Sunday PM pre-game, 4/13/2014


 According to my benchmark chart on gold's intermediate cycles (weekly 3-line break, DJIA:GDXJ), we've had a bearish reversal, and I probably won't be long gold for awhile. However, I will wait to see confirmation on the similar chart I use for silver (GLD:GDXJ) before going short.


Now, it's true that gold is still above the 20-30-wk MA ribbon:



However, the price action looks similar to the false breakout of September 2012 (after the QE3 announcement that caught many off guard). By that, I mean a strong jump occurred above the ribbon, followed by a weak, momentum-less bounce off support that couldn't make it to the previous weekly closing high. Gold then fell to its first Fibonacci line (top blue, horizontal), and this time I bet it's headed to the second 50% Fib (center blue line)

Second, now that reader "David P. of Europe" has stolen the above chart and sold it to Eric King for 20 pieces of worthless fiat, I decided to look for a comparable monthly version, and what I found was simultaneously Astonishing and Staggering.

I don't thing Eric King will be posting this one soon, however, because it indicates that the gold bear market probably has another few years to go.


Note how important the monthly moving average ribbon has been, going way, way back (I shan't reveal the specifics, lest David P. of Europe betray me again, but here's a hint: the bounds are Fibonacci numbers). The upper bound is still well over the old line in the sand, $1525, and anyone who thinks that level won't pose serious resistance needs to remove KWN from his bookmarks posthaste. So basically, it seems probable to me that gold will first need to get to the MA ribbon (probably after the ribbon has fallen significantly lower than where it lies presently), and bump and track below it for awhile, before a legitimate Bottom is manifest.

There will be another clue: check the monthly RSI: the vertical dotted lines (white), which cycle quite regularly every 7-8 years, denote when the 50% RSI level was cleared to the upside after a break below AND the monthly MA-ribbon was cleared (surprisingly, these have generally been simultaneous events!) These points signal the tradeable Gold Bottoms exceedingly well. So we must needs wait.

[thoughts] On Predicting when Bullion will Return to GLD (premise)

[just a quick post] I've been chasing a lot of things lately, but primarily I've been trying to unlock patterns in the GLD bars list data. The 'dark bullion effect' is easy to measure but difficult to understand. Below is an infographic that I've been meaning to release regarding the 2013 calendar year. It is significant because for the most part of the year, most of the new 'additions' came from bars which had already been seen in the inventory. This is not specifically surprising by itself considering that so much had been removed, but it just demonstrates there is a really large stock of gold in London and that it doesn't necessarily all vanish instantly to China. In terms of visibility, interpreting the gold market through the ETF volumes alone is like trying to figure out how a department store operates by studying it through the retail window display.



Tuesday chart update

 A quick update to my previous post:
Last Tuesday, it looked very much like my benchmark chart on gold's intermediate cycles was going to undergo a three-line break reversal to bearish (see here), but with the rally on Friday, that didn't happen (see it in its present incarnation, below). The similar chart I use for detecting silver's intermediate phases, namely the GLD:GDXJ ratio (see below) is also still in its bull phase. So I'm not short presently: where we go from here is still very much up in the air:


Moreover, looking at my world famous 20-30 week moving average ribbon, we still are above it. 


Interestingly, Eric King, a closet Screwtape reader, recently posted the same chart, which I've been presenting for a year now (under the improbable pseudonym "David P. out of Europe").
http://kingworldnews.com/kingworldnews/King_World_News.html
Note the weekly closing price also bounced off a Fibonacci 50% line. If you're long, a line in the sand there (on a weekly closing basis) might be a good idea.

GM Jenkins calls it quits

 After many happy years of education here at ScrewTape Files University (STFU), it is with bittersweet feelings I announce that I have accepted a position elsewhere to do some other crap. I will resign my position as the Leonardo Fibonacci Professor of T&A tomorrow at close of business, and, frankly, will most likely never look at another chart again. 

See, loyal readers, I've been haunted by the suspicion for years now that this stuff is essentially worthless and--not to put too fine a point on it--adds value only to the lives of jibbering idiots and recovering schizophrenics. (Certainly not to their portfolios. . .)


Defragmenting GLD

This article presents some recent bar list work and shines that spotlight even deeper into the darkness of the vault. Does anyone remember the old 'defrag disk' programs we had before solid-state-drives? The screens were beautiful to watch as they worked! Seeing the individual blocks of data move around gave a better idea of what our data was doing and showed a different side to the disk drive we only ever saw the outside of.

A typical defrag program - showing data allocations on a computer file system.
The software would remove blocks from one location and write them in another.
Some files did not move at all (and you could see which blocks stayed).
The mechanic shares some similarity with a gold vault, an analogy close enough that we can take advantage of - a specific fixed area filled with lots of small (identical) units which take up space and are easily moved around.

Ukrainian Gold Fantasies

I am sure that most STFU readers know by now of the news from more than a week ago, reported by GATA on 7 March (http://www.gata.org/node/13754), that the US had taken custody of all of the Ukrainian gold reserves.  I originally saw a barely intelligible machine translation (no URL saved) of the original news release from Iskra News (located in the Eastern Ukraine, where there are a majority of Russian speakers), but the GATA version has been cleaned up considerably.
 

A reworded, condensed version of the story (with my quotation marks) is that four trucks and two VW minibuses, all without license plates, were waiting on the tarmac when a 'transport aircraft' landed at Borispol Airport, near Kiev.  The fifteen waiting people, dressed in black and armed, quickly loaded more than 40 'heavy boxes' onto the aircraft, which (after other mysterious men had boarded) then took off on an emergency basis. Later, a senior official of the former Ministry of Income and Fees reported in a return call (presumably to Iskra) that the US had taken custody of all gold reserves in Ukraine. Various estimates from the intertubes of the Ukrainian gold reserves involved have varied from 33 or 36 up to 43.2 tonnes.