Gold & Silver: Santa Claus Rally Postponed

Both metals missed the time targets, which were set on the 13th of December for gold and on the 20th of December for silver in the previous post as I was expecting the Last Drop Ahead Of Santa Claus Rally.

I updated the charts below and went deep into the anatomy of the current consolidation in the "bc” segment to show you in detail what holds the price for so long delaying the last drop. For that reason, I switched to a lower time frame of 4-hour.

Let me start with the silver chart as it has a less complicated structure than gold, and I will use it as a navigator.

Chart 1. Silver 4-hour

Silver
Chart courtesy of tradingview.com

Corrective structures are tricky as I always repeat it as a mantra, but it really has such a nature as it reflects the uncertainty in the market mixed with attempts of different market forces to break out of the current status quo. This creates sharp zigzags and false breakouts as we see it on the silver chart above. Continue reading "Gold & Silver: Santa Claus Rally Postponed"

Wooing Inflation

The Continuum (the systematic downtrend in long-term Treasury yields) has for decades given the Fed the green light on inflation. Sometimes it runs hot (as per the red arrows) and sometimes it runs cold. One year ago people were confused about why a declining stock market was not influencing Fed chief Powell to reverse his relatively hawkish tone.

tyx-Inflation

The orange arrow shows exactly why, per this post that will be one year old tomorrow (Dec. 19)…

FOMC at Center Stage (NFTRH 530 Excerpt)

Inflation is what the Fed does, after all. But it needs periodic deflationary episodes in order to keep the racket going. I will stick with my original view that the Fed is not adverse to a market correction or even a bear market. It is exactly what is needed to reload the next inflation gun.

The “BOND BEAR MARKET!!!” stuff ran very hot on this cycle as the 30 year yield broke the Continuum’s limiter (monthly EMA 100) before failing over the last few weeks (to the surprise of many, but not us ;-)). As I have noted previously, in my opinion the Fed does not want a bond bear (breakout in yields) or its running mate, a breakout in inflation expectations because the Fed is an inflation machine. But it has inflated against this pleasant continuum of declining yields over the decades that has encompassed the entire training of most of us as market participants.

Inflation

I am not saying that a red dashed line is the be all end all of market analysis. But it is a marker that we have used in NFTRH since 2008 in order to correctly interpret the macro situation. My interpretation today is that the Fed has countered the cost-push inflationary pressures that by definition are injected through fiscally (political) stimulative policy by withdrawing liquidity until something breaks. Ironically, that has involved raising the Fed Funds interest rate and withdrawing QE, which theoretically would raise long-term yields. But when something breaks, the risk ‘off’ herds buy the bond driving yields down.

Fast-forward to today. The herds bought the bond alright; they bought it for most of 2019 amid ‘trade war!!’ and inverted yield curve!!’ headlines and associated economic fears. And so the Continuum dropped again, along with inflation concerns and logically, the Fed’s hawkishness after the Q4 2018 orange alert. Continue reading "Wooing Inflation"

Gold & Silver: Last Drop Ahead Of Santa Claus Rally?

Both metals went amazingly well with the plan that I shared with you a month ago. I have shown you a possible structure of more complex correction and set the time targets for both metals. Below you can see where you thought the completion of the corrective move would finish.

gold silver poll

The votes were split almost even with a little margin in favor of the gold bugs as they preferred January 2020 as the ending point for the current extended correction. Silver fans chose Christmas day as their metal's chart showed it as a result of calculations.

Later on, there was an update where I set the price targets for both gold, and silver for the upcoming drop as the structure got more clarity.

As time goes by and the chart moves to the right, adding more and more bars, we can see the picture even clearer now to adjust both time and price targets for top metals below. Continue reading "Gold & Silver: Last Drop Ahead Of Santa Claus Rally?"

Gold & Silver: Expected Drop Kicked Off

It was a timely call last week to "Beware Of Extended Consolidation" as right from last Monday we saw both metals plummet all the week long. Surely, it wasn't a self-fulfilling prophecy as the market was unexpectedly caught in a bullish euphoria. The chart structure was telling us about this possibility as such patterns appear from time to time. The same pattern had appeared on the Bitcoin chart as I had warned you this past August. That pattern of extended consolidation smashed Bitcoin’s value as planned from $10600 down to the projected target of $7800. Let's see where this pattern could send precious metals prices this time around.

Chart 1. Gold Daily: Undershot => Overshot

gold silver
Chart courtesy of tradingview.com

We've got the tricky junction between two legs down on the gold chart. The triangular structure (blue) had been shaped as lower peaks, and higher valleys were established there. This pattern is rarer than the regular zigzag that I was expecting to unfold. It created a huge undershot to the top of the range, which might result in a big overshot below the bottom of the range. By the way, gold already dropped like a rock to pierce the valley of the range last Friday. But, of course, that's not enough. Continue reading "Gold & Silver: Expected Drop Kicked Off"

Gold & Silver: Beware Of Extended Consolidation

Gold and silver chart structures got synchronized, and I am happy to bring them back together in this post.

Chart 1. Gold Daily: $1557=>$1458

gold silver
Chart courtesy of tradingview.com

In my earlier post, I shared with you a detailed 4-hour chart of gold with a bullish outlook. Fortunately, the price had indeed gone higher and booked $27 per each ounce since then. I set the confirmation above $1520, which wasn't triggered yet, although we were very close as a high was hit at $1518 at the end of October. Continue reading "Gold & Silver: Beware Of Extended Consolidation"