ADL Gold Prediction Confirms Our Targets

The Gold rally we predicted to happen in late 2018 took place, almost perfectly, based on our ADL predictive modeling systems results. This rally took place in May through September 2019 and pushed Gold up to levels near $1600. The rest of the year, Gold consolidated near $1500 as a strong US Stock Market rally took hold in Q4 of 2019.

Our original prediction was that Gold would rally to levels near $1750 before the end of 2019 based on our Adaptive Dynamic Learning predictive modeling system (ADL). This did not happen in 2019 as out ADL modeling systems suggested, but it appears Gold is setting up for another massive upside rally in 2020.

Taking a look at our ADL predictive modeling systems on Monthly charts for Gold and Silver, we see two very interesting suggestions setting up :

• First, Gold may attempt a rally to a level above $1700 before March/April 2020 and potentially extend this rally to well above $1850 by August/September 2020.

• Second, Silver appears to lag behind this Gold rally by about 7 to 8 months. Silver does not appear to want to start a rally until well after July or August 2020.

If we consider what happened in 2008/09 with the global credit market crisis, both Gold and Silver contracted lower near the start of this crisis (in late 2008). Eventually, Gold began to move higher in August/September 2009 (well into the crisis event). Silver didn’t really start to accelerate higher will August 2010 – a full 12 months after the Gold rally started.

Our ADL system is suggesting that the Silver rally will lag behind the gold rally by about 10 to 14 months given the ADL predictions for price activity in 2020. Thus, Gold may continue to rally much higher fairly early in 2020, yet we won’t see much upside movement in Silver till after July 2020.

Monthly Gold ADL Chart

This first Monthly Gold ADL chart highlights the ADL predictive modeling systems suggestion related to future price targets. We can see the upside move in Gold should begin with an upside target near $1600-1625 over the next 60+ days. After that, the rally should accelerate higher in April/May 2020 with another move higher towards $1700-1725. By August/September 2020, Gold should attempt a rally to levels above $1800-1850 and then begin to consolidate above $1800 for a few months.

Silver Monthly ADL Chart

This Silver Monthly ADL chart suggests that Metals will react very similar in 2020 to what happened in 2008-09. While Gold began to rally in August 2009, Silver did not begin to accelerate higher till August/September 2010. This delay in the understanding that Silver presents valid protection against risk may take place in this current upside rally in Gold. If the ADL predictions are accurate, then Silver will continue to provide buying opportunities for many months near $17.50-$18.00 before a major upside price advance begin.

By July 2020, Our ADL predictive modeling system is suggesting Silver will advance to levels above $18.25, then begin a major price advance to levels above $19-20 fairly quickly. Please keep in mind the scope of these predictions related to the global markets and the U.S. Presidential elections. We read into this that a lot of chaos/turmoil may be taking place in the US/World after June/July 2020.

Weekly Gold Chart

This last chart is a Weekly Gold chart highlighting our Fibonacci Price Amplitude Arcs and the major resistance level that has just been broken in Gold. The heavy GREEN arc and the BLACKLINE that we’ve drawn on this chart represent massive resistance originating from the lows near August 2018 in Gold. We believe this resistance level, once broken, will prompt a major upside price move in Gold to levels closer to or above $1700. If this price advance in Gold aligns well with our ADL predictions, then we believe fear will continue to drive future a future price advance in Gold and that fear may be related to continued Global stock market concerns and the U.S. elections.

2020 may be a very good year for precious metals traders who are able to identify solid entry trades for these moves. If our ADL predictions are accurate, Gold should rally over 25% before the end of 2020. Silver may rally as much as 15% before the end of 2020. The timing of these moves suggests Gold traders will have opportunities for bigger price advanced early in 2020 and will begin a larger upside price move after February/March 2020. Silver will begin an upside price move after basing near the March/April 2020.

2020 is going to be a fantastic year for skilled technical traders. Join us and our valued members in finding great trades and incredible opportunities in the markets by joining The Technical Traders.

Chris Vermeulen
The Technical Traders Ltd.

How to Trade as We Near March Top in Equities

Our focus is to provide you with updated and accurate market price predictions for all of 2018, we believe we are entering a period that will be fantastic for traders and active investors. We believe this recent volatility has shaken out the low volatility expectations and will allow the markets to start moving in a more normal rotational mode going forward. This means we’ll have lots of trading opportunities to profit from.

For those of you who have not been following our research over the past 2 to 3 months, we urge you to visit our Technical Traders Ltd. website to read our published research and to learn how we’ve been calling these moves in the markets for our members. We called the early 2018 market rally weeks before it started. We called the lower price rotation over a month before it happened. We called the bottom in this price correction almost to the day and told our members that we believed a very quick Pennant price formation was set up that will drive prices higher which we have seen this week.

Members know price should move higher leading to a March 15 price cycle peak. After that point, we’ll refresh our analysis for our members and attempt to provide further guidance. Today/Friday we closed our Short position in UVXY for a quick 50% in 9 days.

In this post, we are going to focus on one of our price modeling systems based on Adaptive Fibonacci Price Modeling and show you why we believe this recent price move will likely stabilize within a range while attempting future moves. Let’s start with the INDU.

WEEKLY DOW JONES CHART

This first chart is the INDU Weekly chart with our Fibonacci Modeling system at work. We’ve highlighted certain areas with notes to help you understand it in more detail. This adaptive modeling system tracks price high and low points in various cycle lengths, then attempts to adapt a major and moderate cycle analysis model to key Fibonacci predictive points. The end result is that we can see where key Fibonacci price trigger levels are and also see what our predictive modeling system is telling us where prices is likely headed.

This weekly, chart shows us that the current support level (originating from near April 2017) is nearly exactly where the current price correction found support. This level is currently acting as a strong base for current price action and will likely continue to provide very strong support going forward. You can also see the Bearish Fibonacci Price Level near 25,776 that is acting like Resistance. Notice that this Bearish Fibonacci Price Level also coincides with the BLUE Fibonacci projected price level.

It is still our opinion that the US major markets will continue moderate price rotation within these levels for the next 5+ days before reaching an intermediate price low cycle near February 21. After this price low cycle is reached, we believe a new price advance will begin to drive the US majors higher reaching a peak near March 15.

DAILY DOW JONES CHART

This next INDU Daily chart provides more detail of our projected analysis. Again, please read the notes we’ve made on this chart to assist you in understanding how we are reading it and interpreting it. The most recent price peak and trough clearly show the volatility spike that happened last week. It also shows us that the recent trough in price aligned almost perfectly with a Bullish Fibonacci Price Level from November 2017. We interpret this as a clear “double bottom” formation at Fibonacci Support.

The purple horizontal line is the Support Level originating from the earlier, Weekly, chart for reference.

This Daily chart shows more detail in terms of the Fibonacci Projected Price Levels and also shows the wide range of price that we are currently experiencing. Over time, this wide range will likely diminish a bit as the trend continues to consolidate price rotation into more narrow bands, but right now we have a very wide range of price volatility that we have to deal with.

Additionally, the current upward price rotation is above the Bullish Fibonacci Price Level from the recent lows. This is a clear indication that prices want to continue to push higher till some new price peak is in place. We expect that will happen fairly soon.

Notice how the Fibonacci Projected Price Levels are quite a way away from the current price levels? This is because the recent increase in volatility is alerting the price modeling system that we expect larger range price rotation. As newer and more moderate price rotations form, these levels will begin to consolidate a bit with new price levels.

As of right now, our analysis has really not changed much since last week. We believe the Feb 21 price low will prompt a rally into the March 15 price peak. At that time, we’ll take a fresh look at these modeling systems to see what they can tell us about the future.

DAILY SP500 (SSO ETF) CHART

The last chart I wanted to share with you is the Daily SSO chart. This chart helps to firm up our analysis of what to expect in the immediate future as well as continues to support our analysis that the US Majors will likely stall near current levels and retrace slightly headed into the Feb 21 price low. Remember, we don’t believe this Feb 21 price low will be anywhere close to the recent lows. This move lower will be much more subdued and moderate in size and scope.

With this SSO chart, the Adaptive Fibonacci Price Modeling system is showing a potential “Major Bottom” near the recent lows. This happens when the system identifies a potentially massive or major price bottom. Over time, the modeling system will confirm this trigger or replace it with a new trigger when it forms.

We still see the massive price volatility in this chart. We still see the Fibonacci Price Trigger Levels that tell us we are below the Bearish Price Trigger (near the recent top) and above the Bullish Price Trigger (near the recent bottom), so what should expect price to do? At this point, the most recent Price Trigger Breach is the Bullish Price Trigger – thus we are expecting prices to continue higher overall. The new Bearish Fibonacci Price Trigger, below the current prices, is what we would watch for any signs of price weakness. When that level is breached, then we begin a new potential down leg.

Right now, we will issue this one simple warning – the upside move is likely to be ending soon and preparing for our February 21 price low point. The fact that prices are showing that they’ve already reached the Fibonacci Projected Price Level is telling us this upside leg may be over for now which is the reason we exited our short UVXY position here for a 50% profit.

Next, we expect the US majors to rotate lower for a few days headed into a February 21 price low. This will be following by an almost immediate and strong upside push to a March 15th price peak.

This means we will be setting up for some great trades over the next few days/weeks. Imagine being able to know that near February 20-22, we should be able to “pick” the best opportunities for quick trades where the US majors begin a new up leg? Also, imagine how critical this type of information can be to you going forward?

Our research team at The Technical Traders site has a combined 53 years of trading and analysis experience. We develop specialized and proprietary price modeling systems, like these, to assist us in being able to provide our members with an “edge” in the markets. Of course, we are not always 100% accurate with our predictions – no one can be 100% accurate. We simply do our best to make sure our members get the best we can offer them each and every day. We want them to understand the opportunities that are playing out and we help them find the best trade triggers for profits each week.

Stay tuned for our next post on Sunday with an instant trade setup, 

so be sure to join our free mailing list!

If you find this information valuable and would like to include it in your daily trading activities, visit here and sign up for the Technical Traders Wealth Building Newsletter today!

Chris Vermeulen

Hidden Gems Shows A Foreboding Future

A quick look at any of the US majors will show most investors that the markets have recently been pushing upward towards new all time highs. These traditional market instruments can be misleading at times when relating the actual underlying technical and fundamental price activities. Today, we are going to explore some research using our custom index instruments that we use to gauge and relate more of the underlying market price action.

What if we told you to prepare for a potentially massive price swing over the next few months? What if we told you that the US and Global markets are setting up for what could be the “October Surprise of 2017” and very few analysts have identified this trigger yet? Michael Bloomberg recently stated “I cannot for the life of me understand why the market keeps going up”. Want to know why this perception continues and what the underlying factors of market price activity are really telling technicians?

At ATP we provide full time dedicated research and trading signal solution for professional and active traders. Our research team has dedicated thousands or hours into developing a series of specialized modeling systems and analysis tools to assist us in finding successful trading opportunities as well as key market fundamentals. In the recent past, we have accurately predicted multiple VIX Spikes, in some cases to the exact day, and market signals that have proven to be great successes for our clients. Today, we’re going to share with you something that you may choose to believe or not – but within 60 days, we believe you’ll be searching the internet to find this article again knowing ATP (Active Trading Partners) accurately predicted one of the biggest moves of the 21st century. Are you ready?

Let’s start with the SPY. From the visual analysis of the chart, below, it would be difficult for anyone to clearly see the fragility of the US or Global markets. This chart is showing a clearly bullish trend with the perception that continued higher highs should prevail.

Additionally, when we review the QQQ we see a similar picture. Although the volatility is typically greater in the NASDAQ vs. the S&P, the QQQ chart presents a similar picture. Strong upward price activity in addition to historically consistent price advances. What could go wrong with these pictures – right? The markets are stronger than ever and as we’ve all heard “it’s different this time”.

Most readers are probably saying “yea, we’ve heard it before and we know – buy the dips”.

Recently, we shared some research with you regarding longer term time/price cycles (3/7/10 year cycles) and prior to that, we’ve been warning of a Sept 28~29, 2017 VIX Spike that could be massive and a “game changer” in terms of trend. We’ve been warning our members that this setup in price is leading us to be very cautious regarding new trading signals as volatility should continue to wane prior to this VIX Spike and market trends may be muted and short lived. We’ve still made a few calls for our clients, but we’ve tried to be very cautious in terms of timing and objectives.

Right now, the timing could not be any better to share this message with you and to “make it public” that we are making this prediction. A number of factors are lining up that may create a massive price correction in the near future and we want to help you protect your investments and learn to profit from this move and other future moves. So, as you read this article, it really does not matter if you believe our analysis or not – the proof will become evident (or not) within less than 60 days based on our research. One way or another, we will be proven correct or incorrect by the markets.

Over the past 6+ years, capital has circled the globe over and over attempting to find suitable ROI. It is our belief that this capital has rooted into investment vehicles that are capable of producing relatively secure and consistent returns based on the global economy continuing without any type of adverse event. In other words, global capital is rather stable right now in terms of sourcing ROI and capital deployment throughout the globe. It would take a relatively massive event to disrupt this capital process at the moment.

Asia/China are pushing the upper bounds of a rather wide trading channel and price action is setting up like the SPY and QQQ charts, above. A clear upper boundary is evident as well as our custom vibrational/frequency analysis arcs that are warning us of a potential change in price trend. You can see from the Red Arrow we’ve drawn, any attempt to retest the channel lows would equate to an 8% decrease in current prices.

Still, there is more evidence that we are setting up for a potentially massive global price move. The metals markets are the “fear/greed” gauge of the planet (or at least they have been for hundreds of years). When the metals spike higher, fear is entering the markets and investors avoid share price risks. When the metals trail lower, greed is entering the markets and investors chase share price value.

Without going into too much detail, this custom metals chart should tell you all you need to know. Our analysis is that we are nearing the completion of Wave C within an initial Wave 1 (bottom formation) from the lows in Dec 2016. Our prediction is that the completion of Wave #5 will end somewhere above the $56 level on this chart (> 20%+ from current levels). The completion of this Wave #5 will lead to the creation of a quick corrective wave, followed by a larger and more aggressive upward expansion wave that could quickly take out the $75~95 levels. Quite possibly before the end of Q1 2018.

We’ve termed this move the “Rip your face off Metals Rally”. You can see from this metals chart that we have identified multiple cycle and vibrational/frequency cycles that are lining up between now and the end of 2017. It is critical to understand the in order for this move to happen, a great deal of fear needs to reenter the global markets. What would cause that to happen??

Now for the “Hidden Gem”....

We’ve presented some interesting and, we believe, accurate market technical analysis. We’ve also been presenting previous research regarding our VIX Spikes and other analysis that has been accurate and timely. Currently, our next VIX Spike projection is Sept 28~29, 2017. We believe this VIX Spike could be much larger than the last spike highs and could lead to, or correlate with, a disruptive market event. We have ideas of what that event might be like, but we don’t know exactly what will happen at this time or if the event will even become evident in early October 2017. All we do know is the following....

The Head-n-Shoulders pattern we first predicted back in June/July of this year has nearly completed and we have only about 10~14 trading days before the Neck Line will be retested. This is the Hidden Gem. This is our custom US Index that we use to filter out the noise of price activity and to more clearly identify underlying technical and price pattern formations. You saw from the earlier charts that the Head n Shoulders pattern was not clearly visible on the SPY or QQQ charts – but on THIS chart, you can’t miss it.

It is a little tough to see on this small chart but, one can see the correlation of our cycle analysis, the key dates of September 28~29 aligning perfectly with vibration/frequency cycles originating from the start of the “head” formation. We have only about 10~14 trading days before the Neck Line will likely be retested and, should it fail, we could see a massive price move to the downside.

What you should expect over the next 10~14 trading days is simple to understand.

Expect continued price volatility and expanded rotation in the US majors.

• Expect the VIX to stay below 10.00 for only a day or two longer before hinting at a bigger spike move (meaning moving above 10 or 11 as a primer)
• Expect the metals markets to form a potential bottom pattern and begin to inch higher as fear reenters the markets _ Expect certain sectors to show signs of weakness prior to this move (possibly technology, healthcare, bio-tech, financials, lending)
• Expect the US majors to appear to “dip” within a 2~4% range and expect the news cycles to continue the “buy the dip” mantra.

The real key to all of this is what happens AFTER October 1st and for the next 30~60 days after. This event will play out as a massive event or a non event. What we do know is that this event has been setting up for over 5 months and has played out almost exactly as we have predicted. Now, we are 10+ days away from a critical event horizon and we are alerting you well in advance that it is, possibly, going to be a bigger event.

Now, I urge all of you to visit our website to learn more about what we do and how we provide this type of advanced analysis and research for our clients. We also provide clear and timely trading signals to our clients to assist them in finding profitable trading opportunities based on our research. Our team of dedicated analysts and researchers do our best to bring you the best, most accurate and advanced research we can deliver. The fact that we called this Head-n-Shoulders formation back in June/July and called multiple VIX Spike events should be enough evidence to consider this call at least a strong possibility.

If you want to take full advantage of the markets to profit from these moves, then join us today here at the Active Trading Partners and become a member.

VIX Spikes Showing Massive Volatility Increase

Today, we are going to revisit some of our earlier analysis regarding the VIX and our beloved VIX Spikes.  Over the past 3+ months, we’ve been predicting a number of VIX Spikes based on our research and cycle analysis.  Our original analysis of the VIX Spike patterns has been accurate 3 out of 4 instances (75%).  Our analysis has predicted these spikes within 2 to 4 days of the exact spike date.  The most recent VIX Spike shot up 57% from the VIX lows.  What should we expect in the future?

Well, this is where we should warn you that our analysis is subjective and may not be 100% accurate as we can’t accurately predict what will happen in the future. Our research team at Active Trading Partners.com attempt to find highly correlative trading signals that allow our members to develop trading strategies and allow us to deliver detailed and important analysis of the US and global markets.

The research team at ATP is concerned that massive volatility is creeping back into the global markets. The most recent VIX spike was nearly DOUBLE the size of the previous spike. Even though the US markets are clearly range bound and rotating, we expect them to stay within ranges that would allow for the VIX to gradually increase through a succession of VIX spike patterns in the future.

Let’s review some of our earlier analysis before we attempt to make a case for the future. Our original VIX Spike article indicated we believed a massive VIX spike would happen near June 29th. We warned of this pattern nearly 3 weeks ahead of the spike date. Below, you will see the chart of the VIX and spikes we shared with our members. This forecast was originally created on June 7th and predicted potential spikes on June 9th or 12th and June 29th.

What would you do if you knew these spikes were happening?

Currently, we need to keep in mind the next VIX Spike Dates

Sept 11th or 12th and finally Sept 28th or 29th.

Our continued research has shown that the US markets are setting up for a potential massive Head-n-Shoulders pattern (clearly indicated in this NQ Chart). The basis of this analysis is that the US markets are reacting to Political and Geo-Economic headwinds by stalling/retracing. The rally after the US Presidential election was “elation” regarding possibilities for increased global economic activities. And, as such, we have seen an increase in manufacturing and GDP output over the past 6+ months. Yet, the US and global markets may have jumped the gun a bit and rallied into “hype” setting up a potential corrective move.

Currently, the NQ would have to fall an additional 4.5% to reach the Neck Line of the Head-n-Shoulders formation. One interesting facet of the current NQ chart is that is setting up in a FLAG FORMATION that would indicate a massive breakout/breakdown is imminent. The cycle dates that correspond to this move are the September 11th or 12th move.

Please understand that we are attempting to keep you informed as to the potential for a massive volatility spike in the US and Global markets related to what we believe are eminent Political and Geo-Economic factors. Central Banks have just met in Jackson Hole, WY and have been discussing their next moves as well as the US Fed reducing their balance sheets. Overall, the US economy appears to show some strength, yet as we have shown, delinquencies have started to rise and this is not a positive sign for a mature economic cycle. Expectations are that the US Fed will attempt another one or two rate raises before the end of 2017. Our analysis shows that Janet Yellen should be moving at a snail’s pace at this critical juncture.

So, now we get to the VIX Spike Data!

The last, most recent, VIX Spike was nearly DOUBLE the size of the previous Spike. This is an anomaly in the sense that the VIX has, with only a few exceptions, continued to contract as the global central banks continued to support the world’s economies. In other words, smooth sailing ahead as long as the global banks were supplying capital for the recovery.

Now that we are at a point where the central banks are attempting to remove capital from their balance sheets while raising rates and dealing with debt issues, the markets are looking at this with a fresh perspective and the VIX is showing us early warning signs that massive volatility may be reentering the global markets. Any future VIX Spike cycles that continue to increase in range would be a clear indication that FEAR is entering the markets again and that debt, contraction and decreased consumer participation are at play.

I don’t expect you to fully understand the chart and analysis below, but the take away is this. Pay attention to these dates: September 11, September 28 and October 16. These are the dates that will likely see increased price volatility associated with them and could prompt some very big moves.

This analysis brings us to an attempt at creating a conclusion for our readers. First, our current analysis of the Head-n-Shoulders pattern in the NQ is still valid. We do not have any indication of a change in trend or analysis at this moment. Thus, we are still operating under the presumption that this pattern will continue to form. Secondly, the current VIX spike aligns perfectly with our analysis that the markets are becoming more volatile as the VIX WEDGE tightens and as the potential for the Head-n-Shoulders pattern extends. Lastly, FEAR and CONCERN has begun to enter the market as we are seeing moves in the Metals and Equities that portend a general weakness by investors.

We will add the following that you won’t likely see from other researchers – the time to act is NOT NOW. Want to know why this is the case and why we believe our analysis will tell us exactly when to act to develop maximum profits from these moves?

Join the Active Trading Partners to learn why and to stay on top of these patterns as they unfold. We’ve been accurate with our VIX Spike predictions and we will soon see how our Head and Shoulders predictions play out. We’ve already alerted you to the new VIX Spike dates (these alone are extremely valuable). We are actively advising our ATP members regarding opportunities and trading signals that we believe will deliver superior profits. Isn’t it time you invested in your future and prepared for these moves?

Join the Active Trading Partners HERE today and Join a team dedicated to your success.

Weekly Gold Futures Summary with Mike Seery

Gold futures in the December contract settled last Friday in New York at 1,134 an ounce while currently trading at 1,122 down about $12 this week trading below its 20 and 100 day moving average near a 2 week low as I’m currently sitting on the sidelines as this market remains choppy with poor chart structure.

The monthly unemployment report number was released this morning in the United States adding 173,000 new jobs which was below consensus having very little impact on gold prices today as I still see no reason to own gold currently as the risk/reward is not your favor so look at other markets that are starting to trend.

Gold prices had a significant rally in the month of August bottoming out around 1,080 then rallying to 1,170 which was impressive in my opinion due to short covering and a flight to quality as the stock market has experienced volatility in recent weeks sending money out of stocks and into gold as a safe haven but things have settled down putting short term pressure on gold.

As I’ve talked about in many previous blogs I am a trend follower and I do not like to trade choppy markets because they are extremely difficult in my opinion so avoid this market at the current time.
Trend: Mixed
Chart Structure: Poor

When Do You Add To Your Winning Trade?

This has always been a very interesting question because it can create a situation of going from rags to riches or from riches to rags in a very short amount of time. Many times I see traders abuse pyramiding or adding to positions with utter lack of any type of money management system in place and letting it ride which usually ends up in a complete wipeout of capital and sometimes even worse.

Commodity prices can move very quickly with large gains or loses like we experienced in the 2008 crash of stock and commodity prices, so you always have to use stops and not fall in love or marry a position. In my opinion the answer to this question is add only once to the trade if that position has made you at least 2%-3% of your account balance while still having stop losses on all positions that equal 2% loss at a maximum risk.

Remember your stop loses will be different on both positions because of the fact that you entered those trades at a different date and price.

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A Guidebook to Investing in Gold

By Jared Dillian

“A gold mine is a hole in the ground with a bunch of liars standing next to it.”

I started investing in gold in 2005. Not a bad time, right?

Here’s why I started: I was the ETF trader at Lehman Brothers at the time. A couple of guys came by to talk about this crazy idea they had about a gold ETF. I think one was from the World Gold Council and the other was from State Street. The WGC guy brought along a 10 ounce bar of gold. At the time, it was worth almost $6,000.

The ETF was SPDR Gold Shares (GLD).(* Please see disclosure below)

I ended up buying GLD, because I’m a trader. Trading stocks is what I do, so it’s easy for me to buy something with a ticker. I didn’t even know you could buy physical gold. It was 2005 or 2006, so I’m not even sure if the online bullion dealers were up and running yet. If you wanted to buy gold, you’d have to be in the know, go to some hole-in-the-wall coin dealer, get your face ripped off.

I have owned GLD since. And along the way, I learned a lot about investing in physical gold, and I bought that, too.

But that’s not the interesting part.

I Loathe Gold Culture

One of the things I figured out as I was starting to invest in precious metals is that a lot of the other guys investing in gold and silver were… not the kind of guys I really wanted to hang out with. Neckbeard McGoldbug. You know the type.

I’m talking about the ridiculous conspiracy theories, the bizarre politics that are so far right, they’re left. The hatred toward banks. I still don’t understand it. These are supposedly right wing guys who found themselves on the same side of most issues as Matt Taibbi and Elizabeth Warren. The apocalyptic outlook, the relentlessly bearish views, the outright refusal to participate in one of the biggest (and most obvious) stock market rallies ever.

I am allegedly a right wing guy—and I’ll own it—but I am not that.

The other thing I discovered about these guys is that it’s useless to try to sell newsletters to them. They don’t believe in intellectual property. So part of my gold investing career has been figuring out what I am and what I’m not. I guess you could call me a classical liberal and monetarist who takes a keen interest in gold.

Freeze It, Personalize It, Polarize It

As the gold rally crested and rolled over, the mainstream financial media really started to go after the gold bugs. They were super annoying on the way up, and the (mostly liberal, Keynesian) pundits were crushing them on the way down. It’s gotten to the point where the only people left buying gold are… Neckbeard McGoldbug, and they’ve been thoroughly maligned for it.

If you recall, the whole idea was that quantitative easing (printing money) was going to create a lot of inflation. Plus, the budget deficit was about $1.8 trillion at the time, so we would have to monetize the debt.

It was a pretty good argument. And it worked for years. Then it stopped working.

The inflation the gold bugs predicted never happened. It was the biggest hoax perpetuated on investors, ever. So the beatdown from the Keynesians continues to this day, on Twitter, on blogs, in the news.

But maybe the gold bugs weren’t wrong—just super early.

I’m Not an Economist, But…..

I do remember this from a class I had: the quantity theory of money.

MV = PQ   I’m sure this looks familiar to many of you. So M, the supply of money, has gone way up:

But V, money velocity, has gone way down:

Given constant Q (quantity of goods), P (price) remains pretty much unchanged. So we will eventually get our inflation—if money velocity turns around and heads higher. There aren’t any good theories as to why money velocity continues to plummet. At least, I haven’t read any. I think we will have a similar inability to predict when it rises. This is overly simplistic, but I’m a simple guy.

Gold Is/Is Not for the Long Run

There are people who say gold should be x percent of your portfolio in all weather. I get it. It tends to be negatively correlated with other stuff, so it reduces the volatility of a portfolio. And as long as central banks are doing what they’re doing, the long term case for gold is pretty much intact, recent price action notwithstanding.

But let me tell you this. If central banks ever got religion and pulled a Volcker and hiked rates to the moon, it would be a remarkably bad time to hold gold. On the other hand, throughout history, there have been times where people were very sad that they didn’t own gold. I talk about one of them here.

It’s very real, and the history of fiat currencies is also quite sad. I am the furthest thing from an alarmist. I don’t think the dollar, or the euro, or any other currency is going to collapse, at least not imminently. But I also think the Fed doesn’t want to raise interest rates, possibly ever.

The ECB is printing, and you have the prospect of direct monetization. Japan is just insane. Even Sweden is printing money. And I can see a scenario where Canada, Australia, and Norway are all doing it too.

So: if the whole world is printing money, I’m okay with being long gold.

But in 2015, you really shouldn’t care about what people think.

*Disclosure: at the time of this writing, Jared Dillian was long GLD, SLV, and physical gold and silver.

Jared Dillian

The article The 10th Man: A Guidebook to Investing in Gold was originally published at mauldineconomics.com.

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Weekly Gold and Silver Markets Recap with Mike Seery

It's time for our weekly commodity futures recap with our trading partner Mike Seery. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets. And frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.

Gold futures in the April contract are up $13 this afternoon in New York currently trading at $1,233 an ounce after settling last Friday around $1,235 basically unchanged for the trading week still right near 4 week lows is I’m recommending investors to sit on the sidelines in this market as the trend is currently mixed. Gold futures are trading below their 20 but just barely above their 100 day moving average as the S&P 500 had a terrific week as the Dow Jones cracked 18,000 to the upside as that’s where the interest lies currently as the next major level of support is between $1,180 – $1,220 but sit on the sidelines as the chart structure is absolutely terrible at the current time.

If you have followed any of my previous blogs I constantly stress the fact to avoid markets that are choppy as I think the success rate is very low unless you are some type of day trader but I hold positions overnight so look for another market that is beginning to trend and keep an eye on gold as I don’t think we will be trading this market for quite some time. The U.S dollar is still right near 11 year high and that’s always pessimistic commodities in general especially the precious metals but at the current time I just don’t have an opinion on this market as I think we will chop around in the short term.
Trend: Mixed
Chart Structure: Poor

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Silver futures in the March contract are up $.55 this afternoon still trading below their 20 but above their 100 day moving average telling you this trend is mixed as I’m also advising traders to sit on the sidelines in this market as we were stopped out at the 2 week low around 16.71 last Friday as this market remains extremely volatile but prices continue to move sideways. Silver prices settled last Friday at 16.70 currently trading at 17.35 up about $.65 an impressive week in my opinion as many of the commodity markets are sharply higher today due to the fact that crude oil is up another $2 which is beneficial and supportive to many commodity prices thinking that the giant bear markets might be finished.

As a trader I’m always looking for a breakout but at the current time silver looks like it’s in a bottoming pattern in my opinion with no breakout occurring as the real level that you want to look at is 18.50 if prices break above that level I would be recommending a bullish position but at the current time the chart structure is poor so look elsewhere. The one bullish fundamental reason for silver to move higher is the fact that it’s used in electronic components and that business is going to be here for a long time to come so theirs actual demand for silver unlike gold which is just primary used in jewelry as the electronic market should get larger and grow exponentially over the next 10/20 years in my opinion.
Trend: Mixed
Chart structure: Poor

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Weekly Gold and Silver Futures Recap with Mike Seery

Our trading partner Mike Seery is out with his calls for this week and he includes some of reliable rules to protect our profits.

Gold futures in the February contract are slightly lower this Friday afternoon in New York after settling last Friday at 1,216 currently trading at 1,260 as I’m currently recommending a long futures position while placing your stop loss below the 10 day low which is around 1,209 risking around $50 or $1,650 on a mini contract plus slippage and commission. Gold futures are trading above their 20 and 100 day moving average hitting a 5 month high as the chart structure will also start to improve on a daily basis starting next week as the market has caught fire recently due to worldwide problems as money is pouring back into the precious metals and out of the S&P 500 in the beginning of 2015.

Yesterday the Swiss government announced they will let the Swiss Franc float rocketing that currency up while sending shock waves through the bond and currency markets and it certainly looks to me that problems are here to stay here for a while as Europe is a mess and this could push gold up to the next resistance level of 1,300 – 1,320 so take advantage of any price dip while maintaining the proper stop loss risking 2% of your account balance on any given trade as gold has finally turned into a short-term bull market once again.
Trend: Higher
Chart structure: Improving

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Silver futures are trading above their 20 day but right at their 100 day moving average settling last Friday at 16.12 while currently trading at 17.05 an ounce as I’m recommending a bullish position in silver while placing your stop below the 10 day low which is at 16.11 risking around $.90 or $4,500 per contract plus slippage and commission as the chart structure will also improve on a daily basis starting next week. The next major level of resistance is between 17.35 – 17.50 and if that level is broken I would have to think that silver prices have a chance to reach $20 here in the short term as once again money is flowing into the precious metals and out of the stock market for the 1st time in several years as investors are thinking that silver may have been overdone to the downside.

Many of the commodity markets continue to head lower as there is weak demand throughout many sectors due to the fact that the U.S dollar is at a 9 year high while silver & gold prices have also been in bearish trends until recently, however with what’s going on in France and Isis running havoc throughout the Mideast people are finally looking at the precious metals as a safe haven once again so the rest of the commodity markets can go lower with gold and silver still moving higher but play by the rules as the chart structure meets criteria in my opinion.
Trend: Higher
Chart structure: Improving

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Weekly Gold Market Summary with Mike Seery

Gold futures in the February contract witnessed another extremely volatile trading session with another $20 trading range currently trading up $4 at 1,188 after trading as low as 1,167 earlier in the session as the U.S dollar hit another multiyear high pressuring many the commodity prices, however bottom feeders appeared thinking that gold was overdone to the downside.

Gold futures are trading below their 20 and 100 day moving average as I am currently sitting on the sidelines in this market waiting for better chart structure to develop as the market is just too volatile in my opinion, however if you are bearish this market I would sell at today’s price while placing my stop above the 10 day high which currently stands at 1,210 risking around $23 or $2,300 per contract plus slippage and commission as the chart structure is relatively solid at the current time.

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Gold futures remain in a long term downtrend as investors are still putting money into the S&P 500 and out of the precious metals especially with a strong U.S dollar which looks to head higher in my opinion and with worldwide problems cooling down especially with Russia there’s really no reason to own gold at the current time.

Gold futures traded over the last 2 months in a price range between $1,140-$1,240 and now around mid-range so I’m waiting for a trend to develop as traders are waiting next Friday’s monthly unemployment report which should send even more volatility into this market so make sure if you are in the futures market that you use the proper amount contracts risking 2% of your account balance on any given trade as this market is high risk.
TREND: LOWER
CHART STRUCTURE: EXCELLENT


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Gold Option Trade – Will Gold Continue to Consolidate?

Until recently, the world has forgotten about gold and gold futures prices it would seem. A few years ago, all we heard about was gold and silver futures making new highs on the back of the Federal Reserve’s constant money printing schemes.

However, after a dramatic sell off the world of precious metals it became very quiet.


Gold prices have been in a giant basing or consolidation pattern for more than one year. As can clearly be seen below, gold futures prices have traded in a range between roughly 1,175 and 1,430 since June of 2013.





The past few weeks we have heard more about gold prices as we have seen a five week rally since late May. I would also draw your attention to the fact that gold futures also made a slightly higher low which is typically a bullish signal.


At this point in time, it appears quite likely that a possible test of the upper end of the channel is possible in the next few weeks / months. If price can push above 1,430 on the spot gold futures price a breakout could transpire that could see $150 or more added to the spot gold price.


Clearly there are a variety of ways that a trader could consider higher prices in gold futures. However, a basic option strategy can pay handsome rewards that will profit from a continued consolidation. The trade strategy is profitable as long as price stays within a range for a specified period of time. Ultimately this type of trade strategy involves the use of options and capitalizes on the passage of time.


The strategy is called an Iron Condor Strategy, however in order to make this trade worth while we would consider widening out the strikes to increase our profitability while simultaneously increasing our overall risk per spread. Consider the chart of GLD below which has highlighted the price range that would be profitable to the August monthly option expiration on August 15th.





As long as price stays in the range shown above, the GLD August Iron Condor Spread would be profitable. Clearly this strategy involves patience and the expectation that gold prices will continue to consolidate. This trade has the profit potential of $37 per spread, or a total potential return based on maximum possible risk of 13.62%. The probability based on today's implied volatility in GLD options for this spread to be profitable at expiration (August 15) is roughly 80%.


Our new option service specializes in identifying these types of consolidation setups and helps investors capitalize on consolidating chart patterns, volatility collapse, and profiting from the passage of time. And if you Advanced options trades are not your thing, we also provide Simple options where we buy either a call or put option based on the SP500 and VIX. The nice thing about buying calls and puts is that you can trade with an account as little as $2,500.


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See you in the markets!

Chris Vermeulen

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Gold Chart of The Week for Monday December 9th

Before the release of the Non Farm Payrolls last week on Friday, US markets could not catch a break. Lower highs and lower lows were put in on the daily chart of the S&P 500 after the new high was printed on November 29^th. On Thursday, stocks took the day to consolidate inside the prior days price range, but exploded to the upside at 7:30 cst. Markets were treated to a better than expected jobs number where 203,000 jobs were created and the jobless rate in the US hit a five year low. 

Additionally, Consumer Confidence in the US shot up to a five year high soon after the jobs numbers were posted. In short, LAST WEEK traders and investors used favorable reports as a reason to buy equities. The big question is whether the stock market will react the same way THIS WEEK, when data is released. We will have to wait and see.

There is far less important economic data being released in the US compared to last week, but we will hear from multiple FED Members and will also be informed on the ongoing budget negotiations in Washington. Traders will be focused on the language being used this week to determine whether the FED plans to taper their Bond Purchases before 2013 comes to a close or not. This language will be important as investors try to decide whether or not they will continue to buy the market in new high territory this week. Pre-Market, futures are only a few ticks below the high that was printed on the 29^th.

I feel the best way to approach this week is as a technical trader. The plan will be to break down price action on both daily and intraday charts, looking for the best technical prices to  enter and exit trades. I think it will be far too difficult to make dependable commitments to any Financial market when the US Indexes are testing the highs again and waiting for speeches from the very members that will decide next week whether or not they will taper.

It appears the Gold Futures may be waiting on the same confirmations. Last week, while the market did see some nice volatility in a range, we did not see a test of $1200 or a breach of the prior week’s highs. I believe that Gold traders are waiting like the rest of us for a final determination from the FED before either levels are tested again. The language used this week by FED Members may give clues in advance of next week’s meeting as to whether or not we should expect Ben Bernanke to close out 2013 with a slam in the equity markets.




Posted courtesy of Brian Booth at INO.com
 

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Weekly Gold Market Summary

Gold futures in the December contract had one of the most volatile and crazy trading weeks that I can remember finishing this Friday afternoon down $35 at 1,333 an ounce after settling last Friday at 1,308 rallying on the concept that the Federal Reserve will not taper bond purchases which sent many of the commodity markets sharply higher including gold on Wednesday afternoon, however reality has set in as Goldman Sachs came out stating that they believe the Federal Reserve will start tapering in December which put a lot of pressure on many commodities including the stock market today.

I have been advising traders to sit on the sidelines in the gold market & I still think gold looks relatively weak closing right on session lows today as the bond purchasing in my opinion is overrated. The trend in gold is lower at this point but wait for better chart structure to develop before looking to enter into this market as volatility is too high. The U.S dollar hit an 8 month low which also propelled gold prices higher on Wednesday as the Federal government continues to try & support asset prices and it also continues to try to devalue the U.S dollar which is generally bullish commodity prices, however money seems to the flowing back into the S&P 500 as prices are hitting all-time highs while taking money out of gold market.

TREND: LOWER –CHART STRUCTURE: POOR

Here's additional commodity updates from our very own Mike Seery


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Will 1,650 Offer Buying Support for the SP500?

Earlier this week we shared with our readers a great article from our trading partner J.W. Jones where he covered in detail the loomimg correction in the equity markets. Now what? Here's a follow up article that includes the trades J.W. closed this week.......

In my most recent article, I discussed how I was expecting U.S. financial markets to reverse to the downside in the near future. I illustrated the various divergences in a variety of underlying technical indicators which have issued warnings in the past.

Unlike many financial journalists or newsletter operators, I am an option trader first and a writer second. My primary focus is typically to sell option spreads that focus on the passage of time for profitability and/or take advantage of large implied volatility spikes which help to improve my probability of success on each trade taken. Unfortunately in 2013 Mr. Market has not accommodated my style of trading as we have had very low volatility most of the year.

Low volatility levels many times force option traders to take more directional trades which ultimately leads to lower probabilities of success. I still take advantage of stocks that have had implied volatility spikes, but ultimately this market has forced theta sellers to get more aggressive, take more risk, and accept less potential profitability.

I have recently closed several winning positions with members of Options Trading Signals service during the August expiration. Several positions were actually closed Thursday August 15th for gains.

However, what might surprise readers is that several positions that I closed for gains this week and even today were long biased positions. In fact, one of my largest winning trades for the August monthly option expiration cycle was the EWZ Call Debit Spread that was essentially long Brazilian equities.

Here are the detailed results of J.W.'s recent trades


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The Gold ETF Trader


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Gold and Fear Go Hand and Hand

Over the past 5 months we have seen volatility steadily decline as stocks and commodities rise in value. The 65% drop in the volatility index is now trading at a level which has triggered many selloffs in the stock market over the years as investors become more and more comfortable and greedy with rising stock prices.

Looking at the market from a HERD mentality and seeing everyone run to buy more stocks for their portfolio has me on edge. We could see a strong wave of fear/selling hit the S&P 500 Index over the next two weeks catching the masses with their hand in the cookie jar ........ again.

If you don’t know what the volatility index (VIX) is, then think of it as the fear index. It tells us how fearful/uncertain investors are or how complacent they are with rising stock prices. Additionally a rising VIX also demonstrates how certain the herd is that higher prices should continue.

The chart below shows this fear index on top with the SP500 index below and the correlation between the two underlying assets. Just remember the phrase “When the VIX is low it’s time to GO, When the VIX is high it’s time to BUY”.

Additionally the Volatility Index prices in fear for the next 30 days so do not be looking at this for big picture analysis. Fear happens very quickly and turns on a dime so it should only be used for short term trading, generally 3-15 days.

Volatility Index and SP500 Correlation & Forecast Daily Chart:

Global Issues Continue To Grow But What Will Spark Global Fear?

Everyone has to admit the stock market has been on fire since the October lows of last year with the S&P 500 Index trading up over 26%. It has been a great run, but is it about to end? Where should investors focus on putting their money? Dividend stocks, bonds, gold, or just sit in cash for the time being?

I may be able to help you figure that out.

Below is a chart of the Volatility index and the gold exchange traded fund which tracks the price of gold bullion. Notice how when fear is just starting to ramp up gold tends to be a neutral or a little weak but not long after investors start selling their shares of securities we see money flow into the shiny yellow safe haven.

Gold & Fear Go Hand In Hand: Daily Chart

Looking at the relationship between investor fear/uncertainty and gold you will notice scared money has a tendency to move out of stocks and into safe havens.

Trading Conclusion Looking Forward 3 months…

In short, I feel the financial markets overall (stocks, commodities, and currencies) are going to start seeing a rise in volatility meaning larger daily swings which inherently increased overall downside risk to portfolios and all open positions.

To give you a really basic example of how risk increases, look at the daily potential risk the SP500 can have during different VIX price levels:

Volatility index under 20.00 Low Risk: Expect up to 1% price gaps at 9:30am ET, and up to 5% corrections from a previous high.

Volatility index between 20 – 30 Medium Risk: Expect up to 2% price gaps at 9:30am ET, and up to 15% corrections from recent market tops or bottoms.

Volatility index over 30 High Risk: Expect 3+% price gaps at 9:30am ET, and possibly another 5-15% correction from the previous VIX reading at Medium Risk

Note on price gaps: If you don’t know what I am talking about a price gap is simply the difference between the previous day’s close at 4:00pm ET and the opening price at 9:30am ET.

To continue on my market outlook, I feel the stock market will trade sideways or possibly grind higher for the next 1-2 weeks, during this time volatility should trade flat or slightly higher because it is already trading at a historically low level. It is just a matter of time before some bad news hits the market or sellers start to apply pressure and either of these will send the fear index higher.

I hope you found this info useful and if you would like to get these reports free every week delivered to your inbox be sure to visit here to join my FREE NEWSLETTER!

Chris Vermeulen