Outlook for the next couple months on gold, gold stocks and the US markets
Doc joins us to weight in on the gold market including stocks as well as the US markets.
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Ditto.
Isn’t Al always in a good mood though, pretty much?
Stocks topped in May of 2011. It took until Feb. of 2012 before stocks recovered. So it’s not unusual to take awhile to recover. Actually the average is almost a year to recover from a crash scenario like we got this summer.
In support of Doc’s position that the “top is in.” Celebrated technician, Louise Yamada, was on CNBC declaring that this rally won’t last and that the top is in: Here is the link:
I think when gold was over 1900, Louise increased her target to 2500.
So take her advice accordingly.
Dave,
Good point! Her firm was probably shorting gold while she made that crappy call.
33 Analysts: Average Gold Price to Be $5,250 – $6,500 by Late 2014/Early 2015!
Martin Armstrong: $5,000 – $12,000
http://www.munknee.com/33-analysts-average-gold-price-to-be-5250-6500-by-late-2014early-2015/
Peter Schiff may end up being correct:
“Peter Schiff: $5,000 – $10,000 (by 2015 – 2020)”
I would definitely not count on that!
I would definitely not put my name on that, Dave. But then again, fortunately I do not have to.
And let’s not forget Steve Quayle calling for $60k gold!!
What these experts don’t take basic economics into account. At such high prices demand drops to almost zero from China & India as they have much lower incomes than us. Which means a price crash. Gold long term can only go up at the rate of inflation.
Forecasting a price for gold at some point in the future is a chumps game and all those absurd claims prove it. Birdman makes them all sound insane when he was only calling for $800 gold.
When we talk about the price of gold, we are talking about two different commodities, gold and the dollar. Without knowing the price of the dollar, any guess about the price of gold is throwing darts.
It would make more sense to add in a third commodity so we can measure value in terms we understand such as $3000 gold, the USD at 40 and a gallon of milk at $18.
Agree with that Bob. The inconsistency of analyst opinion makes them all sound foolish. The funny part is that only one of them will be right in the end and even that guy will probably have scored by plain damn luck.
Which just means the odds he can repeat the success are slim to none.
I am getting so cynical I doubt just about everyone lately. Seems to me there are just a handful of guys with real insight. The rest are all copycats. The only scorecard that really counts is how well the pundit meshed his calls with the real world.
In other words, all the blah, blah, blah is worthless if it does not prove itself in tangible investment results. So line up all the talkers and compare them by bank accounts.
The guys who cannot translate their words into returns can take a hike.
Pfft. Womens!
I just added some (TVIX) at the end of today’s trading to continue to build a long position in volatility. This may be a bit premature as the general markets may rise for a “feel good Friday,” but next week it is likely they’ll come into pressure butting up against their 200 day MAs. I believe the S&P has a 200 day MA around 2060, so that should keep a cap on the general markets.
Now, is it possible that the markets blow through resistance into the blow-off top Gary is expecting?….sure, anything is possible. However, when I look at longer term charts of the general markets I see a topping pattern, the Sept drop, and major chart damage that broke support, so I tend to agree with Yamada’s interpretation. (and I don’t have a strong like or dislike for her, but respect her track record in general).
If something geopolitical happens, the markets could turn and drop on a dime so I’m starting to build a contingency plan for a further drop.
BTW – Good thoughts today in this editorial from Doc on watching the monthly charts for the bigger picture. I concur and feel the same way Cory does about being encouraged by the latest action in PMs, but not overly excited yet until some of the over-hanging resistance levels like 1223-1224, 1252, and 1308 get taken out.
I also liked Doc’s comments that I’ll be much more encouraged when the 50 week MA becomes support that Gold bounces off of repeatedly. Lastly, I also agree that if Gold/Silver do pull back one more big leg down, then the mining stocks will be more resilient than the metals, and may even base and build in spite of the lower metal prices near the bottom.
More on Louise Yamada:
October 10, 2015: In his weekly Barron’s column Up and Down Wall Street Randall Forsyth discusses Louise’s views on the current market rally:
“Still, markets rallied, no doubt boosted by renewed expectations that a Fed rate hike is a 2016 event, even as central-bank officials and many economists cling to the idea that liftoff could take place before year end. Regardless of the outlook for monetary policy, clients of Louise Yamada Advisors were tipped off last weekend about what to expect in her monthly report titled, ‘Bear Market in Progress; Rally at Hand?’ [published October 3, 2015].
“While Louise contends that the highs of the six-year bull market have been seen, bear markets usually feature rallies. Even without speculation about the Fed’s deferring liftoff, she spied trends in the market that pointed to bounces in deeply depressed materials and energy stocks ahead of last week’s rebound. As for the latter, the Energy Select Sector SPDR exchange-traded fund (ticker: XLE) jumped 8% last week.
“The move could take the S&P 500 to the 2050 to 2060 range and the Dow Jones industrials to 17,500 – from Friday closes of 2014 and 17,084, respectively – but long-term sell signals remain in place. In her monthly missive, Louise writes that the risk is for a retracement to the levels where the major averages broke out from their long-term trading ranges in 2013. In round numbers, that would be back to 14,000 on the DJIA and 1600 on the S&P 500.
“‘Traditionally, rallies in bear markets, if we’re correct on that, can cause a return to complacency before the bear claw comes out again,’ she related in an e-mail on Friday. Her key message to her clients: ‘Capital preservation remains key.’
“Good advice, as the market provides higher prices for losers, which are tax-loss candidates, and winners, as well.”
Louise on Bloomberg TV Oct 7, 2015October 7, 2015: On Bloomberg TV’s new market-wrap show What’d You Miss? Louise is interviewed by hosts Alix Steel, Joe Weisenthal and Scarlett Fu regarding the monthly technical charts of leading market indexes. Video is available from Bloomberg.
The video link for Louise Yamada’s Bloomberg appearance:
AG having a strong day today. It seems like it has been moving a day ahead of the rest of the sector lately. Predictive of a big pop tomorrow? We will see.
Big al to convince doc that gold is in a bull trend you need to hypnotize him first or else brainwash him while asleep 🙂
Just change the parameter of the Bollinger Band and the MACD on
his Monthly chart 🙂
Funny Don Corleone & Gabriel! 🙂
Good show Doc, I agree with much of what you said including that miners will start the next up-leg from a higher level. That just makes sense because as we are seeing already there are quite a few people who have already commit to gold and the resource share sector and typically once commit they will not sell even if prices retrace.
That is not what I would do but it is just the way most peoples minds work.
Anyway, I will throw in my two bits for today. The dollar did rally as I had predicted yesterday and I think that probably came as a surprise to most. Further upside is anticipated.
Gold stalled today but that had little to do with USD in my view. If you notice, the Canadian dollar is still rising and is now within pennies of strong overhead resistance. My belief is CAD will fall back and retrace all of its gains since late September which will take gold back down in the process.
At the minimum, gold should drop to around 1120 if the pattern of lower highs is to be maintained but it could fall below that point which will nix hopes of a major rise into the fall. If that’s the case we will be looking for a seasonal rally in January instead.
Meanwhile, gold is currently putting in a top around 1190 and will most likely trade sideways today and tomorrow leaving most frustrated. Options will expire worthless and we know that most are still on the short side so no big surprise. I am looking for the real action Monday morning when CAD is already in decline after having hit 78 and both the Canadian dollar and gold falling together.
There is reason to my madness here. When I look at the CRB index there is a H&S pattern that has appeared at the tail end of the chart. If you take a close look at the past couple months something very interesting jumps out at you.
And this is the important part of my post……
The pattern on the CRB is eerily similar to the pattern on crude oil right now over the same period of time between late August and today. So by my reckoning, if the CRB is posting a H&S then it does mean oil prices are about to fall hard.
I say that because energy is the largest component of the CRB and given that oil is in decline even as gold has hit an interim peak it stands to reason that what will cause the CRB to fall back to MAJOR support at 186 is falling gold and oil prices.
I think this could happen fairly rapidly so I have entered a short oil position again. What my theory rides on is that once the CRB hits bottom (it will be an important multi-year bottom incidentally) that resource prices will generally all be on the rise and inflation expectations will return.
We should expect that a Fed rate hike will remain on the table unless the CRB inexplicably breaks lower and the bottom fails. I seriously doubt that a 15 year low breaks lower though. How long it takes for this to play out is harder to judge but it could all be over within weeks.
As crude and precious metals decline we should also see many of the shares posting fresh bottoms. This is the point to buy in and it is my strong belief that crude oils final lows will have been seen. It is improbable the CRB can rise if oil keeps falling.
So the bottom is now in sight but it is not here until the fat lady sings.
Meanwhile many of us are sitting on 20%+ cushions on our mining stocks and will stop out in the green if things take a nose dive. Like I said, trying to catch the bottom on the miners will be worth the risk reward every single time, as the gains in the initial 6 month rally will be enormous.
Most will end up chasing at exactly the wrong time or will have to suffer through long sideways to down consolidations before seeing any gains.
Spanky, good comments.
Good thoughts A Listener & Spanky both.
Yep, the gains could very well be enormous.
Not this NUGT bag holder!
A Listener; I can’t disagree with hardly anything you said on that post. When others were talking about $75 oil in the summer (along with T. Boone Pickens) I was warning that there was no way from a technical basis that we would see that price by summer. I’ll continue to say that based on my technicals you’re not going to see oil take off any time soon. In fact, I believe the odds are that the base metals and other commodities are still at risk.
A L:
In August the CRB was the lowest in 59 years in real dollar terms. We have hit bottom. Everyone seems to forget that investors price in the future. The CRB has had a bottom and oil will climb the wall of worry.
I wouldn’t even dream of betting against the record of a market that is 59 years old. That’s utterly irrational. China could drop into the ocean tomorrow and we still need commodities.
Bob, gold reached 150 barrels of oil per ounce in 1931. What do you think the odds are that gold might exceed its forty year, thirty-something barrels per ounce high? I think it’s possible but not probable and at least a few years away if it does happen.
The only thing that makes anything go up is inflation and it affects everything about the same over time. Those grandiose claims for gold didn’t give prices for anything else. If gold is $3000 and milk is $18 which has gone up?
Gold is an insurance policy first. Gold at $5000 means the world just blew up.
I understand all that very well but notice that there is no dollar price mentioned in my question. 150 barrels per ounce is incredible but it happened at a time that is much more similar to the present than the 1970s were. In gold terms there’s no such thing as hyperinflation only “hyper” deflation.
Btw, many claimed just 8-10 years ago that “you won’t want to live in a $2,000 gold world.”
I’m not worried about $5,000 gold blowing up the world but it will mean real hardship for most savers.
BOB:
This is a question from an inexperienced guy (me) for an experienced guy (you): During the last bull market in PM’s when gold went from $35 p/o to $800 p/o, was the feeling then that the world had just blown up? If not, what makes this time different. Thanks.
All The Best,
JIM
Jim:
That’s a really good question. The answer is YES. From the end of November 1979 until the top around Jan 21, 1980. Silver climbed from about $15 to $50 and gold went from $400 to $875. There were long lines at every coin dealer in the US and a sense of panic.
Gold will go into a bubble and the price will overshoot any rational price. When people are standing in line to buy it and it is on the front page of every newspaper or news report and your clerk at the grocery store is telling you how much money you can make owning gold, you need to sell.
Most won’t.
Read what Rick Ackerman has to say on USAWatchdog. We are going to have a financial panic. Gold will go up a lot. It will overshoot and there will be a time to sell. That’s down the road.
All the Rules of markets that i learned in the last 40 years seem to not work very well anymore. the last 10 years [ maybe since the twin towers attack] . I only wish i had boght DIS disney 40years ago i would be a millionaire today. best of health and wealth to you all S
You would probably be at Disney right now Russell S Hamilton !!
Something happening in Shanghai
May I add that what you are not seeing is that over the past few weeks pricing power is now in the ‘overnight markets’, AKA Chinese control. As the Comex inventory gets depleted, shorts can no longer bid down the price with impunity. When they try, it is quickly bid back up to where it was the previous night. This is not a coincidence – the data has nothing to do with it, just provides an excuse.
It appears that willing sellers of western gold have finally disappeared. Unencumbered mine production is all there is, which I believe, will not be enough to unwind the largest short position of anything (if one counts all the claims against existing above the ground ounces) in history.
Thanks Gabriel
Alastair Macleod well worth listening to on FSN esp 20 mins in when he speaks of negative interest rates and the demise of the dollar. AM is part of Bitgold and considering him to be 100% kosher have just bitten the bullet and opened a Bitgold account.
Paul Sandhu addresses the common goals between Riyadh and Moscow.
Thanks Reverend
NUGT refusing to drop below $50. And my RUSL shares have turned green but are so overbought on the 10 day I am worried about a pullback. I did not have any powder for the last pull back and none for the next. sigh
I cashed out of the market today as it looks like the October correction is not done yet.
I still have a short on.
Guys can you show us a chart maybe, on the things Doc was talking about with respect to the technicals on the gold chart (e.g. the 12/26 MACD) and the monthly chart. It was very interesting.
Monthly chart on Gold — Futures Chart — FINVIZ.com
http://finviz.com/futures_charts.ashx?t=GC&p=m1
Great to hear you in such a good mood today Al.