Gold Correction Alert

BuggedOut

BuggedOut

Well-Known Member
Silver Stacker
Having a look at the medium term chart for gold and it looks like we could be in for a bad week for gold (and therefore silver). Previous pennant formation (that had been taking shape since early July) appears to have broken down today and so technical analysts the world over will see this as a very bearish signal for gold.

Coupled with the growing speculation of hawkishness at the coming central bankers meeting at Jackson Hole there is a high probability of a shock to the downside for gold from fundamentals (US Dollar strength) in conjunction with technicals.

Just my opinion. DYOR.

Disclosure - I liquidated my final paper PM holdings today
 
BQFpmbw.jpg
 
^^^^^^^
It's always the darkest before dawn !
plus my stubby is only half full right now.
;)
 
Looking to the positive....

Could be a great buying opportunity over the next month or 2 :D
 
BuggedOut said:
Looking to the positive....

Could be a great buying opportunity over the next month or 2 :D
Click to expand...

I hope so!! I have been neglecting other spending (clothes, etc) and am ready!
 
SpacePete said:
BuggedOut said:
Looking to the positive....

Could be a great buying opportunity over the next month or 2 :D
Click to expand...

I hope so!! I have been neglecting other spending (clothes, etc) and am ready!
Click to expand...

Dude, you need to wear clothes.

Or are you saving up to become the Australian "Gold Man"? If so, pls start with gold underpants. :lol:
 
BuggedOut said:
SpacePete said:
BuggedOut said:
Looking to the positive....

Could be a great buying opportunity over the next month or 2 :D
Click to expand...

I hope so!! I have been neglecting other spending (clothes, etc) and am ready!
Click to expand...

Dude, you need to wear clothes.

Or are you saving up to become the Australian "Gold Man"? If so, pls start with gold underpants. :lol:
Click to expand...
Do gold underpants get skid marks?

Silver underpants are supposed to be antibacterial so maybe I need some of those :)
 
BuggedOut said:
Looking to the positive....

Could be a great buying opportunity over the next month or 2 :D
Click to expand...

That's great news :)
I'm about to buy 1oz bullion from Perth mint & ABC Bullion this week, I guess I'll just wait until next month.
 
BuggedOut said:
Having a look at the medium term chart for gold and it looks like we could be in for a bad week for gold (and therefore silver). Previous pennant formation (that had been taking shape since early July) appears to have broken down today and so technical analysts the world over will see this as a very bearish signal for gold.

Coupled with the growing speculation of hawkishness at the coming central bankers meeting at Jackson Hole there is a high probability of a shock to the downside for gold from fundamentals (US Dollar strength) in conjunction with technicals.

Just my opinion. DYOR.

Disclosure - I liquidated my final paper PM holdings today
Click to expand...

Bug,

According to this chart, it is going to increase: https://www.tradingview.com/chart/XAUUSD/iVzjslOK-Elliott-wave-analysis-on-Gold/

This is due to uncertain economic situation leading to US election. Plus Jim Rickard has predicted that Gold will become more expensive up to AUD $10000 once more country goes into Negative Interest Rate.

Please corect me if I'm wrong.
 
masmas, I am not expert and so it's good that you're doing your own research and asking questions. I'm just posting my opinion and I've been wrong before so don't take my commentary as gospel.

But to respond to your post. Firstly, the chart you posted is over 2 months old. From mid June the gold price did move up pretty quickly, spurred on by the Brexit vote it went all the way up to $1365USD (which is higher than would fit on the chart you linked!)

But what often happens in markets is that after a strong run upwards, it needs to correct itself and take a rest before it will move up again.

I still believe that gold is a good longer term investment for as long as we have wacky monetary policy like negative interest rates and quantitative easing going on(and I also follow Jim Rickards), but I think in the short term gold needs a strong catalyst to go higher so I am waiting until a bit closer to the US election.

My initial comments might be better explained by this chart :-

17623_gold20160824.png


Note the purple "Pennant" shape, a near symmetric triangle. This is a common pattern identified via technical analysis of charts and many commentators have referred to the pennant forming in gold. I believe the support for this pennant was broken on Monday, though maybe I have my line drawn in the wrong place.

I also previously pointed out the "Double Top" which is also a common reversal pattern that technical analysts will pick up.

Add all that to the possibility of the Federal Reserve making Hawkish comments at the meeting of central bankers Jackson Hole this week and there is both fundamental and technical risk to gold in the short term :-

http://www.zerohedge.com/news/2016-08-23/8-12-regional-feds-voted-hike-discount-rate-july

A rate hike in the US would strengthen the US dollar and weaken gold (and so increased speculation of a coming rate hike will do that too)

I might be totally off my rocker and dead wrong, but I generally play the percentages and when enough signs point to Rome....well I go to Rome :)
 
SpacePete said:
BuggedOut said:
Looking to the positive....

Could be a great buying opportunity over the next month or 2 :D
Click to expand...

I hope so!! I have been neglecting other spending (clothes, etc) and am ready!
Click to expand...


:cool: ditto... Told my wife stop spending we got to finish our stack.
 
Lunardragon said:
Have to agree w buggedout

Appears the gold stocks are now reversing....
Click to expand...

yes, Why is this hapening ?

price change alerts for 25 Aug 2016
Security Change Opening Price Closing Price
Freeport-McMoRan Inc (FCX.NYS) 7.51% 11.980 11.080
Alps Sprott Jr Shs (SGDJ.NYS) 8.23% 44.600 40.930
Silver Wheaton Corp (SLW.NYS) 8.07% 28.490 26.190
Royal Gold Inc (RGLD.NAS) 8.42% 82.730 75.760
 
masmas said:
Lunardragon said:
Have to agree w buggedout

Appears the gold stocks are now reversing....
Click to expand...

yes, Why is this hapening ?
Click to expand...

Generally, when the gold price moves the gold mining stocks also move - and mining stocks are much more sensitive to movement in the gold price because they are effectively leveraged against it.

Think of it this way :-

If it costs a miner $1200 to pull 1 oz of gold out of the ground and they sell it at $1750 - that's $550 profit per oz.
But if the price of gold drops to $1700 then their profit drops to $500 per oz.

The price of gold dropped (1 - 1700/1750) = 2.8%
The profit of the gold miner dropped (1 - 500/550) = 9.1%
 
SteveS said:
If somebody in here could explain - in English - what is behind this, I'd be grateful. A huge dump of paper gold yesterday:

http://www.zerohedge.com/news/2016-08-24/someone-just-puked-15-billion-notional-gold
Click to expand...

Who can know? Possibly only 1 person knows. Or maybe zero if it was a computer algorithm executing the trade! :lol:

Here are the most common theories that will go around :-

A) Manipulator - A central bankster wanted to suppress the gold price and saw an opportunity weakness on the buy side.

B) Insider - Someone knows that the banksters are going to make hawkish comments at Jackson Hole and got in before the announcement.

C) Speculator - Sensing a breakdown in technicals and/or fundamentals someone has taken a huge short position to get in first.

D) Other - <Insert your own explanation here but make sure you have your tin foil hat on>
 
BuggedOut said:
Who can know? Possibly only 1 person knows. Or maybe zero if it was a computer algorithm executing the trade! :lol:

Here are the most common theories that will go around :-

A) Manipulator - A central bankster wanted to suppress the gold price and saw an opportunity weakness on the buy side.

B) Insider - Someone knows that the banksters are going to make hawkish comments at Jackson Hole and got in before the announcement.

C) Speculator - Sensing a breakdown in technicals and/or fundamentals someone has taken a huge short position to get in first.

D) Other - <Insert your own explanation here but make sure you have your tin foil hat on>
Click to expand...

A: Perhaps George Soros did it :lol:
B and C: no clue.... perhaps Lord Rothschild try to share the "weak hands" ?
D: perhaps the Quant Trader somewhere making it to sell the majority of the stock before it goes up higher ?
 
BuggedOut said:
Generally, when the gold price moves the gold mining stocks also move - and mining stocks are much more sensitive to movement in the gold price because they are effectively leveraged against it.

Think of it this way :-

If it costs a miner $1200 to pull 1 oz of gold out of the ground and they sell it at $1750 - that's $550 profit per oz.
But if the price of gold drops to $1700 then their profit drops to $500 per oz.

The price of gold dropped (1 - 1700/1750) = 2.8%
The profit of the gold miner dropped (1 - 500/550) = 9.1%
Click to expand...

Whoa, that does make sense, I've never knew about that before you explaion it to me in simple English ;)
BuggedOut, thank you for the sharing and to educate people like me here.
 
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