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Subject:  Re: Gold - Updated TA Date:  5/23/2012  1:12 PM
Author:  MDCigan Number:  41080 of 41568

Good call, everything is going exactly your way. Are you covering today?

Not yet...still need to think through the chart possibilities. The textbook play IMO would be to cover again at 1524-1535, and then watch and wait and reinitiate the short on a downside break of 1524.

My instincts still tell me that 1524 will fall and the price action the laat 12-13 days looks very similar to me to the chart action from 12/12/11-12/29/11 where gold sold-off hard, had a 3-4 day bounce, and then resumed the sell-off to the new low of 1524. In this case, assuming 1524 falls, the next price level that comes into play is 1487 which is the reaction low before the entire upmove from July 2011 to 1900 in September.

When asked about gold and silver, Yamada replied, “KWN published a portion of my report which covered gold and silver on May 4th. At that time I wrote, ‘A break of 1,600 and the uptrend line would suggest further risk toward 1,500 or lower.’ When gold broke the $1,600 level, which represented the 2008 uptrend, it triggered the additional selling we anticipated.

It’s also broken the cusp of the 2011/2012 low. So, I suspect, given the profile of the momentum, which is negative, that it could go lower, notwithstanding interim rallies. If gold were to break the $1,487 level, you would probably see gold move to $1,400. However, there is a decent amount of support (at $1,487), almost six months support between the latter part of 2010 and later. We’ll take it step by step, Eric.

I really have no idea where this current downleg ends. As I mentioned before the 50% retracement of the 2008 move is 1300. If it follows the 70s secular bull, maybe 1000-1100. In any case, whereever it bottoms I think it will set up for an absolutely tremendous long-term buying opportunity.

Every other secular cycle has ended with a Dow/Gold of at least 2 to 1 if not 1 to 1 (the 1980 peak). My best guess is the current sell-off is tech stocks in 1998. The last chance to get on board before the final blow-off move. I would suspect the fundamental backdrop when the happens would probably be some type of central bank moves of unprecented scale. Maybe the ECB finally caves and prints 10 trillion Euros to buy up all the sovereign debt of Spain and Italy.

In any case, what I'll be watching for here is the weekly MACD to turn. Based on what I've seen with past bear market moves or severe correctiosn, the weekly MACD will be the first to turn. Waiting for price to move over the 200 DMA or 10 MMA is more conservative, and better indication the trend has turned back positive, but it doesn't get you in early enough.

In the meantime, the trend is down so all rallies are to be shorted if you are trading. IMO, one should be out of investment positions in gold or hedged to at least blunt the impact of a continued downmove.

I wish I had caught the 3 day bounce back up to 1599 (note how it reversed right at the key level of 1600) along with the 2 shorts, that would have been money to nail 3 moves inside 15 days.
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