In tonight's evening post on TF Metals Report, there is talk of ruthless attacks and price suppression by the bullion bank cartel on gold .
Over at JSMineset, Jim Sinclair has said several times recently that he thinks the bottom is in for this correction in gold.
I mean absolutely no disrespect to Eric King, Turd F, Jim Sinclair etc. as I point out there overwhelmingly bullish biases. I simply want to ask the question: What if the correction isn't yet over? This certainly constitutes a contrarian view in what I'd term the 'gold blogging community'. From a technical perspective, I think there is a case to be made for lower prices, and I'll attempt to explore some key areas of support and resistance in the charts below. Perhaps I myself am biased to the downside simply because I'd like to purchase more bullion and mining shares at lower prices.
Here is a weekly chart of gold:
In this weekly view of gold, I have drawn the bullish falling wedge that has been tracing out since the intermediate top was put in in September. Further, I have drawn in several horizontal lines. These lines represent four of the so-called angels that Jim Sinclair has often referenced. They are square numbers, which have been cited by Mr. Sinclair to have been used by the 'Boy Plunger,' none other than the great Jesse Livermore, to predict the price movements of newly-issued stocks. The lines shown on this chart are: $1681, $1600, $1521, and $1444. There is a lot of talk of $1,650 being an important line in the sand and perhaps that is accurate. Regardless, from my point of view, the current price action in gold is merely noise between $1,681 and $1,600. Notice how the $1,681 area comes right in at the top of that wedge. If gold can decisively break and close above that level on a weekly basis, I suspect this correction is indeed over. However, if the price sputters out and fails to best that price level, I would favor additional selling. If more selling turns out to be the case, the horizontal lines in the chart would offer support. Additionally, I suspect that the 89 MA (Fib #) would serve as rock-solid support. Not only is that key MA down there, but so is the $1444 angel as well. As of right now, I favor a (brief) test of this price level.
Take a look at the RSI at the top of the chart. As the gold price has appreciated from early 2009 onward, the RSI has held above 50, and has frequently bounced off support there. Now I wonder if 50 will serve as resistance. This will be an important indicator to monitor going forward.
Next, here are several gold charts from my friends at Break Point Trades.
First, a weekly view with Fibonacci retracement numbers:
The importance of that RSI indicator is demonstrated nicely in this chart, as is the area around ~$1,450. In all honesty, wouldn't a 38.2% Fibonacci retracement from the 2008/2009 liquidity crisis lows be healthy at this stage in the game? I see this as additional evidence of the importance of that price level. If that were to play out, positive divergence would likely form in the MACD and MACD histogram.
Here is an even longer-term look, again courtesy of Break Point Trades:
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That is all for tonight. I leave you with a brief clip from Marc Faber on Fox Business which was recorded today. Marc is always very cautious with his gold market predictions and always urging a dollar-cost average accumulation strategy rather than trying to time and trade this market. He believes the correction hasn't quite run its course. I consider Marc to the smartest of 'smart money,' and he is the type of person who would buy in size if gold corrects down another $200 or so.
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