Thursday, December 24, 2009

Ackerman's Gold Analysis

Gold’s slippage in recent weeks has closely mirrored the U.S. dollar’s rise. For bullion bulls, the good news is that the dollar is rallying not for fundamental reasons that might persist indefinitely, but because of short-covering by carry-traders who effectively went short against the dollar. Mostly, they borrowed greenbacks in size in order to plow them into something else offering either higher yields, greater leverage, or both. That’s what happens when the Fed artificially lowers interest rates: financial speculators, including most of the biggest banks, borrow all the dollars they could conceivably wish for, practically for nothing. The big losers are pensioners and other savers, who effectively supply the dollars at the going rate – currently close to zero — fixed by the Federal Reserve. Lately, however, the dollar has been rising, putting pressure on the carry-traders to repay their loans in an appreciating currency. The result is a short-squeeze that has pushed the dollar relentlessly higher for nearly three weeks with nary a correction on the daily chart. The rally is just a minor, bear-market blip when viewed on the weekly chart. However, under the magnifying glass of a dollar-obsessed financial world, the rally is being hailed as the beginning of a major upturn in the dollar. We disagree. The dollar is intrinsically worthless, and merely comparing it to other currencies that are almost as worthless is no argument for a long-term bull market. Only a comparison to gold is valid, and in that respect, the dollar, euro, yen and British pound can only fall over time. Remember, no matter how strong the dollar looks right now, it’s only a mirage. It could persist for quite a while – for several months, even — but ultimately, all short-squeeze rallies can only end in collapse. So where does that leave gold? Our current forecast calls for a correction down to at least $1028, basis the Comex February contract. That’s $59 beneath Tuesday’s settlement price of $1087. We began Monday looking for support near $1090 to hold, since that is not only very close to two “Hidden Pivot” supports, but squarely on a long-term trendline. By day’s end, However, February Gold had smashed the support, trading as low as 1075.20 intraday. The breach was sufficient for us to infer that the correction has further to go. Even so, we don’t like to chisel such expectations in stone. And that’s why we’ll be watching closely to see whether the February contract takes a bounce from 1059.80. That’s a minor Hidden Pivot, as far as it goes, but not so minor that it should fail to provide discernible (and presumably tradable) support. If the pivot gives way easily, though, we wouldn’t touch gold until it comes down to at least 1028. That’s not a Hidden Pivot, incidentally, but it’s significant nonetheless for having provided the launching bad from which gold went ballistic in late October.
http://news.goldseek.com/RickAckerman/1261581753.php

28 comments:

  1. I sold ANV here off my latest swing trade of this position, I mentioned the bullflag breakout about a week ago, if you caught it on the backtest of the breakout, your entry probably was around 12.6, nice 20+% win exiting here. NOW I'm done for 2009. - Analyze.

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  2. Yup i did.....and am out as of yesterday..missed the last .50......waaaa....great call analyze.

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  3. The dollar could also continue rallying for different reasons altogether. The short covering by dollar carry traders is just part of the story.

    Improving economic data could result in stronger dollar momentum and more pain for goldbugs.

    http://debtsofanation.blogspot.com/2009/12/debts-of-world-bond-vigilantes-place.html

    Also take a look at the comments by Jeff in the following article:

    http://www.urbandigs.com/2009/12/q3_fdic_stats_messy_but_improv.html#comments

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  4. Another great day for LCC, nice gains since early November.

    palmer

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  5. What an excellent yr for miners.

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  6. In Debt We Trust,

    There are only TWO labels when it comes to stock market, and the label is not gold bugs vs. others. It's those who made a killing in the market vs the REST.

    palmer

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  7. palmer you slimedog.....i calculate that the miners you recommended in january would have netted a cool 600% buy and hold....not bad....and that is not off their lows

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  8. kli,

    I liked the action on SGY and CENX since march lows even better than miners. SGY has gone up from 1.50 in March to $19 now. CENX from $1 in March to over $16 today. That's what I call real gain.

    palmer

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  9. Whoops have to readjust my percentages over 1000%......from lows

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  10. I think you would be hard pressed to find any other site online, including even ones with high subscription fees, that could match those kind of returns, plus people being on the right side of the trade for an entire year. Great work. - Analyze.

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  11. JPMOY,

    The ones who do very well in the market ARE NOT the ones who make their decisions based on what other AUTHOURs write. The REAL winners are those who really understand FED behavior and they make their decision based on their own knowledge and only READ other authours to see whether it's in line with their own findings or not.

    palmer

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  12. Miners were really good gap plays but even better long swing. Only ones that made we money this year with the exception of shorting SPXU at times.

    Merry Christmas to all who post here.

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  13. Yes exactly joe and the media is designed to create bias that distorts your decisions unless you understand the game.....without a complete understanding of the market and fed behavior you cannot play the game. Liquidity is the essence of the market......understand it and you have the market......

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  14. temo you stay warm over in the jungle and stay off the opium pipe......

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  15. Temo,

    Happy holidays to you, hope you are enjoying your visit to states. Best Regards!

    palmer

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  16. US Treasury Ends Cap On Potential Aid To Fannie, Freddie

    http://online.wsj.com/article/BT-CO-20091224-706509.html

    What timing! This Christmas, give the gift of a blank check to insolvent banks. Not that you have a choice, taxpayer scum!

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  17. From Kenny's blog, "Whatever you believe about Jesus of Nazareth, it is an indisputable fact that he is the reason for the season". Yeah, okay, sure...

    http://www.hope-of-israel.org/cmas1.htm

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  18. please brotha, do not confuse fiction with facts. That has never stopped Kenny in this area and he will spew venom at you until his hangover wears off.

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  19. Music selection for tonight, you won't be disappointed:

    http://www.youtube.com/watch?v=TY8J35OXVxg

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  20. Anyone seen yahoo finance home page? The GBP/USD shows it is up almost 3,800%. Something is wrong.

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  21. Happy Holidays to All!

    Yep the dollar short covering continues, with 10 year treasuries joining the fun at 3.81%. Wonder how much more pain/panic it will take until Fed/Treasury resumes it's monetization/reflation full force. That is when you will see the bottom for gold.

    Small traders should stay to the sidelines and just get out of debt and start preparing early for the bad times.

    All of Palmers commodity suggestions will provide a great opportunity once the Fed can't take the pain of higher long dated Treasuries => hint massive drop in housing and Obi's small business loans programs not to mention the credit card debt incurred this holiday season. Cash, or consider some physical bullion along with Alpo, Ammo and warm winter clothing.

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  22. Immred, you waste your time posting. I noticed even at this hour tonight, markymark posting some dumbass chart on transports and some prediction, with no indicators on it at all, no premise, no relationship to global markets or other indices, no intelligent thought. I say we let them all bankrupt themselves and move on. It is not worth it. Period. Let Darwanian law take over to obliterate them. If they need advice, let them go to Daneric and Kenny, those are the fools they follow, and it has not mattered what their track record has been. Waste of fcking time.

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  23. To the earlier post on Kenny spewing venom, the only poison thing he has is his predictions on market direction.

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  24. 4:40 EST, The uneasy stare-off continues on the SKF board, two gay dumbasses Marky and Erik, both vying for unwarranted credibility, avoiding each others posts while desperately hitting the refresh key to see if someone will post back to them, kind of like retards playing Russian Roulette but already both dead to people with brains. Erik will post to himself in the morning to keep the dream alive. Marky will create another fib fan chart after circling blogs but caveat it with I'm just stupid but trying. At stake, the ownership of the SKF board long abandoned by anyone with TA knowledge, but better late than never.

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  25. Anon ......you are right but if we can save 1% then its worth the continued effort.....so we can try to educate....

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  26. You're right. I guess the lesson is to try to love the unlovely. It is easy to find reasons to not be helpful where no one would receive anything because of the pride and corruption of a couple people. Thanks for showing a different perspective.

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  27. Hasn't the whole planet been abandoned by people with TA knowledge? In Daneric and Kenny's defense, the only real way to win the TA game may be not to play. Most people have to be wrong each step of the way in order for the next step to occur. If the internet hadn't called P3 god it might bloody well have started.

    Kliguy's blog has been spot on in his message of not picking up quarters in front of steamrollers.. In fact stocks I saw here first have kept me flat for months in spite of my bearish tendencies.

    The life of a fundamentals trader might look painful lately, but I'm learning that aggressive hedging beats a stop order any day when playing a fundys game. I think I know which direction the risk is in but I admit I have NO CLUE how we'll get there. To enter a stop order I'd need to convince myself I know more than I really do..

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  28. Err "god" back there was a "god knows" that didn't get erased all the way lol

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