Month: May 2016

GLD, S&P Goldshares ETF update

Hamilton

gld mar 31 2016

The GLD has behaved even more poorly then the XAU, perhaps because it is, I think, an ETF that primarily holds gold itself despite the name. Because the low was pretty well at 100,  we are presently up only 15% or 1.15x. The very distinct triangle suggests that that is a fourth wave so, if anything, this chart confirms the notion that the initial leg down from the top was a 5-wave sequence for a wave A. We are now halfway in the B. Then C goes down to new lows. $137 is a reasonable target for the B wave in this ETF.

See also our previous blogs on this ETF.

Note that this is the largest goldfund in the World at 34 billion today. By comparison, the supposedly depressed price of AAPL stock still gives it a market cap of 550 billion.

G, Goldcorp update

Hamilton

g may 31 2016 bg may 31 2016 s

Goldcorp has behaved much like ABX, however it has not been anywhere near as robust having gained only 1.8X against 3.1X. Nevertheless the EW count is essentially the same. Either a full correction is done and over with (beige) and we are in a new bull market on our way to new highs, or, this is just a first leg up in an unfinished correction that may take us to , say, the halfway mark only to then resume the down-trend to new lows, below those of just a few months ago.

G has not yet retraced the full length of the wedge, which is sort of a minimum (unlike ABX that has done more than that). This stock may only make it to $32 (4th wave) or $35 (50%). First it needs to go lower to properly retrace the first leg up.

Personally I do not believe that we are in a new bull market. Gold stocks can easily have a negative value if the marginal costs of extraction starts to exceed the market value. 95+% of all gold ever mined is still above ground and consequently the “marginal” miner has no influence on the price when withdrawing his production. In fact gold mining is intrinsically a very stupid endeavour. We spend a fortune finding it and then another fortune extracting it. Then we bury it in a vault where it is less safe than where it was before. The whole process is quite extraordinary and very wasteful.

The XAU lies somewhere in between ABX and Goldcorp, so a little less robust than ABX but stronger than Goldcorp. The XAU is the Philly gold index which contains 13 of the major gold diggers. It is in US$$.

ABX update

Hamilton

abx may 27 2016

We have been very lucky with our predictions for ABX. All though not absolutely perfect we did manage to capture the main moves and draw a tradable map. What is next?

First of all, the drop from the highs in mid 2011 is undoubtedly either a single 5-wave leg down followed by a single 5-wave corrective up move, OR a complete A-B-C correction that retraced about 85% of the value of the rise from 2001 to 2011, give or take. We preferred the former interpretation but are not at all confident about that. If the latter interpretation is in fact the correct one, then we have completed an initial wave 1 up and are presently in wave 2 (see the beige annotations). In either case we are confident that an initial wave (one or a) is complete. This is because the diagonal wave 5 or C is completely retraced plus a bit in a rather violent manner.

    Furthermore, looking at the technical indicators, it is interesting to note that the RSI peaked out more than a month ago. More interesting than that is that this has happened 7 times before during the time of the above chart, and that in every instance without a single exception, the RSI would move from the overbought extreme to the oversold extreme. This is the 8th time and it has not done so yet. We therefore still believe that this wave b or 2 has further to go, perhaps to about $14.50 or so (about where the 200 day moving average will be at that time). At that point it would be a screaming buy under BOTH scenarios! From there wave c or 3 should take us to roughly $32 or so, again under either scenario. The beauty of this forecast is that you do not have to go to the edge as it does not matter all that much whether you buy at $17 or at $14, if it gets there, because you will make a very healthy return in any event.

   As a word of caution we want to make it clear that this is an unadulterated EW analysis without ANY fundamental inputs. If you see how fast the fundamentals changed two or three months ago, you must conclude that they are irrelevant in terms of predictive value. Like a herd of buffalo the gurus will run over a cliff without batting an eye, or alternatively, they always have only one outcome in mind at all times and that is straight up.

RY update

Hamilton

The usual then, Sept. 4, 2015, and now charts;

ry sept 8 2015ry may 26 2016

Generally speaking we have been bearish on the Canadian banks, but occasionally we have nevertheless shown the bullish side as well. Last September we did just that with the Royal Bank by pointing out that the ups and downs of the past year or so might just be part of a large corrective structure despite the fact that the stock could not break out to new highs for about eighteen months. New highs just did not seem to be right but here we are.

So now, with the benefit of hindsight, we have to assume that the analysis back in Sept. was correct. That must have been the elongated a-b-c wave 4 followed by, what certainly looks a lot like a wedge. These normally retrace in full so once wave 5 is done, which could be any moment now, we drop back down to $64 and perhaps a lot lower this time. There is still a little room for a throw-over but the technical indicators are already screaming sell. Particularly the RSI is always very accurate as a timing tool and it needs just a little push up to get overbought. We would sell right here, right now.

Note that the b wave within the larger B wave moves one step to the right making the whole correction about  5 or 6 months longer than first anticipated. I do not have an explanation for why the stock was trading at about $81 in Dec. 2015 and only at $79 in today’s chart. In fact, looking at a G & M chart the high at that time was more like $83.33. To then make a new high we would need more that just a dollar more!