Cartel Gold Battlefield

Submitted by Morris Hubbartt:

Ultimately, markets are driven by fear and greed. In the current gold market, there is a lot of fear.  Also, most mainstream money managers believe a full economic recovery is underway, so there is no need to own gold.     My worst-case scenario model shows that gold could fall to $1350, but I don’t see that happening.
Only a small amount of gold is brought to market each year. Most assets can be substantially diluted in one way or another, but not gold.  Physical gold and silver are probably the highest quality assets that an investor can own.  Fear of lower prices should not deter anyone from holding gold.  Note the oversold condition of the slow Stokes indicator and RSI on this weekly chart. There is only one thing for long term investors to do, and that is to hold their positions.  Buy more, if additional weakness comes.

 

2013 Silver Eagles As Low As $2.59 Over Spot at SDBullion!

TLT (T-Bond Proxy ETF) Building A Top Chart

 

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  • In the short to intermediate term, the US bond market is in “rally mode”. This move higher should ultimately form the right shoulder of the highlighted h & s top pattern, which is about 6% above the current price area.

 

  • The weekly chart indicators, like MACD and the slow Stokes, are turning up.  Sentiment indicators suggest that commercial traders have been heavy buyers recently.

 

  • Stock market insiders may believe that general equities are ready for a hard sell-off.  Their buying could be helping the bond market rally.Nimble gamblers could buy the bond now for a quick trade, but for longer term investors, the head & shoulders top pattern is a flashing red light.

 

Fannie May Housing “Recovery” Chart

 

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  • In 2007, FNMA was trading in the $68 area. Then it collapsed.  Over the past few months, mainstream media has touted a “solid recovery” in the housing market.

 

  • The reality is that FNMA is not even back to $1 per share. Unfortunately, the price of FNMA is a key measure of any real recovery in the housing market.

 

Gold Shakeout Chart

 

m3

 

  • Ultimately, markets are driven by fear and greed. In the current gold market, there is a lot of fear.  Also, most mainstream money managers believe a full economic recovery is underway, so there is no need to own gold.

 

  • My worst-case scenario model shows that gold could fall to $1350, but I don’t see that happening.

 

  • Only a small amount of gold is brought to market each year. Most assets can be substantially diluted in one way or another, but not gold.  Physical gold and silver are probably the highest quality assets that an investor can own.  Fear of lower prices should not deter anyone from holding gold.

 

  • Note the oversold condition of the slow Stokes indicator and RSI on this weekly chart. There is only one thing for long term investors to do, and that is to hold their positions.  Buy more, if additional weakness comes.

 

Gold Long Tail Cluster Chart

 

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  • A cup & handle pattern formed, but it failed. When a h & s pattern or a cup & handle pattern fails, it usually means a “final” reversal is coming soon.

 

  • Note the large number of long-tail candlesticks on this chart. These long-tail clusters often appear when commercial traders are heavy buyers of gold. That’s probably what’s happening now.

 

HUI (Gold Stocks Index) Stress Test Chart

 

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  • Gold stocks can be volatile, and have proven to be so, during this bull market. Note the support and resistance levels that I’ve highlighted, going back to 2004.

 

  • The key level to watch on the HUI index, is the 275-300 support zone. This is an area where significant battles between bulls and bears have been waged in the past.

 

  • I didn’t build my concrete manufacturing company, by hiding from risks.  The biggest risk for gold stocks that I see is a decline to the 2004 highs.  I don’t think it will happen, but I don’t think any gold stock investor should try to hide from the risk of lower prices.

 

  • Note the extremely oversold position CCI, RSI, MACD, and the Stokes.  The bears have had their fun in the spotlight, and this weekly chart suggests the jig is nearly up, for them.

 

GDXJ H&S Bottom Failure Chart

 

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  • GDXJ tested the bottom of the down trend channel this week, and the inverse head & shoulders bottom pattern failed.  That’s disappointing, but the pattern was pretty small and relatively insignificant.

 

  • Note the volume pattern on this chart, highlighted in blue.  It compares favorably to the May-June 2012 period.  GDXJ soared about 40% after that burst of trading activity, and I think it could happen again.

 

Silver Wedge Failure Chart

 

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  • I mentioned a week ago that more downside action was probably a “necessary evil”, in the short term.  A test of the $26 area lows now looks likely, but note the huge spike that has formed on the CCI indicator. 
  • A lot of amateur investors with shallow pockets have shorted silver recently.  Sizeable short-covering rallies often occur soon after this type of CCI spike.

 

  • The other technical indicators on this chart are oversold.  I’ve highlighted the bullish wedge pattern failure with a red circle, but I’m not overly-concerned by it.  I think the CCI spike is the dominant technical indicator right now, and it is bullish.

 

Silver Public Opinion Chart

 

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  • The latest data from sentimentrader.com shows that the public is quite pessimistic about silver. In the past, such pessimism has occurred near important bottom areas!

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Comments

  1. I think PM’s could hit 2009 levels.
    According to the World Gold Council, 534 metric tons of gold was purchased by central banks in 2012. This is a 17% increase over 2011.
    534 + 444= 978 metric tons
    1 metric tons = 32150 troy ounces
    978×32150=31442700
    @1600.00 per ounce x 31442700= 50,308,320,000.00 USD
    50 billion dollars…how is 50 billion dollars even doubled, going to replace the Reserve Currency, the USD?
    What sense is there to have a gold backed currency when the money supply around the world is in the trillions and having industry wide uses for gold such as gold plated video jacks on our DVR’s? Gold can not be 5000.00 an ounce. The re-evaluations pertaining to industrial usage prevents this.
    The metric tons of gold in central banks can not, nor can the Yuan or Rupee, or Ruble as a basket of currencies ever be a new World Reserve Currency, even if combined. Trading pacts between nations using a currency other than the USD is not going to pan out, not the way China and Russia are governed. What a laugher to expect brutal atheist communists to be trust worthy with their closed government and a purged citizenry.
    I hypothesize the USD is going to be “saved” and “replaced” with a North American Union currency supported with the known and undiscovered NAU gold and silver deposits to be controlled by the yet to be seen hostile takeovers and consolidations of US, Canadian, and Mexican precious metal concerns and oil deposits north of Panama to the Arctic Circle. Why not? This is the logical conclusion following NAFTA. Hedge funds could lead the way with a soon to appear crisis involving Morgan Stanley and an earthquake on the West Coast or even a Canary Island landslide. A combination of these events could solidify the sovereign nations of The US, Mexico, Canada to become united with English and French blessings.
    The idea here is to NOT accept settling international debts with athiest regime structures that suppress their people, that murder their people by the tens of millions, to not accept their errors upon humanity, but to think for myself and offer imperfect solutions, solutions that are viable to strengthen our way of life while purging out of our system their errors we somehow have adopted.
    http://www.gold.org/media/press_releases/archive/2013/02/gdt_q4_2012_pr/

    • @Thomas     Here’s something to think about.  All fiat paper currency is a lie.  Bible is very clear that God intended gold, silver, precious stones, land, cattle, etc., real things to be money.  God could have used pieces of papyrus with a picture of Ceasar as money.  Instead God used gold and silver coins.  You won’t hear this Biblical truth preached from the pulpit.  The lie is too big, too bold to be questioned. Goerbels would be proud.

      Fiat paper currency is perhaps Satan’s greatest lie.  I call it the lie of 1913. Here’s why.  The usury that God forbids in the Bible is misunderstood. God forbids only the type of usury(interest) that ‘bites’ that enslaves.  This describes the type of interest paid to the Federal Reserve as compensation for issuing Federal Reserve Notes. Entire nations, entire populations are enslaved by central banks issuing currency for a sovereign nation. Interest on your bank account is a different type of interest akin to rent.  That’s OK. See Parable of the Talents.  Point is God will eliminate all fiat.  God and silver will return as money world wide when Christ returns.  Soon I expect.

      Bible is clear that money was to be arise from the labor of man; mining, refining, casting of gold and silver coins. Not printed into existence by government edict. Interestingly, the global supply of gold has increased at a steady 1.9% a year for the last several thousand years. The perfect rate that economists say that is best for long term sustained economic growth. Coincidence??? I don’t think so.

  2. It’s voodoo witchcraft.

  3. As long as JPM is funded by the government prices will not recover. Charts are meaningless until we see a collapse in the system.

    • Don’t know about that.  Gold and silver price will recover when central banks flip and go long, physical supply on COMEX is exhausted, or a China or a Russia back their currency with gold. All of which can happen with our gov’t sponsoring JPM.

      Link between the dollar and gold has essentially been severed. TPTB have room to let gold run now. In fact they need gold to increase to strengthen their balance sheets.

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