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A Warning to Those Grown Bored with Gold

53 comments

I’m starting to warm once again to gold. Like many of you, I never gave up on it, I just grew too bored to care. With the bear market in bullion about to enter its fourth year, who could be blamed for losing interest?  Gold has looked so punk for so long that every time it rallies sharply, I get that nagging feeling, as you probably do, that we’re about to get sandbagged for the umpteenth time.  So why the change of heart? All credit to Richard “Doc” Postma, a friend and regular guest panelist with me on interviews with the (Al ) Korelin Economic Report. Doc, a physician by training, is also an astute investor and market timer. A patient sort as well, he is that rare bird who can watch and wait for months or even years while exceptional opportunities slowly take shape. I hasten to add that on more than one occasion, he has been a crucial step ahead of me in calling some important price swings in gold. Naturally, that got my attention.

He now thinks gold and silver are about to take off — as soon as late September or early October.  The very idea of it caused me to look with fresh eyes at my charts for corroborating signs.  The inescapable conclusion is that Doc is onto something. The evidence is there for anyone who cares to look. For one, bullion continues to hit marginal new lows, but without breaking down.  Rallies have been fleeting, followed by slumps that continue to wear down even gold’s most loyal followers. Most telling of all, mining shares have shown increasing reluctance to give ground on days when demand for physical is weak.

Signs of Bottoming

Although the meaning of these signs when taken together seems clear to me now, I might have missed the big picture had I not sat down with Doc to compare notes during a recent junket we took to a Nevada ore property under exploration by a company called Idaho North Resources (OTC: IDAH). In the course of an extended conversation we had on the flight back to Denver, we discovered just how closely some of our timing ideas match up. He sees gold and silver correcting just a little more before they take off. Likewise, I’ve been looking for at least somewhat lower lows in Comex gold and silver, as well as in some widely watched mining stocks. In one case, Silver Wheaton, a stock that is popular with Rick’s Picks subscribers, Doc’s correction target and mine are just a penny apart.  SLW settled on Friday at 24.73, but we both see it falling by a further $1.00 before it can form a lasting bottom.

But it is the broader picture of a precious metals sector bottoming quietly that is most compelling. This is how bull markets often start.  First, the bear breaks the spirit of even the most steadfast bulls by declining relentlessly for an extended period of time. The dirge is invariably punctuated by strong rallies that raise hopes briefly before dashing them on the rocks with equally sharp selloffs.  When the inevitable bear rallies come, investors have grown conditioned to greet them with a shrug.  Over time, fewer and fewer gold bugs will possess the energy or conviction needed to buy precious-metal assets when they are moving higher. This is understandable, given that all of bullion’s rallies over the last three years have failed.

One of These Days…

One day these days, however – and perhaps sooner than many erstwhile gold bugs expect — bullion is going to blast off and not pull back. Most will take it for just another sucker rally; they will ignore it and brace for the selloff that always seems to follow. Instead, gold will continue on its rampage for yet a few more weeks before it dawns on doubters that perhaps it’s different this time. By then it will be too late for them. Gold’s price will have increased by perhaps $300 to $400 in the space of a month, and any investor who hesitated will be frozen in place, psychologically unable to pay up. That’s because buying on weakness over the past three years has earned them only pain and anguish.

Those who were around when the August 1982 bull  took off with a breathtaking leap will recognize similarities to the current precious metals market.  Back then, in the doldrums of one of the most stultifyingly boring summers imaginable, stocks exploded higher one day for no apparent reason; then they continued to run up…and up…and up, with barely a pause until October 1987.  It is from the depths of such asphyxiating tedium  as we now see in bullion that great bull markets sometimes emerge.  If you are going to be ready for it, as opposed to choking on its dust when it bolts for the blue, you had best do your buying now, while stocks continue to firm up oh-so-quietly above their bear-market lows.

  • Richard Dudley September 7, 2014, 4:59 pm

    Charts and comments by MATRIX aka Chris Sturge former partner of Top Gun Capital Management 1980-1990, with Randy Strausberg, are the most informative I have ever seen posted on this website.

    &&&&&&

    Chris is saying that the Yen/Dollar relationship holds the key to the outlook for gold. It’s an observation that is certainly worth considering, especially since the dollar’s ups and downs relative to other currencies hasn’t much affected gold in recent years. Will he be right? We shall see. But with nearly 17,000 posts logged in this forum since its inception, there have been more than a few gems, including some that went boldly and radically against the consensus and were later borne out.

    Regardless, Chris will always be welcome here. I over-reacted to his use of a pseudonym and apologize. RA

    • Matrix September 8, 2014, 7:22 pm

      Mr Dudley

      I’m not Chris, sorry

      I’m watching $YEN take gold lower as a pure currency trade, no manipulation crap, no evil bullion bankers at work just a pure currency trade, smack $YEN, whack Gold…..just as the run from 2000 to 2008 was another pure currency trade sell the US$/buy Gold and everything else priced in US$’s

      CHEER$!……Matrix Who

  • redwilldanaher September 5, 2014, 6:02 pm

    Off topic Rick but supports the main points we’ve been making, with the exception of the seal…

    http://www.marketwatch.com/story/the-american-family-makes-200-more-a-year-than-it-did-in-1989-2014-09-05

    • redwilldanaher September 6, 2014, 6:44 pm
      • mario September 8, 2014, 4:20 am

        That’s an incredible, simple reality. Central banks are stock market customers. Such is not a mere short term blip.

        Now that that is definitively the case, the new state of affairs in the global economy, one would be remiss to shift their thinking, to consider the longterm ramifications, both in terms of opportunity and danger.

        Cheers, Mario

  • Andy Gutterman September 5, 2014, 2:43 pm

    Yesterday gold rallied up to the trendline it broke down through on Monday, then closed down near the low for the day.

    Another attempt today, with the anemic jobs report?

    In classical TA what was once support is now resistance.

    Interesting to watch the tug-of-war between bulls and bears.

    There are a LOT more public bulls than bears, from reading Kitco and other sites. Almost every article I read says we go up from here.

    I disagree.

    Andy

  • mario September 5, 2014, 2:15 pm

    Meanwhile…. Confirmation of the American middle class raw deal…broke’r than ever…

    http://www.marketwatch.com/m/story/the-american-family-makes-200-more-a-year-than-it-did-in-1989-2014-09-05?pageNumber=2&allPages=False

    • gary leibowitz September 5, 2014, 7:33 pm

      All true and as I have touted for years — no, decades. The solution certainly isn’t to cut off the poor and allow them to die off. billions cut for food stamps is ludicrous to solve the problems. it does however show a glaring response by government when the SHTF. Political expedience is always to cut off the people that don’t vote.

      I still ask the same question yet have not once gotten a response. Namely how would the world look today if this government didn’t cater to the middle class and poor with all those wasteful social programs? Will government debt be cut or redirected? Even if this government had a fraction of its debt on the books, will it help the private sector get greater wages and standard of living? Will the economy surge or die? Surely the last 6 years gives us a clue to the answer. Corporations have reaped huge profits on the backs of its workers. 6 years later, record profits and margins, yet wage growth and job growth is anemic at best. the truth is exposed for all to see, if we wish to. Give the power back to the people with fair just laws and regulations. No one can dismiss the huge disparity anymore. it is exposed but not recognized enough to elicit a reaction from the public. We tend to attack the weakest growths first. When they are beaten enough people must move up the ladder for answers. Food stamps cut by the billions in an economic calamity that everyone here states is happening? is that logical or an affective way to control government spending? Hit the hardest hit first? I would think the exact opposite would be needed, but hey I am already labeled a bleeding heart liberal so my voice doesn’t count.

      • redwilldanaher September 6, 2014, 2:11 am

        They’ve reaped huge profits with the strings of those they control, the “authorities”, the fraud/fed, and virtually everything else. If you can’t spot the kleptogarchy that has you by the scruff maybe you need to change your perspective…

      • mario September 7, 2014, 3:39 am

        Hi Gary,

        First of all, actually I would be surprised if anyone here disagreed with your thoughts in this reply.

        Secondly, I might suggest the huge disparity IS already exposed and has been all along and that the lack of a reaction from the public as you suggest is part of how they have been decimated. I mean to say, for example, I have become a bit of a “fatalist” or perhaps moral relativist or defeatist. When I see things happening all around me I take the time to note whether or not I could do a damn thing to change them. And I’ve come to find that I simply can’t. That’s also part of what the oligarchs do, how they arrange and structure and manipulate everything, so that they take from you, game the system in a way that favors them, and in a way that leaves you honestly powerless to do a damn thing about it. And so in the end the common man is left with “why bother?”. He is defeated. One should never subscribe themselves to being defeatist as a broad philosophy of course, but when facing a variety of circumstances, one needs to be a realist. Again. Naomi Wolf points this out very well in her book “Give Me Liberty” about the U.S. political system. They have insured that the structures and laws have summarily locked out the common man, while maintain the illusion that they haven’t. Its all quite despicable. A person might retort “No, we CAN go out and vote.” My reply to that is, no no no, that system has also been corrupted as we all know by special interest parties, oligarchs, lobbies and their money, severely distorting the original intent of the voting democratic system. It has been recognized that the system as originally created and intended is no longer, it has been summarily dismantled. And I for one couldn’t agree with you more. Better and better and better for the oligarchs, for the corporations, for Wall Street, screwing the common man, and then our political leaders come along and say they want to actually “cut” benefits to the people who now need it. Those folks, around 150 million of them, have indeed been marginalized, it is the greatest societal schism of our time.

        The situation is so bad, the unfair collusion between the oligarchs, banks, the Fed and govt, that I recall Rick pointing out a while back that even if we started fully taxing the rich, the amount of collected taxes would not come close to putting a dent in the deficit and debt levels which now exist. Then entire system is now at the mercy of unheard of trillions in debt and those in charge whose response is only to continue serving themselves and those with money. Sad state of affairs for America in this respect. I won’t end by being so one-sided negative; besides all these issues, there are bright spots of economic growth, expansion, and development; I’ve mentioned them in many previous posts.

        Cheers, Mario

    • redwilldanaher September 5, 2014, 7:59 pm

      Ha! Just realized that you beat me to it Mario!

      Good work!

    • redwilldanaher September 5, 2014, 8:09 pm
  • Stephen G September 5, 2014, 5:17 am

    Like clockwork considering the POG weakness this week, Goldman Sachs comes out with a fresh $1,050 target by Dec. 2014 to pound it down further.

    Funny how they never have the guts to make these calls when gold is on an upswing.

  • Matrix September 5, 2014, 4:43 am

    Rick I hope you adjusted your low tag buy opp with Gold, I got $1258.10 so far this eve….a mere .20 off your mark @ $1257.80

    If gold is going to put in a bounce off the NFP would be the norm, check out Gold’s reaction YTD off NFP…a reaction from the US$ to a disappointing jobs data would reverse the Euro and more importantly $YEN

    NFP reaction 2014
    http://tinyurl.com/mwr4ubc

    Good Luck!

    &&&&&&

    Subscribers are reporting in the chat room that they did in fact get aboard near the low using the 1257.80 target, Matrix. I’ve just recommended that they exit half the position on the so-far $10 rally, and that they tie the remainder of the position to an ‘impulse leg-based stop-loss’ on the 15-minute chart. In practical terms, and at the moment (8:38 a.m. EDT on Sep 5), that would take an uncorrected down-leg exceeding 1263.20. RA

  • Dave Holloway September 4, 2014, 10:47 pm

    I’ve chosen to look at AU from a simple Elliott point of view (if EW is ever simple) and thus am seeing a 4th wave triangle that should most likely yield a sharp 5th wave thrust to the downside.

    If that is the case I’d suggest having buy orders to own or take profits on shorts at some deep objectives. You may wake up some morning and most of the flush already over in the London morning session.

    As a sage old trader told me many years ago, you can’t fill orders that aren’t in the deck.

    &&&&&&

    Thanks, Dave. Although I’m not looking for a horrific washout in gold, I would never ignore the warning of someone proficient in Elliott Wave analysis, as you seem to be. RA

  • mava September 4, 2014, 8:57 pm

    Fake towers are here for our own best. I find this phrase working exceptionally well for all the issues I have “no need to know about”.

    Back to watching celeb pictures scandal…

    &&&&&&

    How about some links, Mava? Charlize Theron in her bloomers would be a great addition to the site. RA

    • dk September 5, 2014, 1:52 pm

      Well, Bush set the precedent on that, and I’ll never be a fan of being wire-tapped.

      At least you now know what those towers do every time you go by them, because they’re not helping make sure you’ve got full bars.
      Just like every camera, every swipe of the plastic, and even drones from the PD.
      PRISM basically set up, the all-seeing-eye scanning the globe, notice the logo…
      “scientia est potentia”

      “knowledge is power”

      Police now have armored personnel carriers (built for grenades and IED’s) with protective glass that can withstand a 50 caliber shell. How many rounds did DHS purchase over the last few years?

      This is how far we’ve come 13 years.

      For YOUR own best, not mine.

      Millions of Americans will be distracted every Sunday from now until January, and much of the everyday conversation will be about “fantasy” something or other.

      Sweet.

  • dk September 4, 2014, 8:24 pm

    nothing to see here:

    http://finance.yahoo.com/news/mysterious-fake-cellphone-towers-intercepting-162645809.html

    Trayvon Martin. Ferguson, MO now just a couple of weeks old AND we have no borders…

    ..I was away for a few days over the past few weeks, are they still shipping immigrants in from central and south america and sticking them in makeshift “housing?”

    and those ebola infected patients, are we still shipping them in?

    immunization time again, eh? kids back to school…

    the ever developing saga of MENA…
    and youtube showing graphically violent videos of, well, you get the idea..

    Biden: “We will follow them to the Gates of Hell!”
    Huh? What’s this “we” stuff?
    Nobel Peace POTUS goes golfing and on vacation, AGAIN while our country has “elite forces” in 134 countries around the globe.

    America tunes into “The Walking Dead”

    now thats rich…

  • Weston September 4, 2014, 6:56 am

    I’ll go with the odds that mathematics can’t be belied forever. Gold and silver and other real assets will be there when fiat money and the inflated stock market are decimated. I don’t think it’s too far away

    The United States’ ever increasing debt and unfunded liabilities in the trillions (with a “T”) will soon crash. The banking system is not sound. We’re in uncharted waters. Gold charts don’t tell the whole story. Comex is not reality.

    Gold and silver, and other commodities, are not simply lines on weekly chart in which technical analysis can glean the whole story – not at this stage. Markets are too infected and manipulated for charts to be your only guide. Wisdom is needed. Wisdom, discernment, and common sense.

    If gold drops to $1,000, I will only hope I have money to buy a lot of it. It would be a very good buy, even as it is now – if you think of it as purchasing power and not in terms of “dollars”.

    Central banks can’t cheat at mathematics forever. They are seemingly defying the inevitable, but the Ponzi scheme will end. When the music stops, I prefer gold and silver.

  • Stephen G September 4, 2014, 2:53 am

    Rick, you submitted this piece before Tuesday’s plunge.

    With that plunge to the 1,260s, the promising technicals look broken to me and the chart has transitioned back to a downtrend to who knows where. What do you think?

    I do hope you are right though – I’m holding IAG as my largest gold resurgence stock (whenever it happens). Its share price remains stubbornly low at half its book value despite improving fundamentals including a steadily decreasing all-in sustaining cost.

    &&&&&&

    See my latest tout for December Gold, Stephen. The commentary itself allows for Tuesday’s selloff, which I don’t see as significant. In fact, it didn’t even reach the 1257.80 downside target I’d flagged a while back.
    RA

  • gary leibowitz September 3, 2014, 5:51 pm

    A mind altering discussion might be in order.

    Evaluate your MAJOR long standing suppositions over the last 6 years and its progress. This might enable you to decide to accept or alter your assumptions. For instance the global clashes these last 6 years and its long term affect on the market. The catastrophic events, disasters, like oil drill explosion, Japan’s radioactive leak, pandemics, global warming. The domino affect from the global mortgage debacle. Brick and mortar retailers. Web based companies ability to generate profits, such as Facebook, Google, Microsoft, Trip advisor, etc…

    I can’t understand why the discussion is stagnating with old rehash from the last 6 years. This either ignores the current situation, or dismisses it as if its a short term anomaly when clearly it is not. If you can only explain away the bad calls on fake or manipulated data, than that reasoning can apply to all history. Some still insist that the Holocaust never happened and was just a propaganda ploy. Some insist that the world events are foretelling the biblical second coming. It seems easy to work with a fanatical premise that filters out incongruous results. Much harder to reevaluate a position based on cumulative fundamental and technical analysis. Very few of us can accept a hard core premise being wrong and move on. Even the stellar results from some of the legendary traders can be as a result of a myopic view. If a trader believes financial Armageddon is here, and the stock market has started a major bear cycle they would be lauded with all the accolades of a brilliant investor. Someone with a good track record in both market cycles means that they value their “system” over emotionally based opinions.

    Open up the discussion without baked in assumptions. See where it takes you. Do you really need a support group of cheerleaders? Expand knowledge and ideas with open discussions whose premise isn’t hindered by the extreme bias. So many iron clad assumptions already got shattered here. QE, 6 year tripling of stock market, world wide low rates, housing recovery of 6 years, world wide consumer’s insatiable spending. The service sector’s of France, Germany, Italy, Spain and Ireland, as an example, have shown above 50, flat line, for a good part of this recovery. Not something anyone would have expected.

    Just a wild thought. Ramblings from a bi-polar investor.

    • Matrix September 3, 2014, 6:08 pm

      Excellent comment Gary, I think R.A. may even agree with me.

      Traders don’t trade off opinions, they trade off momentum, trends, and price, period.

      Gold is the example with the above article, how many gold bugs have been crushed following opinions vs the trend on the chart…..and so many guru’s love to put up a chart of Gold at $1270 with an arrow going to da moon….that’s not a chartist

      I doubt R.A. was reading opinions when he was a market maker

      &&&&&&

      Correct. I did follow Prechter’s S&P hotline, however, and came away convinced that when he was in his prime, he may have been the best chartist that ever was. Bob Hoye’s guy, Ross Clark, would be a close second.
      RA

  • mava September 2, 2014, 9:51 pm

    Steadfast? Thanks for a compliment, RA! I never thought of three things: letting go, margin and paper.

    I do disagree from everyone here, on the reasons for Gold being down. It has nothing to do with anything real. Not patterns, not astrology, not inflation, not rates. It is simply the child that tells about king being naked, and so the child is having his mouth closed tight with someone’s dirty heavy glove. That’s all.

    The beauty of it, is that unlike as when you are dealing with the real things, here is no doubt that one day, the hand muting the kid is not going to be there anymore. Everything dies, and I am betting on the fact, that the one who’s hand is at work, will die too. Betting on death is the surest bet. It hasn’t failed even once yet. Kind of like putting it on black, just that all black is at the end of the wheel and the wheel stops when there is no more black.

    Enjoyed the article, thanks RA!

    Also looking forward to price drops. Hopefully some folks here are right and significant drops will happen.
    Cheers to that!

  • Matrix September 2, 2014, 8:26 pm

    Rick, may I be so bold to suggest you and Richard are following the wrong road map regarding Gold. Have a [email protected]@K at the following charts.

    1) Gold from 2000-2008 was a pure currency trade vs the US$ devaluation….since Nov 2012 gold’s trend is based off $Yen….Gold is capped as the Yen hits resistance at 99
    http://tinyurl.com/oap7x62

    2) Golds bottom will be determined by $Yens low
    http://tinyurl.com/p6y9aad

    3) For all those claiming attacks on Gold and manipulation, I can tell you the currency markets can not be manipulated enough to change the trend in motion…Gold is trading off $YEN not manipulation….lol
    http://tinyurl.com/ovcvvy8

    So last eve gold reaction and todays follow thru is all $YEN related as gold is trading as currency…..looking for direction regarding long positions in the pm’s sector $YEN should be your first chart, not the US$

    CHEER$!

    &&&&&&

    Yeah, like, whatever. Sounds like you should have your own newsletter, Matrix — unless posting under your own name as I do intimidates you. RA

    • Matrix September 3, 2014, 5:31 am

      ???? sorry you feel that way Rick, no idea where your comment is coming from. Sorry I bothered to post the charts….please remove as they are wasted here.

      &&&&&&&

      Pardon me for sounding annoyed, Matrix, but it rubs me the wrong way when people use a pseudonym to tell the world they think I am wrong, wrong, wrong. If you have strong opinions, why not post them under your real name? RA

      • gary leibowitz September 3, 2014, 4:42 pm

        The correlation between the Yen and Gold is widely followed. I would agree that Gold is not being manipulated and the influence of the Central Banks seem to be over estimated. They hold around 16 percent of produced gold and the Washington Agreement on Gold places a cap on purchases of 500 tons per year for the members. Members being US, Japan, Australia, and Europe. The other factor in all this is interest rates. Low rates are a positive for Gold purchase. Any sign of increasing rates would adversely affect the metal. Only when fear hits world wide would Gold react differently.

        Looks like Gold is right now hitting some major support, and seems to be losing the battle. I have a wide range for the bottom being 1070 – 970. I doubt it goes below that. I also believe it has a decent chance of tripling from the 1,000 mark. My guess is that the real move up shouldn’t happen till late 2016 at the earliest.

      • Matrix September 3, 2014, 5:56 pm

        Widely followed outside of the gold bull camp perhaps, not from the gold guru’s….every downturn is manipulation.

        Oil was whacked hard Tuesday, funny I never hear the cries of manipulation from the oil bulls, lol

        Where gold goes I have no idea, nor does anyone else, I try and keep my ego off the charts and follow the trend in play….if gold is going sub $1000 its obvious even to the blind chartist that $YEN will be atleast 108/92.50 leading the trend as gold trades as a currency not a manipulated commodity.

        Your real move timeframe is inline Gary with Armstrong’s……Good Luck!

      • Matrix September 3, 2014, 7:01 pm

        I apologize Rick for coming across that your wrong, wrong, wrong, I would think regardless if I called myself Santa Claus, its the chart data I highlighted that matters, its all about making money, isn’t it?

        Again, sorry, its your site please remove and ban me from your site….continued success to you Rick and your followers……never intended to insult just highlight a trend the majority are missing…$YEN/$GOLD

        &&&&&&

        Insult? Just an annoyance, Santa. Anyway, I did publish your links, and your idea that Yen/Gold is crucial is as valid as anyone else’s theory about what is going to happen to Gold.
        RA

  • C.C. September 2, 2014, 6:36 pm

    Is there really much more to say than there exists no longer any ‘fear’? One only need be realistic of how thick or thin the layer of confidence is underneath his feet.

  • gary leibowitz September 2, 2014, 5:00 pm

    Gold today is taking a hit. This when everyone is expecting September to be a bad month for stocks. The bulls see a retrace, while the bears see crash. The start of the month is an interesting one. The economic news is preventing the market from falling. Manufacturing is surging, consumer spending near a 5 year high, and construction spending are all pointing to accelerated growth.

    Gold will find it hard to gain traction in this environment. If we do get a decent drop in equities money will flow back into gold. I still expect SPX 2020 – 2070 as being the top of this run. Just based on the last 3 year trajectory of SPX movement, it seems to coincide with end of September or early October. Could be that Gold does find a bottom in that time frame also.

    • gary leibowitz September 2, 2014, 5:06 pm

      BTW, the 10 year note has made a nice reversal today, up to 2.41. I know I have been horribly wrong on its downward path but this spike does show that the current economic news is much better than anticipated. I am a die-hard in that one respect. I still think bond yields will turn higher before any significant longer lasting drop in equities.

  • Andy Gutterman September 2, 2014, 2:50 pm

    Farmer writes:

    “But like a lot of other people who read these pages I have noticed one very interesting thing. While gold is not rising, neither is it falling anymore. ”

    That’s because its in a consolidation pattern. Gold had a big decline, now its consolidating its losses in preparation for the next big move down.

    If this were a true bottom formation you would see a completely different price and volume pattern, with a distinct bias to the upside.

    We are also at a very important inflection point. Up to today price has been trading along the rising support line going back to the very beginning of the bull market in gold. There is a very real possibility it will break through to the downside of this rising support, and close substantially below the line.

    Not a very optimistic picture.

    Andy

    • steve September 2, 2014, 4:14 pm

      I’m seeing a perfect line downtrend starting right around the middle of October 2012.

      • Farmer September 2, 2014, 8:49 pm

        It is quite interesting to me that so many here see a downturn in gold developing. I really did not expect that. Maybe I am going to be on the wrong side of the trade after all as gold rockets skyward. I will add this though, it is worth watching like a hawk. The move, whichever way it goes, could be quite substantial after such a long consolidation period. Cripes, maybe the signal really is telegraphing that US stock markets are going to do a September belly flop face-plant as Rick suggested. Mercenary that I am I won’t hesitate to skip ships and change sides. I hate losing.

      • steve September 3, 2014, 4:37 am

        I suspect gold will turn down. Big suprise. Where I live there will be lineups out the door buying gold, and not the 10k US crud. Where can all this gold be coming from? And how is the price dropping (especially at 8-8:15)??

      • Farmer September 3, 2014, 1:58 pm

        I only offer an opinion, Steve. Not trying to pick a fight. If any of us knew for sure about gold then life would be a slam dunk picnic with lots of leftovers. For now I have thrown my hat in with the short side even if betting against Rick is a bit like betting against the Fed!

  • SA1 September 2, 2014, 10:39 am

    Rick said: “I’ll credit to Richard “Doc” Postma, a friend and regular guest panelist with me on interviews with the (Al ) Korelin Economic Report. Doc, a physician by training, is also an astute investor and market timer.”

    It must have something to do with the diagnostic training they receive in Medical School. Another physician, Layne Hermansen, makes very profitable calls in the Ag commodities, particularly grains. One made me a small fortune as November soybeans fell from 1248, that day’s recommendation to short, to 1020.25 so far (worth over $11,300 per contract if you held which would have been fairly easy to do since price dropped precipitously and immediately). http://www.insidefutures.com/article/1233711/Grains%20Futures%20Charts%20%28Short%20November%20Soybeans%29%20=%20Best%20Investment.html He also called the excellent rally in the near term September contract.

    I like to think that as a pharmacist, I share some of these diagnostic qualities when applied to the markets.

    Now more to the point of today’s commentary.

    Too many, in fact a great majority of investors, put too much faith in gold’s fundamentals. Are Indian’s buying gold for their wedding dowries? Are the Chinese filling there gold vaults? Are Fort Knox vaults empty? Is inflation around the corner just waiting to drive gold and silver higher? Will WW III drive money out of Bonds, Utilities, Healthcare and into gold? As Donnie Brascoe’s Paulie said, “Forget about it!”
    Watch the charts. Fundamentals will be used to explain whatever the charts have preordained. Need proof? Rick gave you a perfect example of this in his Aug 18th ESU14 tout following the 17th’s 24 point sell off from 1960.75

    He said “The punditry attributed Friday’s sell off to unnerving developments in Ukraine, but we know better: Buyers simply collided with some Hidden Pivot rally targets and that was the end of their spree, at least for the time being. One of those pivots, which I’d been drum-rolling for a week, caught the 1961.00 intraday top in this vehicle within a single tick. The night before, I’d advised subscribers to get short there without fear:”

    I have seen this happen time and time again, and Rick has called them like this time and time again. Market reactions (both pull backs and rallies) occur when the chart tells them to. Not when Putin or our own Communist version does something to provoke them. So follow the charts!

    So, oops!, look at the chart Rick posted for gold’s “slumber” highlighted in Yellow. It appears likely to emerge, but in what manner? Bullishly or Bearishly? Apologies, Rick, I know how you feel about Head and Shoulder patterns (their everywhere!!). So,oops again, if they are everywhere, you must be able to see one here, right? And looking closely, you will probably be able to see what “classical chartists call a “failure’: Jeez, I’m starting to sound like those imbecile analysts on TV that can’t say anything without starting with “So”. “So” is the new “like” apparently. Well, if this is a failure, then gold looks likely to “emerge” to the downside. At least initially. Maybe to shake out any remaining tentative bulls.

    Coincidentally, ask three chartists their thoughts on any market at a given time and you will receive six opinions, much like economists. Why?

    Charts are constantly evolving and a chartist’s bias can change based on changing price behavior. This drives fundamentalists crazy. They (the latter) need to get a life! The chartist’s biases will change as our charts change. Call it “chart morphology.” Longer-term monthly chart patterns are comprised of weekly chart patterns, some successful and some that failed — weekly patterns are comprised of daily chart patterns, some successful and some that failed — and daily chart patterns are comprised of numerous intraday chart patterns, ditto. Trading these “intra” congestion patterns/momentum moves requires great flexibility.

    A chartist’s interpretation of likely outcomes is under constant revision, especially during a lengthy congestion. Being open minded is a “MUST” quality for a trader.

    Gold is in a lengthy (4 year) period of indecision (consolidation?). Gold’s decline in Apr created the possibility that it could be forming a H&S bottom. The market bottomed in May and rallied in June supporting this H&S interpretation. After July, it appeared to be a 14-month H&S capable of launching gold higher, but a close below the Aug. low (1273.40) would represent a failure and we are headed to 1063. Gold is currently $4.60 above that level as I type.
    Dale

    • Farmer September 2, 2014, 11:30 am

      Nice post Dale. I agree with your sentiments.

  • steve September 2, 2014, 6:44 am

    Gold to $1000, even $1100 will completely clean out the West of all physical gold….. Even another low near $1185 would probably be enough to do the job. Add the in the fact that almost every mine would be closed with input costs increasing. Who would be able to short $1b every morning at 8:15?

    • Farmer September 2, 2014, 8:59 am

      I suppose you would be referring to that very thin layer of what we might call freely traded investment market gold, Steve.

      It is the stuff that is not currently held securely by our Grandmothers, Central Banks, certain ETF’s or the miscellaneous deep pocketed buyers. Rather, it is the stuff that comes out of the mints as fresh coins, the stored bullion and bars that banks trade, the dealer supply and the gold that gets traded out of the big funds when prices fall.

      Logic (and fact) both tell us that the serious buyers would snap it all up in a heartbeat at lower prices. Thing is that sellers sometimes become less willing to relinquish their hoards as prices drop so this in itself is not really enough to move price. Especially if those sellers see light at the end of the tunnel and better opportunity beckoning down the road.

      You know what though? There is one circumstance I can think of that could see free-stocks of gold almost literally vanish from the market overnight. And that event would coincide with a whole lot of investment grade gold coming to market in a short period of time.

      Can you guess what that event is? ……Margin calls baby!

      That would be the trigger in my scenario to release the free-floats and investor stores and potentially create the circumstances to drain the system dry before Joe Public even took a pulse on what was happening. Even the investor community would be blindsided on many fronts.

      If we were to see a sharp stock market correction then we should also be prepared to see the usual events unfold. Baby out with the bathwater time. And gold would get dumped wholesale right smack into the laps of the Central and Investment Banks who are most eager to mop up the fresh ingots even as prices decline sharply.

      Which would then pretty much leave mine supply as the only alternative available to new acquisitors (unless you lift Grans goodies when she is wiped out on Margaritas after a hard party weekend!).

      Call this the biggest, nastiest short squeeze on physical supplies imaginable. It is not just likely either. I think such an event is probable as supply is already getting tight due to relentless CB buying (strong hands) and we can be fairly certain a great deal of the old hoards will never see the light of day in our lifetimes again.

      So what we need to be watchful for are signs the stock market is topping or getting ready for a serious correction. That day could be a lot closer than some of us really believe.

      When it arrives, those strung out on margin credit (just about everyone) will dump performing assets like gold to cover which in turn will drive prices down abruptly. Both gold and gold miners will suffer what I believe will be a brief but very painful downside correction. It is still coming.

      And that is the day you will want to be buying all the way down to the bottom because the whip side on the way back up could break the necks of the unwary. As long term gold bugs finally panic and sell into some of the biggest of losses, a savvier group on the sidelines will step in and clean house.

      The big price moves start shortly afterwards as it dawns on the market that no physical free-floating investment grade gold is available anywhere anymore. Most of the gold bullion is now in the hands of the few, the savvy and the big banks.

      And thus we get a stock market top (interim) that almost perfectly meshes with a bottom in the gold price. Outside of that I don’t currently see the conditions needed to take gold to new highs as sentiment is still so weak.

      The mood can change on a dime though. War rumours that some suggest are going to be golds real propulsion are not of themselves enough to push prices up. What interests me are the mechanical linkages that will actually drive a change in market behavior.

      In the past few years we have all heard a myriad of reasons why gold should rise anew and not one of them has yet panned out or caused a positive directional change in price or sentiments.

      Fundamentals have not moved gold an inch. QE did not do it, hyperinflation fears did not do it, Indian and Chinese buying made no difference, supply and demand were irrelevant and who really reads COT reports!

      But like a lot of other people who read these pages I have noticed one very interesting thing. While gold is not rising, neither is it falling anymore. That means the most serious buyers continue to hold and acquire even as others lose hope and cash out. Often at substantial losses.

      We also all know that there are a handful of heavyweight buyers out there who opportunistically snap up large amounts of supply at every discount window. Those are some of the worlds key Central Banks. It includes the Russians, the Chinese and perhaps even the new BRIC’s bank amongst others.

      A deep selling event would be met with quiet buying ferocity from those parties and that would bring with it an end to precious metals complacency as the seriousness of a supply squeeze finally became obvious.

      The mechanical linkage is margin debt. Therein lies the weakness. So in some respects I do agree with Rick’s assessment that now is the time to really pay attention to the metals sector. Most particularly gold.

      I would not be a buyer until I see that downside break though (and I do believe it is coming). Just when cannot not be known except it should coincide with a market correction or crash.

      If gold does take one more deep dive as I anticipate we should be prepared to buy vigorously with both hands and both feet. That means keeping a few pokers hot and ready to be deployed when the day arrives.

      Then tell your wife to pack her bags and choose a nice sunny holiday destination. You deserve the reward and probably earned it too after suffering through more than three years of a metals price drought!

      • steve September 2, 2014, 9:42 am

        When taking into account the average age in India and China… Taking into account how much viable gold in the world is remaining to be mined… The public can’t become any more bearish on gold, so I don’t see any reason why “they” would attack it more. 8:15 everyday is margin calls? I would think after 3 years nobody would have any long positions left to dump.

      • Farmer September 2, 2014, 11:26 am

        Is GLD drained down to zero, Steve? Have all the gold ETF’s and funds gone bust? Have we truly even seen capitulation yet?

        That would be a big no for three solid counts. There are plenty of investors with allocations to gold even to this very day. Some modest, some large on a portfolio percentage basis.

        All investment grade gold is in the hands of someone at all times. Don’t forget that. And just because one man sold it before does not mean another did not buy it. For the fact is someone else did buy it and now holds it and that person is also likely to face margin calls if stocks suddenly go into decline.

        Gold bugs have been getting tuned up since last December for the next big push and are now primed to start buying again. They are all meat for the machine. God loves them I suppose but they will be punished again for their relentless enthusiasm.

        Meanwhile, hundreds of struggling Juniors have still hung on by their last thread and one sorry ball. They await a final verdict before we see a real market bottom. The transition of ownership stakes from weak to strong will be not be peaceful and in the final stages will be a bust not a whimper.

        We are approaching that point of reckoning step by step. A washout of miners is pretty much all that remains but in my view it is an essential part of the process that is in play. I would be very surprised if so many weak players now on death row got a last minute stay of execution after such a long fall.

        It is why I am so doubtful of Rick’s call to start buying now in anticipation of a big price thrust. Makes no damn sense to me at all when a near term downside losses are a much higher probability.

        The buying starts in earnest when equity markets break, not before then. I just have no idea when that day will come.

      • steve September 2, 2014, 1:07 pm

        Is GLD drained down to zero, Steve? Have all the gold ETF’s and funds gone bust?

        Let’s face it its all a lie. #s on a screen that’s all it is controlled by certain people to benefit them the greatest way possible. The easiest trade known to man has been to short gold and buy stocks every morning at 8:00 (courtesy of the Puppet Banks)… I’m talking actual physical gold. My opinion is I don’t care if up or down. Rick posted this essay to stir up the crowd.
        Apparently gold is only good for jewelry now, which might explain why the country with the supposed greatest gold horde dishes out 10k jewelry.
        I suspect/was told gold won’t be going up for many years….. 3 years and counting.

    • steve September 3, 2014, 4:30 am

      “Is GLD drained down to zero, Steve? Have all the gold ETF’s and funds gone bust? Have we truly even seen capitulation yet?”
      So you’re saying the lying and fraud is not even close to being finished? Maybe there is an ETF that sells $1b in gold and silver every morning at 8 and buys stocks? That ETF must be up %500 in the last 2 years.

  • gary leibowitz September 2, 2014, 4:34 am

    Yet another voice to the Gold doldrums. I also expect a washout event right below 1,000 before we see a new bull run. Is anyone watching for Rick’s long standing SPX top of 2019? That might coincide with Gold’s ultimate bottom.

    $$$$$$

    17,209.51 has been my minimum bull market target for the Dow, Gary. So far, the high is 17,153.80.
    RA

    • gary leibowitz September 4, 2014, 5:07 pm

      Rick have you considered that both figures may be correct? We now have 17,151 and 2011 on the SPX. Is 17,209.51 and 2019 on the SPX not possible?

      &&&&&&

      Maybe, Gary. I’ve been reiterating the 17209 target for quite some time. For practicality’s sake, and just to be safe, I’d say short the bejeezus out of it with a tight stop-loss. RA

  • Farmer September 2, 2014, 4:23 am

    Rick, I am not persuaded. Not unless this time is proven to be different. If gold moves in the right direction with force I will buy it but not one minute before. I always did regret impulse buying anyway. These charts just don’t line up to my liking right now and the doubt spoils the anticipation. Two months back, Larry Edelson wrote that gold was about to explode higher and mining shares were going to the moon. What happened? Within a few days of his dispatch prices started dropping and have not looked up since. Miners down, gold down, silver down too. You get the picture. Larry has a good reputation for market timing but that call was off by a lot of bucks and a few months. Another fourty dollar decline from here before September is over and it’s lights out for gold. I mean seriously, I would not touch an asset this toxic unless it started showing it was breathing just a little first!

  • Dave September 2, 2014, 4:02 am

    “He now thinks gold and silver are about to take off — as soon as late September or early October. ”

    Soon we begin a new Mercury Retrograde period on 9/14/14, so this is possible. I’ve found the pre/post shadow periods more market volatile than the actual retrograde. This handy MR calendar from astrologer Roman Oleh Yaworsky shows all the phases from pre through post including increased intensity days.

    http://www.astrologyhoroscopereadings.com/2014-mercury-retrograde-calendar.html

    Putin was born with Mercury in Libra at 23°. During this MR (mostly in Libra 16-30°, some in Scorpio 0-3°), Mercury will pass through his natal Mercury Libra 3x in pre/post and retrograde phases. Expect increased action on his part as he feels the pressure when Mercury passes through 23° Libra on 9/20 pre, 10/16-17 and 11/4/14 post.

    Generally, Mercury Retrograde involves all types of communications which can affect anyone, here more Libra and Scorpio, by adding delay, confusion and basic advice is don’t sign contracts, make major life decisions or purchases, check all plans thoroughly. Mercury, aka Quicksilver, can make events happen fast. Computer backups are also advised. Those born during a Mercury Retrograde may have beneficial experiences during this time.

    Whether gold goes lower before going higher remains to be seen, but during Mercury Retrograde, it’s likely there will be higher market and world event volatility.

    • mario September 2, 2014, 8:05 am

      I don’t wish to hang my hat on astrology, however I can’t deny what consistently happens all around me when Mercury goes retrograde. I’m not saying this as self-fulfilling prophecy. Countless times over the years I noticed a strange vibe in the air as I was going about getting things done and when I would inquire, bingo, we were in another Mercury retrograde. So its a sign post I don’t ignore.

      1. Things already in the works finalize and crystallize.
      2. Don’t bother trying to start anything new, its easier to push a wet noodle up hill.
      3. More communication related difficulties including people and electronics.

      Cheers, Mario

  • Czarek September 2, 2014, 4:01 am

    It all depends on how it goes with Ukraine. US seems to want WW3 started in israel while russia is busy with ukraine. Time will tell but if SHTF, you won’t find any gold at any price as mushroom emp’s will take care of the electonic currency/paper contracts…It is possible and most likely scenario that they will try to bring the price down so that when it shoots up, it won’t go far past 2K.

  • Andy Gutterman September 2, 2014, 3:47 am

    I think gold is going to emerge from its slumber to the downside, in a very big way. Down to $1000 or lower.

    With interest rates falling and likely to keep falling or not rising for years come I don’t see anything that would drive the price of gold higher. We certainly won’t get inflation.

    Add in a very strong dollar….

    Andy

    • Rick Ackerman September 2, 2014, 5:40 am

      Just so, Andy. If gold is about to go up, it will NOT be for reasons of inflation. But if it is geopolitical concerns and global crisis that are about to drive a bull market in bullion, I shudder to imagine the all-too-interesting times that lie ahead.

      • Andy Gutterman September 2, 2014, 6:48 pm

        I think all the media driven hype about Russia, the Ukraine and ISIS is just noise. Its obvious to everyone that Putin wants to recreate the soviet empire, and he’s willing to do it any way he can. Yet the price of gold has gone nowhere or even gone down the whole time. So outside of a worldwide shooting war I don’t see anything on the geopolitical side to push the price higher.

        Today is a case in point. Russian troops in the Ukraine, talks breaking down, gold is falling.

        Andy


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