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Saturday, December 29, 2012

Gold and The Invisible Hand Follow TIME Updated


For what it's worth, I agree with Jim. The West by attempting to contain the uncontainable (market forces) is pushing on a string tied to gold. Investment propaganda and the lure of easy explanations have many believing that the string can be cut, or better yet, no longer exists.

For years I have watched the invisible hand abuse the public, community, trading funds, and computer algorithms on a cyclical basis in gold and silver paper markets. In many ways, the ABCD count system illustrates this cycle of abuse.

Gold investors scared to death by the previous D-wave decline are beginning to embrace any opinion that suggests that the AB transition will skip the C-wave rally and enter another D-wave decline (chart 1).  In other words, the normal count of ABCD or up, down, UP, DOWN  would be replaced by ABDC, or up, down, DOWN, UP.  Though this outcome is highly unlikely, it's attracting a growing number of anxious supporters because logic tends to be the first casualty of fear.

Gold will bottom when the vast majority have been removed from the secular up trend. This event mathematically defined is the B-wave bottom (chart 1).

Nibbling hooks as the public panics have been a profitable strategy for years. How many traders/investors even those with the community recognize this growing hook against the misdirection of the fiscal cliff? Few might be an gross overstatement.  A well-defined hook during the AB transition suggests that not only fuel but also TIME to force down gold is running out (chart 1).

Chart 1:  Gold London P.M Fixed and Gold Diffusion Index (DI)


Leveraged money flows can described as poetry in motion when properly viewed.  Hooks (chart) tend to coincide with oversold readings around cycle dates, because gold follows TIME.  As always, the invisible hand will be ready to capitalize on the change in trend (chart 2).

Chart 2:  London PM Fixed Gold and GLD (ETF) Total Assets WA Stochastic


The diffusion index represents only one aspect of timing.  Jim has written about spreading as tool on jsmineset.com; A subject worthy of further research.  Jim writes about spreading as a tool of management because he understands paper gold and motivations guiding the invisible hand. These motivations provide a distinctive money flow footprint that aid timing.  For instance, another dark green circle should materialize during B-wave (chart 3).

Traders with the ability to recognize footprints wait for them.  The transition from 'nibbling' to 'decisive action' depends on the number of footprints formed.

Chart 3:  Gold London PM Fixed and Gold Diffusion Index (DI) & Spreading Activity (SA)


Also, bullish footprints need not be restricted to the gold and silver markets. It’s unlikely that the bullish setup in oil is just a coincidence (chart 4).

Chart 4:  Crude Oil (WTI) and Crude Oil Diffusion Index (DI)


The phrase "welcome to the show" might help those scratching their heads in dismay. Timing is a complex game, because the weak hands, highly fragmented and poorly organized, outnumber the strong by a wide margin.

Jim's Commentary: The Bright Future of Gold: The Final Solution of the 2008 Monetary Crisis

Let’s keep things very simple:

1. The future of gold will not be determined by the USA.

2. The present manipulation in gold is purely Western, and any other thought is rank nonsense. This event is both short term and very short sighted in terms of people’s published analysis.

3. The triumvirate of Euroland, Russia and China will determine the future of gold as financial power has shifted from the West towards the East.

Source: more


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