Bull and Bear Blog

Time Is Running Out – Why Gold Looks Ready To Collapse To $600 An Ounce

We initially called for and end to wave [1] / start of wave [2] at the end of October, but for two months, gold has not bounced (as is often the case with a higher degree wave [2] start in bear or bull markets).  Time is running out for the move after October to convince us it is in fact a wave [2] up.

We are now seeing something different unfolding.  If the last few months are in fact a consolidation,  we would expect another sharp decline in gold by summer.  This would alter our count (altered count shown in purple) and strongly indicate that we are heading well below $1000 per ounce by the fall of 2015.

We also included the US Dollar (in gray) as an overlay.  The USD historically trends inverted to gold.  Notice the gold top and USD bottom in early 2011.  With the USD trending as it is, we would need to see a major pullback in the USD (and major move up in the Euro) for gold to reverse up.

We have not included silver in the chart (too much information on one chart), but if you refer to the latest silver monthly you will see that the mid 2013 low in silver has already been broken.  In gold, this mid 2013 has not been broken and is currently acting as support.  Gold and silver often correlate well with some lead / lag (Silver top in April 2011, Gold in July 2011).

So how does this affect markets?  First, gold's collapse aligns well with deflation. Second, this supports our belief that the US Dollar and not gold is and will continue to be the safe haven.  And lastly, when this move in gold takes hold, US stock markets will now have more downward pressure put upon them (as the USD continues climbing).  We expect gold's first leg of this collapse ( <$1000 per ounce) under this scenario to start by June 2015.

Gold Collapse 20150103

CCI Shows Different Than CRB But Deflation Message Is Clear – As Central Banks Continue To Pump Stock Markets

The CRB vs SPX commentary we posted last week showed a somewhat different picture than this week's CCI vs SPX brief.

The CRB has much heavier weighting for WTI Oil and varying weights for the 19 commodities that make up this index.  The CCI balances all 17 commodities included in its index (includes WTI Oil) equally.  But as you can clearly see, after the fall in mid 2011, commodities continued sideways down and the S&P500 DOUBLED.

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The CRB Index - the Commodity Research Bureau's index of commodities - has been struggling to stay up since 2011.  Notice the collapse in 2008.  This index is comprised of energies, metals, softs and agricultural commodity prices.  This index is a true reflection of the health of the US economy.  As the CRB rises, the economy tends to be in "good shape".  As the CRB falls, the economy tends to slow.

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UPDATED: SPX Inverted Relationship With The USD – With USD Up Sharply – SPX Ready To Tank

We posted the same on September 30.  Here we are almost two months later with no give.  Each day, the currencies traded in the USD amount to about $5.3T - yes, that's each day.  A 10% move in the S&P500 represents about $500B.  And now we know why it is so easy for Click to Read More →

NASDAQ100 Will Determine The Price And Direction Of Apple

We've endured six years of Fed interference and here we are today - approaching all time highs in the indexes and all time highs in Apple.  We overlaid Apple on the NDX on April 21, 2012 and August 30, 2012.  Notice the correlation?  And when markets tank after Yellen's rambling tomorrow at 200p, we should expect markets to rocket and roll over by Friday or Monday of next week - and guess what?  You can expect Apple to do the same.Click to Read More →

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