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"Goldbug" Analysts Capitulation

Tyler Durden's picture




 

Submitted by Leonard Sartoni via GoldBroker.com,

The gold market has been in a profound lethargy (at least in dollar terms) for over a year. This is as frustrating for the bulls as it is for the bears. These days we are witnessing an avalanche of bearish commentaries on the price of gold for the coming 6 to 12 months. The psychological $1,000 threshold is attracting analysts like a magnet attracts iron dust, just because an almost four-year old trend ends up drawing everybody in it!

Harry Dent (the one predicting gold at $700) is now being joined by many long-time bugs who are seeing gold plummet toward $1,000-$900... before it takes off to $5,000! I call this the final capitulation of the analysts. They are throwing the towel on this frustrating sector and their short- and mid-term predictions end up being dictated by their negative emotions.

We can see in the next three following charts that a bear market is defined by constant higher highs and lower lows. When this process ends, the bear market has stopped and a new trend can take place, as is the case actually with the gold price in terms of euros. With this currency, we’ve had to wait until 2005 for the gold bull market to be validated. Since then, the gold bull market has been validated in all currencies.

The actual lull won’t last the same time for all the currencies. As long as gold doesn’t rise above $1,310, technical analysts will remain bearish on the gold price in terms of dollars. The euro being actually much weaker than the dollar, it helped start the gold bull market sooner. But, ultimately, we will see the gold price rise again in all currencies.

 

 

 

 

I feel the same negative emotions as all the analysts and all gold investors, because we are all following this war between gold and the dollar day after day and we’d all like to see gold coming out the winner in the final battle. At this moment, one has to admit that gold is not doing too well in terms of dollars. If I were to give any advice based on my emotions, I’d say that I’m not satisfied with the gold price in this currency, with the pathetic performance of the gold miners, and that I’m not optimistic on the short term. But when everyone is starting to bet on gold and gold mining companies to go down, including the pro-gold analysts, I tell myself that we’re once again very close to a major turning point in this market. And this would only confirm the restart of the gold bull market in euros and yens!

In 2011, everyone was bullish and was seeing gold reaching $2,000, even $2,500 before the next major correction. In 2015, everyone is bearish and is seeing gold plunging to $1,000, $900 or even $700 before it can really rebound. Fear is palpable in this market. Analysts, instead of advising to fill the truck at these overly depressed levels, are recommending hopping on the selling wagon to surf on the “final devastation” of this market. Is this sound advice?

Have you ever wondered why so few commentators and analysts shout “buy” when a sector is totally depressed and on the verge of starting a spectacular bull market? And why so few shout “sell” when a sector is hyper optimistic and just about to reach its decade-long peak (just like stocks at this moment)?

It is because the price evolution during the years preceding this event keeps them from doing it! Because time has played against them. The preceding bull or bear market ended up winning over most analysts who were predicting a trend reversal. They can’t continue to fight this market, because they’ve lost all their credibility, some capital, and are about to lose all of their clients! They capitulate. They are forced to side with the trend even if fundamentals are screaming to the contrary. It is said that a financial bubble first brings ruin to those who bet against it, and then to those who feed it. This change of attitude among long-time pro-gold commentators and analysts is an important sign of capitulation, the kind of sign that is expected before a definitive trend reversal.

 

For the moment, if we refer to the “power of prediction” of the junior miners (GDXJ) for the future trend for gold in terms of dollars, we are again testing the 50-day moving average, and the result of this test should give us the short- and mid-term trend for the metal (6-month horizon). For the last few months, the junior miners have resisted astonishingly well to the metal’s weakness, and this is a very encouraging sign for things to come.

 

 

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Wed, 06/17/2015 - 19:37 | 6207387 angel_of_joy
angel_of_joy's picture

Trading "paper gold" is the perfect exercise in futility... Better grab a few coins while you still can.

Thu, 06/18/2015 - 09:59 | 6209243 mtl4
mtl4's picture

WTF is this article saying........anything in euros is up because the Euro went down, picking gold just shows the bias.

No commodity is in a bull market until it rises in terms of all currencies, until then all you're seeing is capital flows.

Wed, 06/17/2015 - 19:39 | 6207394 OC Sure
OC Sure's picture

"that a bear market is defined by constant [lower] highs and lower lows."

Wed, 06/17/2015 - 20:46 | 6207572 Lets Buy The Dip
Lets Buy The Dip's picture

I do not know about that. 

I have to be skeptical sorry. One gold Market analyst I listen to ==> http://www.bit.ly/1GgvUtE calls are rediculously accurate. He basically has a great knowledge and predicted the 2008, and just released his video on what he thinks is coming. WOW.

Regarding yellen, they are tricking people every dummy knows the first 12-24 months of interest rate rises
usually does not effect the market. And every man and his dog is calling for the market to CRASH here!.

For now their game is get everyone short, TRAP THEM and then take us up higher!! yes that old chest nut. Fool me once, shame on you. Then….fool me twice SHAME ON ME!

Wed, 06/17/2015 - 20:55 | 6207602 angel_of_joy
angel_of_joy's picture

BS link !

Wed, 06/17/2015 - 22:51 | 6207914 Lore
Lore's picture

BS link to one of those long and painful "Give-me-your-email-address" videomercials.  Shame on you, LetsBuyTheDip.

Wed, 06/17/2015 - 19:41 | 6207400 Fun Facts
Fun Facts's picture

1200 +/- 20 Central Bank virtual covert peg to USD until the plebs get something new.

Think of it as a version of the pre bretton woods $35 gold peg.

Technical and fundamental analysis is meaningless.

Wed, 06/17/2015 - 19:57 | 6207436 seek
seek's picture

I agree, I've had the same feeling for a while now the $1200 price is some sort of arrangement figure among the banks. The price seems far to stable to be otherwise.

All analysis is meaningless when all data and all markets are lies. It'll mean something when the CBs collapse or at least stop talking to each other.

Wed, 06/17/2015 - 20:03 | 6207450 Ignatius
Ignatius's picture

Capping at $1220 +/-

This could go on for awhile as the capping forces are quite substantial.

Wed, 06/17/2015 - 20:51 | 6207586 seek
seek's picture

At this point I'd interpret gold going outside of that band (I'll go wider and say +/- 50, since panic events happen) as being a leading indicator that something big is about to happen.

Honestly I wouldn't be shocked to see the price hold in this range for another three years. God knows we saw something similar through most of the 90s. Eventually it will break.

Wed, 06/17/2015 - 23:02 | 6207937 Lore
Lore's picture

Price discovery in the paper market is ruined and has been so for years. Numbers there mean nothing. But empty vaults are empty vaults.  The psychopaths can't hide behind paper forever. 

Wed, 06/17/2015 - 19:48 | 6207414 Consuelo
Consuelo's picture

Oh Lord -- not again...

It's O-V-E-R.   Not 'gold' per se, but 'TA' ----- OK...?    This is now a 'sealed system'.     There is NO natural price discovery - nor will any be allowed in the current dynamic.   Geopolitical event/s are all that is left - but don't wish too hard for 'em...

 

 

Wed, 06/17/2015 - 19:55 | 6207425 Bay of Pigs
Bay of Pigs's picture

Agreed. This article is useless as it doesn't even address the reasons why gold and silver were smashed in 2011 and 2013.

Wed, 06/17/2015 - 19:58 | 6207427 Latitude25
Latitude25's picture

Yawn.  Another stupid article completely ignoring Asian demand.  If you're counting on western paper demand for correction of this market you're looking in the wrong place.

 

And by the way.  They're not inspecting passengers'gold jewelry in Spanish airports.

Wed, 06/17/2015 - 23:14 | 6207962 Augustus
Augustus's picture

Asian demand is somewhat meaningless if it does not bring about a price increase in USD terms.  More gold is mined every day, month, and year.

There is demand for all commodities.  Sometimes just not enough to cause prices to increase.  If price is not increasing in USD, the investor is better off holding the currency ahd earning some interest return rather than having storage costs.

Wed, 06/17/2015 - 19:57 | 6207437 Tinky
Tinky's picture

Forget about the current price, and answer these simple questions:

Do you expect a major economic crisis to unfold sooner than later?

If so, do you think that it might, just might be important to have good collateral when the time comes?

Wed, 06/17/2015 - 19:57 | 6207438 Amish FinEng
Amish FinEng's picture

Few have knowledge that The Amish luv 3 things:
1) Unusually dense and heavy
2) Shiny
3) Gold in color

Wed, 06/17/2015 - 20:32 | 6207536 Winston Churchill
Winston Churchill's picture

Spanish onions ?

Wed, 06/17/2015 - 20:02 | 6207447 buzzsaw99
buzzsaw99's picture

i am bearish on gold for the short and medium term (and have been for some time now)

Wed, 06/17/2015 - 20:06 | 6207457 chopd livr
chopd livr's picture

good points on pro capitulation.

Wed, 06/17/2015 - 20:29 | 6207517 SubjectivObject
SubjectivObject's picture

Central/Bullion Bank M a n i p u l a t i o n ??

Dewa quick keyword seach; can't find it ....

Junk article.

 

Wed, 06/17/2015 - 20:34 | 6207539 Dragon HAwk
Dragon HAwk's picture

Why just the other day somebody had an Ad in the paper, free junk gold, please come haul it away..

Wed, 06/17/2015 - 20:39 | 6207554 StateofFraud
StateofFraud's picture

"If I were to give any advice based on my emotions, I’d say that I’m not satisfied with the gold price in this currency,"

I in contrast am very satasfied with this continuing BUY opprtunity IN THIS CURRENCY.

Wed, 06/17/2015 - 21:09 | 6207636 honestann
honestann's picture

Anyone who thinks gold will breach $1000/oz isn't paying attention to world events.  For starters, read the current articles in ZH about Greece, plus federal reserve members who are now openly stating their hero is Ludwig von Mises!

That doesn't mean $1000/oz can't happen, it just means "not likely".

If the fed raised rates from 0% to 5% tomorrow, that might send gold below $1000/oz... for a very short time.

If the financial institutions around the world collapse, the mass liquidation of assets might send gold below $1000/oz for a very short time.

But who cares?

Not me, because shortly, gold will be up, up and away!

I just wish I had more gold.  Always do.

Thu, 06/18/2015 - 00:36 | 6208161 HYMN
HYMN's picture

I could not agree more,especially the world events reference. SGE,AIIB, the fact that China will soon be apart of the daily Gold fix and their soon to be a reserve currency will all have an enormus effect as to the value/price of Gold. Thats just a few of the things that will move the "gold posts" Just as one has car insurance, home owners and medical insurance, IMHO it is prudent and wise to hold some physical Gold and Silver. 

Thu, 06/18/2015 - 08:27 | 6208812 Fourmyle
Fourmyle's picture

Yep. It's not a dull time to live.

A bit after I started buying one of the media darlings ( guy predicted the housing crash, so was at least able to see the blindingly obvious, once. ) stated "Gold over $1000, that's just crazy talk". I promptly put on my wizard hat and spent every cent I could buying, must keep up appearances when crazy after all. Been buying a bit every chance I get ever since. Yes it's gone up and down, but if the economy keeps levitating, cash and land will see me through. If it crashes, gold and land will keep me fed and doing ok. Something in between and I'm still ok for a bit longer then I expect to live. Credit is slavery, anyone living on it answers to multiple masters. Keep no debt, a bit of everything saved and let people call us fools for not stampeding with the rest of the herd. Adaptability is always a survival trait for individuals, specialization is for insects.Diverse resources give the tools to adapt.

Can't say I have any idea when we'll see things re-balance. With pretty much the whole world depending on existing systems to live, you know all the talent that can be called on will be used to keep them running. Already lasted longer then I could have hoped.

Do like the sound of real coins tough. :-)

Wed, 06/17/2015 - 21:11 | 6207642 flyonmywall
flyonmywall's picture

Why would anybody care if gold goes to $2000 or drops to $800? You should not be buying gold with money that you need for your lifestyle, just like you don't buy an insurance policy with grocery money or rent money.

Gold isn't an investment, it's an insurance policy or a hedging bet. That being said, whatever % of investable assets one has in it is strictly a matter of personal taste. It could be 10% or it could be 50% or whatever. But at least have some kind of a hedge or allocation of gold (not 0%, but something). Whatever you're comfortable with, forget the fucking pundits.

 

Wed, 06/17/2015 - 21:44 | 6207755 Ginsengbull
Ginsengbull's picture

Scottrade has been calling me up, trying to sell me stocks.

 

The last time they did that was right before the market crashed.

Wed, 06/17/2015 - 21:51 | 6207770 riskon.then.riskoff
riskon.then.riskoff's picture

the beginning of the bull market in gold will be the beginning of the bear market in stock...

Wed, 06/17/2015 - 23:05 | 6207943 christiangustafson
christiangustafson's picture

$650

Thu, 06/18/2015 - 06:28 | 6208491 Kina
Kina's picture

I think paper gold will collapse the same time as stocks collapse in the search for funds, then rebound very strongly as people run to safety. As happened last time.

 

I am hoping for a collapse in both so that some miners I am interested in also collapse so I can buy in on the cheap before gold takes off again.

 

Waiting waiting....

Thu, 06/18/2015 - 08:08 | 6208721 bbq on whitehou...
bbq on whitehouse lawn's picture

When all governments are left without the ability to print, gold is what they must steal. Govenments are not as strong or powerful as they had lead the market to believe.

Every empire tries paper currencies, it never ended well.

Thu, 06/18/2015 - 09:07 | 6208996 damicol
damicol's picture

I guess I'm lucky,I have a business, and I have been involved in financial stuff for the last 35 years.

I do off shoring for self employed and SME's who need to protect themselves, but I never earn a salary, the company makes no profits as everything is paid over to the outsourcing company, which invoices every nickel and dime of potential profits so no taxes.

I own the outsourcing company and that company pays over every nickel and dime to a management company. And therefore pays no taxes.

The management company invests every nickle and dime in gold. And as the holding is now sufficient, and all physical it can be collateralized very easily with most banks anywhere for virtually any currency.

As its in a tax haven the cash is use from the collateralized gold to either buy on the dips or add finance to expand the business under a loan. and to provide me with what I need or want, again under an unsecured personal loan.

Consequences are gold holding has never diminished one gram, and in fact has  grown at a rate of just over 14 % per quarter taking into account the full tax free profits of the company are converted entirely to gold each month, since I stated in 2006.

It is a lot of gold. Now.

And it finances everything I do and makes a lot of profit and thus keeps on growing, an best of ll its it is offshore and tax free.

Only halfwits cannot understand how you can earn interest on gold.

It is no different to cash.

You turn cash into assets, goods stock whatever and then turn it back to cash and hopefully a profit,

You can use gold just as easily and grow your gold holdings just as fast, if not faster if you are smart and avoid the taxes.

I hope gold does go to $700. Even 500 or 500 , only means one thing to me, my gold holdings increase faster still.

Makes fuck all difference to my business or my living standards whatever price gold go to, and even now I am toying with making all invoices out  priced in gold by the end of the year .

If you are one of those wankers that think gold is a relic and fiat is the way, show me your profit. I will wipe you out in returns over any time

 

 

 

 

 

 

 

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