Short covering, triggered by rumours of a potential US downgrade from Moody’s, are sending gold and silver prices vertical. The move higher comes after a very suspicious spike this night in which the silver price was pushed 10% lower within the first hour of Asian trading (with a bank holiday in Europe). The charts show the price action in today’s trading sessions. In our own words: folly of the highest degree, or the metals being subject to greediness of traders.
Author Archive: Zentrader
If this does end up being the start of a new Investor Cycle, then we won’t know for sure until the next Daily Cycle. The next dollar Daily Cycle should top very early and form Left Translated. If however it goes on to make new IC highs then it will almost certainly be the 2nd Daily Cycle of a young Investor Cycle. If this occurs, then gold will also form Left Translated and drop again, likely making yet another deeper low in June.
The good news is that with the culmination of this Daily Cycle we should be starting a new Investor and Yearly Cycle and it should be good for at least a $200-$300 move. Even if the bear market still has a hold on gold, we should expect violent counter-trend rallies. We know there is no way of knowing whether this will end up being the start of a major new bull trend. But in the least, this is shaping up to be a powerful and bullish setup.
Silver this week also finally shows that sentiment has also finally fallen to bull market lows. We know that when sentiment reaches these levels of extremes (see Green lines on below chart), that it has always marked a significant low. As Silver has retraced back to its 2 year support area (low $26 area), sentiment has dropped even further this time compared to past lows.
Last year my long term projection was for the markets to continue higher along with the dollar. The dollar has continued higher while the Dow and now the S&P have made new all time highs. This trend could continue throughout the year and we could see the dollar continue to gain strength.
Gold’s Daily Cycle is offering up very few clues as to its short term intentions. The Cycle remains Left Translated, and that typically is a bearish omen for any Cycle. The fact that it will not sell-off is very positive, it suggests that gold has found a floor that is going to be defended.
For now, I want to see a move and close above $1,587, this is the March 1st high and it would represent a Swing Low covering the most recent period. From that point, the next step should be a fairly quick take-out of the $1,620 mark and new DC highs. Taking out $1,620 from this point would be a very positive development.
Friday was a sustained and consistent sell-off on high volume which did not end in a bullish buying reversal. It also took gold outside of a well-developed trading range where there is little support. For these reasons I fear that the selling is likely not over.
In order to bring unemployment down to the 6.5% level, the economy will need to add nearly 5 million jobs. For those who fear an end to this great gold bull market, please put this into perspective. Understand that the powers to be will not or cannot tell the public what is really occurring. By increasing the amount of fiat money supply, you reduce the burden of debt as you devalue its worth and raise the “nominal” price of all assets.
Although no price appreciation since writing the weekend report, the Gold Cycle nevertheless is constructive. We’ve seen a 14 day streak that has quietly and patiently added 4.3% since the last Cycle Low. The fact that gold has generally ascended for 14 days has almost ensured that our Cycle phasing as a first Daily Cycle is correct. This is important; the first step is to understand which Cycle we are in.
The move on January 2nd and 3rd may have been intended to drop the gold price below $1600–that did not happen. In my view going forward this is positive for gold, however, Saturn is moving slow and will retrograde in February which could continue to hinder the metal. Gold may have a more bullish move setting up toward the end of March. Pluto at 10 degrees Capricorn is positive for mining, so even if gold may seem stuck the miners may start to look bullish. This is an exclusive excerpt from the latest Astrology Traders newsletter.
More of the same unresolved and non-committal action out of the precious metals markets this past week. Once again gold has reached a junction which should provide us with a road-map for where gold is headed in the immediate future. One fork at this junction, the bullish fork, we’re looking at this as just Day 7 of a brand new Investor Cycle. If this were the path gold has taken, then gold must break $1,696 next week. But taking the bearish fork has us still in a 5th Daily Cycle, with multiple possibilities with regards to the actual Daily Cycle count.
The week closed out with some truly amazing action, and to a large extent expected too. The amazing action was the $80 “tip to tip” decline in gold futures in just 24 hours; exactly the type of response I outlined would be expected if the primary Cycle count was still valid. There is more work ahead for gold and we all know gold has thrown more than one curve-ball and sucker-punch recently. But I’m quietly optimistic that Friday marked a significant turn for gold and in due time price action will support this “opinion”.
The precious metals are not making it easy for investors here. Some are buying afraid of missing a rally, others wanting to but afraid to commit, while the rest want to see more evidence of a change in trend before trusting again. The author is in the 3rd camp, as the trend remains down. Until proven otherwise, more evidence is needed before getting long again.
A Dollar in decline, a 3 Year Cycle Top, and a “Dollar pummeling into the New Year” all sound wonderful for Gold. Ordinarily of course gold would be rocketing from here as the dollar collapses. For gold to drop this far while the dollar collapses is only masking the true severity of the precious metal decline. As for the gold Cycle, we officially have to contend with remarking our Cycles to better understand what the market is doing. Remember that Cycles are the true interpretation of what the asset has done, there is no ambiguity, a Cycle by its very definition can never be wrong. The fault lies with the [...]
This is an exclusive excerpt from The Financial Tap, who offers a FREE 15-day trial with complete access to the entire site. It’s decision time on the Gold Cycles, we’re down to the business end and the action is about to reveal exactly where Gold is heading in the near future. I believe that gold over the next 4 sessions will reveal where it’s headed over the next 4 months. I covered my disappointment regarding the 1st Daily Cycle performance last week (in the article Gold Cycles: $1,704 Important Gold Price Point). Since the Cycle clearly topped with the trend-line break, I warned members to expect $1,704 to be marginally taken out. Well it’s gotten [...]