Saturday, 12 January 2013

The Man Who told them Gold had further to fall

It's a tough job but someones got to do it!

 I have been beating the drum about gold since price ran out of steam (energy) last Winter of 2012 and made a third significant 'lower low' pivot completing the start of a topping out pattern. The simple fact is that gold has risen near vertically non stop since 1998 when it was about 260 bucks/oz and as yet no significant retracement has occurred. It's not until you take a look at the monthly charts and realise how fast and quickly we have come from 260 to 1800$ . What has consistently amazed me is the pure blind faith people have in such a precious metal and the spurious fundamentals that are wheeled out and trotted out at every opportunity and that everyone on CNBC et al who's been pumping & hyping up Gold had done so for a commercial reason. Nothing wrong with that at all in my opinion and we all tend to be bullish about our own products, ideas and identities as long as you take them with a pinch of salt. IE not take them too seriously, and thus you don't need to be a genius to see through the hype and the sales pitch. A detailed technical analysis of the charts and in particular the recent price behaviour reveals profound weakness. My analysis is purely based on reaction and median line analysis and observations and studies of price behaviour within that context of linear analysis. If you then add into that the  psychological aspect of the 'herd' mentality mentioned above it merely reinforces a sound technical presentation.
 Do i have any worries about being bearish. Of course I do as I can be wrong (and usually pay for being wrong) and I am always reminded of what i call 'feint trends' often seen in the early part of any year which can then turn out to be false breakouts. I would have no hesitation in correcting my viewpoint should the picture change and look for long opportunities should it be appropriate but as things stand today this market looks very skittish. However I would become increasingly worried if we had not made a new low pivot below $1545 within the next 3 to 4 months. If you use another detailed technical skill such as Elliot Wave Theory you still arrive at the same conclusion if you are (and remain) objective about this market. I do not care if it goes up or down as long as I can make sense of the data/charts.  Even the study and observation of what is called simple 'price action' ie bars and candles (or whatever data presentation you use) reveals current weakness.
So I suspect that a few more weeks of this and we will start to see quiet long liquidation and trimming of large trade and professional (funds etc) positions and a switch in other asset classes such as equities.Yesterday there was a rumour that the SNB was selling gold. The evolving relationship between central banks and gold and the discussion related to it is guaranteed to either send me to sleep or irritate me due to the spurious macro economic argument's and assumptions people make on this subject. However the correlation between equities and Gold is far more important and has changed and was mentioned in this article last summer and was sent to me yesterday by the author in response to another bearish presentation I made.Recent observations (in low time frames) on Gold can be seen in previous posts this and last week.

Links from early 2012 starting with double top trouble:

 Recent links form the last few months:

If you would like to recieve a free PDF showing our current detailed technical arguement for lower Gold prices the please follow this link:

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