Drivers Of The Gold Car
Oct 2, 2012
- All financial eyes should be focused on the FOMC minutes release on Thursday, and the Employment Situation report on Friday.
- What is the main factor that will determine whether gold can surge over $1800 this week?
- The answer is the institutional money manager liquidity flows that occur in response to those two critical reports.
- Ben Bernanke has made it crystal clear, that unless there is significant and consistent jobs growth, the Fed will purchase more monthly tranches of OTC mortgage securities.
- The theme amongst institutional money managers is “risk on”, with gold playing leader of the parade. Top callers have not fared well in this rally, and a violent move above $1800 could cause more of them to throw in the towel.
- Many top bank economists are calling that price of $1800 a “game changer”, and I believe that’s exactly what it is.
- A lot of these risk-on markets are showing signs that they have caught the “QE3 bug”. Please click here now. You are looking at the daily chart for the Dow. Note the beautiful inverse h&s pattern in play. The price target is well over 14,000.
- The weekly chart showcases an ever bigger version of the same pattern. Please click here now. Depending on how the neckline is drawn, the target is at least 16,000, and arguably as high as 17,000.
- A massive risk-on institutional liquidity flows tidal wave is underway, and it’s not just the Dow that money managers are focused on; it’s a broad spectrum of assets.
- Please click here now. You are looking at the daily chart for November oil futures. After bottoming in the $79 area, oil rallied to about $101, and then declined to the key Fibonacci 50% retracement line near $90.
- Oil may be getting set to charge higher, which would put more pressure on the economy, and cause Ben Bernanke to consider ramping up QE3, or implementing QE4.
- Please click here now. That’s a short term chart for oil, and you can see that an inverse h&s pattern has formed. Thursday’s FOMC minutes release could be just what the technical doctor orders, to blast oil up above the $94 resistance area, and start a trending move higher.
- Please click here now. I believe that the price of natural gas could ultimately surpass the price of oil, but I’ll be more than happy if it rises just to my $4.20 target. Note the light red lines that I’ve put on the chart at key HSR (horizontal support & resistance) points.
- Those red lines are “sell like a bird” profit booking points. Natural gas is the world’s most volatile commodity, so it’s very important to buy it at the lowest possible price. Price swings of 50%-70% are very common, and most natural gas players cannot deal with the drawdowns that accompany their investment in this key fuel.
- Please click here now. You are looking at the daily chart of GDX. A lot of gold stock investors were hurt very badly by the decline of 2011-2012, with many individual issues falling 70-90%. As a result, there’s still a lot of nervousness in the air, despite the emergence of QE3.
- I’m not really interested in whether gold is set to “correct now” or not, but for those who are, watch the daily chart for a move to new highs in price that is not confirmed by RSI.
- The RSI oscillator is currently overbought, but is confirming all the price action, so all price lights are green!
- Investors should give serious consideration to QE3, and the accompanying risk-on theme being adopted by powerful money managers. As volatility grows, it may be time to consider fading the use of the daily price charts, and focusing more on the weekly and monthly ones.
- On that note, please click here now. You are viewing the monthly gold spot price chart. Most of the indicators and oscillators are displaying buy signals.
- Note the CCI indicator. It has only just arrived in the overbought zone, suggesting an enormous trending move has just started.
- Institutional money managers don’t see much point in fighting the Fed, and it may be wise for retail investors to follow that same strategy. Risk-on is in play, and “sharp hits” rather than “corrections” is likely how price declines occur, for quite some time. Place light buy orders 2-5% below the current market price.
- Placing too much emphasis on the price and indicator action on daily charts is arguably a form of gambling, and many professional money managers have the same viewpoint that I do.
- I like gambling, with very limited risk capital. Unless you believe gold is going to break the lows near $1523, there is no need to be “calling a correction”, at this point in market time.
- Yesterday, gold rocketed higher in a “flagpole” move, and that was followed by a bitterly disappointing sell-off. Have the patience to wait for this week’s key price drivers to be unveiled, before trying to guess where gold is headed to next. The drivers are the jobs report on Friday, and the FOMC minutes on Thursday, and the only question is, are you ready for action?
Oct 2, 2012
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