Tuesday, April 12, 2016

Gold Trend April 12, 2016

Long Term TREND –Neutral – Price in between Moving average blue (1220) & Red (1298). As long as monthly closes are above 1220, we can say trend has moved from bearish to NEUTRAL. A monthly close above 1322 would add to gold’s strength. Blue average must move back above red average to move to FULL THROTTLE BULLISH. Other important price point is 1438-1488. IF APRIL CLOSES BELOW 1202 then return to bearish mode.
Medium Term ~ Bullish- The blue average has crossed above the red, and that’s a bullish sign. Support is near 1122-1150. Resistance is 1298-1322.
NOTE: Until Gold can decisively close above $1307 (Jan 2015 high) and MORE IMPORTANTLY 1322 on a MONTHLY/Quarterly basis, gold can still be subject to these massive cartel raids we have seen in the past. That’s the resistance points that are of medium term importance
Intermediate Term ~ Bullish– The intermediate term remains in bullish mode and it takes a weekly close below 1202 to neutralize the uptrend. Look for 1206-1222 as weekly support.
Short Term ~Bullish- The short term trend has moved to Bullish. Short term cycles calls for a PRICE TO MOVE SIDEWAYS TO LOWER INTO THE 21st of the Month but a close above 1255 after today will favor higher prices and a cycle inversion. A close above 1287 favors 1306-1322. 

Initial Resistance 1263-1272 2nd tier 1287-1303

Support 1217-1227 2nd tier 1200-1210

A close above 1288 favors 1306-1322. A close below 1202 favors 1172-1190.
A close below 14.60 in silver would also add to the bearish outlook into April 21st. A close above 16.40 is needed for real potential to expand.
As long as we are above those levels, the trend remains up.

One thing to keep in mind………..
The one thing to be careful of in gold is the COT report. As you can see below the COMMERCIALS are very short gold. Can it be different this time? Yes, it can. But it can also be the same as well.
Gold and Corrective potential INTERMEDIATE TERM
We need to see the MARCH LOW (1206) broken ---- otherwise the trend remains up.
A close above 1255 keeps upside alive and resistance is 1263-1272. A close above 1288 will target 1306-1322.

Until then, gold can still pullback as deep as 1122-1172 in this time frame. Consider the strongest support for gold is way down at the 21st Century uptrend line. That is still in the 850-900 range.
Because there is nothing impossible in the markets, gold could still have something in store for us. We must always think that way until bull markets are more than just a rally. And if that is the case then for now gold still has to show us the ability to conquer 1306-1322 on a monthly basis. That is gold’s real 1st long term test after reversing a 52 month downtrend.
Keep that in mind and let’s see what April brings. Whenever gold is trading below 1215-1222 then the potential to move lower remains to the aforementioned price levels of 1122-1172 can even come in play.

Something to think about……………….
The dynamics behind the gold market are different now from the early seventies. Debt levels today are so high they risk destabilizing the whole financial system, making it impossible for the Fed to raise interest rates much without causing a financial wipe-out. Asian governments, such as the Chinese and the Russians are known to have been accumulating strategic positions in physical gold, and the Chinese and Indian populations along with other Asian people have also exhibited notable appetites for physical metal. Instead of starting from a position where the US Treasury on its own in 1969 still held 14% of estimated above-ground stocks, its holding is officially at less than 5% of them today. That is, if you believe it still has the stated 8,134 tonnes.
This time, the gold price is likely to be driven by physical shortages in the old world, as American and European investors wake up to stagflation, their central bank's interest rate dilemma, and the loss of physical liquidity from their vaults.
Today's market set-up, particularly if Chinese demand for energy and commodities materializes in accordance with her new five-year plan to get back to bustling economy, would favor sending commodity and gold prices much higher than today’s price.

The Global Debt Default is accelerating…….
Italy
Finance minister calls Rome meeting to agree details of ‘last resort’ bailout plan
Italian bank shares have lost almost half their value so far this year amid investor worries over a €360bn pile of non-performing loans — equivalent to about a fifth of GDP.
Although the details remain under discussion, it foresees the establishment of a private vehicle that will include upwards of €5bn in equity contributions — mostly from Italy’s banks, insurers and asset managers — and then a larger debt component. The fund will then mop up shares in distressed lenders. A second vehicle will seek to buy non-performing loans at market prices.
Berenberg analyst Eion Mullany argued that the “Italian banking sector is at a pivotal moment in its history”.
“We worry that a bail-in of an Italian bank may cause a chain reaction with ripple effects felt across the European banking system,” Mr Mullany added, referring to the possibility of bondholders and depositors in Italian banks being forced to participate in a rescue.

Gold Overview
This week some things both fundamentally and technically that suggest a bullish resolution once the current consolidation is complete, especially in the gold miners.
So far the miners have not lost their leadership vs. gold on any coming correction. In fact, yesterday's activity brought a new high in the HUI-Gold ratio as the miners bulled despite a very weak stock market. If the bull market in gold has resumed, odds are high that the gold stocks will outperform gold. As we can see on the chart below, the HUI has vastly outperformed gold in gains since the low in January. While only a couple of months have passed since the low, the activity we are seeing is supportive thus far of a bull market resurgence in gold. If that is so, history suggests that the gold stocks will outperform in percentage gains versus gold itself.
Gold vs. European markets looks even better as we noted last weekend that the flag was starting to make a bullish look. This week there is follow through. Gold vs. the balance of developed world equity markets looks as good as or better than the average of these two.
Another thing to look at that accent the positive in gold is its performance versus the stock market.
The stock market bounce since its steep correction at the beginning of the year which itself is antithetical to a counter-cyclical gold sector is playing out on the Gold Vs. SPX large cap index.
Gold has thus far maintained a flag-like consolidation of the recent big up surge in stocks as measured in S&P 500 units. Here's the weekly chart view to gauge the progress of this important macro fundamental consideration. Over the last two years, the 50 and 30 week exponential moving averages served as resistance in 2014 and 2015. Of technical significance for a turn, gold has now fully breached these averages to the upside in a manner not seen in these past two years and is now pulling back in this consolidation to test the averages. More important, gold is testing the averages at a time when the green 30 week average has erased the gap with the red 50 week average and is within just two points, or units of crossing over the red 50 week average. If the gold consolidation holds above the moving averages and the green average makes a successful cross, it will add to the technical action of a resumption of the gold bull market as gold outperforms stocks during a bull phase.
On a shorter term basis, Gold needs to turn up soon as measured in SPX units.
IS THE GOLD LOW IN?
The fact that we have broken above the dual yellow downtrend line and have closed INSIDE the blue and red averages on the above chart gives this move the best chance since the correction began to be the real deal. The next significant step will be to close above 1306-1322 (The 2015 High 1306 and 1322 (the April 2015 crash low).
The dual yellow downtrend line now becomes SUPPORT 1122-1172. As long as we are above that, the potential that gold has bottomed remains.
Summary – Long Term Uptrend Pattern only has 3 month rally (Just like every rally attempt since the high in 2011. No Change. Need to see STRING OF THREE BROKEN for pattern change.
Summary – Long Term TREND (not pattern). The TREND has gone to Neutral (above blue average). Now price needs to get above the Blue average (1306-1322) & RESISTANCE point.

Gold/Silver Ratio
The best evidence we need to see in order to confirm the gold bull market has resumed and that this is not a bear trap is for the gold/silver ratio to reverse.
In a gold bull market --- the ratio keeps moving lower. In a bear market it keeps going higher.
The long term chart suggests we’ve most likely peaked when we reached 82. The one exception is 1985 where silver reached 100 to 1. We’re currently at 78 and thus the 1st step we needed to see (below 80) is developing.
Gold Short term
In our last update we said that the choppy and overlapping wave could very well be signaling we’re still going to pull back towards 1180-1200. The low has been 1207.
The 1217-1225 remains key. UNTIL we close below 1217-1222, gold can continue higher. A close below 1202 will favor 1172-1192.
ANY NEW HIGH AFTER TODAY --- will favor higher into April 21st. There’s a head & shoulder potential on the chart. If the bears can’t stop it, then 1303-1322 should be next.
Gold Short term Cycles
The short term red cycle window closese today. Any new high after today favors we move higher to April 21st (plus or minus 72 hours). A CLOSE ABOVE 1287 would ACTIVATE an inversion scenario that takes us to 1306-1322.
If there’s to be a turn lower it has to begin on Tuesday April 12th. Otherwise odds will turn to higher.
What Next?
The short term cycle for April 7th’s window closes Monday April 11th. Any new high after today or close above 1255 and odds will suggest the gold rally will continue.
As long as price is above 1222 the trend remains up. The key will be to see if gold continues higher on April 12th. If it does, then it should continue towards 1272-1287 or 1303-1322.

Bottom Line
Until Gold can decisively close above $1307 (Jan 2015 high) and MORE IMPORTANTLY 1322 on a MONTHLY/Quarterly basis, gold can still be subject to these massive cartel raids we have seen in the past. That’s the resistance points that are of medium term importance.
With that said, we continue to favor that the odds favor the lows have been made.


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