Saturday, May 11, 2013

Thoughts on Japan, the US Dollar and Gold


I sure do hope these guys in Japan get a clue that they need to knock it off - stop the madness on the currency devaluation experiment- and get a hold of what is happening in reality before they blow themselves up.

Yes, I'm talking about their insane idea of more than doubling their printing of Yen, causing their stock market to rocket higher some ungodly percentage in a matter of weeks, and causing their bond market to repeatedly crash, tempered by numerous trading halts as more investors want to sell than buy. 

This whole scheme has come about due to a change at the top of the Bank of Japan with the dismissal of Shirakawa on March 19 and his replacement as Governor of the BoJ Haruhiko Kuroda.

On April 4th Kuroda’s new policies were announced and that is when the problems in the Japanese bond market began. Searching through one report after another it appears to me that since that date the Japanese bond market has been halted - due to circuit breakers kicking in because there are not enough buy orders to match up with the sell orders - at least 10 times, and as recently as this past Friday. These unusually large moves have elicited some comparisons to the market action of the late 1980's, before the bursting of Japan's economic bubble.

This really looks like it is going to end very badly.

You have the Bank of Japan BUYING its government bonds with its make-believe money and on face value why should that have the unintended consequence of owners of the same bonds selling in mass? Intuitively one would think that if the Central Bank is providing ammunition to support the price of your investment (bond), what could be better?

And for the first few hours of trade following this incredible announcement of policy change, Japanese bonds actually traded higher. After that, I think quite a few light bulbs lit up and bond investors started running for the door. And they are still running for the door as of last week.

Why?

Well for starters, would you want to hold an investment that pays .5% per year when you see your stock market rising that much EVERY HOUR? And since your currency is going to be severely devalued, do you really want to be paid back with DEVALUED Yen at .5% per year?

And if your Central Bank has announced an all-out war to get the inflation rate up to 2%, no doubt the rise in inflation will cause interest rates to rise and how will your already extremely broke government pay you back on your bond (debt) investment if its costs to borrow rise?

Everyone knows that Japan uses 25% of its tax revenue just to pay the interest on its debt. How will things work out if they have to use 50% or more of their tax revenue (due to a rise in interest rates) to service their debt?

Anyway, some of the excitement this past week was the 'accomplishment' of the USD/JPY (dollar/yen) rate cracking higher than 100. Early Friday morning this feat was given as the reason for gold's sharp sell-off. Then the Fed floated some trail balloon nonsense that it had new plans to begin slowing down the QE here and there. Even with all this going on, gold still managed to reverse direction and close strongly. Silver even completed a positive reversal.

Let's get to some charts. I have prepared 5. We'll begin with the USD/JPY weekly chart on the 20 year time frame. Next we'll look at the US Dollar Index (DX) weekly chart on the 10 year time frame. Then we'll move along to check out gold's (GC) secular bull market parabola situation with a weekly chart followed by a close up of a daily chart, and conclude with gold's daily chart featuring Fibonacci and daily cycle observations.

Here is the infamous USD/JPY that has everyone so excited.


Click on any chart to ENLARGE
That is quite a run the Japanese Yen has had lately vs. US Dollar. The media is fixated on the 100 level because, well, its an easy number to talk about. It's 100!

But what is just above 100 at, oh say about, 101.75? Yes, a blue line that runs left to right about 20 years. The line was support for at least 10 years and has been resistance since 2008. Good luck getting much higher on the first attempt. I'm not saying it cannot be done, especially the way the nuts are on the loose at the Central Banks. But I am skeptical.

Now let's see the US Dollar (DX) and it recent 3 year cycles.



I really thought the US Dollar was showing signs that it was finally ready to drop dead, but I got that wrong, didn't I? Anyway, I do find it interesting to see that these 3 year dollar cycles seem to find a way to top in a rather classical manner - a head & shoulders, a double top and if things go according to plan, another double top.

Some time ago I took a shot at figuring out the scheme of gold's parabola in terms of the increased steepening of 3 line segments. I redid that exercise today and got a slightly different result, but surprisingly found 3 line segments still define the parabola so far. I am guessing that this time I used a weekly chart on log scale and I probably used a daily chart on log scale last time. Anyway, here is what I found.



The three line segments are colored magenta, blue and red. The third line segment (red) connects the weekly low in 2005 with the weekly low in 2008 - then the line is just continued upwards and to the right.

Wait til you see where the red line travels at our recent low!



Talk about cutting it close. That red line is $5 above the low, if that. I put this final low on the 5 min time as I was curious what it would look like. Every single bar for 55 minutes was just above and below that line. Like the final war was being waged, then it was over (the bulls won, obviously).

Last, but not least, our daily chart of gold.



The dashed purple trend line is the daily cycle trend line which is ALWAYS broken before a new daily cycle can begin. We got that behind us on Friday. The daily cycle top occurred on Day 13 making it a bullishly right translation. The Fibonacci retracement managed to slightly dip below a very mild 38.2% retracement. We have completed day 18 and though on the short side of the average 24 days, it works. 

Also, gold achieved a Blees rating of 100 again this past week - 3 weeks in a row. Silver had a blees rating of 95. The managed money crowd pushed their luck even further last week by taking off long contracts and adding to their ridiculously historic short position. 

A top in the dollar should give us show time. And I can't wait to see it for myself!

Best always,

John
tsiTrader@gmail.com


41 comments:

  1. Very enlightening! Thank you for sharing your analysis!

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  2. John, Another excellent article. Thanks. Bruce

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  3. John, good report. Excellent point on questioning if the Yen can get through resistance on the first try. Seems most observers are all excited that it has punched through.
    Thanks so much for the insights. Btw, love the charts.

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  4. It can't get any sweeter than this....can it ?
    Although I might suggest we are perhaps one day from the dcl. Tuesday looks interesting as does Wednesday.
    Its been a long time coming and unlike all good things, this one will come with more twists and turns than the last act of hara-kiri.
    That's ok because I'm not going anywhere, neither is my gold / miners.
    What should have been a fun ride (on this next leg up), is going to take a much stronger stomach to whether what's ahead than what's been thrust in front of us to date.
    For one thing, I still stand by what I said some time ago.....Gold / miners wont bottom until the stock markets have a correction. Coming out the other side will be breathtaking to say the least.
    That doesn't mean we cant have some price action (in gold and miners) to take us at least to where all the recent fun started (1525ish).
    There's nothing to say that stocks and the USD cannot correct simultaneously (nor for that matter Gold). What will be the trigger though ? and will it be the Dollar that gets the ball rolling.
    Keep it up John, every post brings us all closer to the end game.

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  5. John -- POG declined this morning (Tues 14th) to 1421.95 --- this seems to move the count on first daily cycle to DAY 20. The low from Friday of $1418.65 is still. Would this then just be considered a re-test of last weeks low with the new daily cycle starting today OR does it change any other observations?? thx KC

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  6. KC - the "lowest" day, to this moment anyway, was Friday - day 18. Until a new lower low is made, day 18 would be considered the conclusion of the 1st daily cycle. If $1418 is taken out today or thereafter, that day becomes the count for this 1st daily cycle. The average daily cycle (I counted every single one of them from 2001 - 2011+) was 24 days. A new low today or later this week would not be extraordinary whatsoever.

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  7. Given your and Gary's consistently bad calls for quite some time now, isn't it time to admit cycles aren't working anymore. Gary bet big on those silver LEAPS, and he's going to lose big. Every time I see now his ridiculous projections for the the dollar, I'm glad I cancelled my subscription to an individual who's married to a failing theory to the point he is becoming delusional. I'm not even a fraction as knowledgeable as Gary, but I know the obvious. The dollar is getting stronger, not weaker, because it's the only game in town, cycles or no cycles.

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  8. John, I think you suffer from "nice chart syndrome". I had it too for a while. You post pretty bullish charts while prices continue down. Remember,the ultimate gauge of right or wrong is the trading account. I think all of us have been wrong for a while now.........

    As far as Gary, I remember they had a silver debacle and a couple of other misteps. This is huge though, he called a bull market in gold stocks while prices of GDX:GLD are lower than the 2007 crash. I also wish I stopped reading his stuff sooner. This decline has been out of this world. I do think it's unrealistic to think we'll pop right back. Today a couple sell technicals were triggered, they need to reverse asap or we're in for more pain.

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    1. Anon - OK, I posted your rant and hope you feel better now.
      I didn't learn anything but again, if you feel better then
      we accomplished something I suppose.

      I cannot speak for Gary, but I can speak for myself. My trading
      focus has changed. And as usual, it does not matter to me one iota
      if others, such as yourself, wish to posture that you are in a
      position to tell me either what I have done wrong or what I should be doing. Trust me friend, it goes in my one ear and out the other.

      Why? Well, because it is far more important to me to do exactly
      what I believe is going to be to my advantage, than to worry about
      what others think. It is infinitely more important to me that I end
      up with the reward that I think my patience will provide than, for
      example, the appearance of my trading record - which is just a little game I began playing with myself the first day I started this blog three
      years ago with a total number of readers of ZERO.

      Perhaps you need to remember that I trade with my money, not anyone else's. And if *you* can make some pretty charts and write articles that
      make at least a little bit of sense, you should send them to publishers, get your own website, and see who cares. Heck, send me the link so I can tell you what you did wrong and what you should be doing. That would be fun. (I would not waste my time, btw).

      Anyway, if you would like to discuss something I wrote that was incorrect, heck, please let me know! Or if you agree or disagree with something I wrote and care to explain why, please let me know! Otherwise I have little patience for your innuendo and will hit the delete button the next time I see it.


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  9. Anon - I will absolutely admit that gold's cycles, in retrospect, were proven to my satisfaction to be screwed up beginning with the confirmation of a failed and left translated daily cycle on December 18.

    We had a left translated daily cycle that properly brought the intermediate cycle that began the day after the May 16 low to its conclusion on November 5th. Intermediate cycles in gold ALWAYS conclude with a left translated daily cycle. So far so good.

    Then the next daily cycle, presumably the 1st daily cycle of the 2nd intermediate cycle follows the usual script and it was right translated (topped on day 14, Nov. 23), concluding on day 24 (Dec. 7th). So far so good.

    What should happen now is another right translated daily cycle. But that is not what happened. On Dec. 18th price took out the Dec. 7th low and officially became a left translated and failed daily cycle. That, in itself, was just plain weird.

    Thinking optimistically I thought perhaps it was a strange metamorphosis of gold's bull, as the cycle ended Jan. 28 was right translated. But what followed this was a series of failed daily cycles....all the way to the ultimate take down in April.

    For now, it appears that gold's bull cycles have returned, as this first daily cycle is right translated. Time will tell, of course.





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  10. And the US hasn't been printing money ??

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    1. Yeah! It's been going into the stock market via the banks speculating.

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  11. John,
    If the dollar tops out soon, it means tha we only have a short period of time for its decline, as the 3 year cycle is due to bottom in 2014 first quarter according to your charts, no?

    Thanks

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    1. Why do you think the dollar should top out soon? If you analyze the dollar from a chart and not how it relates to other currencies, you're missing the reason it is going up.

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  12. Why only go back 10 yrs on a DX chart? Check out 1991-97. Similar basing pattern imho. Take care

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  13. The dollar is NOT topping out soon.. JOhn, go to the weekly chart of the dollar, and you will notice a 2 year head and shoulders bottom.. the Dollar just broke out of major resistance and is going to 90 or higher...

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  14. John,

    In case you did nto look at this.. its a good read as to why the dollar may break out to 96 and higher.
    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/17_Five_Incredibly_Important_Gold_%26_US_Dollar_Charts.html

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  15. For my Anons:

    Let's see - today the US Dollar is 84+. And it's going to 90 or higher. The whole Western world wants to be saved (this month) by the great United States of America.

    Heck, let's be generous and say 90 is way too low. Maybe the US Dollar is going to 100 or, how about 120?

    Very good. The dollar is strong and it is going to appreciate from, call it 75 in mid-2011, to 100 - 120 by mid-2013. OK. Something like an appreciation range of 33% - 60% in just 2 years.

    And this is because of what fundamental reason? Forgive me, I cannot remember. The United States MUST have shown leadership to the world by living within its means and disavowed mooching off everyone else....even accelerated its repayment of debt as a gesture of good faith. Something very noble explains this sudden recognition of US supremacy. Did they double defense spending?

    Wow, I missed that. Hey, I even watch the nightly news! What was it again?

    Let's see, since 2011 the United States has diluted its currency by a trillion or two bucks. It has brought unemployment down a "supposed" percentage point or two. It has raised its debt ceiling a time or two. Hummm. I guess I am missing something really huge, but not sure what it is.

    Well, whatever the rational reason, it does not matter. The dollar is going to 90, and 100 - 120 just for grins.

    OK, so what happens when our companies can no longer sell anything abroad because our currency is too high? (heck, I would think a rise of 33-60% in our currency makes that a fair question). Oooops.....I guess our unemployment rate will have to go up.

    No problem, our Congress and President have shown they have the guts to double our taxes or deeply cut spending while more people sit idly at home receiving unemployment. We have a huge reserve of savings, so no problem. It's China who owes money to every Tom, Dick and Hairy and it is they who should be worried.

    Anyway, I am being sarcastic, obviously. But offhand, my question really is, what is the implication for the US going forward if its currency continues to rise sharply? Is this going to help the US or hurt the US? I don't see how it could be good, particularly if the bond market continues to sell-off and interest rates begin to rise. I doubt the Fed tolerates this forever.

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    1. Your answer John, is that it does not go on forever. It collapses, and we are presented with a world gone mad while the engineers of the madness have their protection, and everyone else is at their mercy. That is the way of history. People in this country have had it good for so long they've become lazy and stupid and voted for monsters who promised to take care of them. Most will be poor by the time this ends, and many of those will be like me who bought the end-of-the-world scenarios and gold but forgot the power of money created out of nothing and the extent of how long the gravy train could go on until that end. I wish I'd never cared about gold like most of my friends who are now rich because they invested in real companies and not gold miners and gold. They will have prepared better; I will be poor along with all the other gold suckers.

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    2. Nice point, I feel the same way --- poor.

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    3. Look at the 30 year long term $ index.
      There is a strong downtrend line from 85 peak and through 01 peak.
      The $ is going through alternating bear/bull cycles at a rate of approx 8-6 years each.
      The last bear was between 2001 and 2008, when it bottomed out at $71.
      Since then, the $ has been in a cyclical bull.
      I suggest this current rally will take us back up to the downtrend line at an index of around 90, in approx 2014, then bounce off into a new bear.
      This will coincide with the collapse of the DOW/S&P after hitting the 'jaws of death' top trendline,.... and a new gold mega-rally off a low somewhere in the region of $1000....and Martin Armstrong will at last be satisfied :D
      (Just take a look at a stock panic collapse chart of 1907 starting with an october high/ descending into a march-april panic plunge/then a november bottom, and see the eerie similarities between that, and the current gold predicament... both occurring out existing bearish sentiment.)
      These charts pointing to late-2013/early-2014 turnaround are like some magical alignment of the Dollar/Stocks/Gold stars in the heavens!

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  16. John,

    This acceleration the downside in metals is tremendous. I don't think you should quick to dismiss people who have an opinion different than yours. I think one of the best comments was the person who commented on your "Miners that are going to make you rich" topic. He said that if we're lucky we might make a little money, but most people lose a great deal of money. Now most of those miners are down 40-50% just from March. They were down big before that too. Not criticizing, but just saying don't be quick to dismiss the downside.

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  17. Joh,

    You should read armstrongs latest missive ... http://armstrongeconomics.com/2013/05/18/global-recap/

    and http://armstrongeconomics.com/2013/05/17/cycle-inversion-reactions/

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    1. Hi Alison - I poked around his website some, read both articles you suggested. It didn't do much for me. Did you have a particular point you would like to make or discuss?

      I did find these words on a nearby article and they left me wondering what the heck he was talking about. He wrote:

      "In here is the long-term view for gold using the database back to 1264. The prospects for gold bottoming in 2013 are not dead yet. There was a chance for a low in January 2013 but that was broken. What appears to be shaping up is an extension in the overall market. The $4000-$5200 target zone has not changed. A rally up to that area is still within the bounds of normal technical rally. Exponential moves are only possible if $5200 is exceeded.

      When 2012 closed higher than 2011, that was basically the kiss of death. That allowed the extension for a 3-year correction to move into 2015. Had 2011 remained as the intraday and highest annual closing, then a correction of 2 years would have been 2013 with a max into 3-years for early 2014. The higher closing at the end of 2012 without electing a bullish reversal expands the time line."

      Alison, unless I live on another planet and am terribly mistaken, gold peaked on September 6, 2011 at $1923.7 and closed that day at $1876. The highest 2011 'closing price' was on August 22 at $1900.4

      And, the highest price in 2012 was February 28 at $1792.7 and the highest 'closing price' of 2012 was that same day at $1784.8

      Mr. Armstrong wrote "when 2012 closed higher than 2011, that was basically the kiss of death".

      Huh? We must not be looking at the same chart.

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    2. John,
      you know he's very cryptic (sometimes even dyslexic?!),
      but i imagine he means that the yearly closing price on 31stdec2012 was higher than the yearly close of 31stdec2011.

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    3. John, I haven't looked at the article but maybe he's talking about the close as of Dec 31 of each year? He's got a database of prices going back to the year 1264? WOW! Bruce

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    4. He is referring to year end closing prices..thank you bwawawa

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  18. My two new Anons:

    First, you do not register a loss of money from an investment in stocks until you sell. If you are not on margin, do not own stock options or LEAPS, and/or are not holding futures contracts you are never forced to sell. If you have invested money in the stock market, miners or otherwise, with the notion that at your convenience you could take your money off the table at any time and put a profit in your pocket with it, you made the wrong investment choice. Those funds should have been invested in a money market account, not the stock market.

    My thought, above, recognizes that indeed, investing in stocks has the likelihood that at any moment in time the market valuation may be significantly higher or lower than one's purchase price. This understanding does not dismiss the downside or upside possibilities whatsoever.

    Second, you can buy into the nonsense that bankers around the world can devalue their currencies with such skill that they solve the world economies problems and create prosperity for all if you wish. I don't believe it.

    Every time in the past this "get something for nothing" manipulation has been tried it has always ended in disaster. Every parabola I have seen, for that matter, always ended in disaster.

    Unfortunately for those who find themselves on the wrong side of the trade at the moment, the emotion and despair they feel fools them from thinking clearly and they become convinced that "if you're lucky you might make a little money, but most will lose a great deal of money". This is only true if one sells right now. And fwiw, I do agree that few can stand the heat in the kitchen, so they get out. That is the effect bear markets have on investors - big and small.

    Third, it is very rare for any stock or index to go straight down, such as we are seeing in HUI right now, and not have a powerful bear market counter rally. Sentiment can be pushed in the negative direction for just so long and then it cracks. Speaking of human nature and sentiment, I have observed that price movement carried by increasing positive sentiment can be sustained much longer, in terms of time, than increasing negative sentiment that pushes price down. For this reason alone, never mind everything else I have written above, I will not sell because prices will be higher than today when the pain finally gets rid of the last holdouts.

    Fourth, if the price of gold falls too far, miners will just shut down their operation. On the supply/demand issue, will it increase or decrease the value of bullion if less is produced? Common sense seems to suggest that there is a natural floor to the price of gold - a price high enough that some companies will continue to mine, otherwise none will be produced.

    There is reportedly a disconnect between the perceived value of bullion and paper bullion. That is, current demand for the real thing is higher than demand for the paper thing. Miners produce the real thing and unless this increasing demand for the real thing changes I would think there is a limit to just how far miners market valuations can drop and be sustained.

    Some miners, like Claude Resources, are presently selling at 25 cents for every tangible $1.00 value. IMO, this is an incredible valuation that, admittedly could get even crazier, but will not last. For CGR to be priced at 1X tangible book value, gold would have to be price at $339.








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    1. Fifth and finally, for now anyway, the markets around the world are being moved in conflicting directions purely because of the manipulative efforts of currency devaluation. This is not a natural normal market. This is a market that is trying to function, simply put, with the interference of desperate bankers. You have to ask, why? Why are Central Banks behaving with such desperation, such intervention and interference? Is it because the laws of supply and demand, the 'free' market, no longer works? Or is it more likely that it is because their entire system is flawed and about to blow up in their faces?

      If you really think about it you will realize that while desperate bankers can impose desperate measures on the world, they cannot do so forever. If you think they can, then think about what happened to Hitler, or Napoleon, or Saddam Hussein, or Kadafy. Each attempted to manipulate, intimidate, control and rape wealth. Each ended with a bullet in their head (figure of speech).

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  19. Hi John. Seems like everyone and his dog is bullish USD and very bearish on gold. Looking at some charts of COT commercial positions of both USD and gold it looks like the commercials are either very wrong, which never seems to happen, or most commentators here and on every PM forum are wrong, and about to get their asses handed to them!

    Here are a couple of charts I find interesting : http://preview.tinyurl.com/aq35fme and http://www.gold-eagle.com/editorials_12/rosen042813.html

    Cheers

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  20. Hey Mike - nice charts. I have never taken the time to understand how Ronald Rosen makes his charts, and what all the deal is about Delta and so on, but he indeed spots that gold lower trend line the same as I do and then adds the pitchfork to do the rest. His silver and HUI charts were impressive as well.

    The tinyurl chart was indeed interesting with current price superimposed upon 1976 gold. If that isn't quite uncanny, I don't know what is.

    Thank you for sharing these with me and whoever may be interested.

    I feel badly for the small investors who have rode this bear to near the bottom and given up, meanwhile losing a big chunk of change. I have tried to give them every ounce of encouragement I could muster to get through this - but now instead of being encouraged they have thrown in the towel, given up and some would even like to take it out on me. I am going to take this as a sign that the final bottom is very near. Another week or more of this should bring so much pain and insanity into play that the bottom will be in. After that no one who has taken a large loss will want to buy a miner ever again and unfortunately that will work to the advantage of those who have held on.

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  21. Hi there John. I am following your blog since a year ago, I find it quite interesting! Keep this way!

    Take a look at that:

    http://postimg.org/image/j1j8f4mw1/

    I have entered into CGR at 0.29 with some shares past week and I am planning to add up another block, maybe in a 4-5 days when TSI could bounce, as in the divergence we can see. Intresting, isn't it?

    Just a question regarding your TSI Trading Record: do you still have your CGR positions open? I can see you made many purchases.

    Thanks for sharing your knowledge John.

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    1. Gimli - divergence: oh, who knows? That will not be what sends CGR up, I can promise you that. As long as there is pressure on gold itself it is quite impossible for miners to get anywhere. But that will change.

      Yes, of course, I own all those CGR shares in my trading record. My trading platform tells me my average price per share is $0.5873227

      I did look at your chart. I figure divergences a little differently than you, it appears. I do absolutely understand your thinking, fwiw.

      What I do is consider the previous TSI low which, in this case, was on May 6. And, as the TSI reading now is lower than that day and the low price is now lower than that day's low price, there is not a divergence. The most recent signal was a trend line break SELL signal on May 10 when, connecting the preceding TSI lows, the May 10 TSI closed below that trend line. Since that day the TSI has steadily been falling which is not a good sign.

      If I had more available money to buy more CGR I would. I am not fond of using margin and content to sit and just be patient.

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    2. Thanks for sharing your thoughts John. I am still learning about the TSI and I have made some bucks with it. Have you ever considered writing a book with all your knowledge? I would get a copy, that's for sure.

      Regarding the CGR chart, I could not agree more with you. I see the trend line break sell signal on the daily chart (the chart I shared was 2-days chart), but I think it could bounce making a higher low in next days. Well, I also know that signal won't be the one that will make CGR to soar, I am just trying to make small gains getting in and out. I know in the long rung CGR will be a a winner.

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  22. Mike,

    Those charts look great, but that Rosen article was published in April - since then $HUI has broken below that low. That chart is long-term so it's hard to tell - but it may have even broken out of that channel. Trust me, no one wants to be more bullish here than me, but the market has to agree.

    I would love to hear your perspective. This monthly close will be potentially the most important in the decade.

    Here is the chart I am referring to http://www.gold-eagle.com/editorials_12/images/rosen042813-3.jpg

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    1. Hi Mike - as I mentioned, I really have not taken the time to understand how Mr. Rosen does what he does. I just looked at HUI on thinkorswim. I used a daily chart to get perfect accuracy.

      NOT using log scale:
      Nov 15, 2000 $35.31 and Nov 26, 2001 $59.86 gave me an extended trend line gave me a bullet shot through 2008 at about $230 and through 2013 at about $338. The 2008 low was not $230, but rather $150. So this technique does not seem to jive with his work.

      Still NOT using log scale I then tried Nov. 15, 2000 $35.31 and Oct. 24, 2008 $150.27 and that extended line bullets BELOW current price and coincides with about $215. (Our low last Friday was $246ish). So this technique does not seem to jive with his work, either.

      USING LOG scale on price, the results were entirely different again, of course. Using the same starting point and date with the same 2008 low and date, I got what appears to be what Mr. Rosen was getting. A price trend line that intersects price at about $338 on April 3, with price retesting this trend line on April 5 and 9 before falling sharply around mid-April 2013.

      My perspective? For starters, bull markets are generally agreed to be characterized by higher highs and higher lows. Bear markets, the opposite. In terms of cycles it is generally agreed that in a bull market the final nested cycle within the larger cycle will be bearishly left translated and even failed - meaning it will make a lower low (which is otherwise uncharacteristic of a bull market).

      Just putting trend line considerations aside for a moment, we see that the HUI 2008 low fit the bull cycle characteristic of a failed final cycle (concluding and roughly coinciding with the 8 year cycle in gold). That is, the HUI 2008 low was lower than the lows of 2005, 2005, 2006 and 2007.

      Now what we see in 2013 is very similar. HUI price has take out the lows of 2012, 2011, 2010. I'm showing a 2009 low of $241.71 which is just $4 or so below our current 2013 low. The 2008 low of $150.27 is some $95.62 LOWER than the current 2013 HUI low.

      The takeaway, for me I suppose, is that we should take out the 2009 low but not the 2008 low.

      As far as Mr. Rosen's trend lines go, I would agree that the generally accepted preference is to use log scaling. In this case, the log scaling method clearly has failed, as you pointed out in your comment.

      When I switch the chart back to NON log scale, the trend line bullets through the May 2013 time frame at about $215 - only $30 BELOW our current low.

      The takeaway here is that price does not have the cushion of being able to fall to just above the 2008 low of $150. Rather, $215 seems to be the line in the sand to get excited about.

      It will be interesting to see how traders and their computers handle this.

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  23. Anon, I was only paying attention to the gold chart of Rosen's. I am not really into charting, but I find some interesting.
    Never bet against the Commercials. The Commercials are always right and right now they are gold bullish and USD bearish. Nothing else matters.

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  24. Mike trike,

    everyone is following the COT which to me means that when the crowd is all using it its useless.. we dont know if the commercials have duped everyone with it.. they may have changed the data or the classifications to suit their own needs.. they may have used other brokerages to place their trades via subsidiaries..(just guessing). Bottom point.. not alot of people back in the day were commenting on the COT... NOW EVERYONE SAYS WE MUst go higher because the commericials are betting that it will....just not kosher to me

    also, armstrong has a missive.. not good... John care to read it.

    http://armstrongeconomics.com/2013/05/19/gold-timing/

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  25. Anon - Ok, I read another Armstrong report. Geez, my website is getting
    to be a commercial announcement for this guy.

    And I heard he spent time in jail for being a crook.....not sure what that is about, but reading his impressive 'About' section on his website, his last brag was for something he did in 1996.... oh, there it is.... "On July 18th, 1996, Martin Armstrong was invited by the US Congress to brief it on the world economy. He testified before the full House Ways & Means Committee on this complex subject or the interworkings of the Global Economy."

    Good Lord.

    And then there is.....well..... absolutely nothing until June of 2011 when he was smart enough to get publicity for some call he made in 1987 and claim he had a new earth shattering revelation to proclaim.

    Heck, sounds like a 15 year jail sentence to me. 1996 to 2011 is, ah, 15 years. Somebody that has the details can give us the rest of the story I suppose.

    As for his article "gold-timing", I didn't learn anything, but maybe someone else will enjoy it.

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  26. anon, show me where the Commercials have been wrong and I will agree with you. It doesn't mean we won't go lower in the short term. By September we will be higher in gold and probably silver. Martin Armstrong became bearish on gold the day he was released from prison. While he was in prison he was always very bullish on gold. Why was he in prison and why was he finally released? Everyone can do their own research on it!

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  27. Wow over 6% down for silver!!!!

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