NFTRH37 out now... Long post to purge a demon

As I usually do each weekend, here is the little tickler promo for the new NFTRH37, emailed to subscribers yesterday. Rather than describe it, I thought it would take a short excerpt from it along with a big picture monthly chart of gold, also included in this issue:

"Here is the monthly chart of gold, which has not been shown in a while. Given that we are entering a time window when the loudest blow horns are likely to get in your ear, it is good to retreat to the calm of the big picture views like this.

Gold, the ancient metal known as sound money through the centuries, remains in a bull market that is likely to continue as long as human beings continue to cling to the confidence that the state of the financial and monetary systems they have created is anything less than terminal. A higher low in the high 600’s or low 700’s is nothing short of perhaps the last great opportunity to buy peace of mind. And that level is no given by any means. But if it comes, at least you know NFTRH’s viewpoint: BUY IT strongly if you want exposure to gold.

Meanwhile, the EMA 18 that has supported the entire bull market, with the fleeting exception of the fall crash, says that 700 may already be a pipe dream. Gold did slash down through it once however, and if it does so again, I expect it to be a short term affair, again."

In light of the fact that the illusory inverted H&S in gold, being micromanaged and mentally masturbated over by a good chunk of the 'gold community' just refuses to go away, I am going to try to explain my thoughts clearly. I try to do this always, but I realize that sometimes reporting the truth as one sees it can be so simple it is confusing. That is because many people have been spoon fed some easily understood cartoons in major and not so major financial media. The problem is, reality is not a cartoon. You have no idea how irate people can become when you dare even mention the possibility of something like gold to 700. To me, that gives a clue as to someone's insecurity in their own beliefs.

Why am I conjuring this issue up again? Well, I am not. Lucas at Trend & Value - an excellent independent thinker by the way - sent an email this morning highlighting this post in which the gold inverted H&S issue lives on.

I originally saw the inverted H&S show up in someone's analysis on a gold website. Can't remember who the fellow was. I then saw it appear on several TA oriented websites and services. I then saw it in an article submission by a trading jock whose work we do not publish at biiwii.com because I do not like the focus on price price price all the time, with no distinction about value. "ENOUGH already!" said I again and again. Now come to find out, it apparently originated with none other than Bill Buckler of the Privateer. I thought highly enough of what I had seen of Mr. Buckler's work that I emailed a request to publish his work on Biiwii.com. No response.

There is a fundamental problem with technical analysis; you cannot prove nor disprove its implications and it is an inexact science (art is more like it). That is why we charties use a lot of if/then type statements. But it is the ones who command from on high that the chart says this or that (in support of their already cemented fundamental views) who are dangerous to your financial health. An example was the self-described 'scariest gold chart in the world' that someone sent me a link to. I think I highlighted it here and had a laugh about its prediction of gold under 200 or 300 or whatever, at the height of a deflation scare no less.

Now, in support of gold [price] bullish analysis, we have the inverted H&S cropping up all over the place. Now, there is context here. First off, the trader jock has apparently already been stopped out. Also, it is not just the gold community captains that have promoted this pattern. As I said, the H&S has shown up in many places that would be considered impartial as far as the gold sector goes.

But that does not make it valid. There is no prior downtrend so there is no inverted head & shoulders. Take a look at that monthly chart up there. Where is prior downtrend Babu? SHOW me prior downtrend! Now can we get over this and move on?

As I wrote in one of my posts, I am not bearish on gold and whatever that pattern is, if (wait for it...) the illusory 'neck line' is broken to the upside, then the target is 1300. Big deal. If gold goes to 1300, oil goes to 200 and copper to 8 bucks, how much is 1300 gold going to help you? It is gold's ratio to these things that is important. But the gold bugs do not want you to know that as they cheer gold 1000, 1200, 1500... 5000 along with all the other 'resources'. Nice and easy analysis for the masses.

Conversely, if gold goes to 700 as part of another deflationary impulse, that 700 bucks is going to be buying a heck of a lot of everything else because the inflationary plays out there are going to implode in relation to gold, again.

I have mentioned this on occasion and the time is right to do so again. I had a guru once. (2003-2005). He was a fellow once called a 'guru's guru' by Rick Ackerman. The wildly relevant Chris Martenson knew him too. The man took to me because he felt I was honest and willing to look into the gaping maw of 'this mess' (his words, parroted often here) without flinching. His vision of imminent destruction became too much for me on a daily basis as I attempted to live a normal life. At least as normal as possible while making preparations for the unraveling of your country (in progress). So, when we drifted apart, I let it happen.

In my opinion, this fellow was somewhat alarmist and I did not then nor do I now agree with everything he put forth. But one thing he hammered into my skull back then was the strongest and most simple truth: 'Gold is not about price... gold is about? Yes Beuller, gold is about value'. All too many crack heads and casino patrons have no grasp on that concept. That is why I am able to take advantage of them with a fair amount of regularity.

Have a great Sunday.

Edit (2:25) As the subject at hand continues on I want to make two points...

1) I did not even know the Privateer was the supposed origin of the inverted H&S and who the hell really cares where it originated? It came from one alter or another where gold bugs worship and it is wrong.

2) I am not bearish on gold, but people get so emotional over this metal it is no wonder they set themselves up over and over again from a sentiment standpoint and become really cranky people in the process.

Here is the weekly chart of gold showing something in between a bullish ascending triangle and a bullish symmetrical triangle. Both project some big upside a few months down the road but both need another successful hit of the lower line (currently in the 700's) to be valid. Are you hearing that with any frequency in Goldbugville?



Alternatively, Kyle's emailer is right. The more times something bangs away at a resistance level, the weaker it becomes. Gold just may decide 'screw this, I'm outta here' and leave 1000 in dust for a long time to come. It really does not matter to me one way or the other.