Coppock Indicator: An Intermediate Term Bottom For Gold Is In

The data wrangler, Nick Laird from Sharelynx, sent these long term technical charts of gold in US dollars with a note saying, "I like the look of it Jess. It's a deep cyclical indicator and you can see from its past performance how it works for gold."

 

I have to admit that this is one indicator I am not given to using, probably since I rarely was a long term investor in the past, and this is a cyclical tool although certain chart functions will allow you to utilize it on shorter term charts, and probably incorrectly based on Coppock's intent.

 

It is an indicator that generates only buy signals by attempting to identify market bottoms after serious declines.  The indicator must turn negative into a trough.  That implies that it had previously been positive. And then it must begin an upturn and sustain it.

 

So if I am reading these charts correctly, the last buy signal we have had was in 2001 with a big bottom buy signal forming in 1998-99.  See what I mean about longer term?  For a trader, that is glacial.

 

For my own charting method, I think we are in a potential bottoming formation, but we need badly to break the cycle of lower highs and lows, in order to confirm any of the potential bullish patterns I am seeing.  There is a closer look at the relevant area on my own gold chart at the very end.

 

Confirmation after a breakout is the most meaningful thing that the metals can do at this point.  Everything else is just talk and speculation.  

 

I include a six sigma trend chart from Nick to give you an idea of targets for any intermediate move.

Just in case you were wondering, I have included a Coppock chart for silver as well.  And if you look at it closely you will see a little fakeout bottom with an upturn that failed in 2012.  Confirmation of a breakout is your friend.

 

Giving the amount of 'tinkering' being done with the metals on the Comex, I have a gut feel that says if and when we go higher, it will be with a breakout, with a vengeance.  This has been as much price thuggery as it is price discovery.

 

Until then it is cap and coil, with some downside risk hedged up by a bullion put from China et al. 

 

Gold Daily and Silver Weekly Charts - A Tale of Two Metals Markets - Shout and Feel It

Nothing of particular interest was shown in the Comex reports from yesterday. Tomorrow we bid adieu to the August contract.

Time to move our eyes to the September month which is active for silver but not gold.

The precious metals are unfortunately very politicized in this currency war. That is both a risk, and an opportunity.

There was intraday commentary on the metals here.

There are obviously two metals markets, one of paper, and one of real metal delivered and taken. One is most expressed in the overnight market with trading in Asia and Europe, and another that starts after the New York opening bell.

I picture that transition in the video below.

Have a pleasant evening.

Here is a visual representation of the NY open in the precious metals markets after the overnight trade.

The house is rockin', until the goons come a-knockin'. lol



By the way, I came across a nice Reinhardt-Grappelli original tune on the radio today for the first time. I thought I would share it with you.

SP 500 and NDX Daily Charts - Hymn To Freedom

The complacency in this market is almost as chilling as the complacency that seems to permeate the privileged classes, from the economists to the politicos.

Narcissists without very good peripheral vision.   It makes one--  uneasy.

Have a pleasant evening.

NAV Premiums of Certain Precious Metal Trusts and Funds - Currency Wars Enflammé

"Among the calamities of war may be justly numbered the diminution of the love of truth, by the falsehoods which interest dictates and credulity encourages."

Samuel Johnson

There is a very little bit of a 'flight to safety' today as the war of words in the Ukraine heats up.  Propaganda is flying hot and heavy from both sides of that border. 

Equities are downright complacent, and the precious metals are capped with fair regularity.  All is good, nothing to see here.  Move along.

This entire episode seems to be a manifestation of the keen disappointment that Uncle Sam felt when Russia started refusing to play ball with the Anglo-Americans in any number of areas, from dissidents to global economics.  In some ways this can be seen as the last gasp of the extended British Empire, with America and France on board along with the usual suspects.

The Yanks keep waving the NATO flag, but the Russians call that coalition FUKUS:  France, UK, US.   Of note is the absence of Germany in that analysis.  Germany is a pivot point.

There is certainly a difference of opinions and interests.  China is quiet, but I think we know where they are likely to be positioned.  If you understand the moves on both sides within the context of the currency war things make quite a bit more sense than otherwise.

This is not to say that Russia and China are the 'good guys' in this, not one bit.  I tend to see this as competing power blocs, or crime families if you will.  I don't see much altruism or activity on the moral high ground by anyone.  We live in a particularly self-centered and cynical time.

What we are seeing in so many areas at once is an extension of philosophy and objective expressed in The Project for the American Century, and a fairly cynical one at that. The neo-cons will work with extreme jihadists in the Mideast and crypto-fascists in Eastern Europe. 

Big Money and the will to power have no loyalties except to themselves and will gladly fight to the last drop of your blood.  I don't see many good actors in this scenario on either side.

I am reminded of this wonderful section and quote from Nomi Prins' new book, All the President's Bankers about the lead up to WW I.

“The war should be a tremendous opportunity for America.”

Jack Morgan, of JP Morgan in a personal letter to President Woodrow Wilson, September 4, 1914

I have written before about the striking parallels between Obama and Wilson.

A real flight to safety would crush the precious metal shorts if it spills over from paper to the bullion markets.  And so I would look for the Banks to do all that they can to avoid it, diffuse it, deflect that possibility.

Premiums are a bit low on the Central Funds.   Sprott Silver is a bit wide on the premium, especially with the likelihood of a secondary offering increasing.