31st May 4:38pm update I was asked about the FML sell off at the end of trade today; here is my answer…
“Same thing happened in SAR yet a buy in RSG on the close took me by surprise – I took yet another profit at 78.5c up 2.5c on the close. Sell off was extreme in SAR too and I can only gather that was book re-balancing by a large player or two.”
31st May gold broke 1400 and came back to test it. Ultra-short-term it will soften here and take a bit off the XGD however we are bouncing confirming the buy divergence. I am going to lighten but this may bounce for up to two months. June is usually soft here on tax loss selling which will mute any progress.
I am upgrading the Ratings Tables today and will deliver ASAP.
Noon update gold did lift and so it lilfted the gold sector this morning. Gold has now hit minor resistance at 1388 and fallen to minor support around 1383.4 which has taken some of the steam out of the XGD again now.
10:13am update gold has been stuck just above 1380 for 5 hours and looks ready for a lift short term rather than a failure according to the intra-day charts. Any bounce on the XGD (showing potential buy signal NOT confirmed yet) has resistance above at 3137. Please note my concerns below.
29th May pre-open the Dow is going up for the wrong reasons be CAREFUL this is a very dangerous market. The bond collapse last night in the US was extreme with the 10yr yield rising 8.29% to 2.1679. Money flows to stocks as I predicted at the end of 2011, the effect is in full force and the flow to the US also pushing USD up. This creates downward pressure on gold and the AUD. Gold is stuck between 1380 and 1400 short term. Deeper support at 1360.
Armstrong has reported “There is absolutely no choice on the table but for a debt â€œrestructuringâ€ of Southern Europe and that is in plain terms a partial default. This week May 20th, the decision was really reached behind closed doors that a massive debt â€œrestructuring:â€ is now being prepared by the EU”
Editor: You can now buy a Euro500k unit in southern Spain for Euro100k – 100% financed by the bank selling the asset. This is done to shift the asset off the bad debt column to avoid collapse of the bank this is getting desperate. This is like the prelude to Q3 2008. I am trying to work out what this does for our gold stocks and finishing off the Ratings tables for you all now.
24th May 3:42pm the pros are closing the market. XGD same pattern as Tuesday and XAO oversold showing technical signs of a need of a bounce. I am paying close attention to this and ready to pounce for the Funds if I get confident enough. Gold looks like it may not break over 1400 tonight and may test 1360 again.
23rd May pre-market: On the Fed speech for gold and XGD – It is pretty neutral in a sense, from Bloomberg – LTG Goldrock director Andrew Barnett said:”It’s not so much a drop in the Aussie dollar but a sharp rally in the US dollar because the market is pricing in that tapering as a virtual certainty by the end of the year,” he said.
My comment: That is based on jobs growth in the USA which I do not believe will be as strong as they think but any improvement will cause the taper of stimulus. So AUD down good for gold stocks and Australia, gold sort of neutral because no change at present except that stronger USD. The numbers over coming couple of months will still be choppy so business as usual for gold as we find it right now in this correction phase.
22nd May thank you for the feedback on my call on the 20th and NL81. Gold was oversold, too many negative and the bounce yesterday was a short covering. It bounced too far too fast on the day and had to cool but I think short term we will see more upside.
The Dow will keep going because there is no point being invested in quality fixed income as one Fund manager put it. I agree and his comment was that the alternate is to be largely in cash with the rest in high risk. Once the media is stating that shares are up all the time and get really positive we will have to start to worry. For now the only gold stock worth trading here is RRL and our XAO will continue to be bid. You should be holding cash like FundA and B, I still look forward to an exit opportunity.
20th May the XGD could find important support here and on a buy divergence IF confirmed. This indicates a bounce is quite possible and RRL may be providing early warning this is on. I have a full report in NL81 due out by 5pm tonight.
17th May In response to a client question on who is behind the gold price fall – “I stated (when GSucks stated “stop shorting gold”) that the big boys would short again on the short covering and push it down again. What a great little earning tool for them. All justified as “trading” and technically they are correct. Perhaps Martin Armstrong is correct in that gold trades technically not on fundamentals.”
We closed under 1390 on gold overnight however I may have been taking the fractal too literally. I wait and see how this pans out we could still fall to new lows in the coming weeks and still fit with this due to the % falls being less severe than in 1975 at this stage. More on this in NL81 under construction.
9:30am update the fall on the fractal pattern in 1975 was 22% of the sharp drop and off 26.5% on the main fall. The main fall this time was only down 18.5% to 1320 and a 26.5% fall would take us down to circa 1190.7.
16th May I worked all day yesterday on a budget commentary and new Newsletter.
Overnight gold just fell onto a rising Bollinger Band on the daily chart so this might hold. The fall from 1485 is also an ABC move now equal magnitude for A and C. This must hold or I have misinterpreted the pattern, perhaps too literal. I still believe this is OK within my self similar pattern but deeper than expected. I nibbled at my first trade to test other systems yesterday and not stopped out yet. If I am wrong it falls below 1320 and this point.
8th May I just finished Newsletter 79 and will load it shortly. Gold is still following my new thesis perfectly with possible a little lower to fall short term followed by an attempt on the 1500 level – that is if this pattern continues. Deep time studies and a new push on education on technical research is now commencing in the Newsletter.
RBA now signalling they could not talk down the AUD and are getting desperate. Our economy is faltering and they are very concerned. They made the wrong call post GFC to start raising rates based on GDP which is a flawed model for real growth as I have explained. The elephant in the room is the unemployment cycle which is running exactly as I predicted in past newsletters.
9th May construction now down for the 35th consecutive month and the RBA starting to wake up that they are charged with economic stability. I am still gob smacked they have been more concerned with inflation as the world, banks, corporations and individuals delever.
Question from a client: What are your thoughts on SBM? Is there problems within this company or just been sold off due to gold correction? Seemed to have bounced off 51c, Do you think this company is severely oversold?
Answer: I believe the sell off is due to gold and also their Pacific operations; formerly ALD. The market viewed this as a pig of a deal as costs were high – no full disclosure either as things were worse than factored. All gold stocks with a margin are ‘oversold’ at these prices, as lower were factored in on the POG. Market got ahead of itself and panicked. This is why I have not sold much in the way of Fund positions as yet. I may be wrong make your own calls as always. I see a modest recovery and then further falls. A few buy divergences forming and sell-offs less severe on drops in the POG.
2nd May 9:10am will clean this area up today. The pattern is still playing out with considerable accuracy in gold and if this continues this will take 2/1 time for this is the compression factor I had to use for the chart. Remember I said 70 – 75 was shorter due to the fixed POG – well the whole rally in the 70’s was and this bull is not. I expect up to 20 years of bull market now after time studies – the overlay is 12 years of this bull market against 6 in the 70’s. SO the launch of the next rally is two years away. The stocks may launch earlier but only by months. The volatility will be high so I can assist you with valuable trade opportunities and guidance + further education, even diversification strategies if you want to stick around. I hope you do I have a great deal more to share.
6th May we seem to be setting up a similar pattern to the March time period this year. I base this on RSI action and price. This can last over the next four weeks however it is a high risk trade to enter. This fits perfectly with my larger view and should provide some calm exit points so I can lighten up further on the gold stocks. Woolworths is on a sell divergence and can run to a double however I expect soft conditions into the end of the financial year.
1st May 9:45am FML report worse than I even thought but it is clear there is some large player with faith going by the depth. They have enough cash to get through this gold crisis and it is clear DT means business to restructure FML completely. If the bids remain it will be clear this is being supported and the negative result was fully expected.
Our biggest threat on all gold stocks is the USD and Europe believe it or not. Japan – you would expect them to buy gold as a hedge but they sold to lock in profits same as bonds and down came AUD a little. The flow will reverse back to AUD once profits are locked as they do have to hedge again.
Now like any decent analyst I will be looking at PlanB for gold to see if the first scenario does not play out. Then we watch this unfold and do our best to protect ourselves.
1:33pm update go to news area at the top of Members area. Please see special file I have been working on today as part of the next newsletter. I wanted to release it to you all right away.