Gold

Bulls and bears appear to be equally enfeebled and lacking in conviction. How else to explain why the futures spent the entire week screwing the pooch near the 1296.80 Hidden Pivot support of the pattern shown? It has been violated sufficiently to tip the odds in favor of a fall to the 1262.70 target, or at least to p2=1279.70. But we won't presume to know how things will turn out until one side or the other makes a decisive move. For now, we'll regard the stalemate as the Battle of the Dwarves. _______ UPDATE (Apr 8, 5:16 p.m.): A rally to the green line (click here for chart) would trigger a 'mechanical' short. I am not recommending the trade, however, unless you can initiate it using a 'camouflage' set-up that would cut the initial risk of $2700 per contract down to $80 or less theoretical.  My skittishness is out of deference to the fact that gold has been playing nasty little games with bulls and bears alike, screwing with their heads at every peak and trough.  In this case, the set-up for the mechanical short is so pretty that it tips me bullish, with mild expectations of a thrust exceeding the 1330.80 peak made on 3/25.

In an interview I did last week with USA Watchdog's Greg Hunter, I apparently came across as a lukewarm gold bull. Although many of those who commented apparently agreed with my grim deflationary scenario for the global economy, the negative implications this could have for gold did not resonate with Greg's audience. In fact, I see significant appreciation potential for gold, although not to the celestial heights that some seers -- most visibly Jim Sinclair, who has been predicting $50,000 an ounce more or less forever -- envision. The chart (inset) shows a logical pathway to $2277, a target that in my estimation would become an odds-on bet to be reached if Comex futures can close for two consecutive months decisively above the $1661 'midpoint Hidden Pivot'.  They have already tripped a theoretical buy signal to this number at $1354 (the green line), making it no worse than a 50-50 bet to be reached. Bullion Is Not Cash Although this outlook might not thrill gold's most ardent fans, it equates to a 28% appreciation from these levels. And if the $2277 target were to be reached, that would amount to a gain of 71%. In the meantime I see limited risk in holding gold as insurance, as I always have. Come hell or high water, even if there's a global deflationary bust, I see bullion at least retaining its purchasing power against virtually all other classes of investable assets. I continue to advise keeping a shoe box filled with (admittedly worthless) U.S. ones, five, tens, twenties, fifties and hundreds just in case, since any attempt to exchange bullion for necessities in the wake of a full-blown financial panic are apt to be met with quizzical stares. Of course, in the weeks, months and possibly years following the bank-system shutdown that

April Gold's tortuous slog toward an 'easy' rally target at 1332.00 warrants a closer look at the bearish case. For if the futures were to fall just $9 to the green line at 1307.40 shown in the chart (click on inset), that would trip a theoretical sell signal to as low as 1255.90 -- a 4.5% plunge from current levels. Although the bull trend begun last August from 1182 still dominates the daily chart, the A-B countertrend in the chart is sufficiently compelling to imply that a sharp correction may be imminent.  The danger would be averted by a rally exceeding 1356. 80, where a small but technically significant peak was notched on the way down from 1400 last spring. (Note: The corresponding numbers for the June contract are: 1313.80 for the short trigger, and a 1262.70 target. The midpoint support lies at 1296.80 for the June, and 1290.20 for the April.) _______ UPDATE (Mar 27, 9:57 p.m.): The short triggered by a hair, opening a path down to -- for starters -- p=1296.80, basis the June contract (30-min, A=1355.60 on 2/20). _______ UPDATE (Mar 28, 9:08 p.m.): The Junes fell hard to 1296.00 in the opening hour, slightly exceeding our target. Bulls struggled to hold this Hidden Pivot support for the rest of the day, but the dip to 1293.3o is probably sufficient to put 1279.70, the 'secondary pivot', in play as a minimum downside objective. If it fails, look for more slippage to a worst-case 1262.70 as originally forecast.

It has taken the futures fully two weeks to achieve an easy target at 1315.00, but because the move has gone on to exceed this Hidden Pivot resistance Wednesday night, the 1332.00 secondary pivot of the pattern shown can serve as our minimum upside objective for now. If it too is exceeded, 1349.10 would be in play as an odds-on bet to be reached. We ought not count too heavily on buyers to get there quickly, since this is gold, after all. But the sooner it happens, if indeed it does, the more bullish the implications.

Hard selling on Friday generated a bearish impulse leg on the daily chart that could grow still more powerful if the weakness exceeds 1281.50 in the days ahead. The effect would be even stronger if this were to occur with an upward correction lasting at least two days. This seems likely, given the pounding gold took last week. It included a 'counterintuitive' buy signal on Friday that produced only a disappointing, fleeting rebound where we might have expected a longer-lasting trampoline bounce. As dispiriting as this must have been for bulls, the futures will have a chance to bottom Sunday night at 1290.50, a minor Hidden Pivot support that I flagged in the chat room Friday afternoon when the futures were trading $10 higher. ______ UPDATE (Mar 5, 5:25 p.m.): The futures would need to hit 1299.10 within the next day or two to trigger a 'counterintuitive' buy signal. That is their last best hope for now, since a further drop would suggest gold could grope its way down into the range 1220-1250 before it is fully corrected. Here's the chart. ______ UPDATE (Mar 10): Friday's robust rally did in fact trigger the buy signal noted above. This means we should use p=1315.00 as a minimum upside target for now. The signal would look better if gold opens Sunday night with a lurch higher. _______ UPDATE (Mar 14, 8:07 p.m.): What a stretch. Gold has gotten sledge-hammered for the umpteenth time after coming within a few inches of an 'easy' rally target. The hourly chart is still bullish and the 1315.00 target still valid, at least in theory. Wake me when it gets there. Zzzzzzzz.

The rally sputtered out between two Hidden Pivots noted here earlier (1345 and 1354) but we'll give bulls the benefit of the doubt because upthrusts have consistently been exceeding external peaks going back to last summer. For now, stick with the ambitious 1378.70 target broached here earlier. If the pullback hits X=1305.80 it would trip a 'mechanical' bid that may be worth considering. Here's a chart that shows the pattern yielding the 1378.70 target. _______ UPDATE (Feb 28, 9:35 p.m. EST): The correction begun a week ago from 1350 looks bound for at least 1309.30. I expect a bounce from within 3-4 ticks of that number, but the futures may ultimately have to test a low at 1304.70 recorded on Feb 14 to get traction. _______ UPDATE (Mar 1, 8:02 a.m.): It is NOT a healthy sign that April Gold has failed to hold the crystal-clear support at 1309.50 (slightly corrected from earlier). Let's see if the 1304.70 low holds. If not, and the 'C' low sits right, I may suggest a 'counterintuitive' buy. Stay tuned to the chat room for timely details.

The trek to our longstanding rally target at 1345.50 has been so labored and tedious as to be nearly  untradeable. Rest assured the futures will get there -- although we should expect a stall at 1336.40, a Hidden Pivot resistance related to a somewhat higher alternative 'A' at 1251.60 recorded on December 19.  The rally has consisted of two extremely choppy legs as different in character as Laurel and Hardy. No matter. We knew all along where things were headed, even if the journey provided no good handholds for a mechanical entry. Please note that a decisive push past the target would put in play a more significant one at 1378.70. It will take a bit more than that, however, to create the impulse leg that would refresh the bullish energy of the weekly chart. Specifically, buyers would need to hit 1404.50 to surpass the key 'external' peak made at the start of 2018. _______ UPDATE (Feb 19, 3:16 p.m.): Gold had one of its sharpest rallies in recent memory today -- a $23 surge that has peaked so far at 1345.00, just 50 cents from our longstanding rally target. In the chat room, a subscriber reported exiting a profitable GLD call option position at the top. The futures have stalled, but the pullback thus far has been shallow. The target, a Hidden Pivot, is sufficiently clear that a close above it would be quite bullish, shortening the odds of a continuation to the 1378.70 target noted above. (Note: Numerous subscribers weighed in later with reports of target-related profits in such equity-based vehicles as GLD, Barrick, JNUG, NUGT and GDXJ.) _______ UPDATE (Feb 20, 10:20 p.m.): Buyers failed to reach an easy target at 1354.30 with today's thrust, warranting moderate caution. The bigger-picture target 1378.70 remains valid. _______ UPDATE (Feb

Gold exploded last week after spending three weeks in a tedious consolidation. The April contract is bound most immediately for the 1336.00 target shown, but if it gives way easily expect the rally to continue to the next, 1345.50. It has required great patience to stay with the trend, but don't be surprised if it fools the herd by accelerating, since that is what few expect. I don't ordinarily recommend placing 'mechanical' bids at the red line (p=1313.50), but if it's touched on a pullback, we can use the signal to set-up a camouflage trade with risk tightly managed. Playing it by-the-book, a mechanical entry at 1313.50 would require a stop-loss at 1302.80. Alternatively, if the futures were to swoon violently down to the green line (1297.50), that would generate an even more attractive mechanical buying opportunity. _______ UPDATE (Feb 6, 5:17 p.m.): Gold has an annoying habit of testing two key Hidden Pivot assumptions: 1) that good trades seldom originate in one's psychological comfort zone; and that 2) the more vicious the price swings, the better mechanical set-ups work. And so it goes with the April futures at the moment, as they plummet toward the 1297.50 'x' level where an ostensibly appealing 'mechanical buy' would be signaled, stop 1281.40. Here's the chart. Let's see how it goes._______ UPDATE (Feb 10): The 1345.50 target remains viable, but I am no longer recommending entry via a mechanical bid because the pattern has strayed too far from 'textbook'.

Gold continues to make headway in herky-jerky fashion, failing to fully satisfy bulls but also denying bears much to cheer about. On Monday, the February Comex contract rallied to within a millimeter of the 1240.20 Hidden Pivot target shown. The pullback so far has been mild, encouraging the thought that the next pop will be good for a ride to 1259.80. Another encouraging sign is that some recent ‘mechanical’ buy signals in gold vehicles, including one in HUI, the Gold Bugs Index, have been winners.  We’d sworn off this type of trade in bullion after getting stopped out once in the futures, but they seem to be working again. This implies that buying enthusiasm has picked up a little over the last couple of weeks. For your information, the February futures is currently on a ‘mechanical’ buy signal that tripped at 1216.80, stop 1202.40.______ UPDATE (Dec 7, 4:00 p.m.): The February contract climbed as high as 1255.80 today. Just a smidgen more! We want buyers to blow past that Hidden Pivot, since that would announce their intention to push still higher. _______ UPDATE (Dec 12, 9:59 p.m.): Zzzzzzzzz. _______ UPDATE (Dec 16, 12:17 a.m.): The futures have rolled down without having achieved an 'easy' 1259.80 target, but also without having exceeded any external peaks on the most recent upthrust. Taken together, these signs of weakness suggest that gold's balky uptrend since August is not destined for greatness. We've made similar observations scores of times since the gold price peaked above $1900 in 2011, and the only thing that has changed is that bears have become too depleted to sell off bullion except for short periods when conditions are perfect. It is not a bull market we are seeing at this point, but neither is it much of a bear. _______