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THE
GOLD BULL: ALIVE OR DEAD? Gold Gold had a tough week, down 24.60 or 3.59% to $684.70. As the weekly chart below shows, however, gold’s 65 wk ma has held like a rock all during the gold bull and continues to do so. MACD remains positive and headed up, and RSI looks like it may be ready to cross, while the histograms are receding back towards zero. Somewhat surprising readings of the indicators given the hit gold took this week.
Silver Silver also got whacked last week, falling .69 cents (-5.13%) to $12.72. Its 65 ema has also held like a rock, but is fast approaching. Histograms are receding back towards zero and a MACD Cross may be looming. Once again – somewhat surprising indicator readings considering the hit of the past week.
Xau The Xau closed back below its breakout level (blue horizontal line) for another failed breakout. It remains to be seen if the high ground is once again regained, and if so – when? The index remains well above its 50 ma and MACD also remains positive, although the histograms are receding. STO is still overbought, which suggests there is plenty of room to fall if it has a mind to.
The chart below of the Hui also shows another failed breakout. RSI is headed down and approaching oversold (but not yet there). A negative MACD Crossover has occurred, and the Hui/Gold ratio trend line that was recently broken above is about to be tested as well.
Summary Remember the show – the week that was? That’s how I feel about last week’s market action. Just when I thought it was safe to go in the water – bam. As the charts showed, when the Yen rallies just about everything else falls out of bed. Only oil, the dollar, and treasury bonds rallied, which if you think about it is one hell of a strange combination. Oil – first everyone loved it, there wasn’t any of it left, then suddenly everyone hated it and peak oil was a crock; now everybody loves it again – why – maybe cause it keeps going up in price? You’ve got to love it or hate it; I guess it depends on what side of the trade you’re on. Well the stock market finally remembered there is a law of gravity and that Newton did get some stuff right. Newton was an interesting guy, as he was the grandmaster of – well let’s just say of a group that has grandmasters. He was also head of the mint of England. Newton did get around, of that there is no doubt. I still maintain that the stock markets are nothing but asset bubbles and that the worst bear market every seen lays not to far in the future. When – I don’t know, but it’s coming. As the charts showed this week, this is a bit more than a “normal” correction. The market may still rally right back up, as the madness of crowds and the delusions of man is a wonder to behold – but like I said – Newton did get at least one thing right. Bonds and the dollar were due for a rally and rally they did. They very well may yet rally some more. I still maintain that any surprises will be to the upside in interest rates, although the Fed may once again try to fight the primary trend, but in the end the market is a force unto itself and it will prevail. The dollar is a bit more obvious, as it has long since given up the ghost. Oil is still doing well but it is about to bump into significant overhead resistance of its old high, which if bettered (and sustained) will mean the start of a new leg up in an ongoing bull market. It may very well not make it through right now (or it could) but that doesn’t preclude that it still will not prevail (nor does it guarantee it will – it doesn’t guarantee anything). The fall from grace of oil and its subsequent rally that has denied most odds, as well as most analysts, may have a message in it pertinent to gold – then again, maybe not. Speaking of gold and silver, they both had tough weeks, as did the precious metal stocks. I most admit to being somewhat surprised at various indicators on the gold charts – I thought they would be much worse – but perhaps that waits ahead, or perhaps it doesn’t. Time will tell. The question has often been asked: if the overall market gets hits hard will the gold stocks go down with it? I have asked myself that same question quite often. I was always of the opinion that they would go down with the sinking ship – until two weeks ago on that day the overall market got whacked but good, yet the gold stocks flew upwards as Icarus reborn. Looks like they got a little too close as well. After this weeks drubbing of just about anything that could take a drubbing, I return to my original stance that the goldies will go down if the market does. But I return this time with my tail between my legs, being once again humbled by the awesome power of the markets. I am but a mouse amongst elephants and must not forget, lest I be squished like a mere rodent of little consequence: just another brick in the wall if you will. As for the gold stocks I still remain resolute and of the opinion that a new leg up in the gold bull is around the corner. A test is certainly underway, and to lose a battle and retreat to fight another day is how wars are often one, and believe me – this is a war – much more than most realize. However, I am tempering that stance with the reinforcement that the gold stocks will go down if the market goes down (by down I mean down hard – very hard). Caveat Emptor. And yes the yellow metal is by far safer to own. I enjoin everyone to take a minute or two out of each day to become more aware of what is going on around us – the getting into position of those that need to get into position, to accomplish what it is they are compelled to accomplish. Please note: they do not care who or what gets in their way. Some call it the loss of freedom, others conquest, some refer to it as plunder – and a few even call it by that which is unspeakable – that which is taboo. Think about it – for your kid’s future if nothing else. Good luck, good trading, good health – and that’s a wrap.
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INFORMATION About the author: Douglas V. Gnazzo is CEO of New England Renovation LLC, a historical restoration contractor that specializes in restoring older buildings that are vintage historic landmarks. He writes for numerous websites and his work appears both here and abroad. Just recently he was honored by being chosen as a Foundation Scholar for the Foundation for the Advancement of Monetary Education (FAME). Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America. The opinions of FSU contributors do not necessarily reflect those of Financial Sense. |
