This market is getting wound up ... so pay attention (New Gold Video)

I think that the gold market is getting wound up. If I'm right, we're going to see an explosion in gold to the upside.

Here's the reasoning behind my optimism for this market: Right now we're seeing gold in an accumulation phase. A move over the $875 level in the spot market will signal the first step to propelling gold in an accelerated upward trajectory.

Certainly a move over the $890 level, basis spot, will begin to bring in many new buyers. When this happens, I expect gold to go into a crisis mode as more and more people look to preserve their capital and seek haven in this yellow metal.

Watch video here:

I would not be surprised to see more backing and filling as the bull market regenerates itself for an upward move. What may create this is a further deterioration in the world equity and banking markets, and the potential of nationalizing the banks both in Europe and in the States.

While this seems extreme, we are living in difficult times. It even appears to be getting even more complicated and fragile. I do not see any fast turnaround, via the new Obama administration, and I think they have been given an impossible task.

There is no guarantee that spending ourselves out of this recession is going to work. It even sounds like a silly plan when you say it out loud, "Let's spend our way out of a crisis that started from spending what we don't have." We will be printing more money and devaluing the dollar and its purchasing power. This can only be reflected in higher gold prices as investors try to maintain their purchasing power.

I have given you the key levels to look for. If these levels are broken on the upside, I would ask that you seriously think about taking long positions in this market. Currently, the April electronic contract is the one that has the most liquidity and that's the one to look at if you're not trading in the spot gold market.

Every success in the markets and in life,

Adam Hewison
President, INO.com
Co-creator, MarketClub

45 thoughts on “This market is getting wound up ... so pay attention (New Gold Video)

  1. Well, the Daily triangle read sell on the 9th and sidelined us. ( I am long in core and strategically hold that core and follow the triangles, though THIS TIME i refrained from selling anything). A green triangle should appear tonite with a new 3 day high. But still, there is lots of support at 880 and 870 and resistance at 920 and 935 area.... (i could be off a few points here and there). We are in a firm bull market, hold a core, trade the daily's and look for a 1000-1050 before another correction ensues.

    It should be noted that I read somewhere that the 2 major banks are hugely short and are in a losing trade right now....this means to me that we will likely see 870 at some point...the question is will it be before or after it hits a 1000. Opinions?

  2. I see that gold has broken through the $900 level but I guess it is early days. Though long term, I think gold is going very high, as paper money loses its value and we all have to fight the inflationary elephant in the room!

    Adam, I thought the video was very helpful and I am grateful for your simple and clear explanation of how useful the MACD technical analysis indicator can be for traders. Thanks much!

    1. David,

      We are in the early days and I think we'll see more backing and filling as we keep moving up to new levels in gold. The recent pullback is back to where the markets should find a good support. We expect that we will see this market resume its upward trend either later this week or early next week.

      Thanks for your feedback.
      Adam

  3. Adam,

    I am a fundamental technician. In other words I will look at the fundamentals of the markets FIRST and then trade it technically, inline with the trend (go long only in a bull, go short ONLY in a bear). TO date i have been a long term (multi month) holder in fundamentally sound markets...ie gold/silver shares and physical. Knowing gold is in a technical bull, and given your signal to go long, I have gone long at 855, 888 and 902. I finally re-signed onto your website for the second time, and charted the ROI on your entire 08 gold triangles and found that you indeed have a stellar record with the triangles (24% and 45%). I love your videos and your demeanor helps....I agree with you 100%. That said, gold looks like it has broken all resistance lines in all currencies except the Dollar. Gold is phenomenally breaking out against the Euro. With a h&s top seemingly developing on the dollar with a gravestone doji (a severe bear indication) it appears that it will not be long, fundamentally speaking, that gold will break above the dollar resistance zones....

    All one has to do is ask, is the world better today than a few years ago in our hayday of extreme earnings and the good life in America (i have now moved out, btw), and you must come up wth a resounding NO...the banks are collapsing (I worked for Merrill, Morgan and BOA!!), a 100 billion can buy you all the major banks now in one swoop. Unemployment is rampant, Iceland went bankrupt, Greece is next, UK is in trouble with a currency collapsing from 1.95 to 1.35/USD....WOW!!!! One needs a safe place to park the money, not real estate, not currency...only thing left is gold/silver...it's inevitable...it's gonna happen. My take is to buy and hold a core position 50% of networth in Gold, 30% currency, and trade with the other!

    1. Aamar,

      I enjoyed your thoughts, thank you for your comment. You've helped make the blog more interesting and useful to our readers.

      Once again thanks for your input.

      Adam

  4. I don't see much talk of this on the web, but gold seems to be breaking out on the high side from a perfect pennant pattern that began around Aug 15, 2007. It could be on a tear for the next six months, IMO.

    The pennant pattern for Silver is harder to read because silver is half monetary metal and half industrial metal. So silver behaves half like gold, and half like industrial metals (copper, nickel, etc).

    But all the other industrial metals seem to be finding a bottom. Therefore, silver could perform half like gold (strongly bullish IMO), and half like copper going forward. Both aspects of silver look good.

    In other words, I agree with you that gold looks good right now.

    1. Chipper,

      Thank you for your feedback. I see that you are a student of the market as you made some great comments.

      Like you, I'm looking for this market to go higher in the next six months. I also think that stocks that are gold related will also do well in this time frame in particular ABX.

      Every success in the market.
      Adam

  5. The main flaw that I commonly see in the deflationist camp is that they are always pricing gold against dollars. As soon as you compare it to something other than dollars you get a completely different picture. Investors need to shuffle from investment to investment. If you hold dollars through this crisis at some point you'll get burned.

  6. GLD has serious technical resistance next week above 92-93. Here are few points,
    a) Gold is in bull market since Mid 2001 when 13 week EMA crossed above 34 week EMA. 13 crossed below 34 in Aug/Sep 2008 for first time after that. Friday 13 and 34 week EMA are equal to penny with 2cents diff. So if next week close is above Friday close, we are definitely in start of new bull market.
    b) It may just spike up on Monday to GLD 92-93(Trenline resistance) and heavily overbought hourly indicators and start going down for rest of week. And if it closes week below last Friday close, we may have hit 13/34 weekly resistance.
    c)When CNBC.com shows bullish articles on Gold, be careful going long.

    If i see weakness on Monday in GLD early morning, my plan is to buy Mar gld $78 puts.

  7. You are absolutely correct in your analysis. What people donot seem to understand is that inflation is caused by printing money the result is dollar devaluation. And then rising prices. I wish the public would wake up.

  8. HELLO , Apparently you do not go grocery shopping , 'stuff is still higher'...my 'greenback buys less ..., around my small town stores are failing ,..i see gold 'the real'' thing in my hand a blessing , and my mier shares going up , auy ..hl ...hanging in there ..good luck to all..

  9. Yes the cash (M1) being printed is tiny compared to the amounts being de-leveraged/ evaporated (which was largly digital anyway)
    So yes we have been/are seeing asset prices deflate(inc gold - but only in dollars) as the supply of money (mostly dollars)deflates.
    But gold people are smart (most of them)They are ahead of the curve, they can see the next ineviability on the horizon AND the confidence to hold their nerve whilst all around shout stories like the first two here.
    New paper money just has to be created, but will it go into the same bubbles as before?
    Property/stocks/finnancials/consumer gizmo production and consumption .... No i dont think so.
    This time it will go into all things (percieved as) sustainable and neccesary.
    Heh, who knows, the true understanding of 'eco-nomics' may emerge.
    (From Latin Ekois)
    How the hell could the human species evolve, sustainably managing resources... without a sustainable, earth bound value measuring system?
    Am i being too simple here?
    IvoryCelt

  10. Adam, good call.

    Now, to the gold bears. I'll give you this: in a true deflation cash may be king, but gold is queen. I'll take the queen because the downside risk is nil compared to the downside risk of the dollar if you're wrong. Simple risk to reward ratio.

  11. Financial markets are vaporizing a lot faster than the ability to get the liquidity into the system.
    As the skids gets greased all hell will break out.
    And then you will see the fireworks.
    Alittle patience.

  12. It went up today $41.90 TODAY the 23rd $899.10, and I read Prechter long ago, he missed gold all the way up,he's not right all the time,He's just like every living soul.

  13. To those who think Gold has gone nowhere....Have you tried to buy physical Gold? The Demand has far exceeded supply, especially in the 1oz and smaller coins. We have witnessed a disconnect between the physical and paper markets. The rising premiums need to be considered.The least expensive 1oz coin listed on the usmint.gov website is is $1078, and I doubt that truly reflects today's $40.00+ move. Regarding Prechter (and I beleive he is right on a lot of points -- but not Gold) and his thinking that cash (may I remind you we are operating on a FIAT currency system) will be king, perhaps you may want to sell me whatever gold you own and I will pay you a nice premium. However, to emphasise my point, I will pay you in Confederate Currency. Gold is true wealth. Paper always goes away.

    1. Curtiss,

      I like your comment. It is always interesting hearing from folks who have common sense and see things as they are and not how everyone would like them to be.

      Adam

  14. Well, Adam --

    Either you nailed the market (on Friday's move), or you're becoming a self-fulfilling prophecy. In either event, congratulations!

    J.P. (1531 hrs EST, Fri 23 Jan)

  15. I don't have commodities account so I tried to apply same analysis to GLD. Parabolic is similar, MACD crossed already around 76, so same message. I could not get weekly chart though which seems to have something wrong with it, same price shown all the way across. So cannot see weekly triangles.
    Price now is 87-88 so has reached Adam's upside point - the question is, is buying now buying at the top or buying for further rises? we shall see
    Adam had some great chart analysis on EUR and gold last year that unfortunately I did not act on...and a less great on JBLU recently which unfortunately I did!

  16. I am heavy into silver & gold by my tiny amount of assets. I worry about the gold positions as the Fed $ pump is a dribble of the amount of lost wealth where as silver is rarer and industrialy needed as well as an inflation hedge...Read(Ted Butler)... Hasn't the printing press just begun to fill the growing lost wealth black hole? Or,was inflation curbed by the lost wealth because $ creation had gone so wild the last 6 years? I'm positioned for inflation but a physical silver and mining stock holder pulled by both arguments.

  17. Economics 101, GDP=MV. V, cash flow, credit liquidity, velocity is declining, M,momney must be increased.The 30s proved money constriction failed. The 70s showed how inflation is always waiting to manifest itself. If M is increased to support GDP, will that be inflationary? You decide. I'm buying gold and as much silver as I can. Herach.

  18. John, when was the last time Prechter was right about Gold? He has missed the whole move from $250. The year-end close has been higher each year, eight years in a row.

  19. Gold had no fundamentals (jewelery and industrial), but the only place the demand is coming is speculative investment. It was similar with oil in the first half of 2008. Wall Street it's about nice stories, then sell'em to the crowds. Gold is in one right now; what's the point buying gold right now? There is not a single sign of inflation out there and paper money win purchasing power. So why buy gold now? On hopes? Of what? The FED will inflate?

    1. Thanks for your feedback. You are correct Wall Street can spin some very interesting stories, just look at the CDOs and SIV stories. And lest we forget do you remember the DOT COM bust?

      The key to trading, is to trade and not invest and get married to a position. I am bullish on gold because the price action is bullish. It really is that simple. When that situation changes as it eventually will, I will change or exit my positions.

      Thanks,
      Adam

  20. Disagree strongly! World financial market has been collapsing for a year and Fed printing money frantically yet gold has gone nowhere and dollar is soaring? Why not??? It's deflation and wealth destruction that has us in it's grips. Fed dollars in can't overwhelm the vastly larger credit collapse and wealth destruction. Read Prechter's Conquer the Crash. Gold will go down!

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