FINAL FLUSH OUT IN GOLD & SILVER

Posted on Posted in Daily Blog Post

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Calm before the storm? GS is determined (?)to devour gold investors by pushing price down to $1050.
(Kitco News) - Goldman Sachs reiterated its call for gold to decline (to $1050) this year as U.S. economic
growth picks up and Treasury yields rise….14th April

Are new lows in gold and silver still possible in the next 2 months? I can’t rule them out at this time as their price levels are still far from break out mode (upside). In fact, I am a bit biased toward the possibility of seeing new lows.

Yesterday, major indices like DOW are testing the highs while silver is testing the bottom (1915), which is unusual since silver is an industrial metal and should benefit from the overall market bullishness. This divergence and together with the latest COT data indicates that Silver could break down to 1850-1860. Tomorrow Jobs Report could trigger the breakdown in gold and silver if the data is very strong.

In this MAY monthly report; I would like to share with you about the characteristics of the 3 phases of the Big Bear Market: 1. Psychological behaviour 2.Technical behaviour 3.Duration. I also want to delve deeper into the next Cycle Timing Turn for gold and silver. When is the best time to buy? You need to be a member to read the FULL Report (19 pages)

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Market Watch Today (by Mark Hulbert) : Consider the average recommended exposure to the gold market among short-term gold timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Gold Newsletter Sentiment Index, or HGNSI). At gold’s low last June, 10 months ago, the HGNSI got as low as minus 56.7%, and at its low last December this average stood at minus 36.7%.

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Negative HGNSI levels mean the average monitored gold timer is short the market, betting on a decline. So levels from last June and December represented a lot of bearishness, and gold bullion dutifully rallied in the wake of both: 19% following last June’s reading and 16% after December’s.

Today, in contrast, the HGNSI stands at minus 16.7% — negative sentiment, for sure, but nowhere near it was on the two prior occasions.

Worth focusing on is how the gold timers reacted to the geopolitical tensions surrounding Ukraine. After Russia took control of the Crimean peninsula in late February, the gold timers jumped on the bullish bandwagon — as you can see from the accompanying chart.

The gold timers weren’t being irrational, of course, since gold is widely touted as a hedge against geopolitical tensions. But the resulting exuberance proved to be too much for the gold market, as the gold timers’ eagerness caused bullion’s rally to quickly fizzle.

As a result, even though the geopolitical tensions are no less pronounced today than in late February, gold has declined. Apparently, sentiment exerts a more powerful influence on the gold market’s near-term direction than do geopolitical tensions — at least those of the magnitude exhibited during the Ukrainian crisis.

According to contrarian analysis, a tradeable low will come when there is a lot more bearishness than there is today, as evidenced not only by a lower HGNSI reading but also a reticence to jump back on the bullish bandwagon when a rally does begin to materialize.

We’re not there yet — which is why I conclude this column with what I said a month ago: “Gold is headed lower before it heads much higher.

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