A week ago everyone was cheering as gold and other commodity markets were making new highs. Last week however, things changed as everyone seemed to want to jump through the same door, at the same time, putting a great deal of downside pressure on many markets.
This phenomenon sometimes happens when people have multiple positions in multiple markets in the same direction. When they start to take profits, there is no one left to buy.
In today's short video on gold, we show one of the clues that was given by this market all the way back in May of this year. The video runs about 4 minutes and will give you a very good idea of exactly what I'm talking about. As you know, we took profits on a 52-week rule on Tuesday around the $1,416 level and we also exited with a daily "Trade Triangle" signal on Friday at the $1,382 level.
I think traders of all skill levels will get a lot out of this short video.
As always all videos are free to watch and there are no registration requirements. All we ask in return is that you comment on our blog about this video.
All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub
see i told you adam ..even beat your signals before they occurred..ha...oh forgot to mention ... united states dollar turns bullish in january-- we will see a bottom sometime in january in the united states dollar and then of course gold will be heading down - and of course ill be out of my gold stocks and be in cash until gold runs big again..usually starts heading up in july .....and yes..the industrial metals and mining stocks seasonal time is nov to may --- watch the wite metals scream upwards -- yes WITE metals -- for you newbies type WITE in the yahoo finance search tab where you type in symbols and youll see what wite stands for.... hey this info for free you cant beat it ..i even beat adams signals before they occurred hahahahahaha
ill let you know before your trade triangles go off adam so this is what happens next--- there hasnt been heavy selling by the institutions - good for the markets-and the dollar is late in its cycle [ day 17 of its usual 20-25 days trough to trough ] and dollars resistance has hit at 80... china has told north korea to cut it out and not mess up the markets and to not mess up the typical end of the year rally for the markets ......this leads the market up to the end of the year - typical end of year rally and of course gold and gold stocks go up also ..............now that ive mentioned all this - your triangles can go green again - lol and adam you forget to mention that gold and mining stocks are the only sector in the world trading at all new all time highs- very bullish indeed ! lw
dollar doesnt break resistance of 80 its down we go for the dollar and up we go for gold huh adam ? smiley face ! hahahahahahah
Wil,
Thanks for your feedback
You are referring to the Dollar Index. One thing I would point out is that our Trade Triangles are at +60 and neutral, indicating a sideways market for now, Also you can draw a perfect 6 month down trendline which has been broken on the upside.
Let's see where our next signal kicks in.
All the best,
Adam
the u.s. dollar has moved from 78.10 to 79.46 by mid week , but came under pressure late in the week to close 0.40 higher. intermediate trend remains DOWN. look at chart for u.s. dollar $usd [ us dollar index - bring up 1 year chart for u.s. dollar ..in june of 2010 u.s. dollar peaked at 88.71 and since then has been in a downtrend....u.s. dollar just hit 50 day moving average line at 79.46 and headed DOWN in november....macd and rsi continue to trend higher but stochastics are OVERBOUGHT AND SHOWING EARLY SIGNS OF ROLLING OVER adam...... id put a smiley face here but you do not leave me the option to do so like i have on my aol account...... ha
gold haters eat your words look at gold price today iron what the heck you talkin bout old man ? govts all over the world buying gold because the politicians you voted for are spending tons of money they dont have ! republicans too with the tax cuts they want for businesses will cost the country another 160 billion dollars over 10 years bwahhhhhhhhh
been holding my gold stocks for a year now through all the corrections and red green etc triangle hooplah ... by sometime in december ill be out and back in cash to buy in the summertime when we will see bargains again.... my stocks: anv allied nevada up 118 % goro gold resource up 148 % ng nova gold up 177 %ngd new gold up 148 % this doesnt include my rare earth metal stocks that ive been holding since july 2010 that have similar returns ...red green triangle bs and yes gold will be going up again soon all this dissing of gold is proof of that- ...it usually always does during the holidays as well as the markets and yes the usa dollar usually comes back during january which means gold usually heads down when dollar gets strong in january forget red green triangle bs and heres a free site that can help all you out thats free and is a good way to get a real education of the market-- timingthemarket.com have a nice day adam and keep smiling hahahahah
My last comments were not appreciated.As an old veteran, GOLD eeh Useless metal Gold fever. What a waste. I have stock in a mountain of iron , more exciting than Gold. When it will be an over supply , like natural gas & cheap .
Interest rates do not rise in a vacuum. There are numerous other factors driving the price of gold - the largest being the fear of substantially rising debt and inflation. But when interest rates increase, we will just see another slump in our continued economic/fiscal downturn. What do you suppose the solution will be from our government and the Fed when that happens? That's why there is so much interest in gold outside of Wall Street. Nobody trusts them to actually do what's necessary to keep us from driving ourselves off the proverbial cliff.
Deciding whether or not to liquidate stocks and bonds will be the least of our worries. But if anyone is still in either of those by that time, then they deserve to lose whatever they had.
Gold has rallied because non-interest bearing funds have been sunk into gold ETFs, a leveraging phenomenon. When interest rates start to increase - who knows when - gold will see substantial downward volatility. There will then be less of a tendency to liquidate stocks and bonds.
This is where the common mistakes are made. Everyone seems to think that deflation is the worst thing that can happen. I'm not sure why that is, considering that inflation is what robs us of our accrued wealth. The problem with what the Fed is doing - and why it will lead to gold soaring - is that they are trying to prevent a natural deflationary cycle by continuing to print more cash, which will only lead to a greater magnitude of inflation once the deflationary pressures ease. And we all know that the Fed will not remove that new cash once the deflationary pressures are gone. This is exactly why many people are fearing hyper-inflation. We have not seen it yet because the banks have restricted their lending and the economy is still in the toilet. That's also why you see the dollar fall - and lately, gold rise - just about every time we see the market doing well.
And like I said before - buying gold isn't purely an investment strategy. It's merely a way to hold something of value when the Fed makes our money worthless through their inflationary strategies, which have been happening pretty much since their inception and has been greatly accelerated in the past few years.
Furthermore, the demand for gold is neither an isolated (local) demand, nor is it only coming from one specific group of investors. It is global and it is being accumulated by individuals, banks, and governments as a protective measure. And we are only seeing the beginning of it. In another 5 to 10 years we may begin to see the upper end of the bull market - but only if we can reverse the trend of our government and our fiat money creators.
David,
Thanks for your very well thought out post.
Adam
So; we see the strange anomalies in the trading of this basically useless metal:
Gold has rallied because non-interest bearing funds have been sunk into gold ETFs, a leveraging phenomenon. When interest rates start to increase (bond rates to fall) - who knows when - gold will see substantial downward volatility. There will then be less of a tendency to liquidate stocks and bonds.
@ Shane Connor
We are in a gigantic and ongoing deflationary and technological cycle. As I have pointed out before here the world is absolutely swimming in increasing overcapacity and endless cheap labor. This cycle has been rising ever higher for the last say 30-40 years and basically it's about evening out wages and living standards in the east and west. Since western manufacturing never could compete with cheap eastern labor it went east there and the most important manufacturing in the west became the creation of money and debt. Now; this cycle is of such a magnitude that it should play out during several decades but instead it has been rising rather alarmingly for only a few dozens of years. To distract from these massive economic happenings we have had terror hollywoodshows and desperate war lies and global warming and all sorts of other strange fables from the powers that be.
Now, deflation is totally lethal for western debt driven economies but inflation in turn very beneficial for the debtors, gradually writing off their debt. It's a balancing act for the FED and other Wall St. owners of the government but I must say that they have been doing surprisingly well so far with their shell game.
The key to this whole debt debacle and whether prices soar further or collapse is down to "Deflation."
Definition Deflation from 'Investor Words'
"A decline in general price levels, often caused by a reduction in the supply of money or credit.
Deflation can also be brought about by direct contractions in spending, either in the form of a reduction in government spending, personal spending or investment spending. Deflation has often had the side effect of increasing unemployment in an economy, since the process often leads to a lower level of demand in the economy. opposite of inflation."
Read more: http://www.investorwords.com/1376/deflation.html#ixzz15epYrKLW
In this respect, it is better to hold cash rather than anything that is devaluing. Credit is very tight and the only game in town is QE. How much has that done for the economy?
Very little, as we are still below the dizzy heights on NYSE 2007, despite hundreds of billions of dollars being released into the atmosphere. So QE1 didn't work.
Ben says "I know, let's try it again, with even more money the tax payers don't have!"
Albert Einstein once condemned the irrationality of those who expected a different result when using the same parameters that had failed beforehand. So it is with the Fed.
And with this QE, just why is the Fed buying T Bonds from Goldman Sachs and other conspirators, rather than directly from the US Treasury at better rates for the taxpayers and no bonus-exploding commission rates either? That smells rather badly to me.
The bottom line here is that deflation sets in because the above has happened and there is a liquidation into cash.
You can't buy anything with gold so that goes too. But the fiat Dollar goes up because it is the worlds reserve currency and all liquidations lead there. Commodities, Crude Oil, Precious Metals, Major Currencies and Bonds, all priced in Dollars, will fall as the dollar rises.
Short term, fear not the Dollar but take the weight off your other investments.
TONTO VERY SMART INGIN
Will Robinson, Green Alert Green alert ........
By the way you predicted that gold will not make another high this year and that was back in June or earlier, right?
It seems no matter how high gold climbs many of you paper traders just don't want to face the realities of the financial markets!
lol
Well, good luck!
Bruce,
Thanks for your feedback.
Bringing up a gold comment I made 6 months ago and ignoring all my subsequent comments on gold is hardly fair don't you think?
All the best,
Adam
It seems to me that gold (and silver) will not be seeing any major corrections - certainly not to an $1100 mark, or below - any time in the next 5-10 years, if ever (as long as we continue to devalue our fiat currency). Gold hasn't been rising simply because investors have swapped it out for the dollar and it doesn't equally drop when the opposite occurs. The primary trend for gold since 2000 has been in one direction: UP. When the dollar rallies, yes, gold usually drops...but not for long and it always reverses to an even higher price on the next run. There's an obvious reason for that and it has little to do with Wall Street.
We have ever increasing astronomical debt and even more colossal unfunded liabilities, in addition to a runaway printing press. And until our government does anything to address those issues, banks and individuals here and around the world - and many other governments around the globe - will continue demanding gold for their protection against a failing U.S. dollar. Those who choose to exit their long positions on corrections soon regret it. No matter what the correction is, whether it's 25%, 50%, or 75% from each rally, it always climbs higher when all of the "experts" claim that the gold "bubble" is about to burst. The forces behind gold's rise are much stronger than a few investors trying to play the commodity market on Wall Street.
My position will continue to be long because my goal is not to "get rich" off of gold. It's simply a hedge against an increasingly worthless paper dollar. I'm locking in my wealth by purchasing something of value that cannot be inflated away. I'm continually amazed to see people think that gold is just another way to make money - another market to play solely for profit. But the joke is on these people, because the money they make isn't going to be worth anything. And I really do hope that they understand that.
David,
Thanks for your input into this blog.
Adam
Only an idiot or a gold CARTEL shill would dare to talk the pm sector down, Chris has it
Right in that these times are unprecedented and yes it is most certainly differant this time!
All gold CARTEL takedowns are to be bought with a vengence and remember taking posession
Of physical silver is the best and least expensive way to defeat these evil tyrants, the BANKSTERS,
Imho... ty for reading and get physical silver now as We will be up up and away here very soon
I like your TA. Keep it up!
Gold is the Central Bankers' KRYPTONITE. It renders them impotent and powerless to conduct their paper currency games. If currencies were forced by defacto to become gold-based, or worse yet, if gold should become a defacto currency, the paper game would be over. Central Banks and IMF vaults do hold stores of gold bars, of course, for bankers to use as they see fit; the Euro Area reports to have 10,793.4 tonnes and the U. S. reports to have 8,133.5 tonnes. Total world banks holdings are reported to be 30,535.6 tonnes. Privately held: 1489.87 tonnes. Data as of September 2010 (Source: World Gold Council). So why should the world's banks want to waste valuable vault storage holding such a huge amount of a worthless Barbaric Relic? Hmmm... Well, maybe the truth is that they want to hold the winning cards and they just don't want John Q. to get too excited about gold.
Guess youal are buying the dip, my shorts are rising! Heres a "thank you very much !! Will be buyin old records, see youal at Kmart! Elvis P
Don't be an idiot. Our present world financial situation is UNPRECENDENTED, we are writing new history. The sheer scope of the poor fundamentals of US and EU Sovereign Debts, the QE2 currency debasement of the US Dollar, make this unlike anything the world has seen. Gold prices will drop as investors are entertained by the news of the EU P.I.I.G.S countries and the endemic debt crisis they are dealing with. These investors are fleeing to the US Dollar which is being diluted on a MASSIVE scale by Ben Bernanke and his QE2 printing press AS I TYPE THESE WORDS. The fear has simply been moved to Europe now, (by design) which drives up the Dollar and drives down gold (along with some general profit-taking, as well). The fear will return to the US in the form of inflation shortly, and lots of it. Investors will eventually figure this game out! When inflation really takes off, you will want to ALREADY be holding physical gold. At that point the price won't matter anymore, you simply will not be able to put your mitts on any gold, The rich will panic and cut everyone else off, there won't be any to sell to "shlubs" like you and I anymore. In my opinion, Gold (and Silver) should not be viewed as short-term investments for at least the next 10 years, it is PROTECTION...
Yes, I believe it is over for Gold. For now.
We are looking for a major correction initially down to the $1100 area and ultimately down to the $680 area.
I believe that most markets will liquidate in favour of US Dollars cash but after a couple of years that will reverse and Gold will soar to new ultra highs to over $2000 per Toz.
That's the ride on want to be in on, unless the government intervenes and again, bans us from holding our own.
Johnbmac,
Thank you for your insightful review of the all too often forgoten simple facts of the recent history of gold prices.
Unfortunately, I've never seen a goldbug who cared about any facts that would interfere with the realization of their appocaliptic visions of the future, as they sit in their bunkers on boxes of ammo and beans.
Wow Dan,
I don't see why my simple comment should be singled out for such a negative response but I guess I'll try to clarify. this is what i posted..
If you look at a chart since 2003 gold has advanced for a two year period three times, 2004-2006, 2006-2008, and now 2008-2010. Each time it then pulled back approximately 50% of each advance
Specifically,
2004-2006 gold went from $420 to $720 or $300, retraced 50% of that advance to $570.
2006-2008 gold went from $570 to $1050 or $480, retraced 75% of that advance to $700.
2008-2010 gold went from $700 to $1400 or $700, a 50% retracement would be $1050.
(the '08 retracement was greater than 50% but i think that was an extraordinary event)
I'm not trashing anybody here, just sharing ideas. I thought that was what this comment section was for.
It is not over for gold long term. For the short term natural profit taking will occur. most likely 15% off the top from 1240 to 1280. Currency concerns and dollar valuations will keep a floor under gold.
Where is one your previous comments ( John B Mac ) getting his information regarding 3 different 50 percent pull backs on gold in the last 6 years. Unless I am misreading his comment I don't see any such pull backs. As big a tear as gold has been on of course we will get correction. I am predominantly long gold and certainly have considered when to pull the plug, but based off the quick rise and falls over the past few months, how is one to know to completely liquidate holding and rebuy. That is a guess, and based off recent price swings has about as much a chance working for you as against. Call me simple but when you see $60 plus dollar drops: buy on the dip - gold fundamentals have not changed, add in uncertainty still in Europe and a hot printing press here for me it adds up - am I wrong - 50 percent drop? John B Macology?
Re: J's diatribe:
Adam, you are a nice guy and we very much appreciate your free videos on gold since we are gold-et-all holders, not traders and not subscribers. We thank you for those. NON ILEGITIMUS CARBORUNDUM EST!
Hello Doug.
Except for the fact that the entire galaxy is moving, and the sun along with it, your analogy may be apt, but I doubt it.
ESSBEE
It makes a lot of sense that US bonds and notes should presently fall a little from a 50-year high.
The dollar should rise from oversold condition. Commodities and metals should fall for the opposite reasons.
Actually all markets revolve around the US dollar. It is the world's major economic indicator.
Wall Street is in charge of the US economy. It is clearly in their interest to play inflation down in the wake of their bailouts of themselves and other major money printing. The parasite doesn´t want to kill the host. So, you can see how expertly their bubbles have been timed. Just now at the right time they´ll reverse their positions in dollar and commodities.
It's really masterful how they cover all their bases. The gold market is totally microscopic (about 1/1000 of the currency market) but still supposed to somehow lead the dollar. That's like the mere tip of the tail wagging the dog. But by talking down the dollar Wall Street´s shills (all those Mad Max Doomsayers out there who incidentally trade gold) talk up the DOW since a lower dollar for those multinationals means more dollars to book home in the US and then the DOW leads other stock exchanges.
Galdur,
Thanks for your input. You make some good points.
Adam
Hi Doug,
Perceptive comment. How are you positioned, long and short term?
Hi Adam:
We've all accepted the falsehood, that the 'sun rises' and 'sunset'. and we're doing the same with gold prices.
The sun does not rise, nor set. It is the earth that does the moving. It is my opinion, gold does not take unexpected plunges, nor go on surprising rampages. In my opinion, gold, as with the sun, is the constant. It would be interesting to observe, if the gold metal and the sunshine could be maturely addressed in reality.
hi adam,
thanks for your response.
just wanted to add (if you get a chance to do another video and it makes sense to you)
the may '06, march '08 and oct '10 highs all line up perfectly
the gold market responded to the first two by retracing about 50% of the gain
i guess we'll just have to see what happens this time
this time is different will be true sometimes - i just don't bet on it
DID ANYONE GET THIS ON FRIDAY 12TH? BECAUSE THAT IS YOUR DATE AT THE TOP LEFT, YET I RECEIVED THIS ON MONDAY 15TH 6;00PM GMT! YOU ALWAYS DO THIS! HINDSIGHT IS CHEATING!!!!!YOU MAY NOT WISH TO BE EXPOSED AS A FRAUD.
J.
What is your problem?
You are not a paid subscriber to our service yet you feel entitled to accuse our company of cheating and indicate that you may not be wish to be exposed a s a fraud.
I trashed your other two rants because that is exactly what they are.
Is anyone holding a gun to your head to subscribe to our service. NO!
Is anyone pleading with you to do business with our company. NO!
The fact that you type everything in caps indicates that you are screaming at us or you don't know how to release the caps lock. If you don't like what we are saying then don't waste your time on our site. It is that simple. Vote with your mouse and go somewhere else.
Adam
Tonto forgot.........parabolic SAR (i LUV THEM)!
Tonto say: euo:udn, use; Elder Impulse System, exp,mov.avg 5, exp.mov.avg 10, macd., rsi., slow sto.
Thom Hartmann talked to author Frederick Kaufman about his cover story in this month's (2010/07) edition of Harper's Magazine
The food bubble: How Wall Street starved millions and got away with it.
Article available here:
http://frederickkaufman.typepad.com/files/the-food-bubble-pdf.pdf
Thom shared a little of the article during his interview with Kaufman.
Hartmann: "The history of food took an ominous turn in 1991, at a time when no one was paying much attention. That was the year Goldman Sachs decided our daily bread might make an excellent investment."
And then towards the end of the story, just a couple of sentences here. "Bankers had taken control of the world's food, money chased money and a billion people went hungry." Remember the food riots of a couple of years ago around the world?
"The world wide price of food had risen by 80% between 2005 and 2008 and unlike other food catastrophes in the last half century or so, the United States was not insulated from this one." Could it be because it was our banksters that were doing it?
"As 49 million Americans found themselves unable to put a full meal on the table, one in five kids came to be dependent on food kitchens. In Los Angeles nearly a million people went hungry. In Detroit, armed guards had to watch over grocery stores." And then the question, "Could this happen again?"
Really great interview. Too bad our "mainstream media" isn't touching this one. As they noted during the interview, it looks like there's nothing that these bankers won't exploit to make a buck. Really disgusting. And all we've got going on in the United States is some half-baked sorry excuse for "reform".
Galdur,
Most would agree that the last depression was deflationary, and even if this one ended up being similar, take a look at this chart from then for what bucked the market trend of the early 30's...
http://oakshirefinancial.com/wp-content/uploads/2009/02/djia-vs-homestake-mining.jpg
Back then the dollar was strong, today it's not, and gold/silver, IMO, will likely be the go-to even more so than homestake was back then.
Time will tell...
- Shane
Very interestingly US bonds rose along with commodities from June to Nov. as the dollar fell. That is bond yields fell while the other markets purportedly forecast inflation. This tells me that the dollar/commodities moves have been merely short term big money plays and will reverse when oversold/overbought as seems to be the case now.
The world is absolutely awash in overcapacity and endless supply of cheap labor and incredible technological progress. Whatever inflation there is must be contrived in the short term to say the least. This is the reason why the Fed is able to get away with those massive bailouts and QE's and money printing. There are stupendous deflationary forces working against their inflationary measures.
Tonto say "time to leave Dodge, keemosabbi". Masked man thinks to himself, never ask an indian why, jUST go with it! Tonto, has knife, gun and that rubber band on his head! Hi Ho silver--away !!
They played the dollar down by 20% from June to November and had a huge rally in dollar denominated metals and commodities. This generally tends to trade in opposite directions, for obvious reasons. Now; the dollar is rebounding and will probably test the June high in the next months, in the process metals and commodities will tank. This cycle will probably take 6-12 months, difficult to time it exactly.
Galdur,
Good observation.
Adam
Is the Fed dead?
Carlos,
Good question. We will see.
Adam
This site is a more reliable contrarian indicator than Cramer.
The top callers come out after every pullback to proclaim the end ... Problem is they've been wrong for 10 straight years!
With round two of quantitative easing just beginning, the US dollar is going to go down and gold will go up further. There is simply no other possible outcome as the dollar is diluted in value further, the limited and known quantity of gold will become more valuable. Short term gold is taking a rest. When perception catches up to reality again, gold will continue it's climb.
A more appropriate title would be: "Is a correction coming?" It's not "ALL OVER" for gold.
Yeah. It's probably all over for gold now. I'm going to concentrate all of my wealth now solely on fiat based currencies that can be created at the pressing of the "enter" key on a keyboard. Much more secure that way.
Hi Adam,
Welcome back. 2 quick longer term comments.
First, I have been 100% long gold nearly all the time since 1999 (except for brief periods being short stocks)
I am currently mostly hedged on gold/silver mining stocks but still hold considerable bullion.
Back in 1999 i gave a chart to a friend showing if gold broke above $850 it should go to $1450. This was based on a very simple rule: trading range of $250-$850 - breakout leads to $1450 ($850+($850-$250))=$1450.
Also, based on techniques I have seen you use on this blog, i would suggest that gold could pull back near $1000.
If you look at a chart since 2003 gold has advanced for a two year period three times, 2004-2006, 2006-2008, and now 2008-2010. Each time it then pulled back approximately 50% of each advance. I see no reason to believe that it won't do the same thing now.
Too many people have jumped on the gold bandwagon with no understanding of why and very ill equipped to deal with gold's volatility. The "markets" always punish this type of activity.
I plan to reorient 100% long gold near $1000 should i see it.
Johnbmac,
Knowing when to hold, and when to fold, is the key to successful trading.
Nothing goes straight up and nothing goes straight down. You have obviously done your homework, let's see how things pan out for gold in the future.
Thank you for your insightful post.
All the best,
Adam