As expected Gold offered another long entry at $1,178. The following rally
created an exhaustion gap at $1,202 but brought Gold up to $1,224. Last Thursday
this gap was not only filled but Gold fell down to $1,192. On Friday Gold managed
to recover above the psychological level number at $1,200 but could not move
above $1,210.
My model went neutral last weekend and avoided the sideways trap during the
last couple of trading days... I am posting an update screenshot of the model
on my Facebook
page every Sunday. So make sure to regularly visit my page for updates...
Overall Gold remains in a bear market and with the negative seasonal window
fast approaching I'd be very cautious here. Also the US-Dollar rally seems
to continue despite the extreme CoT and sentiment data.
Mines & Money Mauritius 2015
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Midas Touch Gold Model Summary
During the last two weeks the model changed from a buy signal to neutral and
now to a sell signal. The GDX Daily-Chart is on a sell signal for the
second week already while this weekend Gold in Indian Rupee, the US-Dollar
Daily Chart as well as the US Real Interest Rate followed. Seasonality is
neutral but will get negative towards the end of April. The Gold Daily Chart is
still a buy but a move below $1.192 will increase the bearish signals.
The model suggests that Gold will fail at $1,220 and that the gold market
is getting ready for the typical sell off in May/June.
Gold Daily Chart
The impressive and fast recovery that started at $1,141 seems to be fading
out in a sideways trap below the important resistance zone around $1,220. The
two long doji candlesticks into this zone underline its heavy resistance. Gold
has been fighting to regain the falling 50MA ($1,204). The stochastic is overbought
and on a sell signal while the MACD is weakening but still with a buy signal
from mid of march. The strong US-Dollar is not helpful here and continues to
put pressure on gold and commodity prices. I think one or two more weeks of
sideways trap is the most likely outcome before the bears will push Gold lower
again.
As you know I am waiting for gold to end its bear market with a final panic
sell-off down to $1.050 (actually more likely $1,035-$980). Not sure if this
is still possible until June. If we get it I will call the end of this bear
market. If Gold only hoovers around between $1,140-$1,225 I am afraid the bear
market will extend.
My model is giving a sell signal so I'd be looking to enter a short into any
recovery towards $1,210 and especially towards $1,220 with a stop above last
Monday's high at $1,225.
The most promising strategy although remains to simply wait until May/June
for the typical pre-summer bottom in Gold and the Gold stocks.
As an investors I suggest you wait for another chance to accumulate physical
Gold below $1,150 until you hold 10-20% of your net-worth in physical Gold
and Silver as an insurance.
Long-term personal view
The return of the precious metals secular bull market is moving step by step
closer and should lead to the final parabolic phase (could start in summer
2015 or 2016 and last for 2-5 years or even longer).
Before this can start Gold will need a final sell off down to $1,050-$980.
Long-term price target DowJones/Gold-Ratio remains around 1:1.
Long-term price target Gold/Silver-Ratio remains around 10:1 (for every ounce
of gold there are 9 ounces of silver mined, historically the ratio was at 15:1
during the roman empire).
Long-term price target for Gold remains at US$5,000 to US$8,900 per ounce
within the next 5-8 years.
Fundamentally, as soon as the current bear market is over Gold should start
the final 3rd phase of this long-term secular bull market. 1st stage saw the
miners closing their hedge books, the 2nd stage continuously presented us news
about institutions and central banks buying or repatriating gold. The coming
3rd and finally parabolic stage will end in the distribution to small inexperienced
new traders & investors who will be subject to blind greed and frenzied
panic.
