GOLD PART 2 – IN Search Of A Bottom

This is part 2 of the special weekend report discussing how we Search for a possible bottom in Gold. This half of the report will include many more charts with just the facts of what is happening in many areas.   Again, these facts keep both Bull and Bears unbiased.  They also indicate that GOLD may already be hammering in a bottom.  Miners especially have the hallmarks of a longer term low in place.

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This chart adds to out last discussion in part 1 and my Big Picture view that I have been pointing out for months now. I pointed this out in this DEC 11 chart .  It shows that with the SPX bull market , and the bear market in Gold, we have repeatedly seen Gold ICL’S ( deep trade-able  lows) and also Golds Bear Market Rally Peaks  moving inverse to  The SPX .  I drew this to make that clear.

T= a TOP  &  ICL = A LOW

 

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I also said that I would be looking for a break down in this area ( A change). Here is my updated chart

So…

 

  I have been saying that I believe the SPX is topping, and we are seeing distribution at the top now and a break down. We are also seeing Gold pound out a different type of bottom.  Not a V-Shaped ‘short covering’ only rally,  but a nice round bottom.  Many view this as weak looking.   While we see ‘distribution’ at the top of the SPX, we see ‘Accumulation” at the lows here. Smart money buying  (And a classic shake out in miners to boot).

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GOLD – A break above $1191.70 is the start of gold breaking free from the bear market.  Higher highs finally after 4+ Yrs!   ( See opening theme image).  🙂

 

Let me stop right here and just ask, ” What does it mean if Golds lows are in and the new Bull run higher is here?”  It means that we could actually buy and hold many of these beaten down miners and walk away for months and come back with large gains in many, possibly all of them.  If we bought and held stocks in the general market and walked away for months,  we may come back to find a problem.  That is why it’s called a Game Changer.

In past reports I have pointed out that some Miners already put their lows in during the Bear market. What will these do in a Bull run? These lows are already in…

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  So lets get back to the research that I have done and show you some other things that I have been looking for and will be looking moving forward.

 

On Dec 11 –  I Mentioned that I had been  studying the XJY – Japanese yen ( I will share more of those studies later  in this report).  Here I had pointed out that I was watching the USD VS XJY.  When it peaked, we saw GOLD bottom with ICL’s. When Gold topped ( the lower line), This ratio would rally and Gold would drop. 

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I then used the Dec 11 weekly chart to show weakness in that MACD on a weekly basis . If this ratio breaks down,  Gold could break out, based on studies that I had been doing.

 Update: The MACD for this Ratio is now very weak, and this could be breaking down ( Remember the surprise by  Japan recently?  BOJ adopted a negative interest rate regime .  The XJY Popped and could rally like the dollar did).

 

I drew 2 charts by accident,  one for yesterdays part 1, and one for today?  I must be tired.   :- )

This gradual change in the relationship between GOLD VS USD is also  slowly causing a round bottom here too.  This bottom would continue with Gold breaking upward and the dollar dropping. 

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Again,  The USD broke below the May lows, then it did NOT put in a higher high when the FED raised rates in December. This looks like the start of a double top and lower lows, lower highs.  Time will tell if we get a gradual down trend now  (Bullish for Gold).   Look at that MACD.

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Is the Canadian Dollar breaking out vs the USD? I think so. 

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We see a MONTHLY reversal candle.  When this happened in 2008 – Gold rallied. When it topped in 2012, Gold topped.  ( Click any chart for clarity).

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Here is the $USD / $CAD  with $Gold in the box below.  I drew this for last weeks weekend report and forgot to include it. It makes more sense in this weekends report. 

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This is the part of the report that I have wanted to share when the time was right. I started this study last spring, saving these charts  as time went on.  I knew that I would share this when it mattered,  when GOLD & The  Miners Bottom looked to be in place.  I wanted to wait and see if this study matched up with that Gold Bottom when the time comes.  I think that time is now.  ( You will also see why I thought the July 2015 Lows in Gold could have been the lows too. ).

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OK – Those who enjoy chart studies may enjoy this,  others may struggle with it’s boredom.  I hope to be able to explain this clearly for all. I hope to be brief ( yeah , right!).  

 

In the following charts I’m pointing out the $GOLD and the $XJY relationship, and my thinking all last year was …” When the XJY finally bottoms, we will see a GOLD Bottom soon after. ”  To the charts!…

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2008 to 2013 –  The Japanese yen is the top box, Gold is the larger chart. Often Gold & the XJY Peaked and Bottomed around the same time.  Notice on the right side of the chart in 2012,   XJY broke down to new lows  orange line (Gold hadn’t –  Dotted line). Was XJY  predicting Golds drop?

D= Dip  P= Peak  

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Jan 2012 – June 5 , 2015 –  In this chart I placed the XJY in the large box and Gold above.  I picked up where the last chart ended.  In 2012  the XJY broke to new lows 1st ( 1st yellow line) , and Gold followed later. Each sell off after that saw the Yen bottom near Golds ICL’s.  THEN we see XJY broke to new lows before Gold in 2014 again ( 2nd yellow line) , but Gold didnt.  Shortly after that-  Gold  broke down too).  That is when I started watching the XJY with GOLD closely. 

You can also see that the XJY   Then broke to new lows  in June last summer  (3rd Yellow line,  Magenta arrow) – so a break down in Gold would come last summer too? 

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On June 5 –  Zooming in.  Gold & Yen really acting in sync with dips & peaks.  They both formed a triangle.  $XJY broke down, would $Gold follow last July to new lows?   I expected that low.   Read the chart.

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SEPT 2 , 2015 –  Gold put in an ICL last July and we traded that low here. I was watching the XJY and it bottomed first in JUNE and made a higher low in August , so I actually started saying,  “This could be THE LOWS” from time to time in my reports.  I mentioned that I was studying the yen and liked what I saw.  This is what I was watching.     If the YEN bottomed in June and made higher lows, then I expected Gold to bottom in July & do the same.  

SEPT 2 WKLY –  And this was looking good.   Notice the break out higher in the yen!   Did XJY recover?  Would Gold follow? 

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Last September  The FED really started talking about   interest rate hikes possibly in OCT? or DEC?  I wanted to see what that might do to these charts.

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The Fed raised rates in December    

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  $XJY – After A dip in November heading into the Fed mtg,  the XJY ran higher & formed an Inverse H&S. Now in Feb 2016,  it  looks ready to finally break out. This means that XJY  most likely bottom last summer, so I would expect Gold to bottom too.  Our SHAKE OUT in the Miners may be THE FINAL LOWS.  A break out in the XJY will be viewed as bullish for Gold,  I.M.H.O.

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And the Big Picture may be changing in many different areas. That is a weekly break out for XJY/USD.  Will it hold  for the first time since 2012? Will Golds lows hold for the 1st time since 2012.

 

  Many of the areas that I have been keeping an eye on are lining up.  As I mentioned,  it takes a long time to turn a large freighter ship around in the ocean.  It also takes a long time to turn multi year markets trends around too.  Smart money unloads gradually at tops, and accumulates gradually at lows.   There are still other areas that I also keep track of, and they are also acting in a way that would indicate that Gold / Miners lows could very well already be in place.  I will include them in future reports too. 

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  Questions remain for some.  What about that re-test of the 2008 area?  What about all the other analysts saying that Gold must go sub $1000?  Is that necessary?   I will share my findings on that in future reports too.  Right now Gold and Miners are acting very Bullishly and Silver is finally breaking out.  There are reasons to believe that it could be more than a short covering rally in  a bear market.   At this point I will still trade this bottom as mentioned in last weeks  reports,  and look to BUY THE DIP if things remain as they are. we’ve been riding  positions bought at the lows 2 weeks ago.     I discussed using Trailing stops, Partial profit taking, etc. in a report last week.    As for Miners that bottomed a year  or so ago, like  LSG, NG, RIC, etc?    It looks like keeping a core position will pay off.  I will  add on the dips as long as things remain bullish.

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  I  believe that this 2 part weekend report is unbiased.  It shows just the facts of what has been happening and the affect it is having on the precious metals.  We see proof that Gold is either at, or very close to forming the Bear Market Lows.  This type of research can add confidence to future trade opportunities in this area after a pullback.  So many others  will remain bearish at the lows, ready to short each pull back. I have been studying the move that the HUI, XAU, GDX, GDXJ recently put in, and the pattern playing out.   I will share those finding soon too. Right now there is no way of knowing exactly when the pull back will begin, or how deep it will drop. In future reports I will try to help us to navigate it, but one thing is for sure… If this is the lows of this bear market and the bull is reemerging, there is a lot of money to be made when these beaten down Miners recover. You will see moves like this one in AG from 2008-20011.

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Thanks for being here and I hope everyone had a great weekend!

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 ~ALEX