Everybody and his grandmother has been watching the key Fibonacci retracement levels in gold: $883.55 (38.2%), $837.47 (50%), and $791.40 (61.8%). If $883 fails then $837 should hold things. If $837 fails then $791 is surely in the cards.

The problem with guys like Jim Sinclair is they get religion and lose their objectivity. One of the most important traits that all good traders share is their agnosticism, or you could say, flexibility. You never want to get locked into one world view and start ignoring what the chart is telling you.

Click to enlarge (Gold, Spot price, Daily chart)

Related: Calling the Top in Gold… Again, March 22, 2008

Gold Bears: Put Your Money Where Your Mouth Is

“My position on timing and price is that Gold will trade at USD $1650 before the second week of January 2011.

I am offering a $1,000,000USD wager to a financially qualified party that this will occur within the stated timeframe.”

I wanted to take Sinclair up on his bet, but my wife nixed it. I’m not a gold bear but it seems like a bold guess: $1650 before the second week of January 2011 assumes a pretty steady rate of ascent. What do you guys think? Maybe we can pool smaller amounts of money to evade wifely approval and call Sinclair’s bluff.

2008.04.07.AM UPDATE: A look at the volume-at-price chart for spot gold. See the pretty bear flags as price waves lower.

Click to enlarge

You’ll recall in early February I wrote a post, Has Gold Peaked?, in which I tried to call another top as I had done so brilliantly (ok, luckily) in both the Chinese and Indian stock markets. The gold price plunged last week completely enveloping the last few weeks of UP, returning to the point where I originally called the top. So I’ll stand by that original call and expect the run up to $1000 an ounce was the ultimate trap.

If you look at the recent action in the financials, the regional banks, even the retailers … it makes sense to stick a fork in the yellow metal. But as always, I reserve the right to be catastrophically wrong.

UPDATE:

I just realized that the Sequential had a 13 count in February for monthly GLD which gives further confirmation that the uptrend has exhausted itself. (Duh, I did mention the monthly 13 count in spot gold before, but forgot about it.)

Click to enlarge (Gold Trust (GLD), Monthly Chart Since Issue)

Richard Russell’s constant refrain lo these many months has been “Treasury Bills and Gold.” The man is clearly a trend follower. :) This chart also explains why he has 11,000 subscribers who pay him $300 a year.

Dollar Trades at Record Low Versus Euro as Fed Plan Disappoints

“Goldman Sachs analysts said in a report that ‘we are not convinced that yesterday’s move will solve all the multiple challenges facing credit markets and the financial system.’”

Everyone knows that Gentle Ben’s bank bailout / reflation plan is murder on the dollar. I thought it would be fun (eye-opening?) to post the charts of crude oil and gold, denominated in dollars, euros, and yuan, so here they are:

Click to enlarge (US Dollar Index)

Click to enlarge (Crude Oil, Dollar-denominated)

Click to enlarge (Gold, Dollar-denominated)

Click to enlarge (Crude Oil, Euro-denominated)

Click to enlarge (Gold, Euro-denominated)

Click to enlarge (Crude Oil, Yuan-denominated)

Click to enlarge (Gold, Yuan-denominated)

Rounding out the fourth precioussss (remember to hiss it like Gollum would), here’s a longer-term look at palladium prices. You can see the big bull market of the late 1990’s, the peak at 1125 in January 2001, and then the horrific crash / bear market into 2003. I have no idea what palladium is good for but I do know how well Pallas Athena protected Troy.

I previously featured long-term charts of gold, silver, and platinum, if you’re interested.

Click to enlarge (Palladium, Spot, Monthly Chart)

Here’s a look at the monthly silver chart. You can see that price has more than quadrupled since 2002 and the Sequential (eventually) nailed the low back in 1992. I’ve recently featured the charts of the other preciouses (hissed like Gollum): platinum and gold.

Click to enlarge (Silver, Spot prices, Monthly Chart)

Here’s a look at the monthly chart of platinum. Looks like a classic blow-off to me, a massive short-squeeze maybe, I dunno. What I do know is that young urban women in China are demanding platinum engagement and wedding rings these days — gold is both yesterday and déclassé.

Click to enlarge (Platinum, Spot price, Monthly)

Here’s the volume-at-price picture… green stairsteps for a solid three weeks.

Click to enlarge (Platinum, Spot, Volume-at-Price)

Following up on my post from the beginning of this month, Has Gold Peaked?, the answer is, not yet! Someone told me that Paul Tudor Jones increases his long positions when the stop-loss level (the purple dashed line) for the Sequential sell is broken — who knows? Price is toying with that level now.

Click to enlarge (Spot Gold, Daily)

Looking at the monthly chart, you can see that the Sequential count also recently hit 13, so I’d be looking for gold to slow down rather than speed up, but what do I know?

Click to enlarge (Spot Gold, Monthly)

Gold may have reached some kind of a peak this past week. (That’s almost poetry.) The Sequential hit 13 on Monday, which made everyone a little anxious, then an ugly bar formed on Friday, which kind of confirms that a top of sorts may be in. My top picks in China and India were more or less spot on… let’s see how lucky I get with gold. (Gratuitous disclaimer: picking tops is a fool’s game.)

Click to enlarge (Spot Gold, Daily)

You’ve got to buy the unpopular, the unloved… that doesn’t describe the opinion toward gold of late, does it? (What do the volumes on the gold ETF (GLD) look like these days?)

Contrarian Alert #1: How to Survive the New Gold Rush, Wall Street Journal, January 29, 2008; Page D1. This one is very cautionary, which is actually bullish for gold:

“… at current levels, investors may be paying a high price for that diversification. Though many investors consider gold a hedge against inflation, it hasn’t always lived up to that reputation. The metal’s price can be extremely volatile, and many gold investments come with significant tax consequences.

… gold doesn’t produce earnings or pay dividends, and its returns over the long haul often look less enticing. From 1969 to 2007, gold was more volatile than the Standard & Poor’s 500-stock index and produced substantially lower returns. What’s more, gold has failed to keep pace with inflation in recent decades. The average 1980 price of gold inflated to 2007 dollars would be $1,563 an ounce, well above today’s price.”

Contrarian Alert #2: Investors Rush to Gold, Wall Street Journal, January 31, 2008; Page A1. The bit I’ve excerpted below from this Page One article should give gold bulls pause (fools rush in where angels fear to tread):

“OppenheimerFunds has a $2.2 billion fund called the Gold and Special Minerals Fund that is 85% invested in gold-related stocks, notably mining companies … In 2005, his fund had less than $40 million in net inflows. In 2006, net inflows were above $250 million and in 2007, more than $600 million.”

And I bet you a dollar to a dime that this fund was seeing substantial outflows in the 1998-2001 period. That was the time to buy.

Click to enlarge (Spot Gold, Weekly and Daily, Volume-at-Price)