With the U.S. Dollar Index trading near the 98 level and investors unsure where gold and silver are headed from here, today King World News shares a fascinating piece from Louise Yamada, which features three key illustrations covering the action in the gold market.
August 6 (King World News) – Gold – The Bear Claw Comes Out For another Swipe
METALS: Don’t Try to Catch a Falling Sword
Gold Spot price (GOLDS-1,095.82, see Figure 28) finally gave way in the ongoing structural bear market as price plunged below 1,138 (nearly a year-long support). Every rally following the initial breakdown in 2013 has failed to exceed the prior rally, continuing to point to the selling into strength (supply). This secondary break is the next in the process of carrying Gold closer to our targets of 1,000 (August 2013 report) over the months ahead and 800. The expectation of significant upside beyond contratrend rallies into resistance of 1,150-1,200 remains unlikely in the current technical condition.
The target of 1,000 represents the support of the 2008-2009 consolidation (see circle). The measured move from the back of the 2013-2015 descending triangle formation (see arrow) of 200 points, projected downward, carries toward 1,000. The 2001 uptrend over time intersects with 800, the next potential target, suggested over a year or two.
In spite of a flat S&P 500, the anticipated collapse in Gold has inched this structural portrayal of the S&P 500 / Gold ratio higher (see Figure 29), in favor of outperformance of the S&P 500 over Gold/ (When the line is rising the S&P 500 is outperforming Gold; when the line is falling, Gold is outperforming equities, as from 2001 to 2010.)
This ratio has been one of our historical structural arguments for equities having initiated another structural bull market, and Gold having initiated another structural bear market, when the ratio turned up in 2013, as equities pierced up through the 2007-2008 highs. The trend should be expected to continue, notwithstanding any near-term cyclical correction / cyclical bear in equities (during which the ratio could turn down minimally as expected in the course of an uptrend), but not necessarily implying Gold will rally; only that equities may correct.
Last month we included a section “Don’t Count on Gold Stocks” showing the underperformance of Gold stocks to the price of the metal. That chart, too, has broken down to a new low from that depicted herein last month. Additionally, the GDX (Market Vectors Gold Miners ETF) has plunged to a new low (see Figure 30). We continue to steer clear of Gold stocks.
For both Gold and Gold stocks, don’t try to catch a falling sword. Price can fall of its own weight simply from an absence of buyers. This was a small portion of Yamada's 50 page report. To subscribe to Louise Yamada Technical Research Advisors CLICK HERE.
***KWN has now released the incredible audio interview with the top trends forecaster in the world, Gerald Celente, where he discusses his prediction for a global stock market crash and panic in 2015, as well as giving the KWN listeners a peak at the just released Summer Trends Journal, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO RELEASED: Richard Russell – Buy Physical Silver Ahead Of The Coming Chaos CLICK HERE.
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The audio interviews with Bill Fleckenstein, Dr. Paul Craig Roberts, Robert Arnott, Eric Sprott, John Mauldin, Stephen Leeb, Egon von Greyerz, Nomi Prins, Gerald Celente, Andrew Maguire, Michael Pento, Rick Rule, David Stockman, Chris Powell, Dr. Philippa Malmgren, Marc Faber, Felix Zulauf and Rick Santelli are available now and you can listen to them by CLICKING HERE.