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Friday, June 22, 2012

July's Gold- what the precious metals are trying to tell us.

It's been a while since I commented on silver and gold here. I have kept some of the PM charts in my public chart for your peruse though. Now it seems to be perfect time to put up some fresh comments here too. You can clearly see that July has given a kickoff to a gold rally three Summers in the row.
If you look closely, all those rallies came out of very similar technical background and were clearly a part of a one, powerful wave up. If you expect the same outcome now, I am afraid you may get disappointed. Just see the setup and the outcome of the same season in 2008. Well, July is when the collapse started. It does not take much of the pattern recognition skills to recognize that current setup is much more like 2008 than the subsequent hat-trick.
Very telling is silver chart, on which I have been pointing that a new wave of collapse appears to be coming, and we got the confirmation yesterday and today with silver breaking down under 28 and failing to regain that level.

So what silver and gold charts are trying to tell us?
I presume they are anticipating a deflationary event similar to the Lehman's failure in September of 2008. Why July downside acceleration? Likely another upcoming European meeting ending with a whimper.
OK, just to make it clear, I am not predicting the future, just reading what the charts are trying to tell.
At the end, another show of my long term gold chart as a reminder.

The 4 year gold half-cycle is scheduled to bottom in December of this year, but the full cycle is in the down phase until December 2016, and I suspect that it will not be until then that precious metals will get really interesting again.

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