The key take-away for now is that traders and investors with a short to mid-term investment horizon should carefully watch the 1151.60 USD price level. It truly is a critical price level. In case gold would stay above 1151.60 on a monthly basis, gold can be traded from the long side. However, if there would be a break below 1151.60 on the monthly chart, then the short trade is the right one until target D is reached.
A few charts on the Federal Reserve’s worthless fiat “dollar,” start our chart line up. We keep referencing the “dollar” as worthless because in truth and reality, it is. Any “value” ascribed to the “dollar” comes from everyone’s imagination. It is the ultimate Ponzi best described by “the emperor is wearing no clothes.” It reflects the largest propaganda scam by the elites to get people to accept worthless fiat paper as having “value,” while maintaining that gold and silver have none. Stackers know otherwise, the majority of others do not, judging by their actions.
The correlations between Dollar-Oil and Dollar-Gold are much stronger, and negative. The 12-month Correlation Coefficients fluctuate above and below the zero line, but the 60-month moving average is mostly negative. Oil and the dollar were positively correlated from 2000 to 2004, but this did not last long as the negative correlation returned. The relationship between gold and the Dollar is by far the strongest, and a strong Dollar is clearly hurting gold.
Now, we are witnessing a potential breakdown in prices towards new 52 week lows and bear market lows, while majority of the hedge funds have still not been shaken out. In my humble opinion, a major bottom in Gold will still occur around $1,000 per ounce, as discussed many times. More importantly, until we see hedge funds (COT Managed Money) get towards net short positions in both Gold and Silver, we most likely won’t be near a meaningful bottom.
Unbacked paper currencies are being printed to excess and they will devalue in purchasing power. Silver and gold have been real money and valuable for thousands of years, in contrast to hundreds of paper currencies that have been inflated into nothingness. I don’t know what will happen to the S&P, but we can be relatively certain the prices for gold and silver will rally substantially as all paper currencies inevitably weaken.
Gold got hit hard Friday on two fronts. One was the sharp jump in U.S. interest rates. The other was the surge in the U.S. Dollar to the highest level in eleven years. The chart below shows the price of gold tumbling $29 (-2.4%) on Friday to the lowest level for the year. And it did so on rising volume.
If you do not own it now, you are playing a game of [irresponsible]risk. For those who already own precious metals, even for prices at the highs, accept it and be glad you own either or both. The insane banker’s world in which we live will come to an end, and likely a disastrous one. Keep on stacking, keep on staking. On a relative scale, price should be your least concern.
Gold has not developed a daily chart bottom — and I believe this is a necessary condition for any future bull market in the metal. I thought Gold had formed a H&S bottom in Jan 2015, but the recent decline has been too severe, so we are back to the drawing board. I see no trade in Gold at the present time.
For the week commencing March 2nd, there are some important economic data and central bank announcements, as seen in the table below. The interest rate decision of the European central bank on Thursday is undoubtedly the key announcement this week. Friday is an important day because of the unemployment report and nonfarm payrolls for the month of February. Our expectation is that the events on Thursday and Friday have the potential to create volatility in COMEX gold and silver, hence influence the gold and silver price. The PMI report in the U.S. and Europe, CPI in Europe, and Yellen’s speech at Citizens Budget Commission’s Annual Awards Dinner are not likely to cause volatility in the metals market.
Bear market declines are in place for nearly all the commodities except for a strong Palladium.. Kickback rallies (contratrend rallies) are in place or in progress; some already may be failing. What to watch for is a test of the lows, which may result in a further breakdown, and lower lows, or contrarily, a decline that fails to achieve the former low, thus holding at a higher level, which could suggest the potential for another rally over the weeks / months ahead.
For the week commencing February 23d, there are quite some economic data coming out. No central bank announcement is planned. Our expectation is that the GDP data in the U.S. on Friday can cause some volatility in COMEX gold and silver, hence influence the gold and silver price. The German and U.K. GDP, German and U.S. inflation index CPI, etc should not result in signficant gold or silver price changes, unless those data would be very shocking.
There are approximately 156 weekly bars on this chart going back almost 3 years. There are only 5 other weekly closes lower than last week. Clearly, the facts of price behavior give evidence of a weak market. It does not matter what your beliefs may be of the underlying “fundamental facts.” The existing reality of current pricing is all that counts. The difference between the fundamental facts and current price is not in harmony, for whatever reason, but it is how the market, in total, is pricing silver that counts. Always go with existing price as the most accurate measure. Opinions vary. Price is.
The race to the bottom continues unabated in the currency wars. And, no matter where you live, if you are stupid enough to believe the rhetoric being spewed out by politicians then you deserve to suffer the consequences. Unfortunately, you have to have a financial insurance policy that will save you from the actions of the current financial and political elite. While there are lots of great options available, owning physical gold and especially silver should be an essential part of this policy.