This study looks at 20 years of daily
gold futures (GC) price and asks:
Which 5
days in the past 20 years did price close at an extreme percentage below a particular exponential moving
average (10,
20, 50 and 200 ema)?
|
|||
% that Closing Price is Below
the 10 ema
|
|||
DATE
|
% BELOW
|
||
1.
|
April 15, 2013
|
10.99
|
|
2.
|
October
23, 2008
|
9.14
|
|
3.
|
June 13,
2006
|
8.17
|
|
4.
|
September
26, 2011
|
6.64
|
|
5.
|
December
14, 2011
|
5.93
|
|
% that Closing Price is Below
the 20 ema
|
|||
DATE
|
% BELOW
|
||
1.
|
April 15, 2013
|
12.84
|
|
2.
|
October
23, 2008
|
12.19
|
|
3.
|
June 13,
2006
|
10.47
|
|
4.
|
August
15, 2008
|
9.45
|
|
5.
|
September
26, 2011
|
8.06
|
|
% that Closing Price is Below
the 50 ema
|
|||
DATE
|
% BELOW
|
||
1.
|
April 15, 2013
|
14.93
|
|
2.
|
October
23, 2008
|
14.57
|
|
3.
|
September
11, 2008
|
12.44
|
|
4.
|
June 13,
2006
|
10.19
|
|
5.
|
December
9, 1997
|
8.39
|
|
% that Closing Price is Below
the 200 ema
|
|||
DATE
|
% BELOW
|
||
1.
|
April 15, 2013
|
17.71
|
|
2.
|
October
23, 2008
|
16.42
|
|
3.
|
December
9, 1997
|
14.26
|
|
4.
|
September
11, 2008
|
13.80
|
|
5.
|
June 10,
1999
|
9.36
|
|
Using the percentage to which price can be compressed below a particular moving average is usually a decent means of assessing how 'oversold' price has become. After all, price has a tendency to regress to the mean which, of course, is akin to a moving average.
If one can make this assessment over a longer period of time, say 20 years of daily data, that should make the extreme findings significant. And how about add to that the challenge of making this assessment using a broad smattering of moving averages, both long and short? Sounds something like an acid test to me.
So I made another (simple) indicator to display the data, sharpened my pencil to take notes and started my self-assigned quest.
It turns out that last Monday April 15th, of every single day gold has traded for the past 20 years, broke every record possible for compression below the 10, 20, 50 and 200 day exponential moving averages. Wow!
October 23, 2008 clearly took second place, also in every moving average category. That was the day before gold reached its 2008 low of $681 and then put in a green reversal candle, closing at $730.3 Also known as the D-wave bottom following the 2008 parabolic.
Btw, the $681 low of October 24th was retested 14 trading sessions later then the bull let out an angry yell, put its head down and charged $1,000 higher.
Third place, I suppose, would have to go to June 13, 2006. That day made the top 5 on all but one moving average. It turns out that day was the D-wave low that followed the 2006 parabolic.
Hummmm...... so how much further can gold's price be compressed at this point?
My answer is - not much (if any at all).
If one can make this assessment over a longer period of time, say 20 years of daily data, that should make the extreme findings significant. And how about add to that the challenge of making this assessment using a broad smattering of moving averages, both long and short? Sounds something like an acid test to me.
So I made another (simple) indicator to display the data, sharpened my pencil to take notes and started my self-assigned quest.
It turns out that last Monday April 15th, of every single day gold has traded for the past 20 years, broke every record possible for compression below the 10, 20, 50 and 200 day exponential moving averages. Wow!
October 23, 2008 clearly took second place, also in every moving average category. That was the day before gold reached its 2008 low of $681 and then put in a green reversal candle, closing at $730.3 Also known as the D-wave bottom following the 2008 parabolic.
Btw, the $681 low of October 24th was retested 14 trading sessions later then the bull let out an angry yell, put its head down and charged $1,000 higher.
Third place, I suppose, would have to go to June 13, 2006. That day made the top 5 on all but one moving average. It turns out that day was the D-wave low that followed the 2006 parabolic.
Hummmm...... so how much further can gold's price be compressed at this point?
My answer is - not much (if any at all).
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John,
ReplyDeleteThanks for that tidy bit of info. That goes straight into the vault.
Now that you've established the extreme move being historical, any comment or suggestion as to Why ? AND more importantly what are the risks for further downside (short term).
I'm not one to attempt to pick bottoms in these things, more the concern that although it seems unfathomable, potential still exists for more pressure on pricing. (I note that the Jackson Hole meeting is arriving soon).
A massive wave of Asian buying of precious metals is emptying dealer shelves across the region. "I haven't seen this (kind of) gold rush for over 20 years," says the head of the HK Gold & Silver Exchange, adding that old-timers haven't seen anything like this for 50 years. SeekingAlpha
ReplyDeleteJohn,
ReplyDeleteAccording to my work gold may be potentially going down to 1000-1100 area sooner than later. Anything in your work could point to those targets?
Thanks for the blog.
Liquid Motion - I'm sure the reason 'why' is somewhere among the 37 versions I have already read.....just not sure which one. I do believe that the further the gap widens between the paper and bullion price of gold the outcome will be very favorable for owners of GLD and miners.
ReplyDeleteShort term downside risk? 2006 came in 3rd place and the C-wave beginning was not much higher than the preceding D-wave low. 2008 came in 2nd place and experienced what amounted to a half hearted retest of the D-wave low some 14 sessions later....that is, price did not go lower. So who knows? A retest seems reasonable, even likely. But as far as another huge drop of $100-200 goes, I seriously doubt it.
Whoever is behind this blatant manipulation, Jackson Hole or otherwise, risks engendering a wrath of world wide physical buying (demand), should the market be so blatantly manipulated again any time soon. In turn the manipulators would unwittingly light the fuse that blows up their plan entirely. Tisk tisk tisk.
And btw, the sovereign buyers of gold having an eye on preparing to partially back their currency with gold somewhere down the road when the US Dollar is replaced, have no use for stuffing their sacred vaults with gold futures contracts. The 'value' of COMEX gold is rather meaningless to them.
Finally, the brilliant plan is to acquire as much bullion from London and NY as possible and put up US Treasury Bonds (owned in abundance and worthy of a struck match) as collateral. This way, the crap these sovereigns were duped into buying in the first place will quite effectively be given back to the ass from which it came.
Kinda reminds me of those kid games like 'Hot Potato' and 'Musical Chairs'.
Anon - well, I gotta admit I am not trying to figure out if or how gold could go down to $1,000 or $1,100 as you suggest. So in that regard I am not the right person to ask, I suppose. Could gold reach those price levels? Sure. Anything is possible. IMO, it would require an entity with a tremendous amount of resources and motivation to get the price there any time soon. And that is exactly the point - this entire price drop is fake. And yes, it is probably possible to make it 'more fake'. But so what? I don't think for one second this situation has a chance in hell of being sustained. I guess it all depends on the degree to which one believes in the fundamentals and their patience to be vindicated.
ReplyDeleteCHIPIT April 22, 2013
ReplyDeleteCBC (Cdn Broadcast Corp) on Thursday played a one hour show on the Secret of Gold on DOC ZONE. Interestingly, it was not available for US viewing. They stated that there is 100 ounces of paper gold in derivatives and ETRs for every one ounce of physical. Goldman. Soros and banking cabal hit the market thru Comex - manipulation for huge profits. If you google CBC Doc Zone Gold you will get to open the comments and maybe you can Watch Video - woth a try. Compelling and confirming!
Maybe they will correct the outcome of the latest COT Report but there is still significant shorts according to the report that seems unbelievable. If it is correct we still have some downside to go I'm afraid.
ReplyDeleteAnon - perhaps you should study just how well these managed money shorts have done in the past 5 or 6 years. I did a post on this not too long ago. Truth be told, they get themselves extended extremely short and every darned time they literally telegraph the bottom in price. If anything, the significant shorts you refer to are the gasoline for the fire of the bulls. Let them be as short as they want! I am not the slightest impressed nor worried.
DeleteTo view "The Secret of Gold" video:
ReplyDeletehttp://www.jsmineset.com/2013/04/19/why-50000-gold/
John what's new with the dollar .... is it still.in a translated left cycle
ReplyDeleteUS Dollar - TSI (7,4) gave a trend line break BUY signal last Tuesday. TSI (25,13) is looking a little shaky but not undecided about up or down.
ReplyDeleteI was just looking at a longer term chart of the dollar and impressed that today it is the same level as in 2005. What a crock! If that does not speak to manipulation, then what does?
if you look at the long term chart of the dollar on a monthly basis... you will notice the same base pattern it has that resulted in it going to 120.. also the dollar on the weekly looks to have an inverse HS with a double bottom..
ReplyDeleteSo, im guessing no left translated cycle?
Nice day for NUGT John!
ReplyDeleteA