26 September 2011

The Golden Bowl - Long Term Update - Intermediate Correction - Target 2360 'To the Rim'

A friend from Strasbourg had sent me a long term gold chart, with the past prices updated for inflation, which I had termed, The Golden Bowl.

He has been kind enough to send the updated prices to it. The past prices are adjusted for inflation, but the current prices are nominal, and of course everything is priced in US dollars.

I should note that all the annotations are mine, so if it is wrong the blame is for me.

Gold Daily Chart Update and a Look at the Golden Bowl

Another reader or two have sent me a similar chart, not updated for inflation, which is The Silver Bowl. I struggle a bit with the reliability of chart formations over such long periods of time.

I should point out that gold has not yet reached the lip of the 'cup' in its formation, so any retracement now would be a conventional one since the last major consolidation or intermediate bottom if you will.

However, assuming that gold does make it to the lip of the cup and break out, the 'handle' ought not to exceed 1580 to the downside for a total 38.2% retracement.

As an aside, I think that anyone who thinks this is just a routine market correction, based on the charts, is not looking at the actual market action, which is highly suspect from any number of dimensions.

But in particular the unloading of large amounts of contracts in the least liquid periods of the 24 hour trading day is highly suspect, and there are far too many 'coincidences' occuring for an intelligent person to blithely dismiss. I do not mind anyone ignoring such information but to dismiss it in the most haughty of manner is not becoming.

And of course for the 'I told you so' crowd that comes out on every correction, well, what else can one expect. They are never long.

I have to admit I was caught a little by surprise with the severity of the reaction to the FOMC announcement, but it is telling in its own way.

But we are in a currency war, whether one realizes it or not, and this has been a 'shock and awe' exercise I think along with other dramatic fiat currency adjustments, especially the Swiss franc.

The Bankers will have their way, until they do not. So let us please exercise caution. I have said, 'wait for it.' I hope that now this lesson is embellished in your memory.

We have not yet broken the blue downtrend line on our Gold daily chart. It is better to miss the first ten percent of any rally and be confirmed in the move. And as always, the early loss is the best taken.

Tomorrow is option expiration on the Comex. I think the bankers once again 'looked into the abyss' and their actions, far from being based in confidence, were fraught with fear and desperation. But a frightened animal, whether it be a badger or a weasel, or a weasely banker, is most dangerous when cornered.