the prior year lows. AOL was up many fold from its 1994 levels. Even YHOO was available close to its IPO price for months. All those stocks went up about 10X plus in the few years that followed.
Sometimes you just have to take in all available info and make a decision. You don't know what the market will do in a day or a week or a month. You just look at the trends in place and wait.
Hi
I think what Prechter is getting at is that
most of the worlds debt is issued in Dollars
and there has been a huge carry trade since march
once fear sets in again and deleveraging occurs everyone will rush for dollars to pay debt. These dollars then dissapear making ones available dearer
this did happen last year and gold did go down as it was sold to settle debt in dollars. Why would the next deflationary downdraft be any different?
The only thing is this time you may get a lot of capital going into gold as a safe haven which he has not touched upon.
Short term I am sure Gold will go down with everything and the dollar will ramp. This is already happening But I think long term Gold is a winner and the dollar dies along with most paper. Mchugh seems to think the same
Please GG, buy all the gold you can now!!!!
i will be very happy to eventually buy it from you for say... $200 an oz.
The best article I have ever read that refutes Prechterian theory at its core is here:
http://www.gold-eagle.com/editorials_03/hultberg020503.html
This was written in 2003 but it seems like it could have been written three days ago in response to Prechter's latest "forecast."
A snippet: "As Prechter sees it, fundamentals are brought about by the "psychological mood" of the public. Thus, Elliott practitioners' insistence on charting this mood via wave analysis. They maintain that they are tapping into the primary force of the market with their wave counts, and that this will lead one to the best possible forecast for future price movements.
But if this is so, then they still have to answer the question, what causes this psychological mood? And once that cause is identified, would it not then be the real "primary" force to tap into? All phenomena of the universe are caused by something. They do not exist axiomatically. They are brought about by preceding causes. This is basic science -- cause and effect. It extends to all phenomena of the universe. Therefore, Prechterian theory is flawed in that it appears to consider "psychological mood" as a given and does not try to explain it's origin."
My grandmother finally asked me about investing in gold when I spoke with her this past weekend. All those commercials Glenn Beck is running must be getting people excited and invested.
I will say GG has been right so far. The worry I have is the manipulation. The market should be way down. The banks should be insolvent, the dollar should be crashing, gold should be $2000.00 an ounce, but its not. Oh yea and Geitner and Bernanke's noses should be about a foot long.
Ah, the classic gold bug refrain. They're right if it goes up, and right if it's "manipulated" down.
Over at zeallc.com read Soaring Base Metals Stockpiles, which is a generally bearish take on the group, and then consider the possibility that interest rates might get squeezed which takes the speculative premium out of gold,
and golds detractors aren't nearly as crazy as the bulls who tell you to buy every time the price goes $5 lower.
I suspect that the price of gold is being held up by bargain hunters, who usually end up with buyers remorse. BUT
suppose the Central Bankers do start buying the stuff? Just who is buying and who is selling? Since the US has fairly large reserves, and China has little. Is this really all about what the Politburo in Bejing is going to do, or do you really think the retail buyer will drive up demand sufficently to make it worthwhile?
When it comes to investing I prefer to steer clear of any investment that resembles a political football. As for the end of fiat currency, and what that means, I would prefer to be the guy taking gold in payment for goods and services, not the other way around.
Bob Prechters history of Gold is available on his website, a free pdf download, and its definitely worth a read.
Well, you have already been forcibly "invested" in the real political football, i.e., the dollar.
GG, this was a very well constructed article... I appreciate the time you put into it.
I had a life changing event- observing the manipulations that brought about this credit crisis. I don't think I can ever recover from my cynicism and distrust for the government...
So here I am, buying gold hand over fist at age 32 with no concern as to whether or not it becomes "fashionable" on wall street.
God help the little people in the ponzi paper world if my way of life ever becomes popular. Many will suffer.
What I find encouraging from the comments is that despite being the only asset class to make new highs since the crash, there is still a lot of hate out there for Gold. We are definitely far away from a top.
This is true. Being at the cone of the yield curve it's quite likely similar behaviours will apply as seen at previous curve peaks, viz 2003-2004 & 1992-1993. Or behaviours around 1975-1977. Or 1931. Right now gold is following the 2004 example & if this continued we'd get a bounce very soon then a drop below today by the end of April. In early 04 GDX dropped 30% after the bounce then rallied 40% in the following 6 months peaking in Nov 04 but essentially PMs didn't recover from the 04 dips till mid 05. Many gold & silvers reached & broke 61.8 fib retrace back then AEM, AU, GSS, GDX, PAAS, Hecla & Lihir retraced 100%, MFN about 80%, many others. The yield curve is rising again, now, similar to 1932 when it stayed at peak till 1935 during which time Homestake went from 100 to 500 & it may follow that example. The next foreclosure wave is getting under way, same dimensions as 2008. Goldman insiders are apparently selling their own stock. I'd be curious to know how many kilos these guys have personally stashed to date. The dollar is behaving much the same way as in 04. the $GOLD:$CCI ratio peaked in Feb 09 at a record high then dropped & settled at a higher level than at any point from 2000, this is promising. $GOLD:$XAU is climbing on a trend break, the wrong way for miners as gold falls. Same case for $GOLD:$SILVER. If silver follows the 04 pattern it should go to $12-$13. In 04 silver peaked in early April 3 months after gold's first peak. Today's $UST10Y has a similar pattern to 04. Copper is about to break its 20 week MA (same 02, 04, 06, 08) & copper miners off 20-30%. JNK, CYE & CYE:TLT are turning, $RUT is poised to go through the 120 DMA. $XAD made a double bottom & broke trend, same other currencies. 8 PM stocks on my list are off 30-40% with Nevsun at 42% & 8 are double digit positive. Dollar peak in May? Let's see.
And I have long noticed, GG, that that seething hate for gold is typically coincident with an abiding love of big government and statism in all its forms.
Gordon,
I don't have time to read all the comments. Will do so in the morning. In my book you da man! You stand by your thesis. Some asswipes were on about how you and Chumba disappear when the POG goes down. This is separate from making the right call or not. I admire you for standing by your thesis.
Integrity bitchez.
Thanks for your kind words MsCreant.
You appear to be predisposed to the notion that gold is going to increase in value. Therefore, I don't know why you spent so much time analyzing various charts, moving averages, etc, etc, etc. I suspect your conclusion would have been the same regardless of what the charts showed.
Better yet:
"It is a tale. Told by an idiot. Full of sound and fury; signifying - - - nothing"
"Those that the gods would destroy they first raise up and make proud".
Gold, bitches!
There's a small problem with physical gold. It's not liquid - at all. You can't pay any bills with it, it is not legal tender except at face value which is 20 times lower than spot. The banks have been building a monopoly on money for 100 years and little shiny yellow bricks aren't going to break it unless gold can be spent as easily as FRNs. Gold would still be at $500 if it wasn't for ETFs providing liquidity and easy convertibility to FRNs. In addition to that, not one average wage earner in the country, and certainly not one in China or India, can buy an ounce of gold after having paid the monthly bills. Retirement accounts are not buying gold, as even the most conservative funds desperately need income, not inflation protection. There are so many reasons not to buy gold. I own physical gold, but once you own a certain amount you find out that for very practical reasons, physical gold does you very little good on a day to day basis.
Are you freakin kidding me? I have to say that sounds more like an American "wage earner" to me.
long gold short gold lol... an oxmoron ..
paper.. . something that the investment banks insider information use to get their100 million.//.,
record amounts of the real gold is being scooped up.. while the paper guys , twiddle
This is really all one needs to know to understand what's going to happen to the dollar:
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/29/AR200904...
For the past 20+ years, the U.S. has been exporting its inflation to China, and China has bought it with gusto. But it appears those days are coming to an end:
http://www.cbsnews.com/stories/2010/01/12/business/main6086779.shtml
With the Tred (Treasury/Fed) printing like mad to cover the Obama spending free-for-all, China and many others will lose their appetite for any more green paper.
The inflation tsunami will inevitably follow. Hedge your bets as you think best. History favors Au.
so pretcher being a yale graduate .. may be he is fulfilling a prior bargin ,, these yale guys are part of the fiat bonus pool.. cant have gold going up.. .brother hood of the skull
especially with so many lemmings that bow to the wave lol
Thanks GG!
The picture of Prechter is priceless. Seriously, he looks like a candidate for the looney bin. So severe is the delusional afflatus evidenced in his consistently wrong headed Wave wanking that the poor sap has become unhinged and its written all over his fiz. Along with so many of the other gold bashing and bull buggering bears who poke their heads out of their mental permafrost only long enough to get singed by the heat of the next leg up, Prechter will eventually collapse under the weight of his immense and resounding cognitive dissonance. GG mentions the obvious divergence between BP and the other wave counter, the masterful and prescient Alf Field who has been spot on for the better part of the last two decades in his predictive and artful interpretation of the Elliot Wave, much more so than anyone else including the Kondriateff Waver, Martin Armstrong. Either one of these two gentlemen prove that sound economic fundamentals grounded in historical understanding inevitably trump the short sighted technical analysis of the small minds circumscribed by mere abstractions.
+1000
if he had been saying sell gold for over a decade, and is still saying it now, why is he suddenly a contrarian indicator anymore? gold just sliced thru 1080 this evening, isn't that some key support level?
He issues his so-called "forecasts" - as he has done recently - right before the next upleg is about to begin.
Anyone who says sell Gold these days is considered a Contrarian Indicator!
Terrific article. Lots of great data and who doesn't love nifty charts!
Here's a tidbit for those of us waiting for QE2 (no, not the ship, Quantitative Easing, Part 2).
1-31-10. (Need more dollars for that toilet paper roll pictured above.)
"WASHINGTON (Reuters) - The White House will predict a $1.6 trillion U.S. budget deficit in the 2010 fiscal year, a fresh record and the biggest since World War Two as a share of the economy, a congressional source told Reuters on Sunday."
The dollar may well rise on Euro flight and debt implosions, however, gold has a "bright" future.
Elliot Wave is worthless in this market because it isn't a real market but one created by the US government. Good luck to anyone trying to project where it's heading.
very important observation....all analysis
dependent upon markets being free and spontaneous
will suffer from the fact they are heavily
manipulated...
AMEN!! they're going to have their heads handed to them when AU reaches pluto in the coming months.
Once you've got all of your other tangible needs covered, Gold and Silver are to be bought.
I would like to announce, as we saw just LAST FEB, that in a deleveraging event both GOLD and the US dollar can go up. As we see in Europe, the euro can be strong for a period of time but in the end it's just as bad if not worse than the dollar. The Europenas have no hope of paying back an iota of debt-remember they have the worst productivity in the world. Read: Greeks.
The senior currency is always strong(just because there is less in circulation and everyone needs it to cover spec positions) and gold is highly universal and LIQUID and FUNGIBLE. For all you gold haters out there, gold is real money and accepted everywhere on the planet.
If you don't believe me, go do some history reading. Gold UP-Dollar UP in the 30's. Gold being measured in the real price. IE: what it can buy in other commodities. See above gold/oil ratio.
Gold miners will be making tons of money simply because they have money in the ground and just have to extract it. Real money in the ground, bioches!
Prechter speaks about the nominal value of gold(gold versus dollar,euro,yen.) This changes in cycles(Waves.)
Gold's real value however, is consistent throughout time. It rarely buys what it should not.
That's have deflations work. What acts like money IS money until it doesn't. See mortgage default swaps, CDOs, CD swaps and other McMoneys. Now worth...zero.
Understood ... & yet GDX:CCI is dumping .. at the moment
http://stockcharts.com/h-sc/ui?s=GDX:$CCI&p=D&yr=2&mn=6&dy=0&id=p85783962320