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GOLD should be completing a cyclical low in February

ilene's picture




 

GOLD should be completing a cyclical low in February

Courtesy of David A. Banister

Over the past 5 calendar years we have seen GOLD either complete an intermediate cyclical top or bottom in each February. My forecast was for February of 2013 to be no different and for Gold and Silver to make trough lows this month.  With that said, I did not expect the drop in GOLD to go much below $1,620 per ounce at worst, but in fact it has. Where does that leave us now on the technical patterns and crowd behavioral views?

First let’s examine the last 5 years and you can see how I noted tops and bottoms in the chart below:

ATP1

 

That brings us forward to todays $1,573 spot pricing and trying to determine where the next move will go. To help with that end, some of our work includes Elliott Wave Theory, along with fundamentals and traditional technical patterns. In this case, the recent action around Gold has been very difficult to ascertain, and I will be the first to admit as much. With that said, one pattern we can surmise is a rare pattern Elliott termed the “Double Three” pattern. Essentially you have two ABC type moves, and in the middle what is dubbed an “X” wave, which breaks up the ABC’s on each end of the pattern. For sure, if we add in traditional technical indicators along with sentiment, we can see very oversold levels coupled with the potential Double Three pattern and probably start getting long here for a trade back to the 1650’s as possible:

 

ATP2

This chart shows oversold readings in the lower right corner using the CCI indicator. That said we would like to see 1550 hold on a weekly closing basis to remain optimistic for a strong rebound.

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Sun, 02/24/2013 - 22:43 | 3272886 Yen Cross
Yen Cross's picture

 Ilene I agree with you. Matter of factly, if you look at xau priced in euros, yen, and pound, then over lay that chart with xau priced in dollars, you would be pleasantly surprised. ;-)

Sun, 02/24/2013 - 20:54 | 3272644 10044
10044's picture

cycles/waves/theories/charts/tapes only make sense in a free market, not this shit created by jpmorgan and the rest of the criminals.

hold physical and be happy

Sun, 02/24/2013 - 22:57 | 3272915 cynicalskeptic
cynicalskeptic's picture

It seems pretty clear that those behind the manipulation are consciously 'painting the charts' - making the graphs that THEY choose as a way to manipulate the behavior of the ;outsiders' in these markets.  When such conscious efforts are being made to create specific charts you're falling for the manipulation if you believe these patterns mean anything.

You've seen a few occasions where they seem to have lost control for a short time but in general these markets are still on a tight leash.  IMO, most of the time,  you're seeing the charts they WANT you to see.

Sun, 02/24/2013 - 22:57 | 3272914 cynicalskeptic
cynicalskeptic's picture

It seems pretty clear that those behind the manipulation are consciously 'painting the charts' - making the graphs that THEY choose as a way to manipulate the behavior of the ;outsiders' in these markets.  When such conscious efforts are being made to create specific charts you're falling for the manipulation if you believe these patterns mean anything.

You've seen a few occasions where they seem to have lost control for a short time but in general these markets are still on a tight leash.  IMO, most of the time,  you're seeing the charts they WANT you to see.

Sun, 02/24/2013 - 22:11 | 3272819 MFLTucson
MFLTucson's picture

On point!

Sun, 02/24/2013 - 20:20 | 3272587 diesheepledie
diesheepledie's picture

My surplus 7.62x51 NATO has vastly outperformed my gold as of late. When is the CME going to let us purchase futures in various calibers?

Sun, 02/24/2013 - 20:49 | 3272639 klockwerks
klockwerks's picture

Diesheep, you are spot on. I sold a box of 9MM, after checking market price, $25 for target stuff. 4 years ago bought them for $10 per box. My 7.62X39 are selling at shows for $1 per bullet. IF, I ever sold I could clean up but, like my silver, it's just sets in the safe and I really don't care. If you figure retail and go to the range and unload a 100rds of 9's thats $50 plus$16 for the range and then 100 rds of the 7.62X39, that visit cost a bundle in todays dollars.

Sun, 02/24/2013 - 21:31 | 3272724 diesheepledie
diesheepledie's picture

Seeing these prices doing what they are, I can barely bring myself to deplete my stock at the range. Maybe start shooting rim-fire and get one of those .22lr uppers and slap it on one of my ARs? ... at $1.00 per trigger-pull for centerfire, I would rather just sit and stare at it, and count it once in a while and grin, like I do with the bullion.

Sun, 02/24/2013 - 19:07 | 3272432 GMadScientist
GMadScientist's picture

The only TA worth paying attention to is down at the strip club.

 

Sun, 02/24/2013 - 17:52 | 3272272 trebuchet
trebuchet's picture

I read somewhere russia has been dumping its gold this last few weeks/days after buying heavily last couple of years. 

So was surprised to see the reversal. 

 

Sun, 02/24/2013 - 23:01 | 3272926 cynicalskeptic
cynicalskeptic's picture

Russia an dChina are playing their own games.  If they can contribute to a signi=ficant drop by selling off a small amount, its' to their benefit.  Push the price down and buy back - plus even more - at the low.  They're in the market for the long term, accumulating supplies.  Meanwhile the aaWest is trying to manipulate PERCEPTION - 'All is well, trust us'.   

Sun, 02/24/2013 - 19:07 | 3272434 GMadScientist
GMadScientist's picture

Even commies know when to take some off the table.

Sun, 02/24/2013 - 18:56 | 3272408 Likstane
Likstane's picture

I read somewhere Madonna's crotch smells like a Waffle House bathroom on race day. 

Sun, 02/24/2013 - 19:51 | 3272530 shovelhead
shovelhead's picture

Latex pants and Depends...

Not a good combination, eh?

Sun, 02/24/2013 - 18:52 | 3272394 Looney
Looney's picture

You lost me at "Submitted by ilene", Ilene.

How's that "Buy AAPL at $700" call going? ;-)

Looney

P.S. I think that "Ilene" is the depressed half of Reggie's bi-polar personality... ;-)

Mon, 02/25/2013 - 18:36 | 3275511 ilene
ilene's picture

Looney, I've never said buy AAPL at $700. 

Sun, 02/24/2013 - 15:12 | 3271924 Hongcha
Hongcha's picture

All jmvho, this is my personal story on the gold play at this point in time:

The horrific truth right now is that the gold spot price drops when the S&P goes up and it drops when the S&P goes down.

Last week's bounce, if you can call it that, was very weak after two weeks of cascading descent.  It was more like slow coagulation after bleeding out.

China did not pick up slack after their New Year, like they usually do.

The S&P does not have much further it can climb; when it goes into correction, gold spot price will go down with it.

They will run through the $1,500 line in the sand and further demoralize paper holders.

A breach of $1,500 and no bounce back over will bring a loud chorus that the bull market is over; which I think works for a lot of people in power.

If you have physical and don't have a need to sell, this is just another shakeout.  Sinclair, who is usually correct, says to sit tight, do nothing.  And he has consistently counseled having physical position OR a paper position WITHOUT margin so you don't get forced out.

If you are trading paper, you have to be looking for a further drop; a bottom is not being put in here.

Sun, 02/24/2013 - 19:35 | 3272496 css1971
css1971's picture

Gold is trading more as as a foreign currency than as a commodity at the moment. USD stopped weakening late 2011, that's when gold stopped dead. It's been trading sideways against the dollar since.

If the dollar strengthens gold will fall. If it weakens it'll rise.

Sun, 02/24/2013 - 14:34 | 3271851 NoWayJose
NoWayJose's picture

Be thankful that your de-valued QE-weakened debt-apocalyse paper dollars can still buy this much gold - at least for a while.

Sun, 02/24/2013 - 14:16 | 3271813 ebworthen
ebworthen's picture

Did some Gold and Silver purchasing this weekend.

I love voting against fiat, central banks, and corruption.

Sun, 02/24/2013 - 15:25 | 3271950 Debeachesand Je...
Debeachesand Jerseyshores's picture

Bought some silver this weekend too,just buying on the dips.

Sun, 02/24/2013 - 14:09 | 3271803 World of Debt
World of Debt's picture

World of Debt: Funny video!

 

https://www.youtube.com/watch?v=IrHiYxDbnMY

Sun, 02/24/2013 - 12:34 | 3271549 enloe creek
enloe creek's picture

japan deciding to create inflation by driving down it's currency has hurt gold. in dollar terms. bernanke and the CB's have to be watching this experiment to see what effect it has.  seems like desperation to create inflation everyhwere but china. japan needs inflation worse than we do. and we need it pretty bad. we have to devalue to prosperity. remember there is no other way to avoid outright default or taxing the economy into the stone age.  I would think if all the currencies linked  to the dollar officially and not officially get too uncomfortable with this experiment, they might have to adjust the exchange rates on some of these other countries like korea. what if china devalued their currency? this is going to be unstable, benefiting gold. 

Sun, 02/24/2013 - 19:24 | 3272468 css1971
css1971's picture

The thing is it's not just USD which the FED gets to play with, it's every currency that pegs to the USD. So the FED prints? The inflation manifests in China where there are 1.2 billion people to pass it on to, not in America with just 300 million.

Sun, 02/24/2013 - 13:37 | 3271728 Lordflin
Lordflin's picture

Currency games produce relative valuations and absolute dislocations... Hold physical and you can ignore the smoke and mirrors.

Sun, 02/24/2013 - 18:12 | 3272311 Croesus
Croesus's picture

I find it interesting in the extreme that we now have a competitive race to devalue currencies, while metals' prices are being kept down......so metals are becoming more undervalued as more time goes by. 

I more and more start thinking that FOFOA is right......

Sun, 02/24/2013 - 21:20 | 3272706 Dr. Sandi
Dr. Sandi's picture

FOFOA is, at the very least, on the right track.

 

Hold your gold, fondle your silver.

One of these days, Morgan won't deliver.

Sun, 02/24/2013 - 15:31 | 3271964 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

I think the banksters have managed to turn gold and silver into just another flavor of fiat. Just look at the games they can now play with the issuance of new shares of GLD and SLV. That and the naked shorting that the *cough* regulator *cough* permits, and price discovery is completely manipulated. Yet another case of the derivative controlling the price of the underlying, like lots of others these days. They're about to do the same with copper, until recently you could only speculate in futures (unless you had your own warehouse), now JPM and others have copper warehouses that sell out to investors. They want to financialize everything and they seem to be succeeding.

Sun, 02/24/2013 - 21:17 | 3272702 Dr. Sandi
Dr. Sandi's picture

Even if they can't EAT gold, they can sure as hell PRINT it.

Sun, 02/24/2013 - 11:13 | 3271376 StarTedStackin'
StarTedStackin''s picture

Why is the gold:silver ratio so high? Is gold overvalued, or silver undervalued?

Sun, 02/24/2013 - 19:11 | 3272438 GMadScientist
GMadScientist's picture

"Is gold overvalued, or silver undervalued?"

Why not ask the people with the mountain of naked shorts (rhymes with Hay Bee Gorgon) about the "value" of silver?

Sun, 02/24/2013 - 21:17 | 3272700 Dr. Sandi
Dr. Sandi's picture

It's time for Fruit of the Fed to come out with a line of "Naked Shorts". Boxer or Briefs with no visible panty line.

Actually, no visible ANYTHING. And now, at even LOWER prices.

Sun, 02/24/2013 - 18:11 | 3271870 Lordflin
Lordflin's picture

As silver behaves more like a monetary metal it moves closer to gold in value... As silver behaves more as a commodity and less like a monetary metal its value decreases relative to gold... The range is roughly 10:1-80:1... At least this has been the pattern in a time of declining global production... The paper market in metals is 15 to 20 times larger than the physical market... and for the moment sets the price... or more correctly dislocates the price... depressing the upward monetary pressure and increasing the gold/silver ratio... Presumably the market will eventually prevail, which is why many see silver as the superior holding assuming you have some place to store it. On the other hand, if this so called recovery takes place... anything is possible... there will be a massive grab for industrial commodities and silver will benefit from the upward pressure on commodity prices... I have serious doubts regarding this second scenario... but I am only one out of 7 billion people and my perspective is limited... Bottom line... They are both undervalued, but silver more so.

Sun, 02/24/2013 - 11:55 | 3271444 kaiserhoff
kaiserhoff's picture

Good question.  Might ask Rocky.  I think he's a pretty active coin dealer. 

My take would be that the markets just aren't closely related.  Gold is a quite sophisticated, international market.  From some of the videos we see, the average Joe still thinks you can go to Vegas and get silver dollars for the slots.  In the South, I still occasionally get an Indian nickel or a Kennedy half in change.  WTF?

Sun, 02/24/2013 - 15:57 | 3272039 RockyRacoon
RockyRacoon's picture

I don't even pay much attention to the gold/silver ratio any more.  It won't be a relevant factor until there is some stabilization of the markets and actual values rise to the fore.   When both become monetary units there will be more correlation between the historic ratios.  One can arbitrage the ratio to trade metals but that mechanism will catch your gonads in a vise sooner or later.  I'd just rather steer clear.

Sun, 02/24/2013 - 19:06 | 3272429 WmMcK
WmMcK's picture

If GSR rises to 57.5 I'll trade Au for Ag.
If GSR falls to 51.1 I'll trade Ag for Au.
Where is the major risk in such a trade strategy?

Mon, 02/25/2013 - 17:05 | 3275079 RockyRacoon
RockyRacoon's picture

The risk lies in having faulty timing.  The prices can move faster than you can trade.

It's not like asking for two fives for a ten at the local bank.

Sun, 02/24/2013 - 16:54 | 3272067 kaiserhoff
kaiserhoff's picture

That makes sense.  Pair trades don't.

Lot's of stuff the hedge funds do really isn't hedging.

BTW, What happened to Cougar?  Did he win the lottery or something?  Too good for his old drinking buddies?

Sun, 02/24/2013 - 11:24 | 3271385 tocointhephrase
tocointhephrase's picture

Ask yourself, would you swap circa 55oz's of silver for 1 oz of Gold? 'There in lies your answer!'

Sun, 02/24/2013 - 11:13 | 3271375 kaiserhoff
kaiserhoff's picture

Technical analysis..., of gold prices..., in a rigged market.

Now that's funny.

Sun, 02/24/2013 - 12:20 | 3271514 Papasmurf
Papasmurf's picture

Technical analysis confirms the market is rigged.  Free market behavior is not to dump large volumes into rapidly declining prices at the open, close or during the night when trading is thin.  Distribution had a much different pattern than we see on these charts today.

Sun, 02/24/2013 - 19:15 | 3272442 css1971
css1971's picture

Actually good point, an average of volumes per hour over many days should show a definite pattern. It would show normal behaviour and when market behaviour is changing.

Sun, 02/24/2013 - 11:12 | 3271373 Mr. Hudson
Mr. Hudson's picture

: "That said we would like to see 1550 hold on a weekly closing basis to remain optimistic for a strong rebound."

 

With that said, what happens if gold drops like a rock through 1550? What should us gold buggers do?

Sun, 02/24/2013 - 14:19 | 3271818 antidisestablis...
antidisestablishmentarianismishness's picture

Whether the end is now or in the future, what happens is that gold bugs will go down with the ship.

Sun, 02/24/2013 - 21:14 | 3272690 Dr. Sandi
Dr. Sandi's picture

If the sinking ship has gold on it, it will be the ONLY place worth being.

Sun, 02/24/2013 - 11:06 | 3271363 moonstears
moonstears's picture

JMO ratio 53 X silver. Diversify your FB and AAPL with 54 ozt (add 1 ozt Au to 53 Ag).

Sun, 02/24/2013 - 07:56 | 3271217 e-recep
e-recep's picture

hogwash.

Sun, 02/24/2013 - 08:55 | 3271253 Quinvarius
Quinvarius's picture

What if I told you gold was going to be moved to $3200 in the next 12 months? 

You are crazy if you are not buying gold here.  Watching gold shorts is like watching Charlie Brown trying to kick the football.  I bet you'd like to go back in time and buy gold in the year 2000, at the height if suppression, right?  That is where the price is now.  Gold is the asset that lends credibility to all the paper out there.  In 2000 the gold backing of the money supply was about as low as it ever got, 11%.  It ranges between 90% and 15% and has continully run to 25% in this bull market.   And it only hits the lower end when money is being printed too fast for it to adjust quickly enough (now) or Gov gold is being dumped.  The gov can only dump its gold once. 

This is an exact match for the lowest gold price EVER after a year of QE3 and 4 added in.  And that is not even going to be the last of the printing.  Gold is the baseline.  It isn't some company stock.  Gold bears are crazy.  It is never different this time.

 

Year 2000 

600 billion base money 11.25% gold backing

250 gold

270,000,000 oz worth 67.5 billion

 

Projected at current prices 2014

Projected 3728 billion base money 11.44% gold backing

1580 gold

270,000,000 oz worth 426.6 billion

Sun, 02/24/2013 - 10:57 | 3271352 JOYFUL
JOYFUL's picture

...What if I told you gold was going to be moved to $3200 in the next 12 months\You are crazy if you are not buying gold here...

most interesting alignment of words there...almost cipher-like...

a believer in the now mythical "market forces" would not use that particular construction: to be moved - yet only someone who felt very confident that the 'rational' forces behind gold's need to rise could not be undermined would follow up with -You are crazy if you are not buying gold here-

This may indeed be the double-edged sword hanging Damocles-like over our precious metals investments: that gold is allowed to rise[and fall]at the service of a shadowy agenda which we cannot perceive nor know the agents of...and that the obvious benefits of $3000+ Au could be potentially offset or even out-weighed by the serial machinations of these forces of manipulation...

whose motives, whilst undiscernable of the present, can be safely supposed to be composed of no fellow-feeling or wish for our collective well-being.

Dawn will come, but the darkness still reigns, and the stench of deceit wafts on the cloak of night like a pestilent wind bearing bitter news from far off fields of battle. Double the watch, and let no man sleep ungirded this night...

Sun, 02/24/2013 - 14:03 | 3271788 A82EBA
A82EBA's picture

Could you please dumb that down to an 8th grade level? Interesting conversation you and Quin having but I just cant follow

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