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The Lunatic Fringe - Trading talk.

Strawboss

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IF we are correcting the entire move from the March lows to the recent highs...there is no way in creation that the correction is completed in under a week.

At the very least - you would expect to see an ABC type correction...or even an ABCDE...or a running flat correction...or a 50% retrace on fibonacci or RSI oversold...

NONE of those things have happened and yet there is talk about the correction being over?

Unless...the move off the March lows isnt complete and there is more to come before the real correction?
I have been doing some historical analysis on the gold price going back to 1979...

I have found something interesting...specifically related to the weekly closing price in relation to the 50 week moving average...

When gold gets above 25% of the 50WMA on a weekly close - here is what happens...

On 1/14/1983 - gold closed at $483.25...26.91% above the 50WMA. It subsequently peaked 4 weeks later at $504.50 on a weekly close.
On 4/21/2006 - gold closed at $623.50...27.10% above the 50WMA. It subsequently peaked 3 weeks later at $725 on a weekly close.
On 1/11/2008 - gold closed at $891.00...25.47% above the 50WMA. It subsequently peaked 9 weeks later at $1003.50 on a weekly close.
On 8/19/2011- gold closed at $1848.00...28.08% above the 50WMA. It subsequently peaked 2 weeks later at $1875.25 on a weekly close.



This analysis does not include 1979/80 - as that is the ONLY time where gold went much higher above its 50WMA...it actually peaked on

1/18/1980 at a weekly closing price of $835...146.93% above the 50WMA.

On 8/7/2020 - gold closed at $2031.15...25.61% above the 50WMA.

Excluding the runup in 1979 - this is only the 5th time this has happened...and the other 4 times signaled a peak in price.

So...it raises a question. Is this 1980 part deux?...or not?

If you say yeah - this is 1979 all over again...there is a 1 in 6 chance you are right.
If you say this is an intermediate peak...there is a 5 in 6 chance you are right...

Place your bets accordingly...

View attachment 176955


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dacrunch

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Apparently Warren Buffet just went all-in on Gold.
Guess he's expecting a Biden win...

Did Warren Buffett just bet against the U.S. economy? His latest investment raises some questions
Published: Aug. 16, 2020 at 3:16 p.m. ET

https://www.marketwatch.com/story/d...t-investment-raises-some-questions-2020-08-16

Warren Buffett has long been critical of gold as an investment, saying that it “has no utility” and that the “magical metal” is no match for “American mettle.” He once wrote, “Anyone watching from Mars would be scratching their head” over how we treat the shiny stuff on this planet.

Yet the Berkshire Hathaway BRK.A, +1.03% BRK.B, +0.75% boss just acquired nearly 21 million shares of Barrick Gold GOLD, -0.29% worth $563 million, while selling shares of Wells Fargo WFC, -1.75% and J.P. Morgan Chase JPM, -1.39%, according to 13-F filings released Friday afternoon.

The move kicked up buzz among gold bugs and other Wall Street watchers across the internet, who saw Buffett’s trades as perhaps signalling a shift in his views on the market.

The popular Zero Hedge blog took a deep dive into Buffett’s repositioning, saying that it’s “a signal that none other than the Oracle Of Omaha appears to now be quietly betting against the United States,” because “the famously anti-gold investor has abandoned banks — the backbone of America’s credit-driven economy — in favor of a gold miner.”

Of course, while gold bugs and staunch market bears come up with their own conclusions, Berkshire is still, nevertheless, deep into the banks, including Bank of America BAC, -1.42% , where it’s been pouring its money into over the past month.

Mike Shedlock of Sitka Pacific Capital Management took exception to the interpretation of the news, explaining in a blog post that it’s as simple as “Buffet [sic] knows financials are struggling due to COVID. And Barrick pays a dividend.” Furthermore, Barrick is merely a tiny piece of his overall pie, and Buffett didn’t back off his stakes in Amazon AMZN, +4.08% or Apple AAPL, +0.83%.

“This is neither a huge cave-in nor a fundamental sea of change regarding gold,” Shedlock wrote. “Potentially it is a short-term sell signal that corresponds to the recent pullback.”

Meanwhile, the stock market continues to stalk record highs. The Dow Jones Industrial Average DJIA, -0.24% closed with a 1.8% weekly gain, while the S&P 500 SPX, +0.23% briefly traded at a record before ending the week up less than 1%. The Nasdaq Composite COMP, +0.72% finished barely higher for the week, as well. The index has posted 32 records so far in 2020.

Barrick Gold, at last check, was up more than 8% after hours.
 

Goldhedge

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It's sitting right about at 5 yr resistance now...


Screen Shot 2020-08-18 at 6.12.05 PM.png
 

Lancers32

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PM Corrections. I have been anticipating a larger correction in the metals and it makes sense to a degree. It is quite possible that we have seen about as much price damage as we will see for this little while. Jeff Clark on Maloney today. We don't need to see major price damage if we are in a bull market bear for sure but not in a bull.

https://talkmarkets.com/content/com...n-their-two-biggest-runs-vs-today?post=273333
 

Zed

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Zed

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This is why the metals are bouncing higher. The USD has failed to rally from its plunge below support. Instead it stopped going down
I was expecting atleast a rally to $95, but it has a mind of its own.
View attachment 177220
IMO it is still reversing and will rally. The USD does this, always takes longer than you expect, always goes a bit further than you think, always manages to JUST wrong foot you. I think it is to do with the small money on big leverage, yes I'm taking about you with your Forex account , it is just easy pickings for the fat cats to push the market a smidge further than the bulk of the little guys can handle... even if they are right longer term.
 

Zed

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ASX Gold Tribe off ~-1.5% on the open here, nerves are back.
 

dpong

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On many many occasions in the past, a smack-down as severe as we recently saw in gold and silver would more or less "break" the market for a period of time. It would be best just to walk away. The damage needed some time to heal before the market became "interesting" again.

I thought that was going to happen this time, too. However, the recent trading in the metals themselves (not the stocks) has really tightened up in the last several sessions. Dips are being bought. The demand has not subsided.
 

Zed

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Gold Daily - I think this looking like a reasonable outcome here.

Untitled.jpg
 

Zed

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On many many occasions in the past, a smack-down as severe as we recently saw in gold and silver would more or less "break" the market for a period of time. It would be best just to walk away. The damage needed some time to heal before the market became "interesting" again.

I thought that was going to happen this time, too. However, the recent trading in the metals themselves (not the stocks) has really tightened up in the last several sessions. Dips are being bought. The demand has not subsided.
Yes... we appear to be in a transition phase, this has me second guessing my reactions, waiting to see what the new normal looks like.
 

Zed

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They had a poke at it on the Comex last night, looks like they are on the back foot but they will be back.
 

Strawboss

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Strawboss

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1597837978417.png
 

Lancers32

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So if we actually are going to do the ABC thing the C leg should be more gradual and time consuming than the move to the $1860 level in Gold.
 

dpong

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A compliment to @Strawboss who is certainly being the voice of reason here. Right or wrong, what usually happens is what one should expect to happen now.

[Heck if'n I know.]
 

GOLDBRIX

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How 'bout this scenario? Zed's $1900 Gold a run to $2300 then we get the 2x4 right between the eyes.
If you got PMs then "DUCK". Let the poor bastard that does not take the hit. JMHO
 

Lancers32

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Not saying metals have bottomed but I would have expected much more price destruction on the move down early afternoon. Few I watch are higher than the early morning lows with Silver quite a bit higher. Since we already got over a 20% correction off $30 I don't quite understand what this guy is saying. Northstar. I think he was quite bullish Monday morning to the point of looking for new highs.
 

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dpong

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GDX made a lower low and a lower high.
GDXJ made a lower low and a lower high.
SILJ made a lower low and a lower high.
AG is just a mess.

[Expect a new lower low.]

kLb9xp3Y.png
 

BeefJerky

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Everyone trying to paint a pretty picture. At some point the writing on the wall becomes reality. People are either going to have it or they're not.
 

Strawboss

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Lets see how my figuring plays out on this...

1597869828391.png
 

Strawboss

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Yes it would. Which means it probably wont happen like that - but considering the underlying strength in gold and the outlook not so rosy for everything else...a relatively shallow retracement of the March lows to the low to mid $1800s makes pretty good sense for gold.

Silver on the other hand is more volatile - and I would expect it to retrace to somewhere in the $21 area or so...perhaps a bit lower on an intraday swoon...

Again - that is predicated on the assumption that we have seen the highs and will correct the entire move before proceeding higher to new highs in gold...which considering how nicely the price action has conformed to the fibonacci retracements as drawn - not only for gold but many of the miners gives me a higher level of confidence that this is the likely scenario we are dealing with...

On the fundamentals - the Fed minutes today from their last meeting show that they are not gonna implement yield curve controls yet...which would have put a solid floor under gold. For the time being - the Fed is going to rely on their jawboning and by giving extended forward guidance. Where this will eventually get challenged is if rates go negative...or inversely - if bonds sell off and rates rise. In either of those 2 scenarios - I think yield curve controls will become necessary...

So - think of this as a breather in the action. After all - gold has risen over $600 in the past less than 5 months. It needs to digest those gains...

Jackson hole at the end of this month and the last Fed meeting before the election in September...
 

Zed

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The trend is your friend, expect it to be respected until broken. The last test of trend saw aggressive buying, we've now bled off a lot of the over bought condition so the next time it gets tested it is more likely to hold, not less ---> JMO.
 

Zed

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Zed

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Just musing, but dollar strength should put pressure on the metals....
For a short wile then gold goes with the USD upward.
 

Zed

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jelly

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Sometimes I have to remind myself not to get too stuck in the short term. I realize we could have seen the lows for this correction and that gold could run to $2300-2500 area before correcting to 1800.
 

Zed

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Sometimes I have to remind myself not to get too stuck in the short term. I realize we could have seen the lows for this correction and that gold could run to $2300-2500 area before correcting to 1800.
I don't think we will see the huge % corrections for a while.