The All-Important Chart for Gold & Silver Post-Fed Meeting [UPDATED]

Sorry I stole the title from King World News.

 If this line is broken on a weekly close, I say gold won't recover for several months, maybe several years.



There's still Friday, though, for the optimists among you. And King World News ...







[**UPDATE**] Disaster narrowly averted with today's rally .... If the red line is broken, I'm confident $1000 (horizontal green line) and perhaps even $800 (blue trend line) will follow.
I made a small bet yesterday that the red line would hold (hey, following this market with no money on the line is like watching sports just for fun ... who does that??), but if it should fail ... that will be the last time I let any concern about fundamentals influence my trades!!!

8 comments:

Warren James said...

I'm expecting more correction, thought this casey article was decent - calls for about 6+ more months of pain before resuming the bull market.

Let's also not forget the debt ceiling drama in January, although it's a safe bet that is just installment #2 in the soap drama ... all eyes on the fed with regard to bond buying.

Warren James said...

The fed's decision to start 'squeezing it off' is not generally predicted by many of the gold blogging community (their view is that the fed cannot, will not), so it will be interesting to see which model holds. Head-fake is entirely possible.

Elmer Habavilo said...

GM -

I hadnt really seen that trendline before, but I think I agree with the notion of gold bottoming in the next 6 months. In a way, I come at it from a socio-economic angle-- that, in spite of the persistent unemployment, things have just been too good for the middle class in the last 5 years. Sure, average people have been robbed via expanding govt and general socialism for the rich through bailouts and ZIRP and no interest on savings in the bank. But they haven't really been made to suffer quite as much as they could have if, say, inflation in consumer prices really began to increase in earnest. We are already used to $100 oil and historically expensive gas, and other expenses a lot of people pay (like tuition and healthcare costs) are pretty high. Food prices, though, havent really taken off at all. Wheat, rice, soybeans, corn all appear pretty flat on a 5 year chart. Cattle and pork have moved up somewhat in the last 5 years, I guess maybe because they depend more on the other agricultural commodities to some degree. But food has been remarkably flat while the world waits for the ZIRP-created tsunami to finally hit the real world.

Anyway, theres still room for more pain for the average american vis-a-vis inflation in consumer prices, and i would wager the oligarchs will wind up pushing the envelope on that to some degree at some point here. This would be an argument ex dolor plebium ("from the pain of the common man", in half-baked Latin). Average americans have gotten off easy in the last 5 years because, even though there hasnt been any marked deflation in consumer prices, there hasnt been much out-of-hand inflation in essential goods and services, with the possible exception of healthcare. When food and energy prices move again like they were moving in mid-2008, then more pain will be brought to bear on the average people... and all the talk of a supposed recovery will no longer be tenable at all. I would say that will be when the gold bull market resumes, if it hasnt already by then. I think that will be next summer, and i wouldnt be surprised if the 10yr*10/SLV chart hits the top trend line by then too.

EH

GM Jenkins said...

Good comments, guys - check the update

"an argument ex dolor plebium" that's f'n brilliant!!

costata said...

Hi GMJ,

"...that will be the last time I let any concern about fundamentals influence my trades!!!"

That line really says it all. FASB sez we can mark to model so the TBTF banks are suddenly, magically solvent again. Therefore it's okay for institutional wealth "managers" to bid up the price of their shares.

A nation state with so much debt and unfunded liabilities that an all-time record-breaking, historical rate of economic growth would be required every year for the next 20 years to meet those obligations in real purchasing-power-parity terms. No problemo, bid their currencies higher as safe havens.

Nominal performance IS performance I guess.

Eric Original said...

Just checking in to see if Jeanne is getting ready to cash in on her bet with Turd. If I remember it right, Jeanne had the S&P and Turd had gold, for the calendar year.

Well done, Jeanne. Winner Winner, Chicken Dinner.

Jeanne d'Arc said...

Thanks, Eric. I remember you from TF's place years ago. You seemed like a nice chap. What happened there? Do tell...

I have called the bet early: here.

Merry Christmas!

Elmer Habavilo said...

GM- another point is that it was widely reported that India bought IMF gold at $1050 per oz in November 2009 ( Bloomberg et al )... They bought 200 tons.. Whether the story is actually true or not doesn't matter... India still looks like they got chumped if gold goes below $1050 4 years later... This argues for the price floor at 1050, bec would (as a nuclear power etc) not want to look like they got chumped and would therefore do what they could to buy and maintain price over 1050