Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

MLSOFT and fellow Gold Bulls,

Here is James Sinclair's latest offering.......


Tech Review with Jim Sinclair

"Gold in Reaction ... sort of"
Two or a Few Days to Go?
01.02.2003
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Gold in Reaction... sort of.
Two or a Few Days to Go?

Jim Goes Out on the Limb.
One More Time.

What do we know?


As we welcome in the New Years trading, we are witnesses to a stampede into equities and a mildly lower gold market.

We have a completed base of superior quality under the gold price, which has been resolved to the upside. This base gives us minimum projections to $372 and to the tops established in 1983 and 1988 above $400.

For our Elliott Wavers, there is a count now which at a close above $400 would indicate that all of the gold price move from the bottom of the Golden Teacup to present would be Wave #1 of a normal 5 Wave count period of appreciation. That 5 Count is what I wish to name that now as the Hum Dinger Elliott Waver!

We know that the world is arranging itself now in two currency camps: the Dollar and the Euro. However, we in our community are of the few who have knowledge that there is a move afoot that breaks down the world into a three-currency camp. The Dollar and the Euro will face off in oil payments against the Islamic Dinar. This is dollar negative long-term.

We know that the Federal Reserve has shifted from fighting Inflation to fighting Deflation publicly, therefore they have Rung the Bell publicly which indicates a shift from equities to hard assets for long-term appreciation. Regardless of the equity rallies generated by managed funds reacting to single economic figures up one day and down the next, hard assets will outperform equities for the fourth year to tie the performance of equities to hard assets 1930 to 1934.

We also know by a close study of the history of gold that deflation is good for gold, not bad for gold. That event horizon is at hand.

A review of the Five Golden Keys ties up the package nicely.

Therefore this reaction we have entered into is, IMO, very short-term in nature. That period I believe is going to be measured in days not weeks. I have speculated that today, Friday and Monday will allow those that sold into the $354.50 to $355.00 to be able to replace their sales be they bullion or shares comfortably in preparation for the next assault of $354.50 and the attainment of $372.00

Up to now I have avoided suggestions that trading in Comex Gold futures can be rewarding. I have done that so as not to attract people into any arena in which they have little experience and there exists - by definition - high risk. Selection of the right gold share has been more difficult this time around than ever before. Questions of hedging, ethics, total focus of management, insider stock option pumps and dumps clouds the issue. For those that understand the risks and are totally disciplined traders, the gold futures are becoming more attractive. The total price flops we witnessed before seem now to find buyers much faster. Determining potential highs on the rise and lows on the declines seems to be turning out to be accurate here. I am stepping up my trading and position size now as the gold futures market is becoming something that can be professional determined and handled with discipline. You, who can handle the risks, are disciplined and can afford the price of entry, might consider doing the same.

Gold: 9-minute chart (not shown here)

Today, as yesterday, only required a ruler and a pencil with some lead (in the pencil) to make money. It was profit via trendline. Gold did quite well today only suffering a modest coronary early in the session along with dollar intervention the Exchange Stabilization Fund. Now the fund works for you. Let them do their little thing, which does not change the trend, and profit from it.

Gold statistically is in reaction and was lower today. However, examine the action and see as soon as the meddling ESF finished their dollar and gold intervention, gold up-trended for the rest of the session. That was good action during a strong equity market rally further encouraging my feeling that this reaction is welcome and will result in opportunity.

Gold: Daily (chart not shown)

The picture again is not seriously weak.

The power up trend is violated, but the up trend from the low or from 315 is well intact.

Two more session to go in reaction before a change, IMO.

Dollar: 15 minute (chart not shown)

You can lift it, but trying to keep it up runs into supply. There was a slight negative violation of the power up trend late in trading. I do not see anything here but intervention helping the dollar. Every time they intervene to bring the dollar up, they run into cash sellers.

Note: The popular overbought/oversold indicator on www.gold-eagle.com, which has been accurate and is widely followed, will now come into a testing period. It is now entering into overbought territory as is any Stochastic and Williams %R. If the Gold-Eagle indicator is of the Stochastic or Williams % R type, it will get nailed to an overbought condition; while the gold and gold share market enters a major up trend, thereby signaling a sell as gold items go on appreciating.

So I remain bullish even though this indicator, which has been extremely good in the Golden Teacup and Handle Chop experience, is signaling the opposite. We shall see. Without gold bulls and bears facing off daily, there would be no market. I will keep you posted from out here on my golden limb, one more time. I know, if you are not lonely how can you hope to be right?

The article, complete with charts can be found here.

http://www.financialsense.com/metals/sinclair/tech/review/2003/0102.htm

Good luck with your new tools!
Dan