Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Investors And Analysts Know Nothing About Gold

Commodities / Gold and Silver 2018 Nov 16, 2018 - 09:45 AM GMT

By: Avi_Gilburt

Commodities

There were several developments in the gold market last week. First, we heard of another trader who has pleaded guilty to “manipulating” the metals market. And, everyone is up in arms again about how gold was manipulated to drop from $1,921 to $1,040 during 2011-2015.

And, yes, they are all again saying “ah ha – you see, we were right.”

But, as I have said so many times before, what this trader did was akin to a paper cut in the market. And, to claim that these types of actions caused the market to drop from 2011 to 2016 is akin to claiming that a paper cut caused the market to bleed to death.


Specifically, it was noted that this trader pleaded guilty to “spoofing.”

This trading strategy was admittedly intended to inject materially false and misleading liquidity and price information into the precious metals futures contracts markets by placing the Spoof Orders in order to deceive other market participants about the existence of supply and demand.
The Spoof Orders were designed to artificially move the price of precious metals futures contracts in a direction that was favorable to Edmonds and his co-conspirators at the Bank, to the detriment of other market participants.

But, as the courts have highlighted in all these “manipulation” cases, these small degree manipulations occurred in both directions. Please read that again. These small degree manipulations occurred in both directions. So, if you really believe you have found another smoking gun to believe you were manipulated out of your profits due to the 2011-to-2016 market decline, think again. If you would like a more in-depth discussion about this issue, I have addressed it in the past here.

Next, I recently read an article claiming to provide us with the holy grail as to what to look for when a bottom is being struck in gold. And, what amazes me is why these same analysts have never been able to recognize the bottom or top in gold in the past despite their holy grail. Rather, they are always certain that lower levels will be seen when we bottom and are equally certain that higher levels will be seen when we are at a top.

There is one thing that will alert you to a top or a bottom, and that is extreme sentiment. That has been the only consistent factor that has alerted investors to a top in the market, or a bottom in the market.

For example, based upon my sentiment analysis in 2011, I said that “[a]gain, since we are most probably in the final stages of this parabolic fifth wave 'blow-off-top,' I would seriously consider anything approaching the $1,915 level to be a potential target for a top at this time.”

And, then in 2015, I wrote:

As we move into 2016, I believe there is a greater than 80% probability that we finally see a long term bottom formed in the metals and miners and the long term bull market resumes. Those that followed our advice in 2011, and moved out of this market for the correction we expected, are now moving back into this market as we approach the long-term bottom . . . We are now reaching our ideal target region, and the pattern we have developed over the last 4 years is just about complete. . . For those interested in my advice, I would highly suggest you start moving back into this market with your long-term money . . .

And, yes, this was all based upon extremes in market sentiment, and not some form of reasoning or manipulation.

In fact, back in the last quarter of 2015, we opened a Miners Model Portfolio, and began adding some of the major mining stocks at the time, such as Barrick Gold (NYSE:ABX) within the $7 region, which then rallied to more than triple our entry less than a year later. And, even though we have had a two-year pullback in the ABX, it is still almost double of our initial entry. How many assets do you own today that are almost double of the price you paid for it two years ago?

At the end of the day, reason or manipulation is not what you need to be concerned about when it comes to gold. Rather, you need to be watching for extremes in market sentiment. That will tell you when you buy and sell.

And, if you would like more information on how we track market sentiment, feel free to read the series I wrote about it: "This Analysis Will Change The Way You Invest Forever," listed on our site as "Elliott Wave Intro Series - Parts 1-5."

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

© 2018 Copyright Avi Gilburt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - 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