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SPDR Gold Shares Message Board

  • FRANKEFURTER FRANKEFURTER Mar 25, 2008 7:19 PM Flag

    Gold in Free-Fall By David Nichols

    Gold in Free-Fall
    By David Nichols
    Mar 24 2008 5:15PM

    Over the last three months, I've been repeatedly telling my subscribers -- and anybody else who would listen -- that gold was going to make a major, multi-month top at the $1,010 target near the big March 22nd turn date.

    The turn was a few days early, as the decisive breakdown came on Wednesday March 18th. Parabolic growth patterns like the one in gold can be an amazing ride to the upside, but it's absolutely critical that you side-step the periods where the pattern re-energizes itself. I call these "free-fall corrections", for obvious reasons, as the drops are breath-taking.

    Even if you were unaware of the big target at $1,010, there were a few very important clues that gold was cycling into a free-fall correction. The most significant clue that gold was changing character was the breakdown below $992, and that's why we had our stop right there.

    Typically in this situation there is a rally back up to the bottom of the last main breakdown area on the daily chart. In the current gold pattern, that works out to the $966 area.

    I recommend using the coming bounce up to $966 as the last chance to get out before the next free-fall. The bigger downside targets for this correction are at least $850, with a good chance that the selling will feed on itself and push gold all the way down to $730.

    Since this is the initial drop in a larger decline, gold should throw the bulls one more lifeline to the upside. Trust me, you are not going to feel like getting out on this rally -- as it will appear that the uptrend is coming back after a violent detour -- but you have to take advantage of this last chance and get out.

    Again, don't allow yourself to get sucked in by the next rally's siren song. Unless you're prepared to ride out a severe correction down to $730, you have to take your profits and look to re-load at lower levels.


    Typically in this situation there is a rally back up to the bottom of the last main breakdown area on the daily chart. In the current gold pattern, that works out to the $966 area.

    The recent action in platinum is a good case study for how these corrections typically play out. After the initial plunge, platinum was able to scratch and claw its way back up to the underside of the breakdown zone, right around $2,100. After that "kiss goodbye" platinum quickly plunged to $1,800, on its way to even lower levels.

    A similar pattern should now develop in gold, as over the next week or so gold should be able to mount a rather tepid rally back up to the $966 area. This rally will not have the same verve and energy as the uptrend we just saw, as this will be a counter-trend rally in a corrective pattern -- a vastly different thing than a primary move in a parabolic growth pattern.

    This correction will ultimately give us a chance to absolutely load up on gold at much lower levels, ahead of the next huge rally. So it can be a good thing, and not something you have to endure.

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    • Minor correction. Uptrend is still intact.

      I see no reason to doubt that Gold will go up much higher.

      Dollar is in a long-term bear market.

      Too many dollars printed because of Republican budget and trade deficits.

      Sorry - but you're quite wrong.

    • I personally think that this is a good analysis
      and would agree that gold is in correction mode. Long term direction is up but short term is down.

    • You cannot become a member of the European Economic community without bringing gold to the party. Central Banks have this double standard. Outside of Tea leaf (chart) reading, Nichols brings no reason for gold to drop, just like all the ignorant shorts.

      • 1 Reply to AlexanderXVI
      • Tea leaf reading brilliant idea. I'm going out to buy tea right now and then I will start a subscription newsletter in technology stocks. I know absolutely nothing on the subject but will not stop the idea from going forward. "APPLE is going to tank" there that should be a good title for the first edition. Read my subscription newsletter for only $1,000 a month by visiting idonthavea$uckingclue.com. I am boiling the water as we speak.

    • This fellow is trying to scare the uninformed out of their gold, if the gold is that bad why the central bankers all over the world buy gold, us fed keeps 75% of its reserves in gold. once china and the other oil rich emerging markets central bankers start doing the same than the new equlibrium price north of 1000$ will happen.

    • Bbbbbbbruessxxxxxxxxxxxxxzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

    • It’ not interesting it’s bull$hit you moron.

      These experts crack me up. Just over a month ago when gold was at $900 this mans boss (Nadler) in his weekly subscription (BWHAHHAHA) newsletter, stated gold would now return to $650. But two months prior to that David already knew working in the same office as and for Nadler, gold would top at $1010 on March 22nd. Events such as Fed rate cuts, Bear Stearns toppling etc and general changes in the world such as SA power failures etc. made no difference to his stupid charts. His stochastic, parabolic, spastic or whatever charts were telling him this all along and all these major events have not changed his little charts under his desk by one day or one dollar. BULL$HIT. Who in the hell believes this crap.

      Généralement, les gens qui savant peu parlent becoup, et les gens qui savant beaucoup parlent peu.

      Generally speaking, the people who know little speak a lot and the people who know a lot speak little.

      Rousseau

    • Interesting. Thanks for posting it.

      Technicals are great but I would take them with a grain of salt. If AAPL's technicals look weak, but then it reports earnings and raises forecasts, you can throw all that technical stuff out the window.

      With gold, the same thing is happening. The government of f*ck ups (on both sides) are giving anyone who wants to preserve their wealth no choice. Bernanke's .75 cut is painted as hawkish?!? The Bear Stearns debacle and bail-out is a good thing? ! An insolvent government that holds its citizens money in insolvent banks? All reasons why gold's downside will always be viewed as a buying opportunity by people in the know that want to preserve their wealth.

 
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