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Gold Update

Alan Micik snippet
Posted Feb 4, 2013

A review of the Major and Intermediate Trends for gold and gold shares is appropriate at this time because bullish Evidence is increasing for gold and the gold shares. Our downside proprietary cycles (PC’s) for both are now alerting MML that the bearish case is getting “dated.” Here are the long-term price charts for Spot gold and the HUI.

Since the September, 2011 peak for both markets, gold has traded in a rather persistent range of $1,800-1525. The approximate mid-point of this range is $1,662 and that is precisely where we are now as we write about this 17 month consolidation phase.

Classically, a sustained 20% decline (i.e., below $1,525) would be described as a Intermediate bear market by most chartists, but that level has not been sustained, so gold’s Major secular trend remains intact at this time.

In contrast to gold, the HUI is now 38% below its 2011 high and so the HUI still remains in a “classical” Intermediate Term Bear market. All historical value comparisons and ratios vs. gold and such have been “blown up” during this Bear market for a variety of solid fundamental reasons at the producing gold companies.

But, with that said, our PC’s for gold and the HUI (they are slightly different) may soon conclude on the downside, and if accurate, they jointly project a specific time for the next “high zone” price down the road.

First, let's observe and note some recent Intermediate & Short-term Trends for both. In our MML 10/7/12 Subscriber Update we noted:

“Our proprietary cycle (PC) had identified the week ending on 9/28/12 ($U.S. 1,774) as a “high zone” week for gold.”

Next, notice that in early October gold made several short-term upside thrusts above September’s highs, while the HUI did not. This was classical bearish technical action for both markets given that our “high zone” gold time target had just concluded. In our 10/21/12 Subscriber Update we noted that:

“Mr. Gold Market has been declining in October as MML had forecasted from earlier this month. On October 7th ($U.S. 1,781 and GLD 172.62), we described the bearish case regarding gold for Subscribers (the high in October so far was 1,798.10).

The decline in gold of late was not unexpected by MML. The major concern that we have is the complacency in this market. We read most everything there is to be read on gold, and there has been, in our opinion, no serious concern about downside risk among the advisors of gold and silver. Correction/consolidation concerns, but no Fear. No fear and complacency are generally the hallmarks of ongoing bear phases, not near-term corrections.” Now, notice the recent near-term-low in the HUI last week, & the higher low in gold vs. its recent lows in December and January.

For the moment, gold has just said “no” regarding following the HUI lower into early February, and this may be similar to gold’s “no” to the mid-November HUI break whereby gold held its ground. Clearly, gold sentiment has moved to the “apathy” level among Traders, and that is constructive for gold’s Intermediate Trend in due course. HUI sentiment, on the other hand, has moved well beyond “apathy” and Fear… it might, in our opinion, best be described as Hate. Apathy, Fear, and Hate are the opposite emotional extremes of the complacency that we observed in our above 10/21/12 Update so Contrarians take note.

For MML, we have multiple PC “low-zones” which occur in February for gold and the HUI so let’s review those as well as our current expectations for these markets.

More follows for Subscribers…..

Our MML philosophy is the same today as always… never sell your physical gold. Hold the amount of physical gold you are comfortable with, and periodically “hedge” some of it (or all of it) when it is overvalued.

MML’s “hedging” positions now have closed “hedging” profits against our physical gold of $160 per ounce for Investors. Our closed Aggressive Trader’s profits are now >$100 per ounce in one year. We have purchased GDX 4 times in 1+ years seeking a low valuation trade, but we have had 1 small win and 3 small losses during that time.

Our latest Subscriber Update was on February 3, 2013, and it covers our current observations. If you would like to review our current MML forecasts for gold and other markets, consider a subscription (details are listed below). In deference to our Subscribers, we have a 4 day calendar “Quiet Period” from all Subscriber Updates before any Posts.


Al Micik

The Micik Market Letter (MML) covers opportunities in any market sector when low-risk opportunities are identified for the investor and/or trader. Ongoing coverage is provided for gold and physical gold hedging strategies. Silver & GDX are periodically covered when low-risk opportunities occur. MML uses proprietary indicators combined with technical analysis, and contrary opinion. Unlike other market reports, we do not have regular “publication dates,” as the markets create the dates of action, and thus the communication to our subscribers. Individual shares in any sector are generally not covered, but nor are they excluded. By using baskets of stocks (ETF’s), we seek to decrease our risks and have improved liquidity when it’s time to exit a position. This enables us to use reasonable Stops, and we use them on every single trade in order to limit our own emotions. This is a new 2011 publication, but the editor has 36 years of market experience.

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