Friday, April 5, 2013

We update our forecasts one predictable leg at a time, with targets that tend to work very precisely. (Click here if you'd like to verify this claim for yourself.)  And while gold may indeed be on its way to $5000 an ounce eventually, as some believe, or to $1000 or lower, as others are predicting, we find it more useful to traders and investors alike to focus on realistic targets and shorter time frames. Ultimately, no matter how compelling the logic behind a forecast, none of us can truly "know" where gold will be trading in six months, or in a year, or a decade. What we can know -- in this case, with about 90% confidence -- is that the June Comex contract will soon be banging on the 1487.90 (this corrects chart error) we've been drum-rolling here for a while.  We should also allow for a possible counterthrust from 1495.80.  This number is not a margin-of-error alternative, just a lesser 'Hidden Pivot' where bulls could conceivably dig in their heels. The coordinates yielding the higher target are shown in the accompanying chart, along with a corresponding 'midpoint support' where price action thus far has more or less corroborated the accuracy of the lower number. Will 1485.60 be as bad as it gets? Although we can make no guarantees, it looks like a compelling spot for buyers to arrest a bear cycle that has been savaging long-term investors since early October.  Another possibility is that the target, a Hidden Pivot support, will get steam-rollered by the decline. This would imply, not that the pivot didn't 'work,' but that the selling was strong enough to overcome it.  Our new target in that case would be 1414.50, and because it is the terminus of a bearish pattern even bigger than the

[We'll finish out the week with the commentary below, since it has generated such a lively response.  If you're interested in Bitcoins, a popular form of digital currency, be sure to click on the link beneath forum remarks from 'Robert' on the subject. It will take you to Max Keiser's web site, where the discussion really took flight.  Regarding gold, this week's price action has left me quite confident that the Comex June contract is on its way down to at least $1487. However, although I have plenty of company in the bearish camp, I don't see this selloff getting much worse than that, at least for now. A detailed technical assessment is contained in a trading 'tout' for June Gold that I have made publicly accessible below. RA] With a scary bank crisis in Cyprus driving the headlines a couple of weeks ago, gold could barely muster a rally. Notice in the chart below that the high of the move failed to clear a minor peak at 1619.70.  Had it done so, we would have given bulls a fighting chance, since it would have created a bullish “impulse leg” with the potential to power quotes as much as $120 higher in just a few weeks.  Instead, buyers showed themselves to be gutless, allowing the April contract to relapse down to within inches of the lower trendline. It could hold, but we doubt it. [Note:  I have updated the chart to show that the breakdown we'd expected has in fact occurred, and decisively.] Still worse is that a breakdown is likely to send the futures down to at least 1553.50, a Hidden Pivot support identified here a couple of weeks ago when the futures were trading above 1600. If that “hidden” support should fail as well, look out below, since