Sunday pre-game, 1/6/13

Hello friends, I have a quick post for you as I'll be traveling for the next three weeks, and with so much stuff going on probably won't be able to post till February. So, gold hit the yellow channel Friday (see above chart) and bounced off strong [1/5 edit: these charts reflect COMEX close, gold was up another $10 and silver almost 30 cents]. I sold my puts... I have no clue where the metals are headed in the short term. It seems somewhat absurd that gold is trading below where it was before QE3 was announced (much less QE4). Recall that after practically every Fed event for over a year and a half, gold and silver would sell off (ostensibly) because QE wasn't announced. Sure, it seemed like eventually it had to be announced, at least to metals bugs, but one in the hand is always greater than two in the bush. Uncertainty is uncertainty. And there were lots of arguments floating around, especially by mainstream pundits, that QE was a non-starter because it wasn't working or that it wasn't needed (insofar as the banks were saved and unemployment numbers were slowly recovering) or that it would only be an option of last resort (e.g. it would take a big equity sell-off to justify it) etc. But no, we got QE and open-ended QE at that, and gold has fallen. Also, on a related note, gold's upside action seems to defy what you'd expect in a market dominated by momentum traders. As a case in point, I mentioned in the comments of my New Year post that I expected Wednesday's rally to be quickly erased to close the week. That's just how things have gone lately when the charts start to look good. Seems to me Ed Steer's term of "not-for-profit trading" is what's going on. At any rate, it can't be ruled out. 

Anyway, seeing as gold on the linear chart has just touched the bottom of a very conservative, long-term channel, you gotta believe a new low next week (as happened Friday during overnight trading), makes the red line the next target:









I've begrudgingly started looking at Fibonacci fans. In the past I've found them useless, but it appears to be dictating silver's action pretty well, or at least giving off that illusion. 
I don't really pay much mind to the gold/silver ratio, but I'll bust out the chart when it hits some of my lines.



Silver and the CCI index go in the same direction, so this chart is important. Note the CCI has once again fallen below its 200-day MA (blue) and is wedged between it and the 50% re-tracement line. It would be bad for the metals if it falls through.


Finally, the ^HUI and "Gold's Safe Haven Quotient" chart. Despite a wild week -- nothing doing...

Gold stocks actually finished up for the day on Friday . . .a good sign.






53 comments:

duggo said...

Hi Gm
World population 7billion so by law of big numbers someone must be right all of the time. He/she makes a decision and it never goes wrong. So taking this a step further there is a very good chance that there are many people in the financial World that are right nearly all the time. Whether they use TA, flip a coin or throw darts at the FTSE they never seem to lose and they are our billionaires. They are probably convinced it's all down to intelligence, skill, in-depth analysis and hard work. There are others who do the same but lose everything. Man has been trying to control his environment and destiny since he began to walk upright on two legs. He has used any number of arguments to prove he is in control when in reality he isn't. He has resorted to religion by praying or making offerings to Gods. These days he makes offerings to financial news-letters and purveyors of TA. All utterly futile. When the market refuses to bend to his will he shouts "manipulation" not being aware that trying to manipulate the market is about as effective as manipulating the seasons. The battle-field of the financial market is full of armies fighting under flags of misconception. They are all led by modern day gurus that would make King Canute despair.
So what's my advice for 2013. Looking at choosing one of 7 billion try to become best buddy of James Beeland Rogers, Jr.

Warren James said...

@GM, good call on the 'suckers rally' mid-week!

@Duggo, that is deep. With your view on TA - what is your opinion of Martin Armstrong's work?

duggo said...

"what is your opinion of Martin Armstrong's work?"

Very prolific, very understandable, very intelligent..... very lucky.

Someone who is clever and well thought of enough to be advisor to just about every financial power in the World.

The financial World is still in a mess so proving the point that the more you interfere the more you make the whole thing unstable and unpredictable.

Warren James said...

Martin is certainly prolific! His latest set of thoughts is quite interesting to read ... I'm not sure I understand it though.

He is basically saying that 'of course Quantiative Easing will stop' ... based on the fact is was announced before the election and that the FED is only interested in protecting the bond market and therefore they will not harm the value of those bonds. So perhaps the market already priced that in, and possibly explains the weak rallies on QE3/QE-infinity.

But, he's also saying 'forget HYPERINFLATION, this is DEFLATIONARY'. But surely he knows that hyperinflation is a deflationary collapse? I'm very confused and I hope someone can explain it to me. The FED won't really stop creating base money to cover deficit payments amiright? Or is there something we don't know?

I liked VTC's suggestion (@fofoa blog) about the FED being used as the scapegoat.

Martin's summation of the tax-thirsty governments is spot on. We sent a Christmas present to the UK, value of about $100 registered and all that crap, it got intercepted and held ransom to pay duty ... ended up being about 45 pounds to release the damn thing ... three weeks late. As far as I know, all this deflationary stuff gains momentum once the governments print more money to try and stimulate the non-production caused by them printing money and raising taxes, etc. In my opinion this is going to get hairy.

Martin Armstrong's cycle analysis and charts still point to a 2016 crisis of public confidence.

S Roche said...

GMJ,

Fib Fans seem to work when fundamentals are out the window and short term traders look for guidance. The more they work, the more.

I have seen them clearly painted before big moves, so I think large traders sometimes use them to signal intent.

Using Median Line or Andrews Pitchforks with Fib Fan overlay can give you a spooky feeling too.

Market Profile(tm) has been having a very good run recently, as short term patterns repeat, repeatedly.

Edwardo said...

But, he's also saying 'forget HYPERINFLATION, this is DEFLATIONARY'. But surely he knows that hyperinflation is a deflationary collapse? I'm very confused and I hope someone can explain it to me. The FED won't really stop creating base money to cover deficit payments amiright? Or is there something we don't know?"

My, but hasn't the question of what is QE really about become positively front and center over the last (not so) little while. Small wonder.

Clearly, on one very important level, QE has always benefited commercial banks since it is they who have been given cash at par for their non performing debt instruments.

At the same time, The Fed, despite being nominally independent, exists at Uncle Sugar's discretion. If they want to, Uncle Sugar can shut the Fed down. Is The Fed perhaps concerned that Congress will do more than pretend to reign in the Fed if The CB doesn't, ahem, help out? Would Congress have been remotely able to come up with their latest can kicking (fiscal cliff) deal, wherein they hardly cut spending at all, if The Fed weren't backstopping their profligate deficit spending?

It doesn't seem to this on-looker as if QE can be reduced, let alone be terminated, as long as there is no one else to pick up the bond market slack. China has left the building for good, and there is no one else- all intimations of Japan getting into the U.S. bond buying business with gusto aside-waiting to take up the new issuance slack except for The Fed.


So, while the announcement of open ended QE before the election was likely intended for maximum political effect, it doesn't then follow that said announcement was all just for show.

The latest alleged squawking about rescinding QE is, in my view, best understood as MOPE. Until we see the minutes of The last major Fed confab definitively demonstrating that there is, indeed, a true blue schism on The Board, that has, as its consequence, an end to QE, I'm not apt to put much, if any stock into what likes like jawboning.

Slow Loris Larry said...

@ Warren

I haven't tuned in on Armstrong for about a year or so - all that stuff about pi and double pi just seems like numerology to me. Unless he can explain what the causal mechanism is that supposedly produces those results, it is just gobbledegook as far as I am concerned.

But, on your recommendation, I went to the URL you provided, but couldn't find anything particularly interesting, unless you were referring to his 'Gold Array for 2013', which I found to be incomprehensible - the graphic was far too busy to convey anything, to me at least, and the prose was too cryptic.

If you were referring to some other part of his site, please advise.

victorthecleaner said...

Edwardo,

The Fed, despite being nominally independent,

The Fed isn't even independent as of today. Since the 1933 Gold Reserve Act, the Fed doesn't own any international reserves, and exchange rate policy has been the domain of the Treasury Department.

Victor

Slow Loris Larry said...

Again, @ Warren

I used to be quite confused about the supposed inflation/deflation dichotomy until I had a revelation that they are just two sides of the same coin. What you think you are seeing just depends on which side you happen to be looking at, by which I mean what denominator you happen to be using at the time. So, you are right that a hyperinflation is indeed also a hyperdeflationary collapse - you can't have the one without the other.

I think that Edwardo is right in thinking that the FED, having the fundamental aim of keeping the show on the road for as long as it is humanly possible to do so, has no alternative course of action other than massive 'money' creation. I think that you can bank on that!

Edwardo said...

VTC,

That's why I wrote that The Fed is nominally independent, as in independent in name only. However, because it benefits both Congress and The Fed, it is made to appear otherwise.

As someone (I forget who) that I came across some time ago indelicately put it, "The Fed is The Treasury's bitch."

GM Jenkins said...

Thanks for the comments, all. I remember a few summers ago, we had big discussion about Martin Armstrong, and I recall he even came out with an essay provoked by our discussion. After a point, I become prediciton resistant. There are so many floating around, that as duggo points out,someone's gonna be right. Has anyone been keeping track of Armstrong's predictions since his glorious return? The only pundit I have time to read regularly these days is Jim Rickards, because he totally nailed the whole QE3 announcement; not just the timing, but how it would come about. Turd mentioned a while back that he thought Jim Rickards was a government agent. I wonder if that's what's going around in his secret circle (i.e. the people who convinced him gold and silver would explode last summer, now moved to 2013). It is strange that KWN totally stopped interviewing him. He went from the "always popular Jim Rickards" to a persona non grata, apparently.

costata said...

Warren,

I skimmed a few of Martin Armstrong's recent posts and a couple of essays after clicking through from the link you provided.

It's obvious that MA thinks that hyper-inflation = wheelbarrows of money printing. So he's a long way from the thesis presented by FOFOA, HI = catastrophic loss of confidence in the currency.

It's weird that a guy who presents himself as a confidant of the rich and powerful isn't taking note of what the big money is doing. Experts in markets from fine art to high end real estate are noting record prices for collectibles, prestige property and other tangible assets.

This isn't borrowed money coming from speculators (according to reports I'm reading). This is cash chasing these hard assets. We can argue over TA versus fundamentals but equitiies are also well bid.

US residential real estate bottomed in 2012 and there is plenty of cash chasing it. Admittedly there is some speculative froth in some markets but that can be explained by the USG government's easy credit for marginal borrowers. But easy credit doesn't explain the cash.

Similar story in prime farmland. Prices in most markets are extremely strong. (Some of this is credit-fuelled of course. Agribusiness is influenced by cheap credit too.)

You can follow the tracks of money that is so-big-their-names-never-appear-in-print going back to the early to mid-nineties. Now big money is also on the move.

(The scope of this comment has expanded from my original intentions but I may as well press on.) No one is going to be able to bid these assets away from the big money holding them. So as these premium assets are increasingly locked up the range of choices for the latecomers will shrink.

As A/FOA pointed out, and FOFOA has reinforced in many posts, the "credibilty inflation" of the $IMFS stored up this HI potential over decades. I think some people are assuming that HI will be a bottom-up driven event, that the general public will unleash this potential.

IMHO it is a top-down driven event. The average citizen is always the last to pick up on trends. The classic "late adopters" of inovation cycle theory.

During the Weimar period it took two to three years for HI to fully emerge in all its fury. Perhaps something similar will occur this time.

So FWIW here's my optimal "TA" analysis tool for predicting US dollar hyper-inflation - a rear view mirror. IMHO the hyper-inflation potential of the US dollar has begun to finally actualize.

GM Jenkins said...

It's weird that a guy who presents himself as a confidant of the rich and powerful isn't taking note of what the big money is doing. Experts in markets from fine art to high end real estate are noting record prices for collectibles, prestige property and other tangible assets.

Good insight, costata. Louis, could we ask Martin Armstrong to engage us here?

Warren James said...

Thank you @everyone, for the interpretations, it helped. Lots to think about.

@GM, he may be open to a video interview, we've got enough questions for him, might be a good article on his views of the QE 2,3,4. I do have respect for the guy, despite not being able to help him do the editing on his Wikipedia page.

I had always observed this quote of his, which I thought was insightful - perhaps he has forgotten his own words. As I understand it, 'things being out of control' is just a matter of perspective!! Better to identify who is doing what and why.

""I truly hate the way 'conspiracy theory' is used to discredit anyone who suggests a bunch of people with common interests might actually put their heads together to engineer outcomes that work to their own benefit. Your sneakers are a conspiracy. Ice cream is a conspiracy. Cat food is a conspiracy, for God's sake. We know men sit in boardrooms to decide which store shelf to put anchovies on next week so they can sell 5% more, yet we are supposed to believe that when multi-trillion dollar cash flows and geopolitical balances of power are at stake, nobody can be bothered to plan how things will work out? That's a theory that's way more daffy than any conspiracy theory I've ever heard. The simplest question you need to ask to figure out who did what is -- cui bono? Who benefits? Cui bono is Latin and that was the Romans. They knew the score 2000 years ago. It's a shame that we've deliberately chosen to forget what they knew." - Martin Armstrong

GM Jenkins said...

Awesome quote!

costata said...

Warren,

I second GMJ on that quote. Armstrong is a frustrating fellow to refute because his arguments are often contradictory if you are familiar with a large part of his writings. But he has produced some excellent contributions to the debate (like the one you quoted above).

costata said...

My earlier comment wasn't sufficiently explicit. The actualization of the US dollar hyperinflation began in the 4th quarter of calendar year 2012. It will continue apace.

zzz28 said...

This may be off topic,I work for a company that does fabrication and painting of art works for high end artists ( Jeff Koons Elsworth Kelly Et Al).There is going to be a lot new art finished in 2013 and 2014.I think costata has it right as to what the rich are doing.

Edwardo said...

costata,

How much of what you describe, namely,
the very wealthy hiding in the assets you mentioned, is simply evidence of an awareness on the part of the wealthy that the taxing authorities are, for the foreseeable future, on a rampage. And so, buying objet d'art, for example, makes sense since it is a decent way to protect one's wealth, particularly where estate taxes are concerned.

costata said...

Edwardo,

...the taxing authorities are, for the foreseeable future, on a rampage..

I think it goes hand in hand. All of these policies erode confidence.

Theodin said...

'During the Weimar period it took two to three years for HI to fully emerge in all its fury. Perhaps something similar will occur this time.'

Ah, there's a typical finger-in-the-air, make it up as you go along, purely speculative gold-hog-wash comment one sees so often at this time of year. The 'perhaps' and the 'something similar' certainly sound convincing to me.

I believe the clock started ticking on these wild predictions 16 years ago, and here we are today with auction results now cited as evidence of a nail in the dollar's coffin. My oh my.

Jeanne d'Arc said...

@Theodin: I rather like the cut of your jib, good sir.

Fancy taking over from me at Screwtape..? ;-)

Warren James said...

@Theodin, yes - but then you automatically discount the rest of Costata's research and observations - not so slick.

@Costata, invitation to write here at Screwtape Files still stands - the whole 'deflationary collapse vs. stagflation vs. MOPE slavery' question is still the million dollar question in my view, and absolutely requires up-to-date observations.

@all, adding to this discussion, BullionBaron has a good writeup on the topic: "Why hasn't Gold rallied after QE3/QE3 announced?". Rgds, Warren

costata said...

Warren,

Thanks for the Bullion Baron link.

I tried to frame a reply to "Theodin" but this kind of stuff doesn't offer much to work with:

Ah, there's a typical finger-in-the-air, make it up as you go along, purely speculative gold-hog-wash comment one sees so often at this time of year. The 'perhaps' and the 'something similar' certainly sound convincing to me.

And I'm struggling to understand why JDA reacted so appreciatively to it. To each their own.

Mike Seymour said...
This comment has been removed by the author.
Kid Dynamite said...

off topic -
I thought you guys might like this long term chart of stocks vs gold. interesting one...

http://www.businessinsider.com/sp-500-priced-in-gold-since-1886-2013-1

Theodin said...

@Warren.

There is a 4-letter acronym in 'Costata's' post that tells you all you need to need about him, and many of the soothsayers out there, they often use it:

'IMHO'

(Of course some commentators should leave out the H, IMO.)

They just twist whatever they read online to suit their already made-up minds. It's part of their religion to do so. Anything and everything will be used to suit their agenda. But it is only their opinion, not fact, not 'research', not 'analysis'. An example from a recent post you may have read:

'For the FPI (or Freegold Puke Indicator) I'm gauging the sentiment of a very narrow band of the market, a segment that we could call the "swing producer" of private support for today's "gold" market. Forget the permabulls (most of the precious metals community) and the permabears (most of the MSM and mainstream investment community) and look for technical traders who have been bullish on gold for most of the last decade but who are always on alert for the top, preferably someone with substantial influence and financial weight.

I have found a good bellwether for my own purposes in this regard, and here are some of the things he has been saying over the past two weeks (paraphrased):

"Gold sentiment is off the charts low right now. It will be interesting to see how low the HGNSI (Hulbert Gold Newsletter Sentiment Index) will go after Friday's (yesterday's) action."

"The more Turk and KWN talk, the lower gold goes. Gold is heading below $1,550."

"Gold sentiment right now is suicidal."

"10 years in gold is enough. I'm selling 100% of my gold over next 3 months."

He believes that the secular "gold" bull market of the past decade has ended and a new secular bull market in the dollar and the S&P 500 has begun. And that's why I said that my FPI had "fired".'

Really, you'd have to try so hard to make this stuff up wouldn't you? It's the ultimate in wishful thinking (please give us freegold now). And what do you reckon will happen when sentiment is as low as it is today in the 'gold sector'. Yes, of course, a bottom will be made and off the price will go to new highs.

An aside, the joker known as fofoa used to quote Martin Armstrong and Karl Denninger, not so much these days since Armstrong bit back. But Armstrong predicted the gold price wasn't due to rise until Spring 2013. Let's see who is right shall we?

Armstrong's comments:

'Looking at our empirical models, the ideal primary target for the next turning point appears to be March 2012 thereafter we see a two-month move in the opposite direction initially there appears to be a fairly large change in Trend developing in September of 2012 which can lead to a move into the January 2013. Therefore if March unfolds as a reaction high we could see a retest of support in May with a reaction high into August for Labor Day and a decline into a final low in January 2013. It is clear that January 2013 should be a very important target. If that is a low then we should be able to see a significant rally into 2017 thereafter.'

Jeanne, what's the hourly rate?

Edwardo said...

KD,

My view with regard to Mr. Leftvich's chart is that he's early with his bargain hunting.

Theodin asked,

What's the hourly rate? No more than half (at the very most) of whatever is already being paid to your new Screwtape champion. This low rate is due to your rudeness and your hypocrisy, since you display, in abundance-a lack of substance-that which you decry so gracelessly.

Jeanne d'Arc said...

Oh, do calm down, chaps. I was just making a cheeky dig at myself, actually, as Theodin's comment was the sort of thing I get told off for doing all the time. Now I rarely write any more I was just teasing about how we probably need to find someone who'll keep up the polemics.

It wasn't meant to be taken seriously.

Oh, and by the way: gold's rubbish and smells of poo. So there.

costata said...

JDA,

Oh, and by the way: gold's rubbish and smells of poo. So there.

You're on fire babe!

Theodin said...
This comment has been removed by a blog administrator.
Edwardo said...
This comment has been removed by a blog administrator.
Jeanne d'Arc said...

@Edwardo and @ Theodin,

Right. It's head-knocking-together time, I'm afraid.

I may bear some responsibility for a misunderstood comment, but this has simply gone too far. There are plenty of other sites where you can trade insults - please go there to do so.

At Screwtape, everyone is entitled to their views and - importantly - to a certain level of mutual respect. Please abide by that, or refrain from commenting and go and kick the budgie instead.

Now shake hands and move on. I'm very disappointed in you both.

JdA

S Roche said...

Regarding the astonishingly accurate Armstrong quote, it leaves me somewhat confused.

March 2012 was indeed a high, followed by two months in the opposite direction, and yes a re-test of support in May took place too as well as a change of direction for September, but, it is only at this point that all the above becomes a prediction: it was published on August 25th 2012.

http://armstrongeconomics.com/2012/08/25/gold-the-computer/

In the spirit of the new, aggressive style of STFU: wtf?

costata said...

S Roche,

According to Armstrong those predictions were issued in 2011:

For now, this is what it wrote and was published for the December Conference last year that has so many astonished for it does not matter about the fundamental news.

Theodin said...

@ S Roche.

Let us see at the end of this year who is correct.

Martin Armstrong, or some anonymous blogger with no apparent credentials and a dodgy track record, but who dreams of paper/physical gold price separation, and believes this year is a window for that to happen.

Time will reveal all things.

Warren James said...

For the record, time may also reveal me automatically removing any disparaging ad hominem references to other blog authors.

Here at this blog, we try very hard to encourage:

1) Analysis of past predictive models
2) Data
3) Debate

p.s. We also have the 2013 famous bet between Turd and Jeanne, which we will watch with interest.

victorthecleaner said...

Warren and JdA,

We also have the 2013 famous bet between Turd and Jeanne, which we will watch with interest.

Can you remind me of what this bet is precisely?

Victor

S Roche said...

Thank you Costata,

You are quite correct. Naturally, I find this so intolerable that I was goaded into further research.

I don't mean to be tedious... (fair warning: I am going to be), but, via this process I obtained the equivalent of Martin Armstrong's December 2011 Conference forecast referred to from a very reliable source, GroovyGirlFriday, an eyewitness:

1. "Just got back from the Conference. I am going to issue a few posts on the subject" http://totallygroovygirlfriday.wordpress.com/2011/12/05/martin-armstrongs-world-economic-conference-part-one/ ;

2. "As I stated before, I can not share proprietary information, but I can highlight things Martin has discussed in past public papers" https://totallygroovygirlfriday.wordpress.com/2011/12/07/martin-armstrongs-world-economic-conference-part-three/ ;

Where I would direct you to the comment where GroovyGirl responds to Band318 as follows:

"Martin did not present any information on gold that was different from his October 2011 gold paper" http://totallygroovygirlfriday.wordpress.com/2011/10/15/latest-release-of-martin-armstrong-dated-october-14-2011/ wherein you will not find the above Martin Armstrong quote.

In the 40 page document linked you will find any amount of other predictions, some very close, but not the astonishingly accurate one from August 25th 2012 quoted above.

Apparently, prediction is very difficult, especially about the future.

costata said...

S Roche,

Hardly tedious, anything but, thank you. I'll read all of those links (and the exchanges in the comments) that you provided as time and tiredness permit.

If GroovyGirl is correct this is pretty brazen of Armstrong.

S Roche said...

Here are some excerpts from the October 2011 Forecast that was reportedly the basis for the forecast at the World Economic Conference of December 2011, I have excerpted mainly those forecasts relating to timing. Anyone interested can wade through the document and make up their own mind as to the value of the price forecasts that I have omitted: http://www.inflateordie.com/files/Gold%20Silver%20%2010-14-2011.pdf

I have scored each forecast and added my own assessment, with the benefit of hindsight, in brackets.

October 2011, Martin Armstrong:

1. the long-term outlook in NY GOLD maintains that only a temporary high may be in place at this time;

(Presumably this means the high of September 6, 2011 $1,920.74 intraday, still running: no score!)

2. as long as this year closes ABOVE $1405.50, then it is possible that the current bullish long-term trend will continue next year where a new intraday high could still be made;

(2011 closed $1,562.92 however 2012 did not see an intraday high: -1);

3. the failure to make new highs in 2012 would warn of a further decline into 2013 followed by a rally into 2016;

(2013 opened at $1,674 and as I type we are trading at $1,660: +1, but 2016?? Too vague: -1);

4. if new intraday highs are NOT sustained next year, then 2011 may produce the high on a near-term basis;

(self-evident: no score!)

5. resistance is still defined by the Break-Channel from the 1980 event. That shows technical resistance at $1941 followed by $2304 during 2012. This is the key resistance to watch for next year;

(resistance in 2012 was $1,800.00: -1);

October 2011, Martin Armstrong’s computer:

(All price indications are excluded here, to be kind to the computer, but for the mean-spirited they are all in the above document.)

1. According to our empirical models, the ideal primary target for the next minor cycle low on the quarterly level remains 06/2012;

(Presumably the May low of $1,526.80 is in the June Quarter: +1)

2. we then expect to see a reaction in the opposite direction unfold on the next major cycle target leading into 01/2013 where there should be high volatility with the next target 07/2013;

(Any reaction by definition will be in the opposite direction: -1; And, 01/13 is trading in the middle of the 2012 range, hardly a major cycle target: -1; Unless, the recent Jan 4th 2013 low of $1,625.94 was THE final low before the rapture: still running but +1, because I like the idea);

3. Quarterly Turning Points: 07/2011, 04/2012, (07/2012), 07/2013, 01/2014;

(The 7th Quarter? I may have to re-visit No. 1 above, however May is close enough to June to keep that point. April 2012 was generally in the middle of the yearly range: -1; July did see a bounce that translated into a turning point: +1);

4. On the Monthly level in NY GOLD, we see November, January, April, and June followed by August as key turning points ahead. We have a Panic Cycle due in July 2012 with directional Changes in October and December 2011. Volatility should pick up starting in May 2012 building into August 2012.

(November 2011 was choppy with a turn down at $1,800 (which set the resistance for the 2012 range): +1; January 2012 continued the bounce from the Dec 30 2011 low, one day out is close enough: +1; April nothing much happened, however, May 1st saw a sell-off that started a return to the lows of the year: +1; June bumped along the bottom of the yearly channel: -1; August saw the price take off, but we have already awarded a point for July (see 3) so: -1);

Cont'd

S Roche said...


5. Looking at our empirical models, the ideal primary target for the next minor cycle low on the monthly level remains 11/2011;

(November had a high of $1,800 which set the tone for 2012, for which a point was awarded (see 3): -1);

6. Thereafter, a re-test of support should develop 04/2012 which is the next key target objective;

(Didn’t happen: -1);

7. it would then appear that 11/2011 should ideally unfold as a high instead of a cycle low and all subsequent targets would also invert causing the next cycle low to unfold during the 04/2012.

(November did happen, a point was awarded, then taken away, now it is awarded again: +1);

8. Nevertheless, as it appears now, 11/2011 should produce a minor cycle low followed by a major high in 04/2012 with a key re-test of support come 06/2012. Therefore, the next major turning point is due will be the 08/2012.

(-1; -1; +1 (being generous, it was May); -1; and a point deducted for flip-flopping: -1);

9. Using a composite of cyclical analysis, the key months for a turning point in NY GOLD will be 02/2012 and 09/2013;

(The infamous Feb 29 beat-down: +2);

10. Our Directional Change models indicate that turning points are due the months of 10/2011 and 12/2011. Our Panic Cycle Models suggest that higher volatility is due the month of 07/2012;

(It was September 2011, but: +1; Dec 30 was already awarded a point for a January call, (see 4): -1);

11. Monthly Turning Points:
(01/2012), (02/2012), 04/2012, (06/2012), 08/2012

(The old Dec 30 turn, close enough to get it back again: +1; Feb 29: +1; It was May or July: -1; see prior: -1);

There were further weekly forecasts which are beyond the scope of this work. As you see the computer narrowed its forecasts down to January, February, April, May, June, July and August of 2012. I scored it -2 for Martin and -1 for the computer.

I am never doing this again.

Tony said...

@ S Roche,

I don't know whether to thank you or offer condolences for that colossal effort. At least we've learned that if we want predictions that mimic the accuracy of Martin Armstrong's predictions, we'd be best served to save ourselves the time and simply flip a coin.

Funky Tape said...

Why don't you guys go and ask Martin himself? He's (Armstrong Economics, rather) is hosting a one-day seminar in March this year in Philly. $200/seat. Open to public.

Also, his recent tirade about hyperinflation is great. Must read for anyone who's sold on the story about hyper-inflating asset prices and a Wiemar-like downfall...esp the Turdites and other nonsense-swallowing "goldbugs."

I've been reading his blog for a long time. It wasn't until I think J Sinclair accused him of being an "insider" who 'They' told to shut up" that it got really good. And by good, I'm mean that's when you could tell he was just getting PISSED! lol.

Good digs, Roche.

I have monthly 20-period BB's at $1516 and $1825 as of today. Every day it goes East, they draw in tighter. The release will be epic.

S Roche said...

@Funky, try them at 10 and 1.9 which is the alternative Bollinger suggested. Interesting huh?

costata said...

S Roche,

I finally read those GroovyGirl links. Thank you for the follow up analysis as well.

It reinforces a suspicion I have entertained about Armstrong for some time. I think his cycle theory is sound. It ties in very well with generational theory, the real estate cycle and other cycle theories.

The problem is that these cycle theories don't produce specific tradeable information. They are too generalized and I don't think you can make a lot of money offering this type of service. The demand seems to favour trading advice.

So I suspect that Armstrong needed to augment his income by emphasising the TA aspect of his work as the key to unlocking the trading potential of his cycle theory predictions. However if TA could be as capable of accurate prediction as his cycle theory is claimed to be then it's difficult to see any value in the cycle theory. TA could do the job on its own.

I think his business model rests on mutual support between the two elements and as a result he can't afford to be seen to be wrong on any prediction or it risks damaging the credibility of his whole enterprise.

answer2me said...

Costata, et al.,

Overall I agree with your assessment of Martin Armstrong but have a few things to add.
Martin has said multiple times that his computer is not fully functional and is not 100%.
Take that for what it's worth. I think of it like This, if he truly is putting everything
that moves into an algorithm, that will take some time. He was released from prison q4
2011 so he has some catching up to do. It would be interesting to compare some of his
1980s computer models for accuracy. As far as cycle theories producing tradable
information have you seen the documentary "trader" about John Tudor jones? It
was filmed during the 1987 crash while it was happening. His partner talks about cycle
theory and how they see extreme volatility in the markets and how there overall trading
strategy was planned around there findings. Btw, one of my favorite movies.

costata said...

answer2me,

I haven't seen that movie. I can see how cycle theory could inform someone's judgement about their investments but I can't see how it would be useful in trading specific markets at a given point in time. Too many variables.

It will be fascinating to see if Martin Armstrong is prepared to expose his computer AI to the world's scrutiny.

duggo said...

Like I said at the top of the comments. Armstrong maybe the "lucky" individual in 7 billion.
He just believes it's his computer programme.

There are numerous technical computer programmes that can predict the future. Several people have made fortunes out of them by selling them to "gullible" investors.

Remember: most predictors of the future work..... until they don't.

S Roche said...

@Answer2me,

I can confirm that the computer is not yet 100%. Somewhere towards 3.1415926539% might be closer.

I find the suggestion risible that Paul Tudor Jones would follow Martin Armstrong. However, I am happy for you to follow him.

I find his life story compelling. I am waiting for the true story behind Edmond Safra to emerge and I suspect that Martin Armstrong could shed some light on that. Hollywood beckons.

answer2me said...

@S Roche,

you seem like a guy who needs it spelled out. here it goes... I am not suggesting that Paul Tudor jones was following martin Armstrong. At Pauls level hes not following anyone but his own analysis. my comment was more of an observation of how some of the bigger players time the market and make there trades. Im mearly stating that cycle theory is part of that. In the documentary he has a partner that is doing most of the historical research and compiling graphs and time lines, looks like all of his timing models where done in house. I found his implementation of his cycle theory into his trading stratagy facinating. a bit of history about the documentary, he made a bulk of his fortune during its filming and tried to buy up every copy after its release on PBS.

S Roche maybe this trading stratagy makes more sense.

http://www.youtube.com/watch?v=lBtJeOLJ5ek

here is a link to the PBS documentary for anyone interested.

http://www.tradeitdontdateit.com/paul-tudor-jones-futures-trader/

S Roche said...

Thanks a2me, for spelling it out and sharing both of those links.

Edwardo said...

We don't have markets anymore of he sort that the great traders of yore, Dennis, Tudor-Jones, Williams, etc. made their fortunes in.