$1,081 gold bottom?

We've recently been updated by GM Jenkins on the 10 year USTs priced in silver chart, notably the ratio hitting its upper channel line at around the 1.50 level. GM is expecting a final lower low for gold shortly, before the trend changes back to a bull market.
I decided to see if the gold price was Fibonacci-friendly, and the chart below plots the key retracement levels from the bottom back in 1999 through to its peak in late 2011.
Here's the chart (I manually added the 23.6% level at $1,522):
Who knows what will happen, but the fib levels seem significant, so I'll be saving my pennies to buy the bottom at around $1,081, and I reckon it's coming within the next 5 weeks, in the midst of a liquidity crisis as stock markets take a dive.
I'm not expecting the 61.8% fib level to be hit.

Time is running out for buyers in my opinion, and the next leg of the secular bull is likely to be the most explosive and volatile we've seen since the late 1970s, so hang on tight.
Good luck.

38 comments:

Alex in Montana said...

Smart traders, Goldman Sachs folks, Hedge Funds all know Fib numbers, resistance and support levels and have been purposely running those for years.

I think your analysis is sound, but I'll guess we either don't make it to $1,081 or we run below it long enough to panic some people. That could even be intra-day or intra-week.

Why? $1,038 was the 2007 high before things got ugly. I wouldn't be surprised if we break that by a few dollars. So the smart folks would run the Fib number of $1,081 the then the 2007 support level but that would be it.

Gary said...

Thanks Alex, that all makes sense.
Around those levels I expect buyers to be buying!

Alex in Montana said...

You are welcome. I just discovered your blog and like it. Thanks for the taking the time to do this.

Gary said...

It's a collective blog Alex, my name should be at the bottom of the list of contributors as the most recent to join in, but I like it here too.

Eric Original said...

Holy F'balls. I can't believe you guys are still pimping the "big bottom" scenario. In my view, the time to buy metals is still 5 - 10 - 15 years off.

What an amazing steaming pile of wasted blog posts you are working on.

Get a life.

Eric

Eric Original said...

Once upon a time, Screwtape Files stood for a healthy skepticism on the metals garbage. Not any more.
No wonder a sensible person like Jeanne d'Arc has utterly abandoned you. So sad.

Gary said...

Hello Eric?
'Still pimping'?
That's a straw man accusation. GM has identified a seemingly reliable USTs/silver indicator for major gold price turns.That has kept him from calling a bottom for several years. I've just looked at some fib relationships. Will the bottom be soon? Or in 5-10 years? Let's see.
But nice of you to comment, best wishes.

Grumps LaBastard said...

Amusing, isn't it? To see the exhibition of Etrade Baby psychology. This is why the market hurts the most people, because so few have the discipline and courage to be contrarian. Granted, to be contrarian means looking stupid for most of the trade, but when it reverses all the people laughing at you are on the other side of the boat looking to unwind positions.

5-10 years? The time to buy gold? I think that will be the time to unload gold. What happened? Did you buy gold all-in above 1600? Silver above 40? And now you're bitter? Didn't really understand why you bought the metal? Why it will have to be revalued?

Look no further than the recent protestations of the IMF, the BIS, and the Jesuit Pope about debt sustainabilty and you know we're getting close to a paradigm change.

Before you close your wee eyes at night ponder this: Why do central banks hold gold?

Like Ben said, it's tradition. It's not money, it's not wealth. It's the traditional extinguisher of all the bad debt chips on the table.

ssgtrader said...

To me gold seems headed lower. Armstrong warned of gold peaked in 2011 and said will have to wait till 2016 for the correction to be over. He is floating $800+ target recently.

Warren James said...

STFU are also of the view that silver will reach $12.16 before it hits the bottom. Like everything, could be wrong but I'll be putting in a few stink bids anyhow (that 30-year cup and handle formation is nearly baked).

Grumps LaBastard said...

We just spiked down 50 bucks to touch 1080 on no apparent news. Please don't tell me there's no manipulation.

ssgtrader said...

There is no manipulation. Commodity is weak because of what happen in Greece and China.

Gary said...

Gold just bounced at very close to this fib level.
Interesting, was that it I wonder?

Gary said...

A quick read of a few popular sites confirms that everyone is expecting sub-$1,000 shortly.

Maybe, but I'm buying more physical right now. This feels like *it* to me.

tamaris1 said...

Mickey Fulp ‏@mercenarygeo 16m16 minutes ago
#Gold dipped down to $1070 this morning $40-50 within seconds.
Embedded image permalink

Grumps LaBastard said...

If this was a Chinese E-trade baby margin call then why not pre-intervention? Why after?

Was this a buildup of margin clerk orders that had no other collateral to sell? Couldn't sell stocks. They'll kill ya for that now.

Grumps LaBastard said...

http://www.marketreport.org/goldcorp-inc-usa-nysegg-a-buy-j-p-morgan/211358/

Maybe the beatings are over. We've gaps above us that need to be filled. We won't know if this over until the HUI trades above 159. When we broke that June 11th, I knew Rambus' target of 100 was in play.

I took a gander on the uptick/downtick ratios from Monday's carnage. You'd expect some ugly figures, but the ratios were way above 1.0.

14 million more dollars actually flowed into Barrick on upticks if I remember correctly, yet the price dropped 8 percent on 51 million shares traded. That's buying on weakness, not capitulation and also evidence of flash trading to push price action down.

Gary said...

I just bought some 1oz gold lunar coins, a bargain at £717.
I know dealers are seeing selling as well as buying in the physical market, so maybe the last of the weak-handed are being washed out in this dip?

GDX saw some hefty selling also I believe.

Grumps LaBastard said...

90 minutes into trading...massive volume to the upside in gold shares. Professionals are desperate for an undervalued asset class. The Potemkin charade is failing. Apple, Caterpillar, and others are revealing what's really happening.

I Will Never Accept The Terms of Service said...

So this was posted on July 7th? You did a great job of bottom-ticking the US with your "in the midst of a liquidity crisis as stock markets take a dive" comment, didn't you?

Gary said...

IWNATTOS,

Yes, although I spotted the fib level that gold might hit and bounce at, and it happened within the 5 weeks I expected (mainly thanks to GM's ratios), the US stock markets are yet to crack, although there is much talk of liquidity being scarce in many markets.

Like you, I am so very disappointed in my crystal ball, I was almost moved to delete the post.
Best wishes.

Gary said...

In the spirit of fair play, here's IWNATTOS mocking a bearish gold commentator on 9th July, and 'guessing the bottom was in':

http://myownmarketnarrative.blogspot.co.uk/2015/07/casey-research-predicts-gold-crash.html

10/10 for sarcasm, but 0/10 for crystal ball reading in that post.
Best wishes.

I Will Never Accept The Terms of Service said...

Wow. So you're saying it was wrong for me to mock Casey Research's July 8th bottom-tick of the A-shares? Or just that I didn't know Shanghai Chaos would slam gold Monday morning?

Keep waiting for that liquidity crisis. Maybe it'll happen one day. But it won't be because of a 5% drop in the NASDAQ.

Gary said...


I'm sure our readers will reach their own conclusions about your blog post and comments here. Have a great day.
Best wishes.

Grumps LaBastard said...

Check these slides out.

http://www.lbma.org.uk/assets/events/BMF2015/Zhang%20Bingnan_EN1.pdf

"Since 2009, Chinese gold reserves keep increasing. Successfully
breakthrough 7000 ton, 8000 ton, 9000 ton. Till the end of 2014, the gold
reserves reach 9816.03 ton, the world’s second"

"Develop gold manufacture, increase gold reserve, improve gold market, promote gold
consumption, and “gold held by people "play a crucial role to increase RMB “gold content” "

"Including Russia, Uzbekistan, Kazakhstan, Inner Mongolia have abundant gold resources. The
total gold reserves is about 18,000 ton, 34.62% among world total reserves." It's ambiguous if this 18,000 tons refers to already mined gold or reserves in the ground.

"China Gold Association and Argentina
Planning Ministry,public investment,service bureau signed《mining
investment and cooperation draft
agreement》in Beijing on Feb.5, 2015." Argentina, very interesting.

Grumps LaBastard said...

http://newscontent.cctv.com/NewJsp/news.jsp?fileId=281241

"The two sides will exchange relevant information about developing the gold and nonferrous metal resources, and cooperate in such fields as investment and development in mine resource, workforce training and technological research, according to the agreement.

Song Xin, president of the China Gold Association, said Argentina has huge potential in developing gold and nonferrous metal resources. In recent years, Argentina has made new breakthroughs in exploring mineral resources, seeing a dramatic growth in the potential reserves in such resources as gold, sliver, copper, aluminum and plutonium.

The member units under the China's Gold Association have shown much interests in overseas mine investment and cooperation.

The two sides will start concrete cooperation plans. China will send a professional group from the gold industry to Argentina for investigation."

http://www.bloomberg.com/news/articles/2015-04-27/in-argentina-5-billion-of-mine-projects-is-riding-on-elections

http://www.bnamericas.com/news/mining/argentina-china-to-cooperate-in-mining-supplies1

costata said...

Grumps LaBastard,

Good links. Koos Jansen from BullionStar has blogged about some of this material. His posts and the discussions that ensued might help to answer some of the questions you raised.

One of the most interesting features of gold-based monetary systems is the relatively tiny amounts of gold used in facilitating trade settlement and consequently the relatively small size of official gold reserve holdings. Provided gold is widely distributed among the general public this is where the "heavy lifting" occurs in the correction of imbalances.

That's why I think China is very close to achieving their objective in gold. Of course official reserves are an important part of the story. For a government that doesn't have to worry about being voted out in-ground reserves are almost as good as above-ground reserves.

These statements coming out of China and their interest in helping countries develop their gold mining sector could indicate that China intends to continue this vendor financing model that has worked so well for them in their trade with the USA. Wouldn't it be amusing if gold became official money again and countries all along the "One-Belt-One-Road" neo-silk trade routes could just dig up the means of paying for all the infrastructure? Perhaps the BRICS and SCO (led by China and Russia) have a plan for a post-USD system!

Cheers

Warren James said...

Martin Armstrong apparently putting forward a (conditional) case for a gold bottom as well reported here however I can't find anything about the call on his blog (subscriber only material??).

The question is now whether the money masters want to push gold further past the 50% retracement just to mess with everyone's heads before the rally. Interesting that Armstrong's previous $5,000 in 2016 is mentioned but that prediction is 5 years old and it's not obvious in the article whether the call has been amended!! (That would need one heck of an explosive rally to get there by 2016). Choosing which estimates to disregard is difficult.

The only recent Armstrong blog post I could find was this one: Gold the Pending Question where he has this nugget of wisdom (his emphasis):

'If gold is your total portfolio investment – that is sheer madness. If you have some gold and it is a VERY SMALL proportion of your net worth, fine, for the question should be CAN YOU survive a drop to the Yearly Bearish Reversal lying at $681? That is your max risk so that is what you must consider. Otherwise, you will panic at the low and sell everything for you will have no choice. Then when a rally begins, you will not be there.'

It's wise advice and in line with what I'm learning about timeframes and risk exposure - it's different for everyone.

Gary said...

Hello Warren.
He's mentioned the $1084 level this week as a bearish reversal monthly closing level.
Based on other reading, I think stock markets top on Friday/Monday.
I wouldn't be surprised to see gold close July below $1084, that'll open up the move down to just under $1,000.
As for the portfolio thoughts, knowing what we all know here at this blog, anything other than a very large portion of your assets in physical gold seems high risk to me. Especially right now, with any other asset a bubble.
$5,000 in a couple of years, no problem at all, probably higher.

Louis Cypher said...

Warren,
http://www.armstrongeconomics.com/archives/33539
"Silver has held the Break-Line Channel for now, but critical support lies at the $12 level. A monthly closing below that will be the final signal that the extreme targets we provided in the the International Precious Metals Report will most likely be seen before this bear market is complete. So nothing has changed to alter those forecasts."

Gary said...

Armstrong today:

'There is nothing wrong with selling at $2,000 and buying twice as much at the low. Anyone who argues against such a strategy is a promoter whose advice you should not take.'

He's losing the plot, poor guy.

Warren James said...

Thanks Mr Cypher, for that. Gold has nearly completed its pennant formation so it will be interesting to see if the next leg is down, or up. Big question is, will $1081 hold?

Gary said...

Hello Warren.
Do you mean this pennant, or something else?
http://screencast.com/t/zXjt3scJsh

Everything seems to be pointing downwards to me, but that fib level might hold. There is a big shelf of lateral support at $1,000 just below, maybe a spike down, and a quick rebound?
Thanks.

PS, saw this at Bron's site, Armstrong was predicting $5,000 by end of 2015. Not anymore. Be funny though, if it happened.

http://www.armstrongeconomics.com/wp-content/uploads/2011/01/armstrongeconomics-a-total-eclipse-of-the-economy-and-good-old-fashion-us-witch-hunt-12-22-2010.pdf

Warren James said...

Oh, on 4-hour gold chart, using the 20th July spike down as the 'flag pole'. The highs keep getting lower but keeps bouncing off the 1081 level. A few minutes ago the US Unemployment survey just spiked us up, but .. it would take a fair amount of green to turn this bullish. Still plenty of room here for a 'rip your face off' green spike ... can't see it happening though.

Gary said...

Ah, ok, thanks Warren.

Gary said...

Hmm, interesting day of gold price action around this pennant thing!

First down to test the bottom, but bought back up to escape at the top.

Up, up and away I wonder? Or just another temporary rally?

Where is GM and his charts when we need him?

Gary said...

The fib level held, for now.
Everyone still expecting lower prices.
Will they get them?
Only GM can answer these questions.

Warren James said...

While I'm glad to see the bullish green on the gold chart, I was still expecting an almighty spike in the upwards direction (reverse manipulation?). Be interesting to see if this is a dead cat bounce or proper buying. Agree with your above comment there is still a good chance of a quick spike down below $1,000. September? Just because they can.