Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

When To Buy Gold And Silver 

Commodities / Gold and Silver 2011 Jan 12, 2011 - 04:23 AM GMT

By: Bob_Clark

Commodities Best Financial Markets Analysis ArticleGold and silver are falling. 
Two of the most over loved, overbought markets on the planet, are going down.  What fortune awaits the holders of these barbarous relics. Will they go the way of oil, after it reached $145 and was never supposed to see $100 again, let alone $30.00.  Is another crash like we saw in 2008 coming? Have the inflationist made the mistake of their lives?


If you own these products or the stocks of the companies that dig them up, you are probably wondering what comes next.
 
The people that invested in gold are acting pretty smug right now.  Laughing and mocking Bernanke.  Talking of sending him thank you cards and cheering his incompetence.  That is ok if the gold has been sold and the money is in the vault.  However, if you are still holding the bag, be aware, the fates do not always smile kindly on gloaters.  So do not cavort too long, or laugh too loud.
Everyone is on one side of the boat and the boat is listing badly. If it flips and you go in the water, the hungry sharks may still eat their fill. 

Rather than pejorative rhetoric.  At times like this, it makes more sense to watch our positions and keep our fingers on the purse strings.
 
So far the sell off is on track
I called the top in the metals market (please see M.O. article, What is wrong with gold) and I gave my prediction on how the move down would unfold. I thought I would follow up on that call and talk briefly about using cycles to trade with. 
 
Below is what I wrote on December 21 2010
....................................................................................... 
I am looking for another quick swing toward the highs, that may reach above 1400. Then I expect a swipe down toward the October lows (128ish). That is where I will be backing up the truck. I also have a strategy to make sure that I don't get left behind if the markets start the new up leg early.
.......................................................................................
Below is the chart I posted at that time.
 
 

Lets look at what has happened since.
I have highlighted the price action since the last article, in red.  We held the 1 month low and rallied to 139.00 forming a triple top.  We exited our long positions in the 138 area. Since then, the bigger cycles have started to dominate.  We have started the swipe down that I was looking for, when I wrote the first article in December.
 
How far we fall in this correction remains to be seen.  I originally had a target of 128.00.  That target is still valid, but because of the extreme bullish sentiment that preceded the turn, I will keep an open mind and let the market show me where to enter.  It is possible that we revisit the lower 120 area, if enough traders panic or get squeezed by margin calls.  We can also hold higher as well.
 
Notice that the two patterns on the lower chart are similar.  They both had the same up sloping pattern.  They both turned down after trying the highs 3 times.  That is an example of how to use a fractal.  The last low was a 1 year low.  The low we are making now, is a 6 month or half year low.  One thing to keep in mind, is that a 6 month low can be quite large.  My point is, do not underestimate this cycle's potential to scare many traders out of their positions.  Remember the boat can flip easily.
 
 

We are here.
The purple arrow in early January is a good "you are here" marker.
The purple arrows also mark short term cycles, that can give a fleeting uplift to the price.  They tend to come in around the release of the jobs data early each month. They can be seductive, causing a false start for traders eager to join the precious metals gravy train.  I have marked a false bottom with the orange arrow in the July time frame.  Notice there was another one later in the month. 
So far, it does not look like we are finished with the down side.
 
Bottom line 
It still looks as if the up trend is intact.  The next week or two should be a time for hand sitting.  I will be leaning to the long side as we approach the next options expire, on January 21.
Missing the exact bottom is not a big deal here.  It is more important to be sure it is in.  There will be 2 or 3 months of upward movement to profit from after it is confirmed.  Plenty of chances to enter.
 
After a powerful multi-year rally like we have seen in gold, we should not end the bull move with a V top.   In the bigger scheme of things, a failure and collapse here would not look right.
 
We are also in the third year of the presidential cycle.  I went back to 1965 and looked at the price data for the S&P 500. Every third year went higher than the previous year. There was one year that had a nasty clunk in the middle, but that was after a huge ramp up to new highs. I know gold is different than the stock market.  However I have trouble imagining a strong year in the economy and the general markets, without higher commodity and metals prices. There should be higher prices in the spring, before we turn lower into the summer.
 
Devil's advocate
By hammering down the gold mining stocks, just after what should be a very profitable quarter and just before those earnings are announced, the Fat Boys seem to be giving us free money.  I have to ask, why.  They don't usually give out free money.
 
Keep in mind that it is possible to drown in a river that averages six inches deep. Always use stop loss orders.  I never trade without one. Ever.  Preserving capital is rule number 1.
 
Also keep in mind that Bernanke is a front man for some very nasty, powerful people. Mock Bernanke if you choose, but be very watchful of the ones that control him.
 
New traders find cycles magical 
I use cycles to trade, but they are not a panacea.  I use them as a guide, but they are only part of my trading methodology. They can shift or skip entirely, leaving us at the dock, or worse boarding a ship just before it sinks.  I always caution new investors and traders not to be overly reliant on them.  

In my courses and videos, cycles make up a small part of what I teach.  It is much more important, to know how to find the trigger points the Fat boys use in their algorithms. You have to understand market structure and manipulation to be a profitable trader.  
 
I offer one on one, learn to trade courses. There is also a powerful video set available. Both will get you on the right track in the new year. It is the same track the Fat Boys are on. They control the markets and if you are not with them, then you are a victim. 
 
Please visit my blog and let me help you.

    Bob Clark is a professional trader with over twenty years experience, he also provides real time online trading instruction, publishes a daily email trading advisory and maintains a web blog at www.winningtradingtactics.blogspot.com  his email is linesbot@gmail.com.

    © 2011 Copyright Bob Clark - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Thomas Crown
12 Jan 11, 15:55
cycles

You presume to trade on cycles that have no bearing in todays market given the toxic environment of sovereign debt facing the world today. I assume you also used the same "charts" when advising people/clients to invest the years leading up to the crash of 2008 as well..? So given your chart methadology. Did you recommend to people to get out of housing and into precious metals in 2002?


Bob Clark
20 Jan 11, 00:26
cycles are a only a guide

I don't presume anything. Cycles are only a guide. I use much more powerful tools to profit from the greed and manipulation of the Fat Boys.

I don't know if you have noticed, but the toxic environment of which you speak, has yielded some juicy profits to those that take the time to learn the ways of the Fat Boys.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules