As U.S. equities continue to march into new all-time highs, permabears like Gluskin Sheff's David Rosenberg throw in the towel, and the consensus view is that "there's no other place to put your money but into U.S. stocks".
Any time there's so much overwhelming consensus, my inclination is to grab my wallet and take 3 steps back as I look around me for the thief who is conspiring to rob me.
As much as everyone agrees that U.S. equities are the place to be, nearly every market guru and expert chartist on the web is telling us precious metals are headed much lower. This after gold has traded in a 19+ month, sideways consolidation after hitting 1923.70 back in early September of 2011.
I can't recall a time in recent years when the precious metals complex, particularly gold, has been so reviled. To mention gold for a long trade other than for a quick scalp is to be considered ridiculous, and just plain stupid.
And now we have some investment firms and brokerage outfits like Goldman Sachs, Societe Generale, TD Securities, etc. coming out and downgrading the sector. Thanks for the timely heads up guys!
Earlier this morning on Twitter I posted a weekly chart of gold showing a falling wedge pattern, and highlighting the action of commercial hedgers. Recently they have been increasing positions while gold lingers near the low of the aforementioned 19 month trading range.
Pay attention to prior times when these hedging firms were accumulating at these levels, most recently in the May through early August period of 2012, and then further back in the latter part of 2008. Both instances marked the beginning of an upward move in gold.
From what I see, we're possibly closer to some type of a tradeable bottom than on the verge of a precipitous decline. As always, use stops losses to prevent huge losses to your portfolio.
Click on chart to enlarge view:
Any time there's so much overwhelming consensus, my inclination is to grab my wallet and take 3 steps back as I look around me for the thief who is conspiring to rob me.
As much as everyone agrees that U.S. equities are the place to be, nearly every market guru and expert chartist on the web is telling us precious metals are headed much lower. This after gold has traded in a 19+ month, sideways consolidation after hitting 1923.70 back in early September of 2011.
I can't recall a time in recent years when the precious metals complex, particularly gold, has been so reviled. To mention gold for a long trade other than for a quick scalp is to be considered ridiculous, and just plain stupid.
And now we have some investment firms and brokerage outfits like Goldman Sachs, Societe Generale, TD Securities, etc. coming out and downgrading the sector. Thanks for the timely heads up guys!
Earlier this morning on Twitter I posted a weekly chart of gold showing a falling wedge pattern, and highlighting the action of commercial hedgers. Recently they have been increasing positions while gold lingers near the low of the aforementioned 19 month trading range.
Pay attention to prior times when these hedging firms were accumulating at these levels, most recently in the May through early August period of 2012, and then further back in the latter part of 2008. Both instances marked the beginning of an upward move in gold.
From what I see, we're possibly closer to some type of a tradeable bottom than on the verge of a precipitous decline. As always, use stops losses to prevent huge losses to your portfolio.
Click on chart to enlarge view:
1 comment:
Hi,
Interesting analysis. I like to follow the commercial net short on the commitment of traders each week. With yesterday's selloff, I expect that net short number to fall even though it won't be reflected in this week's data.
Another thing I track is the Dow:Gold ratio. It's been screaming higher and I wouldn't want to pick a top there. However, there is some negative divergence on both the RSI and MACD.
We shall see. The overwhelming bearish sentiment, the GS downgrade, the joke corporate performance in the mining sector are all bullish. So few people track new mine supply in their calculations. Look at Tasiast or Pascua Lama or the South African miners. They are all struggling to bring the new mines up.
Ah well. Good work man. Good luck in your trading.
Best,
Mike (@michealph)
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