And the winner is……gold!
Like many, I have been enjoying the fiasco over the ‘wrong’ best film winner at the Oscars last night. The voting procedures and the keeping of the winners’ names confidential has been entrusted to PwC for eighty years.
But it shouldn’t have been a surprise to anyone! No, this is a firm of accountants, for goodness’ sake! These are the same people who forecast an economic disaster if the UK voted to leave the EU, remember? They are major ‘advisors’ to governments, and that explains why they mess up so often and so spectacularly.
So who would put trust a big firm of accountants now? They can’t even handle the Oscars without mixing up the envelopes – surely a far simpler task than projecting the GDP to two decimal places in ten years time?
And I am sure Mr Trump will also be enjoying this pantomime with a heightened sense of schadenfreude with a quiet chuckle (if indeed he can do that). After all, the rabidly ‘liberal’ luvvies in the entertainment industry have been trolling him mercilessly since he became president (and again on the night).
So let’s have our own luvvie-free Oscars here instead. I promise not to mix up the envelopes – after all, I am not an accountant.
For an Oscar-winning performance, how about this?
In December I was watching the market decline to below the $1160 area which was near an important Fibonacci level and looking for a major turn. Sentiment was max bearish as the prevailing story was that with stocks rampant, who wants to own gold that pays no dividends?
That is the kind of thinking I just love – and with hedge funds holding record short bets, it was only a matter of time before the huge momentum divergence that was building would kick in and send the gold (and silver) price northwards. And start to squeeze the record number of spec shorts.
When I received the final confirmation the trend had turned up at around the $1150 level, I advised VIP Traders Club members to go long. Now here we are $100 higher and at the $1250 region and I can apply the Elliott wave labels to the rally.
The bottom line is that we are in a third of a third up. These are the most powerful waves in the book. When these waves play out, that will be large red wave A up. It could top out around the $1320 area.
Glancing at the chart, note that on the way down, the same span of about $100 took a shorter time that the current rally phase – and that is perfectly normal. Markets tumble out of the window faster than they climb the stairs.
But the rally will not all be plain sailing. The yellow zone is the Fibonacci 50% resistance area where there usually lurks some impediment to progress. But so long as the minor lows on the rally hold, the trend is firmly up.
The next envelope, please…
And the Best Supporting Chart is …Silver!
When I became bullish in the precious metals in December, I believed that in percentage terms, silver might even outshine gold. And so it is proving. Gold has improved by 13% while silver has appreciated by 18%. And the rise in silver has been almost non-stop
but it has run into major resistance at the Fibonacci 50% level – the very same level; that gold is grappling with. Is that a coincidence? Of course not! Markets are patterned and the same sentiment that has driven gold 13% higher has sent silver 18% up.
With spec long positions at elevated levels (COT data), we must expect decent pull-backs along the way.
