Was the gold rally capped at $1240 and now is not the time to invest?
Gary joins us to chat about the dropping gold price and where he is putting his money.
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Good strategy Glen – Buy low and sell high:-) Buying it we make lower lows is ideal.
Once again, good score with the Iamgold purchase in Nov. Yes, you have been pretty clear about that a number of times in discussions on this blog, and that is the kind of oversold environment that creates the ability to hold the miners a bit longer.
That should have said Buying “If” we make lower lows is ideal.
Thanks shad.
Always ket to be on the opposite side of the herd 🙂
I meant key!
You contrarian you.
This is what bird said.
I agree Chartster. Actually that’s my playbook right now as already mention these past weeks. The dollar will rise to meet its recent peak where it will top and roll over. The Euro will similarly double bottom.
As the dollar rises, precious metals will face-plant breaking to new lows below the 2014 lows. If they do that then a recovery in price for gold is highly improbable in the near future and will be put off to another date as a major technical breakdown will indicate to all that the lows are indeed not yet in.
The gold wash cometh. Call it the bloodbath phase if you like.
It is dangerous as hell to be getting long miners right now, in my view. We really don’t know exactly what will happen once price is definitively below production costs but it won’t be pretty.
The longs are going to get another education in chart dynamics and be taught that while contrarianism is often a good play, that it also has its dark side. And being hasty and premature to the bull party carries a heavy price.
I have a 99% certainty gold has NOT yet seen its final lows.
Thank you for repeating that. I LOVE to be quoted!
Interesting perspectives, but Gary I am confused, as you had mentioned for the last 2 weeks that we had the intermediate cycle low in Gold and you expected 4-6 weeks of an upturn. Why would you now be calling for a downturn in metals prices for the next 3-5 trading days out to days 18-21 in the cycle?
It looks like this is what is actually playing out now, and everyone is entitled to digest new information and develop a new outlook, but this seems like a 180 degree shift.
Now there really has been an abnormal amount of selling pressure in gold in pre-markets and afterhours over the last 2 weeks, and even during the regular trading hours, with a lack of conviction from the gold buyers. This is likely large financial institutions capping the price a bit, but if the cycle you had discussed on this show for the last 2 weeks had played out, wouldn’t that have presented a scenario that would have squeezed the high level of short positions in the marketplace?
Personally, I expected a continuation of the uptrend in PMs into mid-April, and just thought we’d have a 1-2 day breather on Tue/Wed and would start heading upwards today and tomorrow. The Greek situation had the potential of starting that ball rolling, but it was a fizzle as they are going to make the payment and beg for liquidity, and deny the austerity reforms as per usual.
This market is extremely frustrating, and seems to lack conviction to the upside, but it isn’t completely falling out of bed either.
Regardless, the new approach you laid out does seem more probable now and thanks for your input.
Listen to the interview again and you will understand the difference between an intermediate cycle and a daily cycle.
So to clarify, you are just expecting a daily cycle low in PMs, but still think they may move higher for the intermediate cycle. Is that a fair understanding?
I was only expecting a 1-2 day breather in PMs on Tue/Wed and then a resumption in the price of PMs. I was a little surprised we didn’t see the pop in Gold yesterday, but think the Greece deal was a fizzle and the marketplace anticipated more fireworks.
I am not sure about the daily cycle low, and just think it was a breather in an upleg in PMs that should continue into in mid-April (which should be through next week or two).
This is what I replied to second post above from bird.
Your scenario does not make sense to me. You speak of a double top in dollar and we are a dollar and change away from that and gold is still hanging in. You expect new lows in gold and gold staying done there technically for a long time while the dollar rolls over and heads down? Nah no way dollar face plants and gold stays down for long the way you describe. I can see dollar continuing higher and gold face planting but not the other way.
I agree with you Glenfidish, that I could see the Dollar continuing higher and Gold face planting in that environment.
Interesting article from Jim Wyckoff:
Rebound in U.S. Dollar Index Squelches Gold Market Bulls
http://www.kitco.com/news/2015-04-09/Rebound-in-US-Dollar-Index-Squelches-Gold-Market-Bulls.html
The action in the markets is so schizophrenic that it is hard to see what exactly is playing out at present, and people are reading into the tea leaves (charts/fundamentals/sentiment indicators) all kinds of different scenarios.
As they say, many times your first initial thoughts are the ones to stick with if undecided, so I am sticking with my call for a dollar surge and commodity cycle low in May.
I believe the Euro is a mess and the Yen isn’t much better, so this will bolster the dollar in the mid-term (2 months). In addition, the 4 year end to the Gold bear will likely coincide with this dollar blow off top, and it is possible that Silver could get dragged down in the commodity undertow if that plays out.
Later in the year things like earnings reports in the Oil Patch/multinationals/miners, the effects of the new AIIB, and the Middle East abandoning the Petro-dollar should pressure the dolllar and allow commodities to start climbing back out in a U-shaped recovery (not a V shaped). Gold & Silver miners and Uranium should lead the charge out of the starting gate.
To add further, “if” dollar double tops here and gold/hui hang in here and dollar reversus, then look out. Gold will boomerang due to technicals.
Yes if the Dollar double-tops and rolls over then Gold should start a nice leg up.
As mentioned on the March 11th & 13th daily cycle double top in the USD around 100.39, I don’t see that happening, and expect the dollar to surge higher to 110 before it rolls over into May/June. This was the pressure from the $ that would cause the final Major bottom in Gold, Oil, and the commodity space in general.
If the dollar does do a double top in the 100-101 range, then that would minimize the commodity cycle major bottom and will indicate that the bottom is already in. That is unless you mean that the USD would double top, roll over for a few months, and then surge higher to new highs at the end of this year. Is that what you mean?
Waiting to see if gold can stay within the 1180-1200 zone this week. If 1180 holds (with a couple quick drop, then snapbacks below), then I’ll build up a position in JNUG again.
If it drops significantly below 1180, I will probably just tidy up my junior miner positions and take the summer off from (constantly) watching the markets and trying to trade for a couple percentage points, here and there.
You are a smart man Brian. I got on the wrong side of the trade in JNUG the last 2 days and haven’t been happy about that. I expected a breather on Tues/Wed, but thought PMs would bounce back higher today and Friday. No dice.
I’ve done well lately on JDST and JNUG, but sometimes you get a kick in the pants to keep you humble and respectful of those 3xETFS in the Jr Mining space (which is already amped). I told Glenfidish a few days ago that my beach balls turned into tennis balls after hitting the buy button.
I don’t know what the shape of the bottom in gold should look like. I don’t really fully agree with Gary that it should look like late 2008, which was an exceptional panic deleveraging sell-off within a bull market.
The shape of this bear market is getting more like the shape of the 1999-2001 region where there was at least one low in 1999 and another one maybe at the end of 2000 and the whole thing was a saucer shaped bottom lasting 3 years.
This is a fascinating market because gold is well up in Euros and still struggling to find a low in dollars. The Euro gold uptrend has lasted over a year now. on the point an figure chart there were 5 failed attempts to get above 985 Euros since start of June 2014 and 2 failed attyempts to get over 1000 EUR; also on the weekly chart 3 failed attempts to get above 1010 EUR (and one failed try to get above 1084 EUR) since Summer 2013. Now gold is at 1116 EUR!
If these trends continue with gold grinding a little lower in USD terms and higher in EURO terms, it means much more dollar strength, perhaps beyond parity. Perhaps you could see $1000 gold with Euro gold at 1200 and the Euro at 83 US cents, for example?
Great thoughts Silverbug Dave. I also agree that the bottom in gold doesn’t need to look like the 2008 bottom on the chart, and the disconnect between the way gold is behaving in every other currency and then in the dollar is becoming more and more apparent. Very well said.
Thanks Shad; I do try!
Bird,
I think you have me mistaken. I used November lows as an example of buying Iamgold at 1.62. I’ve been vocal about it. I sold some and rolled it over into cash account. I bought iamgold at 3.80 and ran with it to about 22.80 in 2009. When it fell and broke 16.50/17.00 level for the third time I sold a good amount. Rolled back into cash account. I have money to unload and have stated “if” we go lower I will only buy if new lows are made. I will put some down on a double bottom for a bounce but will look for 875/1025 region to deploy the battalion.
Hope this helps with my by low and sell high. Im not talking years. It could mean weeks/months