ALERT: Recent updates to subscribers. Follow Jeff's analysis below as the gold trade unfolds...
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Aug 25, 2017 9:27 am
Position in GDXJ, RGLD, FNV, NGD and FNV
Aug 28, 2017 11:17 am
Position in GDXJ, NGD, RGLD, AG, FNV
GDXJ Square of 9
Aug 28, 2017 11:58 am
From the last swing low in early May at 29.33, a 90 degree advance in GDXJ ties to 35.50.
Position in GDXJ
It’s remarkable how many articles are saying that North Korea’s firing of a missile over Japan drove gold’s explosion over the key 1300 level.
If you are following the Daily Market Report, you know that gold and the miners were ‘winking’ on Friday and rallied all day Monday.
Indeed, as I said in August. August, the metals were due for a liftoff going into the 9-year cycle set for September.
As we stated recently, since this is a 9-year cycle, it could exert its influence at any time.
Any time came on Monday.
Let’s recap some recent charts.
In early August, we showed a one year weekly GLD depicting an outside week:
Notably, the Monthly Swing Chart turned up with authority on Monday on trade over July’s high.
Fast moves come from false moves and as presumed, the shakeout below a weekly trendline in early July was a false move that pulled the rubber band out for Monday’s breakout.
But importantly, as you can see, the stage was set in early August.
Also in early August, we showed a monthly GLD which suggested synergy between the current pattern and the September 2009 breakout:
One canary in the gold mine was the 20 month crossing above the 50 month. The last time that happened was April 2011 as gold was going parabolic into the big September 2011 peak.
Since then, gold has been so compressed (some would say artificially so) that it could be shouting danger ahead.
Why? Continue Reading…
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HIT AND RUN TRADING
HIT AND RUN TRADING 2
In July 2014, We forecasted major low in gold. That low was tested 6 months later and gold exploded for another 6 months into a summer peak in 2016.
6 months later it made a higher low..
We then said that 2016 was projected to be the year in which gold experienced the largest and longest advance in at least 4 years.
That rally overbalanced the largest rally during that period, confirming the possibility that a multi-year bottom was in place.
The presumption has been that following that advance, the ensuing corrective wave was a “wave 2” of a larger advance.
Consequently, there is good reason to believe the current breakout over 1300 may validate the idea of a powerful 3rd wave advance — just at a time when shorts in the miners are epic.
Remember, third waves are marked by accelerated momentum. As the train leaves the station with very few passengers,, buyers must step up the bids in the face of unwilling sellers.
Everyone that wanted out is out. There is blue sky ahead.
Moreover, a cadre of speculators has embraced selling gold every time it approached 1300, selling calls and other derivatives as if it were a free lunch.
That’s a strategy… until it isn’t and the point of recognition sets in that the complexion and character of the market has changed.
The same may be said of the robotic, mindless selling of SPX volatility.
Gold and the miners did not back off into the bell on Monday. Consequently, if we see follow-through this morning, it could be an air pocket to the upside as a point of recognition sets in.
Remember that markets rarely switch from a debilitating downtrend to a euphoric uptrend in a few months. Often, it can take 1 to 2 years for this shift in sentiment to unfold.
The stage is set for this shift with quiet higher lows since the major low in December 2015.
The breakout in gold is occurring as the overall stock market is in the eye of the expected 2017 hurricane when a slew of long-term cycles are pointing lower and when many of the most significant declines in history have played out.
It is fitting that gold may be set to embark on a potentially epic run as the SPX may be on the cusp of a chasm.
I don’t use that term lightly — it seems the conventional wisdom among the vast majority of the highest paid market soothsayers is that the SPX is set for a 5% decline.
The contrary view is that a downturn could may be much deeper.
Indeed we’ve been speculating that the advance from 1932 may be culminating.
It’s hard to comprehend the implications.
Even in the context of a bear market for stocks (which I don’t subscribe to), I think gold sees a 50% retrace of the 2011-2015 bear market. That means a rally to 1450ish.
If’s it’s a 3rd wave advance, gold should see new highs.
The important thing is not the forecast of a where an item is going, but the direction.
Projections are fun but they are a progressive, cumulative process. The most important criteria is the direction. Once an item gets to certain levels, its behavior in time and price will talk.
Now let’s look at a GDXJ monthly.
Note how an inverse Head & Shoulders bottoming formation backstops the idea of an advance and how our above 55 level ties to prior major pivot highs.
This prior high around 55 looks like it tie to a Neckline.
The presumption is that trade through 55 with authority will give a projection to 88.
This is a projection, not a forecast. As offered above, we need to keep an open mind so as to be able to listen to the market speak. It may have something different to say along the way.
The speculator’s enigma is in reconciling following the trend with having a projection. Speculation is a pilgrim’s progress of putting the pieces together like a jigsaw puzzle.
If in fact gold is embarking on an epic leg up, let’s take a look at a projection we made at the beginning of 2017 for XAU.
There is good synergy between the 104 level on the Square of 9 and on the price formation.
The last swing low (A) was 72.
XAU is now attempting to clear 89.
Strong trade above 89 implies an extension to 100.
And a move above 104 could see an epic run toward the prior highs at 200.
So is gold on the verge of glory?
I’m saying yes.