gold outlook report 20 jan 2012

8/3/2019 Gold Outlook Report 20 Jan 2012

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JAN 20, 2012

Gold at the Cross Road

It was 32 years ago today, January 21, 1980 that gold made its first long term wave

high. The fundamental driving force of that move was the removal of the Gold

standard in August of 1971. It was the seminole point in the 2nd half of the 20thCentury and yet, went completely unnoticed by the majority of the populus. For

those of us over the age 57 (give or take a few years) we all remember where we

were when we heard JFK had been assassinated. Or John Lennon. And Bobby and

Martin.

But does anyone remember where we were when Real money was assassinated

(removed) ?


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The technical picture suggests a major long term wave completion is upon us. The

total wave structure includes the "three steps forward and one step back" pattern.

Three cycles up and one down. Elliot would count 5 waves up and 3 waves down

but the idea is the same.

The cyclical price analysis on the chart shows the major lows that have developed

in this current wave which began at the low and end of the first debt and currency

panic of 2008. The suggests that this is a point in "Time" where gold attempts to

return to a bull market mode. From a time basis, that last wave was a Fibonacci 34

month up wave that culminated in the first week of Septembe 2011.

In order for the correction to complete in this "time frame" gold has to exit the

rounding Green Gann Arc and then enter into the upper portion or quadrant. This

window of time for a major trend change is most likely at this point. The time

cycles have lined up, and price is arriving at the center of attraction where price is

going to make its decision of whether gold is now ready to go attack the 2000 area

or if it needs more time inside this correction. This current window of time is open

from January 17th thru the 24th for immediate entry into the upper quadrant

marked enter here. This cycle should run into the February 7th thru the 15th timeframe where a strong move up into the middle of February can develop. Depending

on price decision at this 'window of time" we'll either look to trade long up to the

1900-2100 area or if price decides to take the road back to 1588.5, we'll look to

play it on both sides. A MOVE ABOVE THE CENTER OF ATRACTION AREA

will increase the odds significantly that the correction in gold is complete and new

highs will be in play


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Gold with a less technical tilt -- but with the same story

Gold has run into some important resistance at the 1670 area where the dotted up

and downtrend lines reside. That is the cross road we are discussing. The long term

trend remains up inside this green momentum channel. It takes a push above the

dotted line crossing. A weekly close above the cross and the green line labeled

target #2 will come into play.

There is additional resistance at the middle green channel line at the 1750 to 1775

area and that would become the target on a price surge above the cross road. Price

is also at the daily moving averages so its a short term make or break area.


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Its also important to note the fundamentals coming into play. Next week is the

Chinese new year. In 2010 and 2011, gold made its lows right at the week of the

Chinese New Year and never looked back. However, 2008 and the last liquidity

crisis found gold peaking in February (think target #2 on the chart) and pulling

back in March. Regardless, the one constant is whether gold will be above to moveabove this 1680 - 1700 for week January 23rd.

A failure at this area next week would favor a pullback into the first week of

February and another reset and consolidation before its next attempt. Once the

cross road is broken, the odds will favor the upside into February. The long tern

trend still up, but the medium term has been in a correction that dropped 20% of

price value. This coming week is the first attempt to turn the medium trend backup.


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We can see on the WEEKLY LEVEL that the oscillator is still in a downward

position. At this time, the Major Weekly Bearish Reversals are 1522.7 and 1405.8.

Thus, only a weekly closing below 1522.7 will signal that an immediate downtrend

could retest long-term support. According to our model, the Minor Weekly Bearish

Reversals are found at 1588.5 and 1542.8, followed by resides at 1479.7.Consequently,

only a weekly closing below 1588.5 will signal that a sell-off is likely to follow.

On a long-term basis, our Reversal System indicates that our Major Weekly

Bullish Reversals are 1680.1, 1730.5 and 1762.9. In order to see a reversal in trend,

gold would have to close ABOVE 1762.9 on a weekly basis. The weekly turning

points are coming into the end of January and to stabilize this market gold has to at

least accomplish a weekly closing above 1680.1.


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SILVER

Silver moved up to our target area and is making a bid to enter into 2011 price

territory. The move to 32 this week arrives at first resistance. The long term blue

line is where the bull/bear battle line exists. This blue line is a 9 year old line that

has separated all the major highs of this entire bull run. When it began in 2003, this

blue line stood at 6 dollars. That price penetration above it in early 2011 that set off

the major spike up to 50 was the first time that price had ever exceeded the long

term blue line.


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Hui Gold Stock Index

The HUI gold index has been in a massive choppy and overlapping pattern all year.

This is now the 5th time we hold the 480 area in the HUI. This area is the line in

the sand and we've been using the 480-520 area for quite a while. A break belowthis area would warn of a test into the 400-420 area.

The medium term trend remains neutral --- and yet another bounce attempt is to

try and get out of this dangerous area.

There is a dip that usually happens this time of year as many of the higher lattitude

gold mines close for the winter. What we usually see is a buy point gets set up in

the January timeframe and then a rally takes place into April/May. Perhaps the

strangest thing is why are the gold stocks ready to break down and for gold bullion

to break out higher.

There can be only two reasons if you really think about it. Either the gold stocks

are waiting for gold and silver to peak right at this point in time and both the

metals and gold are about to take a deflationary turn lower

---- OR ------

Gold and silver are so strong that the gold stocks are making their LOWS RIGHT

HERE at the winter seasonal dip and are about to move higher in a strong moveback up to the 600 area.

Regardless of the the fundamentals and every single bullish or bearish arguement

out there --what i've addressed above sets the pace for what can happen. There are

no other options ------ unless you favor that they are going to go sideways forever.

Thus to recap, which ever side that price on the HUI takes out of the bull/bear zone

should set the pace for the next two weeks. Since price has held the lower line for

15 months, its prime real estate for the 'control boyz' to try and take a shot at

clearing the stops below. Which ever way we come out of the bull/bear line shouldset the pace now into the first or second week of February.


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Disclaimer: Not hing I say is advice, please do your own research and

consult a licenced financial advisor. Remember t hat invest ing and

t rading is risky

gold outlook report 20 jan 2012

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