$2000 is, to me, not an unreasonable figure, The sun rises on the yellow metal - 500 Beiträge pro Seite

[peter.wedemeier1]

The sun rises on the yellow metal
by Clive Maund
posted July 7, 2002

Clive Maund is an English technical analyst, holding a diploma from the Society of Technical Analysts, Cambridge and living in southern Bavaria, Germany where he trades US markets.

So, what is happening to the price of gold itself at this time? Take a look at the gold chart below, which goes back to 1968 and therefore includes all of the boom years of the 70`s. As the bear market which started in 1979 has ground on and on, the steepness of the decline has eased, if irregularly. This is shown by the successive breaking of the downward pointing fan lines on the chart. The move up through the third fan line, which only happened this Spring, finally signals a shift in trend to neutral/up - a definite up being confirmed by a rise above the 1999 high at $339. The price has been advancing last year and this year out of a rather fine "double bottom" which has developed around the lows of 1999 and 2001 at about $255 which can be seen on the right side of the chart below and is shown in much greater detail in the chart further down. This double bottom has a minimum objective at about $420.

Technically, until the spot price breaks through resistance in the $330 - $340 area, gold is still in a bear market. The price approached this point a few weeks ago at the time of the India - Pakistan crisis and then backed off from a short term overbought position as tensions between these countries eased. The fact that the price has failed to get through $340 so far may be viewed as a temporary success of the US authorities` gold dishoarding scheme. However, they`ve played that card and can now only sit and watch. There are several very important observations that should be made here. The first is that when one looks at a long term chart of the gold price going back to the seventies or sixties (see chart above), one should not just look at the price but also take into account the currency inflation throughout the period. Looked at like this, it can be seen that gold has been in a REALLY SEVERE bear market for years, which has reduced its monetary value enormously. The second point is that although bullion itself is not yet technically in a bull market, the gold mines indices definitely are. Many gold mining shares have blasted through into bull market territory. What is particularly impressive and convincing is that many gold mining stocks have had very high volume "breakouts" this year.Still another point to note is that the rise off the 2001 low has been relatively gradual - and therefore more sustainable, in contrast with the rise off the 1999 low, which was vertical and sliced up through still falling long term moving averages

Gold Bullion spot price $321 approx. at 20 June 02

My longer term view, beyond the immediate objective at $420 is that gold is about to enter into a bull market of unprecedented proportions. I believe the rate of increase will steadily accelerate in a parabolic curve which will culminate in a steep vertical "blowoff" move which is the way many speculate stampedes end, such as happened with the NASDAQ mania. Where will it end? $2000 is, to me, not an unreasonable figure, although I admit that this is an educated guess and it may well go much higher. Think I`m crazy? Firstly, this is not such a large rise, proportionately, as happened in the 70`s. Secondly, the amount of liquid, speculative cash sloshing around these days dwarfs that available in the 70`s.

The underlying reason for the emerging bull market is clear and simple to grasp. Many of the world`s leading currencies have been thoroughly debased. Without the anchor of a Gold Standard, banks and governments have been a law unto themselves as far as currencies are concerned and accountable to nobody. Greed, corruption, egotism, short term-ism and good old fashioned human stupidity have wrought havoc and, especially in recent years, those responsible for the deepening mess have sought to disguise their culpability with an ever denser thicket of intrigue. The intensifying financial crisis will have one eventual, inevitable result - money will once again be underpinned by real value.

One final thought that will especially appeal to people with a black sense of humour; while the United States is about to be economically "tarred and feathered" for its hubris in acting, for many years now, as though it is somehow above and beyond the normal laws of economics and finance, poor old Russia, derided for years as an economic basket case and the butt of countless jokes, has quietly introduced some gold coinage into circulation thus starting to underpin its currency with a REAL store of value. So Russia shows the way forward - funny how things can change, isn`t it?

[peter.wedemeier1]

THE GREAT CRASH OF 2002
Every cloud has a GOLD lining!
by Clive Maund
posted July 9, 2002

Clive Maund is an English technical analyst, holding a diploma from the Society of Technical Analysts, Cambridge and living in southern Bavaria, Germany where he trades US markets.

There has been a lot of talk over the past year or two about "the bear market," how long it`s run and the damage it`s caused etc. Well, if you think what we`ve seen to date is a bear market, I`ve got news for you:- it`s BEARly begun - you ain`t seen nothin` yet!

Take a look at the long term 10-year S&P500 chart below and you will see that this index is just completing a massive 5-year long "Head-and-Shoulders" top. This is a large, clear formation which has major implications. The rule with these patterns is that the fall which follows a break of the neckline, shown as the almost horizontal line on the chart, will at least equal in extent the preceding decline from the absolute top to the neckline, as measured on a log. scale chart.

Many commentators have remarked that we have had no panic so far in this bear market, failing to grasp that the reason for this is that WE ARE STILL IN THE TOP AREA. By far the worst is yet to come.
I state now, without exaggeration, that I firmly believe that we are now about to witness, within the next few months, possibly within the next few weeks, the MOST DRAMATIC STOCK MARKET CRASH IN HISTORY, which will make the crash of `29 look like a Sunday School outing. THE WRITING IS ON THE WALL - it`s as clear as that NASDAQ board in Times Square (and what a warning that was!). A clear break of the neckline of the Head-and-Shoulders formation on the S&P500 will probably, as often happens, be followed by a brief but deceptive pullback towards the neckline. After that a vertical all-out crash to the 560 area is to be expected. This will be a straight down vertical plunge - the market will go down like an elevator with its wire cut.

I am a pure technical analyst and my assessment of the outlook is an objective one based solely on the technical condition of the market. However, it often adds a bit of color to later learn the fundamental reasons for what transpires on the charts. A little bird has told me that THE MAJOR WALL ST. BROKERAGE HOUSES WILL SOON BE FACING A TIDAL WAVE OF LITIGATION from investors who are, among other things, apparently upset at collectively losing trillions when the NASDAQ bubble burst. A thing that seems to have really narked them is that while the big brokerage houses were issuing glowing recommendations on many of these stocks, they were at the same time circulating Emails and memos internally which were, to put it politely, less than complementary about the stocks they were recommending and openly mocked the "suckers" who bought them. This is not conjecture, this is a matter of public record - these mails were not shredded or deleted and exist as evidence. Damages are likely to be awarded in the billions, possibly reaching gargantuan proportions. As already discussed, the charts indicate that A TOTAL MELTDOWN IS IMMINENT. We`ve already had plenty of warning of what to expect from the Enron affair and then, much more seriously, the Worldcom scandal and these were just the tip of the iceberg. This mass litigation against the big Wall St. houses may well be the factor that precipitates the crash.

Some readers may consider me to be a doom and gloom merchant. Not at all. "Every cloud has a silver lining" is my motto, at least when it comes to markets - except that I now prefer to say "Every cloud has a GOLD lining!" If I am right in my assessment, then when the broad market caves in there will be a huge amount of money on the move and scurrying for safety - what better place for it to go, in the present climate, than into gold and highly leveraged (at this time positively, of course) gold stocks? I recently read that THE MARKET CAPITALISATION OF ALL GOLD STOCKS IS ONLY ABOUT $90 BILLION, OR ONE THIRD THE SIZE OF MICROSOFT!! If this is only approximately correct then it would require just a small percentage of that "funk money" panicking out the general stockmarket into gold and gold stocks to force massive rises in gold shares, where supply will quickly evaporate. "Smart Money" is already heavily entrenched in gold stocks, obvious to someone who is experienced in reading volume patterns on charts and they are using the current dip in gold shares to quietly soak up even more. When prices start rising again they won`t be in a hurry to sell, supply of stock will therefore be suddenly very limited. A newly-arrived army of anxious buyers will find a market bereft of stock and I don`t think I need to tell you what that means

Now, how does that song go? - ah, yes

Always look on the bright side of life, di-dum, di-dum di-dum di-dum

By Clive Maund, Diploma Technical Analysis, no responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Kaufbeuren, Germany, 9 July 2002

[peter.wedemeier1]

THE GREAT CRASH OF 2002 part ii
THE STORM BREAKS
by Clive Maund
21 July, 2002

Clive Maund is an English technical analyst, holding a diploma from the Society of Technical Analysts, Cambridge and living in southern Bavaria, Germany where he trades U.S. markets.

Regular readers may recall my article, posted July 9, 2002, in which I predicted the worst market crash of all time, within months and possibly within weeks.

Friday`s fall of 33.8 on the S&P500 (390 on the Dow Jones Industrials) although substantial, was far more serious in its implications than the magnitude of the fall would suggest. This drop - on the heaviest trading volume ever recorded - was the decisive, unequivocal breakdown from the massive 5-year Head-and-Shoulders top in the S&P500 index.

The significance of this, which I view as the most important technical development in U.S. stockmarkets for years, was, as far as I know, almost completely lost on the media who, as usual, saw it only in terms of points. On Saturday, a certain large international TV network wheeled in an "expert," who proceeded to tell viewers that this was the time to start accumulating "value stocks." I sat there watching in a state of disbelief. I could scarcely believe that at this perilous time, at one second to midnight on the market clock, they would have the audacity to continue angling for the few suckers who have so far miraculously escaped their massive dragnet and still have some money to lose!

With the U.S. dollar now falling rapidly and U.S. equity markets set to do the same, the exodus of foreign capital, which played a large part in sustaining and extending the 90`s boom, will swell to a torrent. With few exceptions, there is now no rational reason for a foreigner to hold U.S. securities.

Last Friday`s high volume breakdown from the Head-and-Shoulders top in the S&P500 was The final Warning. If you are a holder of U.S. stocks, aside from a very few special situations and sectors, this is your last chance to get out! The crash is upon us!

The only permissible variation with this crash scenario is that there may be a brief, thin rally back towards the "neckline" of the Head-and-Shoulders formation, which would only delay the inevitable by a couple of weeks at most. However, for practical purposes, I think we are looking into the abyss right now.

I expect the market to crash down to at least the 560 area on the S&P500, during this vertical plunge we are likely to witness days in which the Dow Jones Industrials index drops by 800 - 1000 points in a single day.

After the crash phase is completed we can expect a period of shock and adjustment after which the bear market will enter the third phase, which will be less dramatic but nevertheless prolonged and destructive and possibly have some mini-crashes embedded within it. It is, however, during this phase that individual stocks and sectors, which are intrinsically sound and strong, particularly the contra-cyclicals, can be expected to make healthy gains.

Gold, in particular, is expected to benefit especially from the general atmosphere of fear and paranoia and the mushrooming distrust of credit and paper money. "Smart Money" knows this, is "keeping its powder dry," and will move in on the bargains immediately the crash phase is over, when those investors who trusted the guy on the telly and all the wonderful, convincing research by the big brokerage houses will be nursing massive losses and dumping stocks for whatever they can get for them, throwing out the good with the bad.

By Clive Maund, Diploma Technical Analysis - no responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Kaufbeuren, Germany, 20 July 2002

[peter.wedemeier1]

New Bull Market or Sucker Rally?
by Clive Maund
31 July, 2002


Clive Maund is an English technical analyst, holding a diploma from the Society of Technical Analysts, Cambridge and living in southern Bavaria, Germany where he trades US markets.

Anyone who has read my earlier articles on the broad market will already know what I think and may also recall that in my last piece here on 321gold entitled The Storm Breaks I mentioned the possibility of a pullback to the neckline of the giant 5-year Head-and-Shoulders in the S&P500 following the breakdown from this formation. This has now occurred and, in my view, we are now presented with one of the finest shorting opportunities of all time.



So, as cool pragmatic speculators, let`s look at the opportunities and risks associated with the two main scenarios facing us, namely...

that we have now seen the bottom and the dawn of a new bullmarket is upon us

and, alternatively,

that the rise over the past week was a classic sucker rally following a major chart breakdown which will be followed by huge decline.

Playing Devil`s advocate for a moment -- let`s just suppose that the bottom is in -- what can we, as bulls, look forward to? A long tedious advance through a quagmire of overhead supply from millions of investors locked in at the higher prices prevailing over the past five years. Such an advance would be punctuated, of course, by sharp selloffs. Where would we set our stop loss level on the S&P? 880? 860? 800? Difficult to say, isn`t it?

Now let`s look at what bears have in prospect. Bears who short the S&P500 (or a basket of stocks) can look forward to the biggest panic selloff of all time over the coming weeks and months, quite likely weeks rather than months. This panic has a minimum target at 560 on the S&P500. With the neckline at approx. 930, a close stop loss level can be clearly defined. I would put it at 955, which, in my estimation, means that one is unlikely to be shaken out by a whipsaw move.

So, which would you rather be? A bull looking for a long slow advance through massive overhead supply, with vague or arbitrary stop loss levels, in a market perched on the edge of an abyss? Or a bear with the prospect of huge, swift gains and the assurance and the security of tight, clearly defined stop loss levels?

Not much of a contest, is it?

Gold

As regards gold, many readers will now have figured out the plot.

Chase, JP Morgan and Goldman et al, facing a derivatives squeeze which will be exacerbated by a rising gold price have asked their friends the banks if they would be so kind as to wheel out some tons of gold from their vaults and dump it unceremoniously on the market, which they have obligingly done. A major reason for the timing of this move is that the credit rating of JP Morgan is about to be re-evaluated. What we can deduce from this, of course, is that these monster companies are net short in their derivatives` positions. At present, they largely control the gold market through their cosy relationship with the banks and are therefore able to keep the lid on things -- for now.

But these companies are in deep, deep trouble for reasons I won`t go into here and are like beached whales waiting to be sliced up. When they lose control of the gold market, which may be through their own demise and/or a massive move towards gold by investors feeling disillusioned and fleeced by the market as a whole -- there is likely to be a meltup in gold and gold shares -- a massive upward spike. We must presume that should these companies still exist when this happens, they will contribute to the meltup by their frantic short covering which should finally finish them off.

We must not lose sight of the fact that despite the shocking plunge in gold and gold shares over the past week or two, resulting from manipulation as described above, overall volume patterns in gold shares are very bullish and many gold shares are now above the major support of their long bases -- a classic buy spot, in fact.

Yes, the gold market is at present manipulated, but the dumping of gold by the banks is a measure of the desperation of the authorities as they try to shore up the crumbling fiat money system. They are playing a game they are doomed to lose -- perhaps they never heard about King Canute and his attempt to stop the tide coming in.

By Clive Maund, Diploma Technical Analysis - no responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Kaufbeuren, Germany, 20 July 2002

[thepharmacist]

Vielen Dank für diese tollen Gedankengänge. Ein echter Querdenker im positivsten Sinn.
Weiter so!
the pharmacist

[peter.wedemeier1]

Pavlov`s Markets
We will all go together when we go
A snippet by Clive Maund
7 August, 2002


Clive Maund is an English technical analyst, holding a diploma from the Society of Technical Analysts, Cambridge and living in southern Bavaria, Germany where he trades US markets.





It must be comforting for American traders to know that many foreign markets and traders are standing shoulder-to-shoulder, or should I say, Head-and-Shoulders to Head-and-Shoulders with the American markets in their current plight. Have a look at the three charts below, the US S&P500, the German DAX index and the UK FTSE100 index and you will see exactly what I mean. There is a striking similarity between these three 10-year charts.

Regular readers of 321gold will probably be aware of my prognosis for the American market and so be able to deduce that my forecast for both the British and German markets is virtually identical. Both the British and German markets have experienced speculative bubbles in recent years. Older readers may recall a humorous song by Alan Sherman (?), entitled `We will all go together when we go` which was referring to collective annihilation in a nuclear holocaust. The title of this song makes a very apt description of the outlook for these three markets.


.


In Germany it is almost pitiful to observe how the market slavishly mirrors the movements of the US markets.



It`s almost as bad as watching Blair running around behind Bush. When the German market opens in the morning there is usually a knee-jerk reaction to whatever happened in New York in the final couple of hours after Germany closed the night before. The market then mulls around like a disoriented drunk looking for guidance waiting for the all important news of how Wall St is going to open, a sizeable move then frequently occurs followed by more vacillation pending the start of trading in New York.

By Clive Maund, Diploma Technical Analysis - no responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Kaufbeuren, Germany

[peter.wedemeier1]

[peter.wedemeier1]

The Case for Gold

by Clive Maund
27 August, 2002

http://www.321gold.com/editorials/maund/082702/maund082702_2…

[peter.wedemeier1]

JP Morgan Chase & Co
A Nightmare on Wall St

by Clive Maund
Clive Maund Archives
23 September, 2002

"I state now, without exaggeration, that I firmly believe that we are now about to witness, within the next few months, possibly within the next few weeks, the MOST DRAMATIC STOCK MARKET CRASH IN HISTORY, which will make the crash of `29 look like a Sunday School outing."





http://www.321gold.com/editorials/maund/maund092302_jpm.html