Within the next month, it seems likely that gold will rally back to 1680 and silver to 31. Important dates to watch are 25 January 2012 and 13 March 2012, because those are the next Federal Open Market Committee meeting dates. The market treats the Federal Reserve's quantitative easing as the 'fundamentals' of gold and silver. Actual physical supply and demand doesn't seem to matter to COMEX traders, especially with silver. Silver is treated as an abstraction. The market does not seem to understand that government criminals will always inflate by printing more currency. There will never be serious deflation, only deflation scares. But my worry is that the Fed, which will have more dovish (in favor of QE3) voters in 2012, will once again not explicitly announce QE3 in January. The market could then panic out of the metals, breaking their three-year channels. Gold could fall to ~1275 and silver could fall to 18-20. The HUI would get hit even harder, since it would probably drop down to 300 or less. Eventually, though, people will remember that governments are going to default on debt.
Technically and fundamentally, however, the bull market shows no signs of being completed. When you look at gold and silver long-term charts in log-scale, the 2011 parabolic moves up look typical. There has yet to be a real mania phase. I have read a lot of very good mathematical analyses on gold and silver by people like Alf Field, Jim Sinclair, and Martin Armstrong. Fibonacci numbers (like 5, 8, 13, 21, 34) play a major role in gold's moves. I do believe that there is a good chance that 1523.90 and 26.14 were a major bottom (or close to it since 1478 and 24 are possible still) in gold and silver. Silver has bottomed four times at 26. Pessimism is at extreme levels (see $BPGDM chart near 2008 levels, typical of wave C down). Thus, we are still in Elliott Wave III (up) of the overall bull market. This correction could actually be only Wave 2 down within the overall Wave III up. The bull market has a long way to go.
Gold Elliott Wave Count
WAVE I MAJOR (2001-2008) - 255.80 to 1033.90 (+304.18%)
1 - 255.80 to 384.50 (+50.31%)
2 - 384.50 to 320.10 (-16.75%)
3 - 320.10 to 728.00 (+127.43%)
4 - 728.00 to 561.50 (-22.86%)
5 - 561.60 to 1033.90 (+84.1%)
WAVE II MAJOR (2008) - 1033.90 to 681 (-34.13%)
WAVE III MAJOR (2008-?) - 681 to ?
1 - 681.00 to 1923.70 (+182.48%)
2 - 1923.70 to 1523.90? (-20.78%)
(FUTURE POSSIBILITIES)
3 - 1523.90 to 4999.00 (+228.23%)
4 - 4999.00 to 3800.00 (-23.98%)
5 - 3800.00 to 9000.00 (+136.84%)
WAVE IV MAJOR (2016?) - 9000.00 to 3800.00 (-57.78%)
WAVE V MAJOR (2016?-2020?) - 3800.00 to 11025.00 (+190.13%)
1 - 3800.00 to 5900.00 (+55.26%)
2 - 5900.00 to 5000.00 (-15.25%)
3 - 5000.00 to 9000.00 (+80.00%)
4 - 9000.00 to 7200.00 (-20.00%)
5 - 7200.00 to 11025.00 (+53.13%)
Disclosure: Long physical gold/silver.
Silver is frustrating me. I'm just going to ignore it until the boom occurs. And it will. I also must admit that your many graphs and "inside terms" are going over my head.
ReplyDeleteI also notice that a football post has disappeared. :( Tebow is going to be buried by James Harrison the Anarchist.
Silver's 'problem' has been gold's unusual, huge parabolic move. When gold goes down, silver goes down harder. Now that I think about it, the banks probably didn't "let gold get out of control." I think they intentionally let it go wild, because a move from 1500-1900 doesn't hurt them much. But JPM was getting killed on its silver shorts. They really were afraid that they couldn't stop it. I know "it's never different," but I am certain that they used every trick in the book to reverse silver's move up. They couldn't deliver the physical silver. They've used gold's reversal downward as their chance to finally cover those silver shorts. The latest silver COT indicates that they don't think it can go much lower.
ReplyDeleteIf you want to buy silver at the lowest price because you know it's going much higher, I'd start buying at 24-26. But if you want to minimize downside risk, wait until it breaks above that line downtrending from 50. It's currently at 38 and will most likely move above that line sometime this year. The metals offer the best combination of safety and upside potential.
After the September plunge I became determined to master the art of technical analysis. I will explain whatever you wish me to.
Every gambling post is gone. I'm not gambling anymore. There is something psychologically wrong with me. I was at like 57% for four years and then this year I was like 40%? I don't know. I've been depressed for like seven months. I'm happier in Phoenix and I do have a number of friends that cheer me up when I hang out with them. What's odd is that I'm still very self-confident. But I just feel... doomed? That's probably the best word.
I also would like to express that both you and Z. bullshit me a lot. In the past I was more amused than anything, but now it's just repulsive. I know you respect my intellect but I would like you to respect me on a personal level as well.
The game against PIT actually seems like a typical Tebow game. PIT's offense hasn't been good lately and their rush defense isn't as good as previous years. Could be a 13-10 game.
http://i.imgur.com/s5Q0U.jpg
ReplyDelete