Jump to content

Gold & Silver retrace complete? Heading down


Recommended Posts

Read plenty of articles from the tin foil crowd about gold going to 10,000 an oz and with hyper inflation and currency crisis it may. Of course this is irrelevant if it costs $20 for a bread roll.


If the USD drops/crashes etc I think we could see $1500 in the not so distant future. Double long term (3 yrs) is entirely feasible...but I'm not holding my breath thinking NFP is going to get this back to July highs. Good trading all.

Link to post

Of course this is the joke with the gold bug, gold will only really rise in line with other assets. So in this sense it is a hedge against government and a part preservation of purchasing power, but only in so much as it can be made liquid with ease. We won't have hyperinflation. I doubt the USD won't crash either, at least not until it has crippled itself with is own strength as people park money in it.  

Link to post

It is more likely that stocks will collapse with a bond market bubble burst.  After all Stocks are also in a massive bubble and when one goes they all go.  Traditionally Bonds are the "safe" bet but these are not "normal" times despite the economists trying to get us to believe in their "new normal".  The problem economists have is that markets and the economy are driven by human actions, which are driven by human sentiment.  In short the rest of us do not follow arcane economic theory and the markets will do what they always do and this time larger than usual because the central banks have been propping the whole house of cards up for so long.


So what has been happening as a result of artificially stimulated economies is a bubble in asset prices.  Pension funds have to buy government bonds despite the high prices and poor yield (sometimes negative...)  Others are chasing high dividend yielding stocks, that are also defensive in nature (utilities, tobacco, Oil, consumer goods).  This isn't about growth it is about income.  So we have a reversal of normal financing currents with investors buying stocks for income and bonds for growth (price has soared as yield has plummeted).  This is an aberration that cannot last and when it snaps back, watch out for the carnage.


Pension fund managers are no more prescient than anyone else and frequently get caught on the wrong side of a major turn, just like hedge funds, because they are trend followers and paid to be invested.  A fund manager who tells clients to get out of the market is an unheard of animal.  Such a manager would be fired just as a Bank employed economist or analyst will never stray from the employers party line.  In short they cannot be trusted.


So FWIW I think financial disaster looms large.  The economy simply has not responded to central bank stimulus and the system needs a serious reset (20% won't get the job done).  All assets are hugely over valued (even Gold but relatively it is not).  Cash and Gold are the only sensible place to put all your wealth, including your pension funds.. Better to be prepared to ride out the storm than to chase the last squeezings of a lemon that is already pulp.  Everything will crash except USD and Gold.  Even property...

Link to post

In normal times I think your statement is correct  in that normally Gold represents a portion of a diversified portfolio (I never understood the logic in this by the way...  It is not a Trader mentality.)  However these are not normal times and in a crisis Gold has historically represented a safe haven and if a major set of asset bubbles are about to burst then Gold will once again represent the only safety at hand, other than USD, which is only a relative safety and only if you can get or hands on the actual cash...


I am no Gold bug but the twin reasons Gold has enjoyed a recent rally, despite still being at a relatively high valuation on historic levels, are growing concern over these asset bubbles and ultra low interest rates.  If that concern grows (and especially if it becomes manifest in an actual crash scenario) and if rates remain low (which I believe they will so long as the central bankers currently in charge are still in their roles and until a major crash is played out) then Gold will have so much upward pressure that it is hard to call how high it could go.

Link to post

If both stocks and bonds collapse at the same time what will the big players put their cash into? The answer like you say is the USD cash and gold. No one will go Euro cash as negative rates are changed on overnight deposits. While neither of us are gold bugs (thankfully) I only see gold rising as a hedge against negative rates of government otherwise it is inert and has real value (sorry for those who think of it as money) my local Tesco does not take gold. So in this sense Gold may rise temporarily ahead of a stock market rise; but US assets in particular are sure to pick it up and over take it? 


In US terms as an UK investor I don't see US stocks as overvalued as in part they are an investment (despite lower yields of late) but they are a hedge against my currencies weakness. Even after todays blip (which I think we agreed was too early), the FED is the only central bank talking about hikes not negative rates.



Link to post

Looks like gold catch us all . 

How is your new count, you think that C completed ?


September is the most bullish month historically for gold.

Also, looks like us rate hike possibility going down with new datas.


You still think its a pull back or new bullish wave started ?




Link to post

I honestly don't know what to make of Gold/Silver just now .  I lost confidence in the set up so didn't trade the breakouts to the downside and they proved false as I had feared.  Now both markets have retraced back up to the upper formation lines (Triangle and parallel tramlines respectively) and are meeting resistance.  Should a turn down be confirmed here then that sends the markets back down for another round trip but after that who knows?


All 3 scenarios previously discussed remain potentially valid being:


  1. The Large scale wave 1 is done and the current move is a wave 2 retrace before the major wave 3 rally with further to go in the retrace
  2. Same as above but wave 2 is done and wave 3 has started
  3. Large scale wave 1 is not yet done and the current move is a smaller scale 3-4 retrace thus we would get a rally and larger retrace back down

Will need to see more price action to hone in on this and may prove a challenge to do so safely.


I have been concentrating on other easier set ups in FX, Oil and Copper but will keep an eye on these as always as things progress.


Link to post

The complex retrace continues  with an almost predictable bounce back off the upper Triangle (parallel tramline in the case of Silver) and I must confess I too a cheeky short on both at the line.  I now expect these markets make their way down to the lower lines and then we will see if we get a break out to a lower retrace level or another round trip.  Very hard to trade such complex retraces and best to sty out or if you do want to trade it only do so at the extremities of the range and with tight stops as one thing can be guaranteed, there will be a breakout eventually...


I still retain my short/medium term bearish stance on Gold but if we get another round trip back up doubts will once again creep in, c'est La vie... 


Link to post
  • 2 weeks later...

Hmm, I can't help feeling I may have missed the boat on Gold with a turn and bounce off the long term trendline support.  I did spot this yesterday but the FOMC and my preference for other markets made me pause on this one.  It will be interesting to see of it breaks the upper Triangle line in the coming days and Silver may give some advance clues to that.  If it does a Long at a confirmed break would be interesting.


Link to post

Don't worry about , nothing missed yet.

It was really hard day to trade though.

I got hit by the needle with just 2 points while I was sitting on the 6K profit :( Hopefully, I managed to secure 2K of it.

I just can't help thinking of how much profit I would be sitting on right now if I put the stops 2 points lover, possibly around 15K :((


I was expecting stronger move to break the resistance line after fed decision, but Gold came only half way.

On the other hand, Silver is at the resistance line already.

I start to believe that we will be moving up and down in the wedge, triangle or whatever it is until December for both gold and silver :)

So, I am short on silver and long on gold at the moment.




Link to post
  • 2 weeks later...

Gold and Silver have been an exercise in patience as the market once again teaches me to stick to my guns and wait for the right moment.  That moment came on Monday with a confirmed break of the long term supporting trendline and brief retest before a drop through the additional Triangle formation.  My original assessment is now confirmed I think and I am look for the wave 2 (or B but likely 2) retrace point.  The Fib 50% seems popular on Gold in general and it coincides with a strong support area AND a parallel tramline drawn from the line recently broken through so for now this is my working target.  I do expect some relief rally action in the short term before a resumption of the drop but will need to read the shape of that drop to hone in on the retrace point as we close in.  Of course the Market has to get through Fib 38% first.


Short term then a rally before another drop and then I will be looking for congestion action that signals a major turn into a long and strong wave 3 rally, which could go for a long, long time...  If we see stocks and bonds jitters, not to say beginnings of a collapse then all the better for Gold.


Link to post

Good insight Mercury. Clearly from yesterday it would be fair to make the statement that we began a clear W-3 impulse wave yesterday of a retracement of which a good channel was produced of which will help guide the end of this retracement.

I am long-term bullish on gold at the moment, but since I am not in the trade, I would rather sit out from this one until the tide turns for now, which looking at the COT data for this month it does not look as if this is going to turn any time soon. Which is why we could see equities continue on the bullish trajectory.

Link to post

Looks like we all waiting for 1200 to get in the train now.

Another thing that they know that where we are waiting, but we do not know that what they are planning...


I believe that dirty money not smart (hedge funds, banks etc) hunt together against small traders, investors like us.

They all know the plan, timing etc... 

It looks like impossible to win against them with the charts they draw.


We need a clear long term strategy and willingness to loose if it is wrong.

Otherwise they will fool us again and again with psychological and computerized price movements.



Link to post

Interesting your COT data shows shorts heavily outnumber longs. What I saw from this week tells a completely different story. Producers (miners and the like) are net short (6.8% of OI is short vs 22.4% long), swap dealers (counterparties to miners, hedge funds etc) are similarly net short (4% vs 22%). The only bunch who are net long (almost record) are hedge funds and individual traders. See here http://www.cftc.gov/dea/options/other_sof.htm



Link to post

That is correct , I guess it depends on what data you look at and how you interpret it.  The phrase, "lies, **** lies and statistics" springs to mind with this.


The way some people use COT is to trend follow the financial markets (i.e. the so-called non Commercials or managed money as you have it).


The way I use it is chiefly to identify when the Financial markets may be too Bearish or Bullish.  The Financial markets are non commercials who take the other side of the commercial trade hedges and future buying/selling.  The theory is that it is the commercials who are the "smart money" because they have the inside track in that they are closer to what is really going on in the industry.  In this case it is the commercial producers who know what the real demand is and where it is coming from and what the supply side is looking like in the mines.


As an example, the high point for Longs over Shorts by the non commercials was in the week of 5 July 2016 (414k longs over 67k shorts - Futures & options combined).  The market topped out the rally up from Dec 2015 on 10 July 2016...  You can see this in many other markets at major turning points, of course it is easy to see in hindsight...


Where we are now doesn't tell us much except the non commercials are rapidly unwinding their net long positions (137k shift towards Short side since the July top, 100k of that in the last 2 weeks) and the rate of that unwinding is gathering pace.  At some point they will shift too far to the other side of the boat and then it will be time to go Long again.

Link to post

Thanks, mate. I agree with your interpretation of following commercials (or industry insiders)' positions closely. And they are net short currently. And I'm a bit scared to buy into precious metals at this stage as there are significantly long positions found on non-commercials' books. Once they start unwinding these longs (that I expect to happen when interest rates rise), gold and silver could go really low. Last month's dumping of gold and silver (along with Soros' selling of ABX.N), kind of intuitively telling me to stay away from them right now. Having said that, I do believe, however, in long term values of precious metals especially against GBP.

Good luck with your trading.

Link to post
  • 2 weeks later...

Gold may be rallying, but for me, nothing more than a retrace and therefore looking to sell until the main bear retrace concludes. Would not supprise me that gold may complete its cycle a few weeks after the US election, or visa versa, depending on how quick it moves, but knowing gold, it will move at a snails pace.

Link to post
  • 2 weeks later...

Looks like the retrace is completed  and right at the Triangle breakout resistance area and just short of a Fib 62%.  Not a classic A-B-C but the move down coupled with 2 long tails (if today is confirmed) is quite bearish.  Silver is even more bearish.  If today's price action continues in a bearish tone then I suspect we will now see a 1-5 down to a major turning point into the Gold rally everyone has been talking about.  I'm looking for this in the 1200 area at the Fib 50% of the major rally leg up from Dec 2015.


As a watch out, given the non classic A-B-C another short leg up hit the Fib 62% and deliver NMD cannot be ruled out.


Link to post

Although the technical without suggests that, for me I would rather wait until after the election, because this is very dollar sensitive and adding to the mix the political, uncertainty I fear that even if we get a move down, it would be small and end up being an intraday trade. Also bear in mind NFP tomorrow so best await for those numbers as well. However during the long term, yes I do suspect that we will have a nice bull trend to the upside, which will last a nice long time which is just my type of trade, no doubt yours too.

Link to post

You could be right and I feel there is still a leg up to come but not far as this A-B-C comes to an end and a significant drop comes into play.  Perhaps this would correlate with a contrarian view that the stock market has dropped too far on the basis of election "fears" and we could see a reversal soon, resulting in gold risk hedging unwinding for a while.

Link to post

If stocks and possibly USD is going to continue the post trump rally, at least for a while, doesn't it stand to reason (haha!) that Gold and Silver ought to retreat from their spike rallies?  I can see an A-B-C retrace forming and if true then the wave C could be swift and long back down to the 1200 area before the next rally is primed.


Link to post

Yes but at this stage I'm tacking it for a long campaign, possible around the Fib 50% (seemingly very common retrace point for Gold) although the 1200 area is also enticing.  Will have to wait and see how it all shapes up but a turn and rally in Gold now must surely be a precursor or reaction to US large caps and or bonds topping out right?  I mean what else can push Gold on a long rally?

Link to post
  • 2 weeks later...

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Create New...