Daily Gold Chart

Weekly and Daily Gold Charts

Gold is in a potential breakout formation with a minimum upside measuring objective of 1200. A consolidation here that does not violate 800 to the downside is within the bounds of this formation and will be considered a right shoulder.

Such a correction is not necessary to the formation.





Gold is still in a bull market. There will be corrections, some of them quite challenging. This is the very nature of a bull market, to shake the resolve of the bulls, and continually entice and confound the bears, who struggle to hold their pessimism from one line in the sand to the next.

Some day the bull market in gold will end. But not yet.

Yellow Dawg Howling

Cry havoc, and let slip the dogs of .... ?

The Gold Bull in Context

One of the most difficult things to determine is a trend change, from a bull market to a bear market, and vice versa. The market needs a wall of worry to climb, and a slope of hope to decline.

Historical data shows that the prevailing climate in corrections in a bull market reach conditions that are bleak and worrisome, with the majority of investors bearish and pessimistic before the next upleg is taken.

This is what makes it so difficult to separate a trend change from a correction; sentiment is often a misleading indicator, and people will self-select soft indicators to suit their bias.

But sometimes a trend DOES change. So how can we tell the difference?

This is where technical analysis becomes an indispensable companion to the fundamental perspective. While the trend is intact it remains in control of the market, until it is broken.

Important Support Level on the Monthly Gold Chart

The support level around 730 is important. It is easier to see on the monthly chart.

If it holds any retests and gives us a monthly print there may be significance for this well beyond the gold market.

Let's see what happens.

Long Term Gold Chart and a New Set of Hedged Positions

We are in a market liquidation that is very powerful and ought not to be underestimated. In the short term value means little when the task is to raise cash and sell assets to do so.

Still, it is good to keep the longer term in mind, while we WAIT for the market to stabilize. Please also remember that the mining stocks are NOT the underlying asset, and should be treated as a speculation.

We started buying high yield and high cashflow per share energy and mining stocks today, hedging them dollar for dollar with QID and SDS and DXD. We will vary the ratios and positions accordingly. We have done this before in this cycle when we reach support and resistance levels we consider to be 'extreme.' The first few attempts were not entirely fruitful.

The objective is to emerge from a short term or intermediate term market bottom with our capital intact, holding a portfolio of very desirable stocks with attractive yields that pay while we wait.

This mix gives us some downside and upside protection, for those who have had this market whipsaw them on the bearish side with 400 point rallies. We actually came to this strategy from our approach to this decline from the short side.

This is not simple to do and we do not recommend it for those not experienced with hedged positions. Getting the ratios to work for you, and not against you for a double hit, is a critical competency. Overtrading is a definite risk.