Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Sideways Megaphone Pattern Continues, Is the U.S. Dollar the Key?

Commodities / Gold & Silver 2009 Aug 23, 2009 - 11:06 AM GMT

By: Merv_Burak


Best Financial Markets Analysis ArticleGold is still in that megaphone pattern and still going nowhere but sideways.  One would expect that it can’t continue like this much longer but who knows?

U. S. Dollar Index


I think that many gold investor/speculators are looking to the U. S. $ for some sign as to which way gold will go.  There is a very large contingent of industry professionals that correlate the dollar movement with that opposite to gold.  Now, some time back (I guess a couple of years ago) I showed a correlation between the U.S. $ Index and gold price movement.  That did show a long term correlation but not all the time, so one must always be prepared for the next movement maybe being another of those “not this time” events.

However, looking back at the U.S. $ Index and who was President at the time there is another correlation here.  In recent times, going back some 25 years (because that’s the amount of historical data I have) it seems that the U.S. $ drops in value during Republican Presidents and increases in value during Democratic Presidents.  Now, it’s not that simple.  It depends upon who controls the spending and what that spending looks like.

As everyone knows (don’t you all?) the President DOES NOT control spending.  It is the responsibility of Congress (the House of Representatives and the Senate) to initiate and approve spending measures.  So, what did Congress look like and how were they acting during these periods of U.S. $ Index movements?

I’m going on memory so don’t hold me to exact accuracy.  As I remember, during Reagan’s time the Congress was controlled by the Democrats.  Although the tax reductions under Reagan did increase revenues Congress in their wisdom spend like drunken sailors (my apologies to drunken sailors).  The Democrats effectively controlled Congress until the Gingrich revolution is late 1994.  The Republicans basically controlled Congress till the end of Clinton’s Presidency.  When Bush (the younger) took over, Congress remained in Republican control but not full effective control.  They lost a lot of seats in both the House of Representatives and the Senate.  The Democrats took over full control of Congress during the elections of late 2006.  They were in full control during the major spending period of the last two years of the Bush Presidency.

In the matter of the U.S. $ and the U.S. economy, Congress should take the credit and the blame, NOT the President. 

So, if you want to get an idea of the Dollar’s movement over the next years you need to know the political leanings of Congress over that period.  For the next year, at least, it will be spend, spend, spend.  The Dollar would be expected to drop, drop, drop.  After that, it depends upon the elections in late 2010.

One thing that comes out of this is that the Dollar performance is not as much dependant upon if Democrats or Republicans control Congress but what their real actions will be, spending or limited government? 

So much for another of my space filler.



Back to our real world of what’s happening NOW.  Long term there has not been enough real gold movement to affect the long term rating.  Gold remains above its positive sloping long term moving average line and the momentum indicator remains in its positive zone.  The volume indicator had moved into new all time highs earlier in the month but is now moving sideways.  The long term P&F chart remains positive.  The rating must remain BULLISH for now.


It continues to be frustrating trying to gauge the intermediate term rating.  I am going strictly upon the combination of indicators at the time of analysis.  Other considerations may give a different impression of where we are.  The price of gold has been moving sideways and as such has been closing above, below, above, below, etc. its moving average line.  At the Friday close it is once more above its moving average line and although the line turned down on Monday it turned back up on Friday.  The momentum indicator has been a little less volatile.  It has remained above its neutral line for a few weeks now and is once more above its trigger line.  The volume indicator, although moving sideways, remains above its positive sloping trigger line.  On the intermediate term the rating remains BULLISH for another week.

The latest price action remains in that megaphone pattern as it moves closer to the apex point.  It is now in the location that further sideways movement inside the megaphone should reduce the strength of any move following a break-out.



In the past few days everything in the short term seems to be perking up.  Friday was a good up move, almost nullified Monday’s downside move.  The ups and downs are getting smaller and smaller.  Unless the action is expected to move in a straight line from here this gradual decrease in the height of the moves will have to stop and take on a different character.  For now the Index closed Friday above its positive sloping moving average line and the momentum indicator is once more in its positive zone above its positive trigger line.  The volume activity could be better and is neutral at this time.  The short term rating is back to BULLISH.

As for the immediate direction of least resistance, I guess that would be to the up side based upon the recent price move and the Stochastic Oscillator moving into its positive zone.


 Silver did not perform as well as gold during this past week but that has not changed the relative performances of the two over the past three time periods.  Although their declines were still relatively small the two Merv’s Silver Indices had by far the largest declines this past week of any of the Merv’s Indices.  Is silver being shoved back to the background or is this just an over reaction to their previous advances?  Another week like this and I can see the two shorter term ratings moving into the NEG level.  For now they are still not that far gone.


An interesting note, almost all of the Merv’s stock Indices were on the down side this past week (the Penny Arcade was up 2.4%, however) while almost all of the major North American Indices were on the up side.  I guess the thinking would be that the more aggressive stocks were losers this week while the higher quality were winners, except for the Penny Arcade, of course.  The real penny stocks are still on gambler’s minds so all is not lost for this market.  Until they throw in the towel one can assume that the basic sentiment is still positive for gold and silver stocks.

Non-Edible Futures

Some time back I developed an Index of what I called the Non-Edible Futures.  This included 26 futures contracts made up off the metals, energy, currency, market Indices and Financial futures, all the stuff one can’t eat.  What good is the Index?  I’m never really sure but here it is for your information.  Make what you will out of it.


 One thing this Index seems to show is that the Non-Edibles seem to be ahead of the general public in their perception if we are in an economic mess or not.  It topped out a long time before the public was really aware we were into an economic mess and now it seems to be well ahead of the public realizing we may be getting out of the mess, and the “stimulus” was nowhere in sight when the Index finally bottomed out.  Even now very little of the “stimulus” money has seen the light of day as far as any “stimulus” spending programs are concerned.  Was the “stimulus” really necessary?


Well, that’s it for another week.

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Merv's Precious Metals Central

For DAILY Uranium stock commentary and WEEKLY Uranium market update check out my new Technically Uranium with Merv blog at .

During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician ( CMT ) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada 's Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE .

To find out more about Merv's various Gold Indices and component stocks, please visit . There you will find samples of the Indices and their component stocks plus other publications of interest to gold investors.

Before you invest, Always check your market timing with a Qualified Professional Market Technician

Merv Burak Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in