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Midweek Market 26 March 2020

Mar 29th, 2020 No comments

Executive summary

Extreme charts appear every day, with markets totally broken and dysfunctional beyond anything witnessed before. The speed and magnitude of collapse is unprecedented in history with 11 year’s worth of buyers under water in a matter of weeks, since the bottom of the global financial crisis in 2009. This is the fastest financial market collapse ever, even faster than the 2000 tech bubble crash and the 2008 global financial crisis. In less than a month, we have seen major indices fall 30%, and in sectors such as oil and travel by 80%. We are experiencing terrifying declines not seen since the 1929 stock market crash.

This is all happening in the deepening gloom of a global pandemic and just this week the US administration announced a coronavirus stimulus package of $6 trillion dollars. This takes US deficit spending above $8 trillion dollars, and it has not stopped there either, with more to come in future. That is all ‘fake’ currency, by the way, just printed from nothing. This is the basis of the gathering ‘death of currencies’ and the basic cause of the market collapse we are witnessing.

All this is great for gold, but as the chaos and collapse escalates so too will gold collapse with everything else. The true gold bottom will be reached when confidence in the fake money system finally collapses. But there is a way to go yet. Because, guess what, in this environment of deepening gloom the US dollar is seen as a ‘safe haven’ and is rallying to new highs (rate cut and all). However, the fate of the dollar and US Treasuries are closely linked, and the excessive (and artificial) over valuation of the US bond market will eventually lead to the collapse of both.

US Dollar

The US$ is in long term decline but has been in a rally since 2008 with a recent strong rally since 2018 to a new high which could also exceed the previous high at the start of 2017. The very recent dollar indication of the start to a potential weakening phase will have to wait as, for a while yet, dollar value will correlate inversely with US equities. The current reversal up in US equities has the dollar weakening slightly, and this relationship is likely to last until more meaningful loss of confidence in the present structure of the international monetary system.

This applies also to US Treasuries and therefore the US bond market as interest rates and the dollar are closely linked. The excessive over valuation of the US bond market will lead eventually to it’s collapse as well as dollar collapse.

The dollar turns down as demand reduces in the current equity reversal up. Also, the negative divergence stretching back nearly 2 years is still active and this will have an influence on reducing dollar value.

The drop in dollar value in the wake of sell divergence and equity strength is more evident in the shorter term 12 month and 3 month charts.

The dollar breaks down through the bear flag, but is still above the 10-Day MA with no confirmation of a top yet.

EuroDollar

The Eurodollar corrects up in the wake of the dollar correction down, and creates a buy divergence in the process. This should strengthen the Euro further and, by definition as the virtual opposite, weaken the dollar further.

US Treasuries

The benchmark 10 year US Treasury yield continues towards a fragile recovery, as the bond market continues to hold precarious elevated levels. This means the yield could move either way, but the major non-confirmation with collapsing US equities cannot last, despite continued massive manipulation from the US Fed, and therefore the increasing yield trend should move up to test resistance eventually.

Short term US Treasuries, such as the 3 month, are at zero yield. This means the note is at virtually extreme valuation as investors pay the highest price for no return. Unless US Treasuries go into negative yield, the only way value can move is down. In other words this is the safest way to invest your money at a cost in return for nothing. Crazy!!!

And remember, this is how the US Fed ‘prints’ money in the process of QE (quantitative easing), by buying US Treasuries with fake money which elevates the price of the note and therefore reduces the yield.

Gold

The sell divergence is still active and therefore gold will still go lower, despite the recent rally. The next gold bull market will drive price many times higher, but only after further declines to new lows first. These lows will finally signal an end to the gold bear market in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights the sell divergence is still active despite the snap-back rally. On this basis prices should decline from here.

The 12 month chart illustrates the sell divergence and snap-back rally in more detail. Gold should still decline from these levels, although the key support levels need to be breached for the second time within a month.

The 3-month chart illustrates in more detail the breakout leading to the snap-back rally (black circle) and the rally topping out.

South African Rand

The Rand turns down from peak weakness against the dollar as it continues to look fragile and volatile. Much depends on dollar behaviour, and currently this indicates little change.

HUI / Gold Ratio

The ratio is consolidating in the partial recovery after the declines in the wake of the sell divergence, some way still below the 50-Day and 200-Day MAs. This indicates US miners (HUI) are tending to move in tandem with the gold price until more divergent breakaways occur in either.

GDX US Gold ETF

GDX has a stronger retracement than the Hui/Gold ratio and is back up to testing the confluence of the 50-Day and 200-Day MAs.

This pattern is also similarly reflected by the GDX Juniors and XAU (charts not shown), although somewhat different in the inverse Dust chart which is shown next.

Dust US Miners Bear Index

The US Miners bear index has created a buy divergence, dropping down below the recent region of activity. This is an indication of rising Dust prices which in turn indicates dropping prices in the US Miners such as HUI, GDX, XAU, and GDX Juniors.

Silver

Long term silver continues to trend lower, despite the recent rally which broke back up through the previous low point of Dec 2015 at $13.60, which was penetrated last week. Despite this the chart has a negative bias and the trend continues down in a continued major non-confirmation with gold, as silver leads the price declines. As with gold, the next silver bull market will drive price many times higher, but only after further declines to yet lower lows first. These lows will finally signal an end to the precious metals bear market in a world of approaching monetary and political chaos.

The silver snap-back rally penetrated back up above the Dec 2015 low point at $13.60 and in the process breached up through earlier support levels. But the silver rally underperformed gold’s rally, and prices should decline again from here. However, the price plummet earlier to $11.65 created a buy divergence which assisted the price increase to $14.87, and this may increase further first.

The sell divergence is still active despite the recovery rally which underperformed gold’s recovery rally. This should assist silver to decline further.

The 3-month chart illustrates silver’s rally after the selloff in more detail. The chart bias remains negative and silver looks poised to break yet much lower. This begs the question as to what level silver is likely to drop to once gold declines below the level of late 2015. Some have it at $7.00.

The Silver miners chart mirrors that of US gold miners, with a partial recovery after continued selloff in the wake of the sell divergence.

Gold : Silver Ratio

The gold / silver ratio corrected down after the spike to close lower at 109.82, but the chart continues to present an upward bias. All this indicates a continued era with substantial silver underperformance remains negative for metal prices.

General Equities
Extreme charts appear every day, with markets totally broken and dysfunctional beyond anything witnessed before. The speed and magnitude of collapse is unprecedented in history with 11 year’s worth of buyers under water in a matter of weeks, since the bottom of the global financial crisis in 2009. This is the fastest financial market collapse ever, even faster than the 2000 tech bubble crash and the 2008 global financial crisis. In less than a month, we have seen major indices fall 30%, and in sectors such as oil and travel by 80%. We are experiencing terrifying declines not seen since the 1929 stock market crash.

Using the Dow Jones Ind Ave as a proxy for general equities, one can see a strong reversal in progress measuring just short of 4000 points off the low. This may be the start of the first major correction or there may still be yet another new low first. Either way, the severe decline is getting close to a strong correction. But either way, the correction will be followed by yet other strong declines. This is just the beginning.

Elliott Wave analysis has it that the final top at 5 in various degrees is in, and that markets have started a major systemic collapse which is now in progress. The Dow has completed the strong wave (3) down and may be close to completing wave (4) up to start the final wave down to (5). This will complete the first 5 wave impulse leg down, to be followed by the first 3 wave corrective leg up, before the second 5 wave impulse leg down begins.

Conditions have been deteriorating in the financial and monetary system for some time now, having implications for global markets as well as all the other elements in a monetary system which is broken and in dire need of fixing. In simple terms, the core problem is that money value (measured against gold) is collapsing, and when confidence in the fake money system is finally lost, a new international monetary system has to be created based on gold.

This is a long term chart of the Dow illustrating the Global Financial Crisis bottom in 2009 followed by the build up to the final top of the market at (5), and the first leg down being the 10 000 point collapse in less than a month wiping out 3 years of gains. The major systemic collapse is now underway, and certain top Elliott Wave practitioners have it that the Dow will collapse during most of the next decade from the top at 29500 down to regions between 6000 and 1000 points.

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Midweek Market 19 March 2020

Mar 19th, 2020 No comments

Executive summary

Markets are declining with unprecedented volatility. US equity futures went ‘limit down’ first thing Monday morning, and then again first thing Wednesday morning as limit triggers activated to stop all trading after declines quickly exceeded 5%. All trading was halted again on Wednesday afternoon as equities plummeted further. This was largely attributable to the US Fed cutting the rate by a full 1% on Sunday to launch yet another co-ordinated global initiative to pump vast quantities of fiat money into the system. Government and central bank levels of panic are becoming less shrouded as the countdown towards the end of the current international monetary system begins to gain momentum. And there will still be much more ‘money printing’ and interest rate manipulation as momentum increases.

The Coronavirus is attributed as the cause, but it is really only the catalyst. The root cause lies much deeper: Central bank interventions have propped up assets to record levels by almost any measure, for so long now. At the same time they have ‘hollowed’ out real economies with artificially low interest rates leading to massive capital misallocations. What we have now is a huge and distorted fake system based on fake money which is beginning to implode. Add to this the fact we are at the end of the credit cycle with the beginnings of tariff war.

All this is great for gold, but as the chaos and collapse escalates so too will gold collapse with everything else. The true gold bottom will be reached when confidence in the fake money system finally collapses. But there is a way to go yet. Because, guess what, in this environment of deepening gloom the US dollar is seen as a ‘safe haven’ and is rallying to new highs (rate cut and all). However, the fate of the dollar and US Treasuries are closely linked, and the excessive (and artificial) over valuation of the US bond market will eventually lead to the collapse of both.

US Dollar

The US$ is in long term decline but has been in a rally since 2008 with a recent strong rally since 2018 to a new high which could also exceed the previous high at the end of 2016. The very recent dollar indication of the start to a potential weakening phase has been eclipsed by the US equity collapse which has dramatically increased dollar demand. This has in fact changed the whole support / resistance structure of the dollar chart which now looks set to rally further.

However, the fate of the dollar and US Treasuries are closely linked, and the excessive over valuation of the US bond market will lead eventually to the collapse of both.

The dollar spikes higher as demand increases in collapsing markets, which at this stage trumps the bearish influence of negative divergence stretching back nearly 2 years. Other competing currencies such as the Euro, Yen and Aussie dollar are correspondingly weaker at the moment.

The dollar powers up in multiple breakouts, by 7.5% in a matter of 7 trading days: Probably as remarkable as the collapse in US equities. This creates a sell divergence which will have the effect of reducing dollar value going forward.

The dollar powers up to a new high in response to the demands of collapsing global equity markets. But the close link with excessively over valued US bonds and the newly created sell divergence detailed on the 12 month chart will eventually reduce dollar value. This will be evident in the newly formed bear flag.

EuroDollar

The Eurodollar corrects down in the wake of dollar strength, rapidly and powerfully as the dollar strengthened. Unlike the dollar, the Eurodollar has not created a buy divergence.

US Treasuries

The benchmark 10 year US Treasury yield continues to correct up as the note starts to turn down from excessively high level values. The major non-confirmation with collapsing US equities cannot last, despite continued massive manipulation from the US Fed, and therefore the increasing yield trend should continue and move up to test resistance quite quickly.

Gold

Gold declines in the wake of the sell divergence and this indicates an end to the bear market rally which is likely to unfold into yet lower prices ahead. The next gold bull market will drive price many times higher, but only after further declines to new lows first. These lows will finally signal an end to the gold bear market in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights the initial decline from the sell divergence which is soon to test the 1st support zone below $1448. Timing still depends on the relationship with dollar movement and the collapsing markets, and whether trends continue or whether reversals are imminent.

The 12 month chart illustrates the price declines delivered by the sell divergence and the key support levels breached.

The 3-month chart illustrates in more detail the price declines in multiple breakouts through key support levels.

South African Rand

The Rand peaks to weakness, once again, and continues to look fragile and volatile as the dollar strengthens. Much depends on the dollar, and currently this indicates little change.

HUI / Gold Ratio

The ratio collapses further in the wake of the sell divergence, although with a partial recovery after the collapse. This indicates US miners (HUI) are declining faster than gold on balance, but are recovering partially while gold declines further. This is also evident in the other US miner vehicles (following chart).

The HUI, XAU, and GDX are all recovering partially in charts with decidedly negative bias, indicating further declines ahead.

Silver

Silver plunges massively to new lows below the previous major low point at the end of 2015. The long term silver trend continues down in a continued major non-confirmation with gold, as silver leads the price declines. As with gold, the next silver bull market will drive price many times higher, but only after further declines to yet lower lows first. These lows will finally signal an end to the precious metals bear market in a world of approaching monetary and political chaos.

Silver’s non-confirmation with gold continues to be the reason the Gold / Silver ratio continues to increase, in silver’s price declines exceeding gold’s declines. Silver is now declining severely, to levels lower than the previous major lows at the end of 2015, which gold is still far from doing.

There is a massive silver selloff in the wake of the sell divergence which decimated support in multi-breakdowns.

The 3-month chart illustrates the selloff in more detail, which resumed in a massive drop of 30% in the week. The chart bias is negative and silver looks poised to break yet much lower which begs the question as to what level silver is likely to drop to once gold declines below the level of late 2015.

The Silver miners chart mirrors that of US gold miners, with a partial recovery after continued selloff in the wake of the sell divergence. Silver miners are not copying silver itself in that there is hardly any partial recovery in the silver price. If silver miners are leading silver then it indicates that the metal is due a similar partial recovery.

Gold : Silver Ratio

The gold / silver ratio spiked 30% to over 130 last week and closed substantially higher than last week at 125.54. All this indicates a new era with substantial silver underperformance. Much depends on reversals and what silver will do until gold also declines to levels below Dec 2015. For now the ratio continues to edge up, which is negative for metal prices, and this looks likely to continue.

General Equities

Markets are declining with unprecedented volatility. US equity futures went ‘limit down’ first thing Monday morning, and then again first thing Wednesday morning as limit triggers activated to stop all trading after declines quickly exceeded 5%. All trading was halted again on Wednesday afternoon as equities plummeted further. This was largely attributable to the US Fed cutting the rate by a full 1% on Sunday to launch yet another co-ordinated global initiative to pump vast quantities of fiat money into the system. Government and central bank levels of panic is becoming less shrouded as the countdown towards the end of the current international monetary system begins to gain momentum. And there will still be much more ‘money printing’ and interest rate manipulation as momentum increases.

The massive selloff in US equities continues with the Dow Jones down about 10 000 points in less than a month. It could be that the first major correction will be soon, but the systemic collapse is likely to continue for much of the next decade.

Elliott Wave analysis has it that the final top at 5 in various degrees is in, and that markets have started a major systemic collapse which is now in progress. The Dow is in the powerful wave (3) down in a 5 wave impulse move that could be finishing. This means it will be followed by wave (4) up and the final wave (5) down to complete the first major leg down.

This has been developing in the financial and monetary system for some time now, and has implications for global stock markets as well as all the other elements in a monetary system which is broken and in dire need of fixing. In simple terms, the core problem is that money value (measured against gold) is collapsing, and when confidence in the fake money system is finally lost, a new international monetary system has to be created based on gold.

The Dow chart above is long term illustrating the Global Financial Crisis bottom in 2009 followed by the build up to the final top of the market at (5), and the first leg down being the 10 000 point collapse since in less than a month wiping out 3 years of gains. The major systemic collapse is now underway, and certain top Elliott Wave practitioners have it that the Dow will collapse during most of the next decade from the top at 29500 down to regions between 6000 and 1000 points.

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Midweek Market 12 March 2020

Mar 12th, 2020 No comments

Executive summary

US equities are collapsing at the start of a major systemic collapse which is likely to now unfold into a series of declining patterns over the next decade. This has been developing in the financial and monetary system for some time now, and has implications for global stock markets as well as all the other elements in a monetary system which is broken and in dire need of fixing.

US Treasuries are at new historic highs with yields at new historic lows. This cannot be, and we await the final corrections to rectify the situation which will no doubt be quite severe.

The dollar is beginning to roll over and a break below key levels has confirmed a new weakening phase. The bearish influence of negative divergence stretching back nearly 2 years is likely to power the dollar lower. Confirmation is also provided by other competing currencies such as the Euro and Aussie dollar.

Gold and silver is set to decline with intensified sell divergences becoming active, especially in US miners which appear to be leading the breakdowns. Once this all unfolds into lower prices ahead, and even much lower prices, before the next gold bull market drives price many times higher in a battle fought in a world of approaching monetary and political chaos.

So, all is in the balance between ‘The Everything Bubble’ being pricked sooner or later, depending on the ability of central banks to continue propping up the system, and whether there is any confidence left to support that.

US Dollar

The US$ is in long term decline but has been in a rally since 2008 with a recent strong rally since 2008 to a new high. However the dollar is now beginning to retreat down from these levels and a new weakening phase has started, which is just visible on this long term chart (black circle).

The dollar is rolling over as it breaks down through the rising wedge pattern, to confirm the new weakening phase. The bearish influence of negative divergence stretching back nearly 2 years is finally beginning to power the dollar lower. This is also confirmed by strength in other competing currencies such as the Euro and Aussie dollar.

Having broken down to new lows the dollar is now correcting up at the start of the weakening phase, to well under the 200-Day MA (green)

The expected dollar correction up is in process, although still well below both the 50-Day and 200-Day MAs. The US Fed may well follow up last week’s rate cut with yet another this month in an attempt to stall the equity collapse, as the short term US Treasury 2- and 3 – month yields are still dropping. This will reduce dollar value further, especially as the ECB held rates this morning.

EuroDollar

The Eurodollar is at the start of a strengthening phase, which is further supported by the ECB holding rates this morning. However, a correction down is in progress at the moment although still ahead of the 200-Day MA (green).

The long term 10 year chart indicates a breakout from the reducing wedge (black circle) which should assist further strength to test resistance.

US Treasuries

The benchmark 10 year US Treasury yield plummet to an all-time low has been arrested with a sharp reversal to a yield of 0.82%. This remains a major non-confirmation with collapsing US equities, and once the reversal gains momentum it should move up to test resistance quite quickly. Final corrections to rectify the situation should be quite severe.

Gold

The sell divergence in the long term chart has intensified with the recent gold rally, and this will still lead to lower prices. The gold bear market rally is all but complete and is likely to unfold into lower prices ahead, before the next gold bull market drives price many times higher in a battle fought in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights the gold rally in a very late stage, as the power of the sell divergence intensifies. The gold rally is likely to end soon and could be finally driven by a collapse in US miners as the major cause.

The 12 month chart illustrates the price drift sideways since the top and sell divergence, in a pattern that could now signal the final top: More evident in the 3 month chart and certainly in the US miners’ charts.

The 3-month chart illustrates in more detail the price declines starting slowly after the sell divergence. This may be the top of the rally but price is still well above the MAs.

Gold cots data continues to develop a strong bearish case for gold declines ahead. This is based graphically on the massive dilation (red circle) between red and green, and technically represented by Large Speculators (green) holding increased large long positions and Large Commercials (red) holding increased large short positions. This indicates the gold price will decline, based on the historical fact that Large Speculators are usually incorrect and Large Commercials are usually correct.

South African Rand

The Rand peaks to weakness and continues to look fragile and volatile as the dollar starts to correct to strength. Volatility is likely to increase further unless the dollar trend to weakness actually adds strength to the Rand.

HUI / Gold Ratio

The ratio collapses in the wake of the sell divergence. This indicates US miners are declining faster than gold and could be the main driver behind further gold declines. All US gold miner vehicles are in sync with this, as indicated on the next chart.

The HUI, XAU, and GDX are all breaking down lower than previous lows, as opposed to the metals which are not. They are leading the charge lower and could well be followed by the metals soon.

Silver

The long term silver trend continues sideways to down after the recent ever-lower peaks. This continues to be a major non-confirmation with gold, as silver leads the price declines. Irrespective, the next silver bull market will drive price to many times higher but will be preceded by a sharp decline first. Like gold, this battle will be fought in a world of approaching monetary and political chaos.

Silver’s non-confirmation with gold is the reason the Gold / Silver ratio continues to increase, in silver’s price drift sideways to down. But silver is actually poised to decline severely, more obvious in the shorter term charts.

The silver selloff resumes in the wake of the sell divergence, and a potential break though support is likely soon.

The 3-month chart illustrates the selloff in more detail, with penetration down through the 200-Day MA again. The chart bias is negative and silver looks poised to break lower soon.

As with gold, silver Cots data has a similar structure which continues to remain increasingly silver bearish.

The Silver miners chart mirrors that of the US gold miners, except even more pronounced. The strong selloff in the wake of the sell divergence looks poised to drop further soon, even much further.

Gold : Silver Ratio

The gold / silver ratio spiked to over 100 last week and has dithered up and down since. But it nevertheless still closed higher than last week, as gold continues to outperform silver. The ratio continues to edge up, which is negative for metal prices, and this looks likely to continue.

General Equities

The Dow Jones declined strongly since confirming the final top at 5 in multiple degrees, in confirming the start of a major systemic collapse which is likely to now unfold into a series of declining patterns over the next decade. In Elliott Wave analysis the first and current impulse wave down has completed a (1) (2) with the next longest and strongest wave (3) down to follow, before completing the (4) up and final (5) down.

This has been developing in the financial and monetary system for some time now, and has implications for global stock markets as well as all the other elements in a monetary system which is broken and in dire need of fixing. In simple terms, the core problem is that money value (measured against gold) is collapsing, and when confidence in the fake money system is finally lost, a new international monetary system has to be created based on gold.

US Treasuries are at new historic highs with yields at new historic lows. The US Fed did in fact cut the rate by 50 basis points early last week and will probably cut the rate again later this month, as short term US Treasury yields are dropping. The market has not yet responded positively and this could be the start of a new normal which will increasingly indicate that central bank ‘interference’ in markets become ineffectual, and that markets begin to reflect the actual situation in economies.

This of course is how it will be once the collapse of the current international monetary system is re-tooled and based on gold.

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Midweek Market 5 March 2020

Mar 5th, 2020 No comments

Executive summary

Markets are unfolding at critical pivot points which are indicating the early stages of the major systemic collapse which has been developing in the financial and monetary system for some time now. US equities, using the Dow Jones Industrial Ave as a proxy, are breaking down through key levels which indicate confirmation of a top, and this has implications for global stock markets as well. At the same time US Treasuries are at new historic highs with yields at new historic lows. This cannot be, and we await the final corrections to rectify the situation which will no doubt be quite severe.

The US Fed did in fact cut the rate by 50 basis points early in the week and will certainly do what it can to prevent a further collapse. The market has not yet responded positively and this could be the start of a new normal which will increasingly indicate that central bank ‘interference’ in markets become ineffectual, and that markets begin to reflect the actual situation in economies. This of course will be how it will be once the collapse of the current international monetary system is re-tooled and based on gold.

The dollar is beginning to roll over and a break below key levels will confirm a new weakening phase. The bearish influence of negative divergence stretching back nearly 2 years is likely to power the dollar lower. Confirmation is also provided by other competing currencies such as the Euro and Aussie dollar.

The recent gold rally and integrated sell divergence continues for now. This is likely to propel prices lower in due course as the gold bear market continues, but it may or may not also involve a yet higher gold price first. Once this all unfolds into lower prices ahead, and even much lower prices, before the next gold bull market drives price many times higher in a battle fought in a world of approaching monetary and political chaos.

So, all is in the balance between ‘The Everything Bubble’ being pricked sooner or later, depending on the ability of central banks to continue propping up the system, and whether there is any confidence left to support that.

US Dollar

The US$ is in long term decline but has been in a rally since 2008 with a recent strong rally since 2008 to a new high. However the dollar is now beginning to retreat down from these levels and a new weakening phase appears to have started.

The dollar is beginning to roll over and a break below the rising wedge will confirm a new weakening phase. The bearish influence of negative divergence stretching back nearly 2 years is likely to power the dollar lower. Confirmation is also provided by other competing currencies such as the Euro and Aussie dollar.

The dollar has dropped by 2.5% in a matter of weeks as it starts a weakening phase, assisted also by the US Fed cutting the rate by 50 basis points on Monday. But it is now probably due a correction up having also punched down through the confluence of the 200-Day and 50-Day MAs.

The dollar is now well into the weakening phase and has penetrated both the 50-Day and 200-Day MAs. The slight upward move since could be a ‘kiss goodbye’ (black circle), but a correction up should probably be expected soon.

EuroDollar

The Eurodollar has a breakout from the bull flag in a rally quickly gaining momentum with more than 3% increase since the bottom. It penetrated the 200-day MA and has since corrected back to a potential ‘kiss goodbye’. This provides strong confirmation of continued dollar weakness and a top in the dollar chart, as the near inverse of the dollar index.

US Treasuries

The benchmark 10 year US Treasury yield plummets to an all-time low, extending the yield declines of last week. The collapse in US equities prompted a surge in ‘flight to safety’ funds moving into bonds as the US bond market reaches yet another all-time high, following on from the previous week. In reaching ever-higher new highs the US bond market creates a major non-confirmation with US equities in decline. This cannot be, and we await the final corrections to rectify the situation which will no doubt be quite severe.

Gold

The recent gold rally and integrated sell divergence continues for now. This is likely to propel prices lower in due course as the gold bear market continues, but it may or may not also involve a yet higher gold price first. Once this all unfolds into lower prices ahead, and even much lower prices, before the next gold bull market drives price many times higher in a battle fought in a world of approaching monetary and political chaos.

The 5 year weekly chart highlights the still active sell divergence which is the prime driver of price declines. But for now the trend remains up in the rising channel formation, with a final top still to be confirmed.

The 12 month chart illustrates the price drift sideways since the top and sell divergence, in a pattern that could still go up or down. The natural chart bias suggests up and the sell divergence and technical generally suggests down.

The 3-month chart illustrates in more detail the price dispersion since the top in moving sideways including the recent rally. This may be the top of the rally but price is still well ahead of the MAs.

Gold volatility spiked during the recent gold rally but has started to drop in its wake, illustrated by the red dots in reducing levels. This suggests investor eagerness is probably waning again.

Gold cots data continues to develop a strong bearish case for gold declines ahead. This is based graphically on the massive dilation (red circle) between red and green, and technically represented by Large Speculators (green) holding increased large long positions and Large Commercials (red) holding increased large short positions. This indicates the gold price will decline, based on the historical fact that Large Speculators are usually incorrect and Large Commercials are usually correct.

South African Rand

The Rand strengthened from the chart peak and could strengthen further as the dollar continues to weaken. This will be accentuated by breaking down from the bear flag, but will be corrupted if the dollar corrects to strength first.

HUI / Gold Ratio

The ratio continues its decline profile in the wake of the sell divergence, despite the rally in the tail from the recent low point. This indicates US miners are declining faster than gold is declining, and any further gold price decline will accentuate miner declines. Obviously, vice versa applies with a gold price increase.

GDX US miners ETF

GDX declined abruptly from the sell divergence including a breakdown from the bear flag. But this was invalidated by an equally abrupt increase to regain half the decline. The chart structure is still within the power of the sell divergence but in a chart that is more bullish.

This pattern is also similarly reflected in the GDX Juniors, XAU, and by the inverse Dust US Miners bear Index (all charts not shown).

Silver

The long term silver trend continues sideways to down after the recent ever-lower peaks. This continues to be a major non-confirmation with gold, typical at major trend changes. Irrespective, the next silver bull market will drive price to many times higher but will be preceded by a sharp decline first. Like gold, this battle will be fought in a world of approaching monetary and political chaos.

Silver’s non-confirmation with gold is the reason the Gold / Silver ratio continues to increase, in silver’s price drift sideways to down with no obvious direction evident (as it is in the shorter term charts).

There is a silver selloff from the new sell divergence and double top with multiple breakdowns that have been partially invalidated by a price bounce.

The 3-month chart illustrates the selloff in more detail. Multiple breakdowns (black circles) through key support levels have been partially invalidated. The selloff however illustrates silver weakness against gold which is reflected in the much changed Gold / Silver ratio this week.

As with gold, silver Cots data has a similar structure which continues to remain increasingly silver bearish.

The Silver miners chart mirrors that of silver nearly exactly, with a double top, sell divergence, price selloff, multi-breakdowns and invalidation. It illustrates the accentuated damage to miners from price movement in the metal.

Gold : Silver Ratio

The gold / silver ratio spiked to over 100 this week to close well up at 95.27, as gold continues to outperform silver. The ratio continues to edge up, which is negative for metal prices. The general trend continues up and this trend looks likely to continue.

General Equities

The two consecutive sell divergences in the Dow chart plus the build-up of negative divergence over the past year has triggered a sharp drop in price from the unfolding topping pattern. The Dow dropped 17% in all before the start of the current correction. A likely region for the declines to resume could be at a Fibonacci retracement of about 61.8% (black circle), and declines below the break level of 25700 (red) will confirm completion of the countertrend rally.

Markets are unfolding at critical pivot points which are indicating the early stages of the major systemic collapse which has been developing in the financial and monetary system for some time now. US equities, using the Dow Jones Industrial Ave as a proxy, are breaking down through key levels which indicate confirmation of a top, and this has implications for global stock markets as well. At the same time US Treasuries are at new historic highs with yields at new historic lows. The US Fed did in fact cut the rate by 50 basis points early in the week and will certainly do what it can to prevent a further collapse.

The market has not yet responded positively and this could be the start of a new normal which will increasingly indicate that central bank ‘interference’ in markets become ineffectual, and that markets begin to reflect the actual situation in economies. This of course will be how it will be once the collapse of the current international monetary system is re-tooled and based on gold.

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