Guest Post: Stealth Precious Metal Base Building

(by DenaliGuide):

This is a time where your senses tell you to sit up and pay attention.  Bulls burned on the last 2 year down from 2011 are generally unlikely to jump in both feet at a rally.  However if we look at  the Summer rally that starts every year about the July 4th / Canada Day weekend,  it is an expression of the strongest seasonal rally in both Specie metals and their miners, for the entire year.  So, it is then, my opinion that if not both feet perhaps a couple toes or one foot should be used to test these waters.

HUI GOLD BUGS INDEX

Bottoming has not been invisible, unless your swamped by all the Main Stream Media’s drum beating and the FED’s sword rattling concerning the supposed death of the Gold Bull.   Again, in my opinion, the Bull rests, nothing more.  Its quite clear so much fundamental damage has been done to the economy and financial infrastructure that it must express itself no matter how camouflaged.

While we talk of the Gold Bull at rest, as to the death of the recent Gold Bull, when the MSM have no CLUE #1, as to what gives here.  The 4.3 year cycle has been folded, spindled and mutilated by various alphabet agencies and reps,  IMO, like the ESF run by JPM, but the cycle is still whole, extended perhaps but nowhere near done.   Typically we see 17+ yr up cycles in commodities and other items, quite related to Armstrong’s 8.6 yr cycles.

Without the extension imposed on this latest cycle by the antics of the current regimes, a Death or Cycle Switch would require the 17.3 yr cycle to end 25% early, which does not happen to my knowledge.  Inversions happen, but not a cycle slice off by 25%, IMO.  Since the timing and position are right in their true windows, the ODDS then say, the Cycle will reassert itself, probably by end  of Summer if not before.  Thus the validity of this rally.

The question everyone thinks about but really does not express is “ Is it a real rally?

Is it worth my involvement for  the Risk entailed.  Let’s look:

HUI Stealth Rally

Easily enough we see that each of the last four years,  the July 4 / Canada North American Summer Rally has boosted the Gold Bugs Index about 160+ pt on average and lasted about 90 calendar days.  Two big rallies of 175 pt up in 2009, and 2011 and a crest rally of 150 points in 2011.  Last, as if it snuck up last summer but really was more or less on schedule a rally ending Sept 28 of 150 points.  As to repeatable, that’s good enough for me to look for similar behavior for this rally.

If you give the HUI, the Gold Bugs Index, Point & Figure Chart (below), you see, that it estimates a potential upside target of 360 from a low of 208, which would of course, would be 152 points more or less..  OK.

HUI POINT CHART

Now, other than throwing dice, what validity do Point & Figure charts actually have?  I use them as estimating tools.   Whether 1 minute charts based on Break-Out measuring or Monthly Charts based on Reversal measuring, I use them for estimates.  The shorter the time measure, the shorter the lag time, based on the  filtering of non-meaningful moves.

They can be  a useful tool.  The daily charts can get old quickly and need to viewed skeptically.

In Bull moves the real prices overrun to the upside and the opposite in Bear moves.

Point & Figure charts are easily computerized and available free on Stockcharts.com, and, IMO, useful if you understand their limitations and application as tools. LINK > StockCharts Free P & F Charts

Based on my estimate of probabilities, I think the rally completes in end September.   Operationally speaking,  the correct approach then is Tactical, finding the bottom of any correction, and assessing whether this Rally becomes the first leg in a resumption of the Gold Bull.  My bet is the Gold Bull does this Rally and turns into something bigger, with this rally completing and becoming  the Reversal off the Jun 206 HUI low, that carries above the 362 resistance.  So far it has crested the 10 week / 50 day moving average.

Thus, this is part of my supporting reasoning that the Rally continues to Sept and then can resume.

Check my blog, www.denaliguidesummit.blogspot.ca, for updates.  See my tactical approach to using Technical Analysis can benefit trading, and preserve profits in up and down markets.  Drop me an email at denaliguide1@gmail.com.

(SRSrocco) EDITORS NOTE:

I have stated several times that I do not believe technical analysis works in a rigged market to determine short term moves in stocks and commodities.  However, I do believe charts can reveal changes in long term trends.  Here, Nick does a good job showing just how much the HUI Index is oversold as well as its four year cycle.

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24 Comments on "Guest Post: Stealth Precious Metal Base Building"

  1. technical analysis are battle lines that bull and bears, or investors and manipulator, all watch very carefully.

    this correction in silver is very much overdone given the fundamentals, but nonetheless, exactly because the manipulator ignore fundamentals, they rely on technicals to attack in both directions.

    it’s not difficult to call the bottom on June 28th, 100% retracement of 18-19 to 50 then back to 18-19.

    fundamenally speaking, the price action doesn’t make any sense.

    but traders have to take the market as is.

    technicals are flashing buys signals everywhere in PM space and finally align with the fundamentals now. when the tide turns this time, it will be fast and furious.

    actions in shanghai silver futures smell like last summer right before the aug. to sept rally too.

    btw, the new f&f episode #6 is well worth watching.

    • Let me assure you that calling the bottom on THAT week in real time is far different that looking back a month and saying YES that was the Bottom. Also you personally might believe how much spew I get my way when I am telling people to be like Big Stealthy Slow Money and POSITION. My room mate in University taught me to play POSITION pool and I thank him for that, cause that is what that Big Slow Stealth Money does, and then lets MSM drive the mullet to them to be harvested. This way, you dont have to be a mullet.

    • judejin… what F & F episode #6?

      steve

  2. while indian govt is busy hiking import duties and cracking down on gold smuggling, chinese govt is busy cracking down gold price rigging of the gold jewelry industry in shanghai.

    more than a dozen biggest gold jewelry retail chains in shanghai are found guilty of price rigging.

    retail gold jewelry price is some 30-50% higher than international spot per gram.

    the premium between gold jewelry and international spot became much wider in recent years because when the gold spot price dropped, the gold jewelry cartel in shanghai were reluctant to track it to the downside.

    hopefully, when the prices are normalized, more buyers will step up and buy gold jewelry in shanghai.

  3. Calling it while it was in it was a lot more fun than it might seem rather than looking backwards, for sure, and I got a lot more spew for telling it like it was AT THAT TIME and up to a month before.

    LIke the Position Pool my roommate in University taught me, the Big Slow Stealth Money finds its way in before and as the bottom is put in and like the big fish they are, and they let the MSM drive the mullet bait fish TO them.
    No reason to be a Mullet if you know before hand !! For that reason it is worth it for me to drive tirelessly to the goal of putting investors in good positions just as and before the BOTTOM goes in. Once its in, and my investors are in, it is a done deal with the MSM driving the mullet in.

    http://www.denaliguidesummit.blogspot.ca/

  4. the logic of calling the bottom on june 28th is actually not that difficult. silver has completed retraced the move from 18-19 to 50. that morning, gold got whacked hard again, but silver barely budged.
    and i guessed that whoever is selling at that level were funds cutting losses for end of quarter purpose.

    other considerations are gold/price already way under production costs, plus the miners actually bottomed before June 28th. newcrest mining was going up while gold was smacked to 1179 that morning.

    plus the length of the correction is already as long as it ever had before.

    for all of these reason, i called the bottom almost immediately. if you can read chinese, click below. i listed out 8 reasons.

    http://www.zby.in/thread-288668-1-1.html

  5. calling a bottom after a correction has lasted for over 2 years and down over 60% is not difficult!

    the real difficulty is sold at the top and waited out the correction. i wonder who did that!

    i wish i did that!! damn it!

  6. steve, silver investment in china is not much right now. in shanghai, at most 10 tons a year of silver bullions. but over all, silver jewelry is growing healthily, double digits a year. silver medals are growing too. silver medals/coin are issued to mark many occasions in china. i don’t have the figure. silver institute has it. but i doubt it’s accurate.

    but in 2010-2011 when the prices were going up, it was quite a lot of investment demand across the country.

    so i believe when silver makes new highs, investment demand will come back! silver would still be very cheap at 50/ounce, compared with other asset classes and money supply.

    in china, just gold, the core demand still comes from jewelry, which already overwhelms supply.

    investment demand will make the manipulator panic just like you said in one of your articles.

  7. btw, blogspot is blocked in china, i can’t view it. so if you want to reach chinese audience, please mirror it on some other sites too.

  8. Calling bottoms or tops is, (IMHO) a fool’s game. You have a 50% chance of being right and/or wrong!

    I find that putting too much empasis on prognisticating with TA, will do nothing but cause you consternation and loss. Almost like going to the ‘witch doctor’ to have the chicken bones cast and read, to foresee the future!

    I like long term and very long term charts that deal with past performance. Used in conjunction with the historical, societal record of events at the time, will paint a picture of what MAY occur in a similar situation at present.

    Other than that, they are good discussion points of interest.

  9. steve,
    i believe both china’s private and public silver is mostly gone. there’s a chinese article estimating:
    1. silver stock in china was 1.7 billion ounces before china went off silver standard.
    2. after china went off silver standard, 70% of that was melted down and exported to USA and became US treasury’s silver stock
    3. another 100 million or so was moved to taiwan when china’s nationalist party lost the war against the commies in 1949.
    4. 90%+ of the remaining was bought or confiscated by the commies after 1949 and sold off to the west during the 1960s and 2001-2006.
    5. so there’s around 50 million remaining old silver coins hidden in mattresses in china.

    the best evidence of there’s little old silver coins left in china is that i don’t see any significant turnover of old silver coins anywhere in china. in the USA, there are significant turnover of 90% or 40% coins bags.

    i have never met anyone in person or online who claimed that they still have lots of old coins passed on thru generations in china. silver is almost “worthless”, so i don’t think ppl will refrain from disclosing it if they do have.

    prices of old silver coins are priced at 300% of their silver content reflecting the fact that they are collectibles not just silver.

  10. in the meantime, i don’t think the west has run out of gold. but i believe the ruling elites in the west are down to their absolute minimum stock of gold of retaining control after the ultimate reset.

    the fact is jpm is accumulating silver right in the open is another sign that they’re switching to the long side of the trade. because comex inventory is probably one of the few remaining silver(if not the only one) stock in the world, they can’t hide it.

    but fort knox, etc are complete mystery. so we have no idea what’s really going on in the gold space except that gold is moving east.

    i doubt china has accumulated 5000 tons of gold yet, that may be the ultimate target. for the simple reason that most of gold moving east is absorbed by consumers.

    • judejin….this was from one of my articles back in 2012:

      While this huge increase in silver Panda production figures seems impressive, it may only be a drop in the bucket for what is being planned by the Chinese government in the future. Again, according to Orcholski quoted in the article “China Strives to Make Silver Panda as Popular as American Silver Eagle”:

      The Chinese government is also eager to make Silver Pandas as popular as American Silver Eagles. Pandas are obviously very popular within China, and it’s not known how many of the Silver Pandas are exported and how many are sold within the country.

      ————————

      I thought for sure they would have been increasing the mintage more this year, but I gather the Chinese public isn’t as excited about silver as the Americans. As we both agree, once the price heads back up towards $40, then we may see a big increase in silver demand in China.

      steve

  11. most chinese are unaware of the coming big reset. in the last 30 years, their living standard has been improving steadily. most of them have no idea about the evils of fiat money and central banking. but chinese love gambling and chase gains.

    per capita silver holdings in china is neglible while americans have 1 ounce of silver on average or more.

    i believe when silver makes new highs, we’ll see silver completely out of stock for weeks or months.

    100 billion RMB to buy up the entire silver production of the world. silver price can go up 10 times without affecting industrial production or anything.

  12. silver is simply too cheap. it doesn’t take much money to clean out the entire inventory of any shop that carry silver bullions or silver jewelry in china

    i don’t think even the chinese govt wants to promote silver over gold.

    i remember in the last week of april 2011, chinese official media repeatedly warned about silver bubble.

    silver is the archilles heel of banksters.

  13. Steve

    When will your membership be open and when will the reports be available for purchase?

    • Bob… thanks a million for the interest. My original plan was to have a monthly subscription service. This was the plan back in Nov-Dec 2012. Well as you know, precious metal sentiment is in the toilet and so this has impacted subscription revenues in the industry. I have heard some companies are down BIG NUMBERS.

      So, without being stuck to produce monthly reports if there isn’t a decent subscription base or even good enough material, I have decided to put out SINGLE PAID REPORTS. I am starting to put together the first report and hope to have something out by next month or the beginning of Sept.

      My problem is that I want’ to put out as much GOOD ORIGINAL WORK and not bland garbage just to fill pages so I can make a buck.

      I will give a heads up to when the Paid Reports will be coming out

      steve

      • It’s hard Steve. but you manage it and very under-appreciated for the work you do. Nobody likes analytical work, they just want to be told they are going to make a million bucks. Q2 reports will start coming out this week and that will offer a lot of discussion.

        Thanks Steve.

  14. Hi!, Patrons Et Al:

    Seen through my eyes/experiences gold bottomed August 15, 1971; when Nixon closed OUR US Gold Window for the past 41 years+ To the shieks who got deluded from taking gold against OUR US $ redemption @ $35 per troy oz., their reaction provided US 911 as their response. They thenceforth call US The Great Satan (LIAR). They are right. We now pay their bill yearly called Homeland Security etc. What then exactly is this price of gold discussed here all about anyway? Itr reminds me how we each drive OUR vihicles sense on gas that went from around $.29 per gallon up to around $4 per gallon today. We use their expensive fuels so we can wear out expensive auto parts; buy expensive commodities; pay expensive utility bills so on so forth until? This folks is what we get from abrogating Article 1; Section 10 of OUR US Constitution calling for gold and silver coins as OUR ONLy forms of money in lieu of debts. From OUR present insane positioning there will be NO US economic recovery, because quite simply there can’t be a recovery from that FOUL move. Nobody is rewriting the real rulebook of economics whose first rule is “U don’t get something for nothing” pure and simple. The US is broke Internationally sense August 15th, 1971 and there’s nobody doing anything about it but talk while the US Government continues to put US ALL further in the economic sink hole by the trillions of $’s created by the TROJAN HORSE Federal Reserve out of thin air yearly. As one guy said: “You can’t cure one form of rottenness with another form of rottenness” which is what deficit spending and fiat money creations represent in my mind. The price of gold presently under today’s set of circumstances can never return to its’ $35 per troy oz, price support no matter what including those speculators and/or foul play manipulators. My mentor picked up his gold (AU) @ $11 per troy oz. from the gold dredgers operating here in Butte County, California and how about you folks? His CEO oil Executive Uncle from Holland told him to do it calling the United States The United Snakes inflating its’ $.

    RUSS SMITH, CA. (One Of Our Broke Fiat Money States)
    resmith@wcisp.com

  15. ManAboutDallas | July 28, 2013 at 7:35 pm | Reply

    In a “rigged market”, TA is your ONLY weapon with which to fight back.

    • TA is TRACKING. When the tracks lead a certain way in a certain season, certain probabilities exist.

      Seasonal tendencies, volume paradigms, and repeating phenomena all point to “likelihoods” but CANNOT

      predict, that is left for humans with overflowing hubris. Technicians, like snipers, watch the wind, and other

      factors, as humidity, air pressure and temperature…………That is the edge…….

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