Gold Market Update
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Gold plunged today as the steep but orderly decline from a “Matterhorn” top gave way to a stampede for the exits as blind panic set in - normally a symptom of a bottom. The “Matterhorn” top is so called because it involves a market that ascends in a steep uptrend, then without any kind of pause to mark out a normal top distribution area, it goes into a steep decline that more or less mirrors the ascent that preceded it. The Matterhorn top is, of course, most familiar to Swiss investors.
Despite the plethora of pundits reading “the last rites” for the dollar, it did as we expected and broke higher from its base area. This development really put the boot into the Precious Metals - so much for those who loftily proclaimed that gold had “broken free from its inverse relationship with the dollar” - how can it break free of the currency it is priced in? - the notion is absurd.
Silver Market Update
Clive Maund
Silver at least had the decency to give us much more warning than gold that it was going to cave in. It marked out a rather fine Head-and-Shoulders top, although the “Right Shoulder” was deceptive as it was very stunted - we had been been looking for a larger one, but remained aware throughout that a break of the neckline of the formation at $11.50 would lead to a rout. Despite being now at strong support, we could see more downside in silver before the decline is over. Another warning was the number of commentators touting the “wonderful fundamentals” of silver.
Clive Maund, Diploma Technical Analysis
Kaufbeuren, Germany, 14 June 2006
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Clive P. Maund’s interest in markets started when, as an aimless youth searching for direction in his mid-20’s, he inherited some money. Unfortunately it was not enough to live a utopian lifestyle as a playboy or retire very young. Therefore on the advice of his brother, he bought a load of British Petroleum stock, which promptly went up 20% in the space of a few weeks. Clive sold them at the top…which really fired his imagination. The prospect of being able to buy securities and sell them later at a higher price, and make money for doing little or no work was most attractive – and so the quest began, especially as he had been further stoked up by watching from the sidelines with a mixture of fascination and envy as fortunes were made in the roaring gold and silver bull market of the late 70’s.
Clive furthered his education in Technical Analysis or charting by ordering various good books from the US and by applying what he learned at work on an everyday basis. He also obtained the UK Society of Technical Analysts’ Diploma.
The years following 2005 saw the boom phase of the Gold and Silver bull market, until they peaked in late 2011. While there is ongoing debate about whether that was the final high, it is not believed to be because of the continuing global debasement of fiat currency. The bear market since 2011 is viewed as being very similar to the 2-year reaction in the mid-70’s, which was preceded by a powerful advance and was followed by a gigantic parabolic price ramp. Moreover, Precious Metals should come back into their own when the various asset bubbles elsewhere burst, which looks set to happen anytime soon.
Visit Clive at his website: CliveMaund.com
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