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Gold Long Term Perspective
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Gold Long Term Perspective

by The MoleOctober 14, 2011

A friend of mine sent me an email today asking me whether or not this is a good time to buy back into gold. As he’s not a trader but more of a long term investor I sent him back the following chart:

And this is the perspective I shared:

In essence the weekly shows us a retest of a ‘sell signal’ which we got about a month ago. IF gold can push above 1700 and hold then there’s a decent chance it can continue higher. IF it fails and turns back down from here then I think we go to 1400ish.

And of course a breach of 1478 on the *monthly* chart would officially trigger a long term sell signal and after an obligatory bounce near 1400 the odds would support a continuation lower toward 1000. Bear in mind that it’s that possible that we drop to 1478 and stop there, which would then be the conclusion of the weekly signal but keep the LT bullish view intact. So, the current level of 1681 (i.e. the old sell signal) actually is very important and will determine the direction for the coming weeks and potentially months.

Bottom Line: A push higher from here puts gold back into bullish mode, at least until new evidence tell us otherwise. A failure here opens the gate to quite a bit of nastiness, medium and perhaps even long term.

I leave you with this:

Have a great weekend.

Cheers,


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • Anonymous

    Funny I was just looking at gold about 1/2 hr ago and I don’t watch it much.  SLV is another story…

  • Anonymous

    I have my eyes on gold too. The retracement of the down move so far looks kind of weak. I am cautious for now.

  • Anonymous

    see you guys later. have a good weekend!

  • http://practicalt.blogspot.com/ Gold_Gerb

    FAS close, what a whipsaw!
    holding fast.  Mole better be right.
    😉
    he he.

  • http://practicalt.blogspot.com/ Gold_Gerb

    [removed]
    PnF links from stockcharts NOT cooperating.

  • http://evilspeculator.com molecool

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    D   A   I    L   Y      Z   E   R   O     H   A   S      B   E    E   N      U   P   D   A   T   E   D

    ????????????????????????????????­???????????????

  • Anonymous

    ZH gone bullish: http://www.zerohedge.com/news/long-overdue-short-covering-eur-begins-after-7-consecutive-weeks-increasing-bearishness

    Time to short

  • http://evilspeculator.com molecool

    What – you’re gonna stop NOT paying me? 😛

  • http://iberianviews.blogspot.com/ catracho

    yes been watching gold and silver up move looks unconvincing. good analysis!!!

  • TwinTurboRX7

    Do we have VIX out of BB today? or is that quick drop by the close prevent that from happening?

  • Anonymous

    Volume speaks volumes
    Dos one need convincing volume, or can rallies grind higher irrespective

  • Anonymous

    banks failed to participate today

  • http://evilspeculator.com molecool

    We closed above it seems.

  • Anonymous

    FYI, we almost closed the gap made in September on bucky:
    http://www.finviz.com/futures_charts.ashx?t=DX&p=d1

  • Anonymous

    Just went short on that mo;) Gold barely reached the 38.2 retrace and IMO is going lower. Small bet though!

  • Anonymous

    Thanks for the bonus post Mole!

  • Anonymous

    sometimes i think a few of their “tylers” are playing the other side. would be tempting with that many readers.

  • Anonymous

    Zerohedge should be renamed zeroedge – why do i bother reading their stuff

    Good Nytol :-)

  • Anonymous
  • Anonymous

    MMs have a ball for sure on ZH’s “posters”. What a bunch of low lifes. Comments read like they are paid to be idiots. 

  • Anonymous
  • Anonymous
  • Anonymous

    This is anecdotal, but here is a thought.

    I work in the US for a large Germany pharmaceutical company.  Recently  (October 4th) our 401K
    stable value fund moved from a US based fund to a Deutsche Bank managed fund.   According to Bloomberg… Germany has been the
    main driver behind the provisions for “private sector involvement.”

    In my 30 years at the company this is the first time we a
    non US base fund.  I would guess that
    with this market condition the Stable value fund (the closest thing to cash among
    the 401K choices) is quite large, i.e. 10s of $billions from my company alone.  With Germany banks like DB getting these
    inflows, this could in part be a driver behind the recent markets advance.

  • http://twitter.com/nogreedorfear nogreedorfear

    MA(10) and trin level 1 also good.

  • http://twitter.com/nogreedorfear nogreedorfear

    did u go short ?

  • http://twitter.com/nogreedorfear nogreedorfear

    Are the levels shown derived as Count back line(CBL)? – third lowest bar when counting backwards…?

  • Anonymous

    I did some with inverse ETFs

  • Anonymous

    Is your 401k going from US dollar to euro? If so you will get screwed.

  • http://twitter.com/nogreedorfear nogreedorfear

    ok…thx.

  • Anonymous

    To my knowledge it will remain in US dollars. I am paid in US dollars but all company profit get converted to Euros (or maybe soon DM) in the end.

  • http://evilspeculator.com molecool

    Articles are perma-bearish which is poison for traders. But what really gives me headaches are the comments. Half the time I no idea wtf those idiots are on about.

  • Zero % forever

    I used to work for Hoechst AG for quite some time as Medical Rep (Hospitals & Teaching Institutions) when I finished college many many moons ago.

  • Zero % forever

    I trade GDX Options and NUGT (2xBull GDX)& SLW (not GLD & SLV per se)
    Intraday charts looks promising for a little more bounce.

  • Anonymous

    Hi all just checking in.  After departing at 8.00pm local (3.00pm NY) on Friday I had closed out my longs and taken a small short position.  

    I left orders above at 11,625 and 11,650 to go short.  I had been playing a Friday afternoon sell before the weekend move.  Looking back at the tape, it seems there was some headfaking/stop runs that went on.

    My order at 11,625 hit in regular hours and my 11,650 hit shortly in AH before the contract closed for the weekend. 

    My  bottom line is I now have a large short position at a composite level of 11,632 which is basically at the money for where things closed on friday (11,635).

    Looking back I closed out my longs too early at 11,602 (my tight trailing stop idea would have been better).  That being said, I’m fairly philosophical about things as had I been there at the time, I would have seen the initial plunge and probably chased it down afraid my 11,650 would never get hit.  

    Not sure what to do at this stage, as I expected more of a friday afternoon selloff.  That being said, if I was an evil market maker I’d probably want a gap down open to inflict the most pain on the people chasing friday.  Another thing, you have to go back to February to find a week that failed to overlap in price terms with the prior week.

    Therefore, effectively having a short position at the highs of last week should on balance have an opportunity to become profitable at some stage next week, but I’m just a bit concerned it wont be monday (think Chinese GDP Monday night could well be the catalyst for the next downmove) and I wont be able to withstand the pain of waiting for this to look like a good idea.  

    So when the contract opens at 11.00pm tonight (local time), I’ll probably take some off the table, unless the asian market opens badly and runs down from the start.

  • Anonymous

    Nice reading, but bad for trading as you say!

  • Anonymous

    was just watching a video about Le Chatelier’s principle and couldn’t help but think how well it relates to market equilibrium and short/long interest… http://www.youtube.com/watch?v=4-fEvpVNTlE

  • http://practicalt.blogspot.com/ Gold_Gerb

    Now I remember why I hated chemistry so much.

    http://en.wikipedia.org/wiki/Mole_(unit)

    October 23 is Mole day.
    I thought my Chem teacher was a whack job talking about Mole day in the early 80’s. guess it caught on.
    -GG

  • Anonymous

    DM would be good for Germany. But if history is any guide politicians tend to destroy economies rather than saving it. Hopefully the Germans will walk away but I doubt it.  Europe is not alone. Take a look at Japan.

  • Anonymous

    “Deutschland, Deutschland über alles” ? :-)

    Anyway, will be an interesting week in markets me thinks!
    Have some shorts on, but will exit if market goes upward a pace

  • Anonymous

    based on the fx open I should be ok, if eurusd correlations are to be respected.  Euro trading weaker in asian trade.  Still going to check in in an hour and a half and take stock of things.

  • Anonymous

    If you are this worried you should not be too leveraged. Whats wrong with inverse ETFs? You can sleep better.

  • mail
  • Anonymous

    nice song!

  • Anonymous

    Where would we be without do-no-evil translator :-)

  • http://twitter.com/nogreedorfear nogreedorfear

    dollar index bottomed at 76.79 it seems..

  • Anonymous

    Not a question of being overly worried.  Its a question of managing positions and recognising that its a 24 hour world nowadays.  The reasons I entered into the trade are no longer valid so I’m adjusting accordingly.

    Anyway, I just got out of the 11,650 position for small loss at 11,656.  Holding the remainder short, and leaving some orders for higher at 11,700 and 11,725.

    Oh and the inverse ETF’s are CGTable over here, whereas spreadbetting is tax free which over the long run works out better.

  • Anonymous

    Futures ripping like there’s no tomorrow (to buy some stocks).

  • Anonymous

    mole… have you ever tried using the zero on range bars? seems like that might work out well.

  • http://evilspeculator.com molecool

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    ¨°º¤ø„¸  N E W  „ø¤º°¨ 
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • Anonymous

    O.K. , don’t get mad, was looking at another site (minyanville) when I noticed this dude Eric Swarts ending his articles with a “stay frosty”.  This outrageous plagiarism needs to be nipped in the bud …

  • Anonymous

    Almost took me out on the EUR/USD trade:) Still hanging!

  • Anonymous

    Not the only site – marketanthropology uses that line too !

  • Anonymous

    Aha! See it is spreading, that’s what happens when this sorta thing ain’t nipped in the bud.

    And now back to the sunday night “hand egg”.

  • Anonymous

    Actually Marketanthropology is put out by Swarts.  The term itself has been around for a while though