right here, right now... gold

"Right Here Right Now", was the smash hit of Jesus Jones. They were among a handful of odd groups in the early 90's; not American enough to be grunge, not electronic enough to be techno. Jesus Jones rode a sort of fading post-new wave tide into the horizon, never to return to the scene.

Right Here Right Now was the theme song of Hillary Clinton's presidential campaign. While Americans were chanting "Yes We Can", more than a few weary democrats and liberal-thinkers were experiencing a deja vu of sorts. Gold seems to be at the precipice of something that I loosely define as a Right Here Right Now moment. Looking at the chart I cant help but be filled with bullish enthusiasm, all the technicals, moving averages and trend lines appear to be in place for a push forward to and beyond $1000.

I use the Money Flow Index rarely, perhaps only because I so rarely see it featured in discusions of technical analysis, but I think recent developments warrant consideration of what has registered on the Money Flow Index at 2 different time frames (14 and 21).

The OBV indicator is best restricted to breakout's from consolidation patterns (imho), otherwise it gives a host of false flags and divergences that never seem to match subsequent price action. We see in a 1 year chart of the GLD the OBV like the current price action is up against a critical resistance point. The direction has a bullish inclination but has yet to be decisively broken to the upside. The recent recovery of the US Dollar from week's plunge below .82 on the index reminds me that nothing is ever a sure thing, especially in gold and in early 90's one-hit wonders.


Good Luck gang,

J

A tale of two cities?

Bonds, having fallen through support in such a short period of time has drawn the attention of not just gold-bugs but the powers that be, who couldn't permit a free fall in US debt. No, a nice gradual cooling would be the politically expedient thing to do. A bounce back towards the 100 level in the TLT at the 200 SMA which will soon flatten while the 50 and 100 SMA's look to cross downwards is a classic short set-up. (That is for those confident enough that the Fed will not announce further rounds of QE in an attempt to goose the market)


The inverse or short EFT the TBT is flashing all the tecnical signs of an interm top:

Sto, RSI, MACD turning down on fairly strong volume after a test of the 200 SMA. The 50 and 100 SMA's are curling up nicely and correction down into the 45-47 range is not out of the question. The first shot across the bow is TLT 100, while the war begins at 105 where any advance from there would reassert an intermediate uptrend in bonds. Gold $1000 does not appear in the cards until bonds can fight it out.


good luck,

J

Gold at $1000- then and now

Gold first moved above $1000 in March 2008. The chart below gives us an interesting perspective on gold then and now. Specifically note the arrangement of the simple moving averages (SMA) at the time gold crossed above $1000 in March 2008 and in February of this year.

Too many gold newsletter writers got caught with their pants down predicting the end of the financial world in March 2008, urging readers to get on board and buy gold. The ensuring correction made fools of most of them. As gold moved aggressively above $950 I noticed several gold bug's alerting readers that gold had moved too high too fast and that caution was in order. I think these predictions are self-serving more than anything else. The technical picture is nothing like it was in March 2008 for Gold, and I suspect they will be the first to trumpet their cautionary calls should gold correct down anywhere below $950.

Gold may just crash back down to earth in the event a bank-bailout proposal is viewed as viable by the market, and a perceived stability is entrenched in the public's minds as they abandon safe-haven buying of treasuries and gold. But the alternative is equally troubling for gold bugs: What if all the cautionary tales are just that? Tales. Being stung so often by gold's oxymoronic behavior, are those most vested in gold about to sell the first sign of weakness and miss a much larger advance? Will the oft-predicted explosion in the gold price that catches both shorts and those in cash by surprise come to fruition?

The technical picture is looking better each day fo gold and even the gold shares. But Im suspect of relying soley on TA at this time considering the magnitude of the markets structural problems that we are only topically aware of. What lies beneath multiple levels of bank assets is a mystery to all but the most well studied and informed, and even they seem to be either quiet or confused about the implications.



Contrarians were a popular bunch for some time, and many still profess to be contrarian without realizing the irony inherent to associating one's self with a group that is supposed to move against the herd. Contrarians are becoming a herd unto themselves. Citing examples of gold reaching saturation levels in the media are generally baseless. There have been ads, commentary and discussions of gold for years on both the mainstream and alternative media sites.

The chart below gives what I believe is the best snapshot into the popularity of gold at any given time. Quancast.com provides hit counts for various websites, and Ive posted the daily hit count for the most popular gold site on the web: Kitco.com. Traffic to Kitco has only modestly increased as part of a general uptrend since the end of 2008. This tells me that there is no "gold-fever" per se in the media other than the "cash 4 gold" ads during the Superbowl.


Its always difficult to call considering gold has moved above $900 so quickly. Talk of "momentum" buyers or of "sideline cash" moving to gold have no basis in reality as there is always a seller for every buyer. Momentum studies tell us how the chart is moving but not how long it can continue in any particular direction. Crossover's occur quickly on many indicators and only look prescient in hind-sight. The TA for gold does show it is extended in many ways, but not in others on a comparative basis. Its been 1 year since gold last kissed $1000. It would seem too easy to expect a pull-back from the prior highs simply because they were the prior highs. I also suspect it would be too easy for gold to pull back from here and take a short rest prior to another advance. That is what many expect and that is why I dont believe it will work out as neatly.

Should the US Dollar continue its slide downward that began late last week, golds behavior will give us an illuminating sign of whats to come. Gold has advanced in the face of US Dollar strength for long enough this year to suggest a massive change overhead. Will it advance against US Dollar weakness?

If it does, then Jim Sinclair's recent prediction may well come true sooner than later:

The third time above $1000 means $1650 and I believe that Alf will take the award for being most correct.

The following is the schedule for Gold:

Gold will try $1060.
Then $1224.
Then $1650.

Its going to be an interesting few months ahead.

Good luck,

J aka dr. cosa

GDX 1 year TA

1 year chart of the Market Vectors Gold Mining Index (GDX), click below to enlarge:

Gold Miner's (GDX) Technical Analysis

TA for the GDX shows some interesting developments the past week. May 22nd I posted this 1 year chart of the GDX.

Since then the GDX fell with the POG registering multiple positive divergences, and some interesting Fibonacci retracements make a case for an intermediate term low having already passed.

J

US Dollar Index Technical Analysis

1 year chart of the US Dollar Index, shows some negative divergences alongside a rising trend chanell and a possible intermediate term base forming while gold gets hammered below $880 at the moment. The index may trend up but it may do so on increasingly weaker technicals, making the sustainability of any rally questionable.

My May 24th, 2008 chart of the GLD noted a potential fall back down to support levels below $90, thats happening now due to the recent weakness in crude oil and bounce in the US Dollar. The longer term picture remains unchanged on a technical basis for the US Dollar's down trend.

J

Gold Technicals (GLD)

TA for Gold using a 6 month chart of the GLD notes a possible downward move to towards a new uptrend line and bullish divergence across the charts.

J

Gold Miners TA update (GDX)

Update of the Gold Miners ETF (GDX) today highlights the recent breakout from the spring lows. J

Gold Technicals (GLD)

1 year chart of the GLD. Jim Sinclair has called a bottom in the gold price since last week. If this does prove to be the near-term bottom, the falling wedge on weak volume and some bullish divergences may be signaling the next leg up.

J

Weekly Gold Chart Review

3- month charts of the GLD, GDX (Market Vectors Gold Miners) and XGD (Canadian Gold Miner ETF)

New uptrends appear to be in the making but downtrend lines on all 3 charts must be pushed through convincingly to bring increased interest back to the gold market.

J

JR. Gold Miners vs. Gold ratio

The ratio of the Jr. gold mining shares (represented by the Venture exchange: CDNX) and the price of Gold (GLD) looks to be base-building and signaling a possible reversal of it's year long death run that has seen Jr. Mining stocks suffer while gold reached multi-decade highs.

J

Why the XAU is not a pure gold stock index any longer

Below you will find today's TA on the HUI gold bugs index. The HUI represents unhedged gold producers, while the XAU Philedalphia Gold and Silver Index represents a broader range of precious and now base metal producers. After reading the comments made by Frank Barbera I have stopped looking to the XAU as a measure of gold stock performance as its largest holding is more of a copper producer than gold.

The HUI chart below highlights the peak reached in the May 2006 run up which we are approaching at this point, along with various trend lines that may become more significant going forward. These multi-day plunges are painful for gold stock investors and there may be more to come in the upcoming weeks but this drop is still no where near exceptional.

copied from http://www.billcara.com/:

Frank Barbera: $XAU: $HUI

The good folks at the Philadelphia Stock Exchange decided awhile back to include Freeport McMoran Copper and Gold (FCX) within the XAU. Their argument was that FCX is a major gold producer, --period. However, FCX also produces a lot more Copper then Gold, with up 85% of the companies revenues coming from sales of Copper. Thus, FCX is more a Base Metal stock, then it is a pure play Precious Metal stock. What’s more, FCX trades precisely along the same lines as other big name Base Metal stocks like BHP Billiton (BHP), RTZ Corp (RTP), Teck Cominco and Rio Dulce (RIO). It trades in a very different pattern then Gold Stocks and as a result, we would argue that it should not be included in the XAU or any other Gold Index.

Well, that argument has gotten us no where despite many calls to the PHLX. What is important, is to watch FCX as it presently accounts for 22.34% of the total index, by far and away the heaviest weighted component of the XAU with Barrick Gold currently at 18.29%, Newmont Mining at 9.95% and Goldcorp at 14.05%. Essentially, FCX is worth GG and NEM combined! Since April 1st, ABX is down from $41.92 to today’s close of $40.80, NEM is down from $44.80 to today’s close of $43.85, and GG is up slightlyfrom $37.46 to today’s close of $38.44.However, since April 1st, FCX is up 25.64 dollars per share, from $97.63 to a high today of $123.27, for a percentage gain of 26.26%. Since every one dollar in FCX stock kicks in 2.85 index points into the XAU, the 25.64 point gain in FCX has added 73.25 index points into the XAU since April 1st.

That is huge! And that is why the XAU is holding up much better then other Gold Indices, for the simple reason that since the beginning of April, FCX has skewed the XAU sharply to the upside causing the index not to reflect the real sideways action which has taken place in precious metals mining stocks. We can see all of this graphically on the charts below, with FCX moving to new all time highs and in the process skewing the XAU to the upside, with a super bullish bias.

If instead of the XAU, we use the HUI – Amex Gold Bugs Index, or the GDX ETF, which tracks the MarketVectors Gold Mining Index, we see that both of these other indices are now fully back to the March and April lows .

Canadian Gold miner (XGD) updated chart

The XGD has plunged from its recent bounce with spot gold falling below $900 this morning. Just a theory that a possible patten may be developing:

Any thoughts or comments are appreciated.

J

XAU 1 year chart

Here is a 1 year chart of the XAU with notations. Within resistance and support lines lay an upward drift pattern in the making. With gold below $950, watch for a violation of the lower trendline in the drifting pattern.

Your comments and observations are always welcome.

J

Gold Miners (XAU) vs. Gold Bullion

Here is a 1 year chart of the XAU/Gold ratio. A breakout may be in the works, but expect more base building in light of golds recent action below $950. The miners have tended to outperform gold on the upside the past while but the general trend has been down for some time.

J

Neptune Tech Bioresources (NTB.v) Update #2

My April 5th, 2008 chart of Neptune Tech and Bioresources (NTB.v) highlighted a potential breakout. Here is an updated chart with notes. Next week's action should give me a signal to either add to my position on a confirmation of a break-out or if this is just another fake-out.



Heres a link to what several Canadian analysts think about NTB.

I currently hold a position in this stock, this is not financial advice. Do your own DD!

Your thoughts and feedback are always welcome.



J