Uranium Failed Breakout and How A Rising USD Will End Up Being Good For Gold
Jordan Roy-Byrne, Founder of The Daily Gold joins me to discuss a couple topics related to resource investing. First up is uranium and the failed breakout over the past couple months. We then move to the bullish USD and what dominoes could fall if the dollar continues this strength. In the longer term sense it could lead to the move in metals all the bulls are waiting for but it is a process.
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Here is the only uranium chart I can really find.
Gold is good:
http://schrts.co/LGdhrx
Just like uranium… I just don’t think I will ever believe gold has turned. It’s just ingrained in me now. Gold can hit 1500, my gold stocks can double, and I would probably still have doubts that the market has turned.
But keep giving those hopeful charts Matthew. They do look good.
$gold will be overbought on the weekly chart by next week. Odds are it’s very close to putting in at least a short term top.
By what measure? Gold isn’t even overbought on the daily chart.
the daily and weekly stochastics
The daily stochastics have been pegged over 80 for almost 2 weeks now, which tends to be the outer limit for duration before they head back down.
The weekly stochastics aren’t overbought yet, but they will be by next week in all likelihood.
Compare the following stos, MACD, and RSI with the 2016 action:
http://schrts.co/o9AMGV
The action out of the 2016 low is incomparable to the action over the last few months, IMO. For one, there are many more weekly candles making up the decline and recent bottom than in 2016, which will be a major drag on the 20 and 50 WMAs going forward. In other words, there has been more time to consolidate these low prices than in 2016, which to me is pretty suggestive of a bearish consolidation.
Now, it could be that gold manages to rally back to the 100 WMA on this cycle, but I think it is far more likely that the 20 WMA will act as a magnet (due to the aforementioned bearish consolidation. Price will likely consolidate around the 20 WMA as the bollinger bands tighten in, setting up the next series of whipsaws followed by much lower prices.
I was referring to the low at the beginning of ’16, not the end. Look at my 50,15 Full STO:
http://schrts.co/Uc4p4X
I can certainly relate to that senitment. Mind you if gold were to hit $1500, I would feel much more positive about the PMs in general.
Yes, I agree. $1500 might have been a bit high of a number to say there
Gold does look good on this chart. That 200 week ma is proving good resistance at the moment however. If gold can just base here for the next week or so then move towards $1250, I think it just improves the short term picture. We shall see.
The 50 and 100 WMAs are sloping down, yet are both still over the 200 WMA. That is almost universally an incredibly bearish signal, especially in the metals. Gold is going lower, 100%. It may take some time to break down again, but it will eventually.
Nice chart Matthew. Thanks for posting. What are your thoughts on GLD. I have it getting to around the 1.20 level which is where the upper bound of the weekly bollenger band is. I don’t own it, but I use it as a proxy for gold.
My interest in GLD is the same as yours; it’s worth watching. The next level I’m looking at is around 118. Once it takes that out, I’ll give it an 80% chance of going to 127-128 during this weekly cycle (weeks/months). That’s probably conservative but look what happened with my ISLVF to “at least .30” call.
http://schrts.co/u3p3pX
Thanks Matthew. Good to know. On your chart I understand how you have drawn your small fork, but not the larger one that shows the top of the fork at your 127-128 level. Can you give a clue as to what you are doing and why?
Regarding ISVLF, $hit happens! I was targeting 30 cents and you thought a bit higher! LOL! At least I sold half of what I was planning to sell at $0.30 when it turned down. Today, the stock broke below the trend line that started in early September which is concerning. Hopefully it will reverse up to today or more critically tomorrow to end the week.
What are your thoughts on Anaconda Mining? It looks pretty good to me but feel like it needs to take out the $0.275 level to really get going. I have it back testing a downward sloping wedge yesterday with a bullish engulfing candle today on heavy volume. The ticker is ANX.TO
The first point of the big fork is based on the 2016 high. The second point is the big 12/16 low. The final point is the 1/18 high. The first point was moved down 50% of the way to the second point, which makes it a “Schiff” fork. Had I also moved the first point 50% horizontally between points 1 and 2, it would have become a “modified Schiff” fork.
Although I probably haven’t posted them much, I’ve also had good results by putting the first point at Fibonacci levels between points 1 and 2. The standard Andrews’ pitchfork leaves point 1 at a high or low — not shifted vertically or horizontally.
Unless the market has already been clear about which one is working best, I’ll start with the one that best approximates the trend. For example, if you extend to the left the top of the big GLD fork above (from point 2), the line will come closer to the point 1 high than if you did the same thing with either the Andrews’ or the modified Schiff forks.
Thanks for the primer. Very helpful.
The 200 and 600 week MAs are a big deal. Even a single weekly close above them will probably light-up the sector and smoke the shorts.
http://schrts.co/c5UmsT
Wow! That is an interesting chart. BTW, Peter Hug and Bubba Horowitz over at Kitco both think gold has further to go. That is a pretty good endorsement in my mind.
Notice that the previous several moves above the 200 week MA happened when that MA was still falling. That finally won’t be the case this time and THAT is a big deal. Once the next move gets going, it could be many years before the 200 wMA is touched again. It took 11 years during the last bull market.
Good point. Thanks.
I’m surprised GLD hasn’t at least filled Tuesday’s gap.
http://schrts.co/1EybGp
I think the miner are telling us that it will, and then some, in time.
That could very well be but it probably won’t change my view that the low is in place. Whether it takes two weeks or even two months before the sector gets moving, I think weak days are for buying. That can obviously change but it seems unlikely to at the moment.
Sell-offs spreading throughout the world. The metals arent immune today so far.
Gold isnt going anywhere…Jordan has been calling for a BIG RUN up in gold for years….along with the rest of the gold bugs…..then when it doesnt happen…they just say ..OH NOT YET…but soon…and the same bullshit story is repeated again and again…its laughable
Jordan has been about as realistic as it gets among the gold newsletter writers. he has been ultra-cautious and for good reason. The price action since the 2016 peak has been terrible across the complex.
The action since ’16 has been tiresome but not terrible. You have to view that record year with the proper attention to scale/symmetry. Even the senior gold miners tripled in 6 months while countless juniors went up 5, 10, and even 20 times. Moves like that don’t get corrected overnight. However, that mean reversion for the sector did the bulls a tremendous favor by dramatically shrinking the time needed to “fix” the charts. The next move will now be technically supported and protected during the next intermediate decline. In other words, the sector will behave like most expect it to during a bull market.
As I have said, I think the 2016 low was very significant. I just think one and possibly two more retests of that low are highly likely over the next 1-3 years. Most examples I can think of in which a devastating and lengthy bear market ends on a super spike upwards almost always end up retesting the lows years later. My best hunch is that $HUI will re-test and possibly marginally break below 100 heading into the the new year. The rolling over of the long term MAs, notably the 50 and 100 WMAs, was a terrible sign.
I would expect a clear cut V-bottom this time, unlike 2016. The question is whether the bounce out of the next low will be able to retrace the entire break down from the 200 level extremely rapidly. If it doesn’t, I think there is a good chance it will drift back down over the ensuing 2 years.
Miners getting absolutely smashed today. HL and GPL leading the slaughter for the silver miners. The handwriting has been on the wall for weeks, as I have been saying.
$HUI might bounce off the 50 DMA next week to set up a H&S on the daily chart, but they may not even bother.
158 on the $HUI probably isn’t going to be taken out for another 1-3 years IMO.
UUP is at resistance – double top or breakout?
http://schrts.co/b5x7EJ
It looks like a toss-up. Maybe just a marginal new high. It’s interesting if you cross UUP to GLD the chart looks a lot more bearish and no where close to a new high. Seems like is outperforming the dollar currently which is interesting.
I agree and think that outperformance matters.
Zoom out and look at the weekly chart. The dollar has crushed gold this year. the dollar to gold chart is forming a textbook bull flag right now after a huge run up.
Not saying it is “The Top” for the dollar or “The Bottom” for Gold, but I don’t think the move in Gold is quite over yet. For the miners it is certainly a stock by stock situation right now so I am selective by weakness and selling strength when it happens.
In other news, uranium spot is currently pushing its 30 month high.
http://data.tradingcharts.com/futures/quotes/ux.html