We focus on oil and gold – Can oil continue it’s run higher, and will gold ever move from the $1,200 level?
Cory is joined by Gary, on the road in Utah, to discus the movements in oil and gold today. Oil has been on a slow but steady rise and gold has not done a whloe lot of anything. Is any of this going to change?
Click download link to listen on this device: Download Show
Gold is just popping a bit on the news of moving Patriot missiles to Poland. That is all.
BOB, that is not all. There is a strong big here for gold technically at $1200 we will move to $1225 then pull back
CrAyZe – I see first resistance at $1222 ($1221.80) the peak from Dec 12, 2014. If it makes it through there then next resistance is at 1239 (peak @ $1238.20 from Oct. 17th, 2014)
As for lower targets of $1065, $1044.70, $933.20, and $890 for later this year, see the post below to Stewie if interested.
I believe that the $1221.80 level from Dec 12th is why there has been so much congestion at the $1220 level, and not so much that central banks are suppressing it at that level.
Hey Shad,
What happened to Jerry in Moscow…er…I mean Indiana or Florida? 🙂 I think we are all getting a little concerned.
Hey Shad,
What happened to Jerry in Moscow…er…I mean Indiana or Florida? 🙂
I think we are all getting a little concerned.
Ebolan,
I sent you over the clues about our Russian friend Frank from Moscow….da Boot in Doc’s blog from yesterday. Hopefully this link will work and you can check out the banter and bread crumb trail for our comrade.
LOOKING FAKE NR LOOKING ALL TV FAKE YOUR LOVING YOUR FAKE WORLD NR AND TV YES YES ! DON’T STOP YOU ONLY DEAD !
FRANKY, YOU DOWNSIZE!
Oil may be ready to pullback to the break out level at $54 this week.
Yes! YES! NUGT closed above $12s and Scott has upgraded the fund! Woohoo! Maybe holding out for more profits will pay off. I am still kicking myself for not taking 11% in profits last week.
Thank you Gary. That scenario would be wonderful for both gold and oil and it’s my expecatyion what will happen purly based on COT being in the middle and that is NOT how bottoms are formed. Extremely oversold is how THE bottom is formed and in order for that to happen we would need to see 1000 gold.
Still on sidelines waiting for my washout. Bring it! I ain’t got time for this sideways bull crap. Bullion banks make your move. Murk it!!!!!
I am also waiting for the final washout in Gold later this year to end the 4 year bear market.
There is only one wildcard in that plan, this would be if the Nov lows really were the major bottom in Gold, and that it surges higher robbing people of the opportunity to buy at lower prices. This is still technically possible as $1132 has not been breached in the last 4-5 months, so we can’t rule out that was the bottom.
The November low didn’t feel like the bottom, because there wasn’t a washout in sentiment, and we are just now seeing the bankruptcy / mergers phase getting going. My belief is that gold will hit support at $1044.70 or next support at $993.20 if it takes out the $1132 low.
Shad very good points. I again like how you think. I agree 100%.
BTW how did you come up with those numbers being exact like that. Are those fibs?
You think if we break 1132 we would go down as low as 993? I think your numbers are legit but i see bottom between 1080-1000. 1000 being our big time high few yrs back i highly doubt we’ll breach that. In fact i would argue HFTs and people will be trying to get in before 1000 so maybe 1044 would were bottom forms. It would be inefficient for bullion banks to take it down to round number of 1000 but i’ve been wrong before and it would not surprise me to see 993 either. Just my thoughts. Good conversation mate.
Stewie, I use a number of technical indicators like Fib retracement levels, Moving averages, MACD crosses, trendlines, etc…
I find that often just simply using prior peaks/troughs as indicators of where there will be stop/limit orders places for buying and selling is quite accurate, and in a mathematically guided marketplace, those points usually coincide with the trendlines, Moving averages, or Fib levels. Since nobody really knows where a trend will turn, you need to have targets to analyze your investment strategy. I know that either consciously or sub-consciously traders look at prior highs and lows as important levels, and as a result, traders and computer programs line up many trades at those levels, (so they become congestion points).
1)**Honestly, in just going back an looking at the longer term gold charts, I am more prone to see the Feb 5th , 2010 trough at $1065 as a larger trough and point where Gold really started taking off that year. So I was just using prior peaks/troughs, that would be first support.
2) The $1044.70 is based on the Oct 30th, 2009 trough, because it most closely correlates with the different fib levels and moving averages of traders that kept coming up with 1050. I used to have the % of the written down because, it always matters where you start/end the levels on where the fib retracement points fall. People start at various places, but the 1045 zone should be one layer of support.
3) The $993.20 level is based on the Feb 20th, 2009 Peak, which was substantial. When Gold hit it’s spooky weekly bottom of $723.70 on Halloween Oct 31st, then that first impulse leg up made it to $993.20 on Feb 20th, 2009. I see that as a strong area of support and congestion from longer term gold traders that remember that first leg up. Programs and software and statisticians marked that area as resistance on the way back up to $1176.70 on Nov 27, 2009.
4) The lowest low I can get my head around would be the prior high from 1980 at $890 Gold. That has been calculated as the 6 1.8% fib retracement from $252.80 in 1999 to $1920 overnight trading on Sept 5th-6th, 2011.
So the support levels as I see them are $1065, $1044.70, $993.20, and $890.
But the truth is nobody knows……….. That is why I just keep it simple and use previous troughs and peaks as key indicators of where other traders may place orders to fill.
By the way…. in part 3) that $1176.70 level from Nov 27, 2009 is why there was so much resistance and support (congestion) at the 1180 area for the last 2 years, as an example of how these prior peak/troughs end up becoming support/resistance levels.
Shad thanks bro. That’s helpful. I thought so you were using fibs. Any website you use for fibs or you just calculate on paper. BTW those numbers look good to me. I will add $5 to each if i will be pulling trigger lol
I use a combination of data on Fib retracements (I value Avi Gilburt, Gary Wagner, Jordan Roy-Byrne and other Elliot Wave schools of thought like http://www.elliotwave.com) Sometimes I just pick two key points and look for the 38.2%, 50%, and 61.8% retracement levels, and see if they coincide with trend lines or moving averages, and in particular, prior peaks and troughs.
I think I can say with a good deal of confidence that the low in Nov. was probably not an 8 year cycle low. I’m epecting it either this fall or more likely in the spring.
I tend to agree Gary, and I really expected the lows in May/June for gold originally based on a surging US dollar, but as I mentioned to you on your April 16th editorial, I see how the USD was just going to double-top and head down for the next few months, so that moved the Gold bottom out until the fall. I still think it will be later in the year that we get the big sell down bottom, but you’re correct that it may drag out until 2016. Good thoughts as always.
The washout starts this week and continues until early to mid May. The mining sector has to take it on the chin sooner than later.
Gold would have already broke 1225, if it were going to at all.
The washout is finally here! ( finally..)
The upcoming dollar rally will also be a factor.
Chartster, I felt the exact same way until I had a change of heart on April 16th during the Gary and Chris T. interview. They made such a strong case that the dollar was not going to go up and tag 110 in the next few months, that I reluctantly (and with egg on my face), conceded that if the dollar was going to double top, that the PMs may not slide into late April/May as I originally had forecast in Dec 2014, and consistently this year.
If the dollar keeps falling for a few months then the commodity and PM washout may get delayed until the end of the year. Gary and Doc think it may take until 2016. Regardless we’ll be at exactly 4 years in the Gold Bear in September of this year, and so we are definitely getting into the timing band where the bear should reverse, and it should coincide with the blow-off top in the dollar.
Jordan Roy-Byrne feels that we are in the second longest bear market and second deepest on his Palisade radio editorial. That means that only the 1987-1993 bear was longer and it was 5 years.
Check out abut 8 min and 29 seconds into his presentation from the 11th of March.
Thanks Shad. One thing for sure. This next week or two will tell the story if it’s now or later. The cycle low should be May 7th to 14th. It will have to get started right now, if it’s going to at all. Based on the overall economic picture and the mining sector, it should be now.
Honestly I’d rather get the final plunge over with now (meaning in the next month or so), but, since it would seem we’d need an even higher dollar (surging to 110) to cause the sell-off, and if that is slated to happen later in the year, then I’ve had to push my bottoming in commodities and Gold until the fall.
I do still think Uranium has already bottomed and is heading up and it will be back over $50-$60 by 2016. Both URZ and URG surged higher today.
Chartster i would welcome that. The sooner the better. Gold may be range bound within this sideways move until dollar starts to surge higher again but i hope you’re right.
Gold will not go to that level
500s to 600s bottom.
Yea, I know, I’m nuts.
You are a very wise person Chartster, but I don’t see how gold could get that far down below the cost of production. $500-$600 Gold seems like a stretch, but maybe you have a reason why you have targeted those numbers. Would you mind unpacking how you see the gold industry could even survive at those levels?
Even Harvey Dent is only calling for $700 Gold 😉
Personally the $993.20 target I have, the $965 target from Jim Rogers, and the $890 prior gold top from 1980 are already really really low. I thought Rick’s $881 call and Bird’s call in a similar area were the low calls.
At $500-600 for gold, depending of how we’d get there (ie what’s the narrative being the drop and how does the chart look like – ie slow grind lower or wash etc…), I’d probably love to get some 12-18mths duration GLD Calls and swing them.
And to be honest… I’ll probably consider the same if gold gets around $1000 (but again, it will highly depend of how we get there).
GL to all investing/trading.
LPG
Oh, those low numbers would be a blip in the radar. Gold should go right back up quickly.
The wash will be big enough to scare most out of the sector, so the commercials can take advantage.
They will spin it on TV that gold is no longer the safe haven and push stocks until they start crashing this fall. Them gold and the PM stocks will have already taken a good bounce.
That’s how I see it anyway.
OK…..as long as it is just a blip…….
Shad,
I also like the 7 year cycle better. Which 3.5 years would be half of that giving a cycle low on May 7th.
The big cycle is 70 years and 1/10th would be 7 years.
The cycle being from one economic structure to another. In this case Bretton Woods in 1945 to the BRICS 2015. ( right on schedule )
Interesting points on the 7 year cycle Chartster. Definitely something to consider. Again, I’d rather get the bloodbath over with and rip off the band-aid, so May 7th is close. It just seems the dollar surge is on hold for 3-4 months, and I just don’t see the sell-off getting epic unless the dollar is surging due to crashing commodities elsewhere.
There is the Bank of Japan QE announcement on April 30th and the jobs report on May 8th that could be triggers though.
Ditto on ripping off the band-aid..! Lol
I’m sick of this bear!
Yeah, me too. I have some miners that I want to ride up for a while, but want a confirmation that the bottom is in.
I really enjoyed reading this thread.
Sigh. Again, I find myself the contrarian. Although TA is a great tool, it seems to work BEST when the market is in a definite Up or Down trend. For the PM market, it has definitely been sideways for quite some time. So, personally, these lower GOLD targets (below the Nov14 low) do not seem very likely.
On the bright side, TA seems to be working quite nicely (of me anyway) in accumulating undervalued, high quality PM stocks.
On the FA side of things, China is the BIG unknown.
I Ma kind of weary of hearing how gold is inextricably tied the the US Dollar Index.
FFS, the dollar index is completely out of touch with the realities of their international trade:
Euro (EUR), 57.6% weight
Japanese yen (JPY) 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight
Swiss franc (CHF) 3.6% weight
Great thoughts as per usual Brian. I actually was thinking of you and Matthew and Glen (The Novemberists), when I threw in this wildcard comment to Stewie up above.
“There is only one wildcard in that plan, this would be if the Nov lows really were the major bottom in Gold, and that it surges higher robbing people of the opportunity to buy at lower prices. This is still technically possible as $1132 has not been breached in the last 4-5 months, so we can’t rule out that was the bottom.”
Exactly Shad.
The point is: nobody knows where the bottom is (still ahead, at what level then, already behind?)
So a “simple” investment strategy is to accumulate gold on dips for safety and to buy QUALITY stocks on (large) dips for speculation.
As mentioned on a post a few days/weeks ago, a bunch of quality names are up 100/200% and some even more since June-July 2013 while gold is basically flat compared to that time.
M-a-yyy-b-e this “kinda” means something 🙂 🙂 :-).
Best to all and GL investing/trading
LPG
Yes LPG, it is always good to accumulate the metals and miners on dips, but if there is going to be washout in May, or now, more likely towards the fall, then you want to have some dry powder to expend during those lows and not buy before there is a dip.
There were some good miners that I made profits on in Jan/Feb that I purchased at the end of 2014, and some that I purchased on Friday March 13th and St Patrick’s day on March 17th and sold into strength in late March. I still have some positions, that I have accumulated on dips, but am waiting for the bigger Gold pullback to deploy my remaining cash.
I do get your drift though, the miners can go up or down independently of the spot metal prices, and yes it M-a-yyy-be kinda means something that many stocks have almost doubled in the last 4-5 months. (it’s a refreshing sign).
Personally I have gone over to Uranium and Platinum/Palladium miners in the interim and have had some good short term trades while I am waiting to see when Gold is going to make up its mind for spring.
Here is a link to a good interview with Rick Rule (of Sprott Inc), where he discusses the divergence and bifurcation of the good mining companies that are breaking away from the rest of the pack since the end of last year, versus the walking dead zombie Jrs.
http://palisaderadio.com/rick-rule-my-philosophy-on-business-politics-friendship/
Thanks for the link Shad. Rick is talking about an idea I agree with. It will have to be the worthiest and strongest of companies that eventually lead gold out of the wilderness. Its funny because so many had insisted that the Juniors would be what you had to watch but that makes no sense at a time like this. The market is still expressing significant doubts about the gold trend and its future.
So despite cheap valuations on some shares, the risk / reward still does not favour the majority of miners.
Just finished listening to the interview. Rick notes that should an equities rout arise (stock market crash or correction) that miners will take a hit and fall lower yet. I agree. And since it is now my view that a major correction in equities will happen this year we should be cautious with what we buy. The big game starts AFTER stock markets fall when the shift back into deeply oversold and depressed resources has a chance of getting going again. The trick is survive long enough to buy into it!
That was an excellent interview btw. Rick is a pretty interesting guy. I have not tuned in to him that often in the past but he seems to have a pretty good social rudder….I mean, he has a conscience.
I agree with you Bird, right now if a company is not profiting I don’t bother with them.
I also agree, should a crash happen the baby will get thrown out with the bathwater yet again.
Thx Rick for the insights.
Matthew/Glen are 79ers (Gold’s atomic number), but they have left this forum, methinks.
Yes they are 79ers, but you guys had a post about a month ago where you all agreed that November could have been the final lows, and originally were called the Novemberists. Yes, Matthew & Glenfidish felt like they were being constantly attacked and have taken their emails private. I miss them both and learned a great deal from both of them.
That’s a possibility i contemplated myself as well but if that was the case i would see no point for banks to be capping it at 1220 and 1200 so i have to reject that scenario at least for now. They will be long for rally off of the bottom so capping it at those numbers makes no sense at all to me.
Yes, that is my point. I don’t think anyone or the central banks are capping Gold at 1220. I think Gold merely ran into the Dec 12th peak, which is current resistance at $1221.80.
It’s not a conspiracy, just a technical resistance point, but now that it has been tested a few times and retreated, it has more of a likelihood of breaking through it, if gold surges on a weaker dollar in the short to mid-term. If it did break through 1221.90 (basically $1222) then 1238-1239 comes into play (peak @ $1238.20 from Oct. 17th, 2014)
OK. My song of the week? Best Jazz pianist ever.
Bill Evans / You Must Believe in Spring / Peacocks
Very nice. I’m not familiar with Bill Evans, but every once in a while get on a Jazz kick, so I’ll check him out. That song was good and contemplative.
If for some incredible reason gold was to fall to anything remotely associated with the $900 range, the term “back the truck up” doesn’t even begin to do justice to potential future profit options if the companies you select are fully solvent and can remain that way.
The implications for Major and Junior miner stock prices at that level would be so compelling from a value standpoint it would almost be beyond words.
I’ve lived through one of these “life changing experiences” already, but the next one I suspect will make that one look like childs play in profit comparisons.
That sounds good if we keep the longer term in mind, Vortex.
I think we need to appreciate the significance of the repeated approach to the range of 1200 dollars though. We first hit on 1200 in the middle of 2013 which is now almost two years behind us.
Since then the chart has followed up by touching down on that 1200 zone in 2014 and repeatedly during 2015. We currently have what appears to be a double bottom near 1150 but golds inability to break with decision from the 1200 region gives me serious doubts that will hold nor is that bottom significant.
So we have been fighting 1200 for almost two years. Once that level breaks down though, that same region will become very stiff overhead resistance that should be anticipated to hold for a considerable period of time.
I would therefore avoid EVERY company that cannot produce profitably at that number. It remains my belief that gold will break down from the current price levels and once it does it will have difficulty breaching the current 1200 range again.
Indeed, silver (as it often does) is telegraphing that gold will soon fall. Note how it has broken below 16 dollars in the last days. So I am not giving much consideration to the higher gold numbers so many here are discussing today.
The bear market in precious metals remains firmly entrenched and shows no sign of recovery given its weak performance after gold’s posting of a double bottom earlier this year.
It is now up to the bulls to prove they can take gold out of its (nearly) four year long slump and take it out of the current range before it breaks down one round number further. I seriously doubt they can pull it off with sentiment levels where they are.
Thus, both gold and silver remain short opportunities in the larger trend.
Howdy Bird, you’ve thrown a lot of stuff out there to ponder my friend.
I agree, of course all of this should be balanced with a side order of long-term in mind. I’m thinking your going to need a three year plus time horizon to get this right. Having said that, one mans LT projection might be six months where another mans might be six years.
Even the old pro and stalwart of the sector Rick Rule has recently pontificated that the bull may not reemerge in full form again until around 2020. (I’m paraphrasing)
Additionally your correct, that the $1200 range has been a real cap with strong overhead resistance although breached temporarily, and could well remain that way for far longer than many can hold out. Personally I’m in this to win or go to my grave trying so a washout or slow trudge downward will be painful but it will not last forever.
As far as profitability goes, forget $1200 as your benchmark investment thesis. I wouldn’t touch a company for any reason that’s in production that can’t make an all in sustaining profit at $1,000 gold and under. Preferably $700-$900 range if possible.
The explorers are simply the ultimate lottery ticket, that requires an astonishing level dumb-hubris and idiotic grandiosity in search of profits.
Remember from my first snippet, its all about solvency first and being able to remain that way. So this is not about throwing good money after bad although that happens from time to time.
Its about selecting 7-12 of the potentially most compelling companies in the sector and riding them bad boys for all their worth.
The mere fact that we are discussing the miners means you already fully understand the magnitude of the risk parameters.
Thanks Vortex, I agree with you 100% on watching out for companies that cannot make a buck even at lower levels. This period of time is all about basic survival where the companies are concerned. Its why we are suddenly seeing so many hedge their books…and it is NOT bullish as some assert.
Good grief, I could burst out laughing whenever I read a foolish commentary on a gold blog (not this gold blog btw) suggesting that hedging is a bullish indicator! What the heck are those guys smoking? This is a “fight for your life” type of action when a company realizes it no longer has confidence prices will recover and cannot risk getting this wrong.
They simply cannot afford another price decline and remain in business in many cases without a hedge in place. Their shareholders would have the board and Exec’s tarred and feathered if they did not act proactively to avoid an obvious extinction threat.
I had not heard Rick Rule say he was looking out as far as 2020 for a recovery. Not yet anyway. But I am tuning into one of his interviews this morning and he still sounds fairly bullish.
Good to hear from you again!
Bird, I don’t want to represent Rick Rule in a false light. What he said was that by 2020 he suspects that we should be in a rip roaring bull market. So in that sense, he’s bullish but 2020 is a ways off.
So I take that to mean we may still have a little while as the churn continues to reek havoc and keeps PM participants confused and apprehensive.
My gut tells me we’re going to have a lot a action long before we get to 2020. This bear is very long on the tooth, so I think with in a year we should see some progress.
But what do I know.
As far as hedging, if anyone thinks hedging at $1200 is good, then I would hate to see what bad means.
Good to talk to you as well!
V
Gold has crossed the US$ 1200 line 24 times in the past 6 years
oops 2 more this morning … 26
Gold to $6!!! GOLD: we don’t need it until we NEED it! It would be pretty perfect if gold went to Jim Rogers mathematical guessestimate but you still need to hedge that bet in case he is wrong. Don’t sell all your positions as gold can and will disappoint to the UP as well as the DOWN side. Too manny turd-birds flying around to make wreckless wishful thinking bets. The logic about the Dollar vs gold is flawed as as the dollar went up recently so did gold for a couple of months…..with that logic shouldn’t gold have dropped between December 2014-Feb 2015? This doesn’t make sense at all.
Hey there Confused. No I completely agree with you that there will be surprises to the upside as well as the downside. As for the dollar versus gold they can often travel in tandem (like today) but more often over a longer period are inversely correlated. All we can do with an investment thesis is make a plan, backed by probability, and react accordingly. Nobody is always right, the correlations don’t hold every single time, cycles get stretched beyond the norm, and there are market surprises. Having said that, at one point you got to be in it to win it, and take a position having weighed all the competing opinions.
Best of luck in your investing Confused and may you screen be filled with green.
Shad-Bird….please enlighten me on my flawed logic!?
thanks
Time to be buying back oil with XOP as it has fallen enough from 56 to 52.5.
Bought back some Intel yesterday and today.
Gold is back up again. Right where I took profits.
There was a guy in here that claimed gold would
start down last week. Hmmm..he’s not here today.
Said yesterday too ..gold was going down.
Thats right, he did mention a new drawing board.
Oh well. I do wish him good luck.