Special Report On Gold Silver

GOLD AND SILVER TESTING LONGER-TERM CYCLE TRENDS Since my last report on oct 6 Gold has tested the 1180 area again for the third time since June 2013, and held. It fell to 1183.30 on October 6, one day before our October 7-8 three-star critical reversal zone. Silver, on the other hand, fell to a new 4-year cycle low at 1664 on October 3, which took out the 1817 low of June 28, 2013. This was a case of intermarket bullish divergence long-term, and led to our special update to subscribers issued early the morning of October 6, advising traders to buy for at least a 2-5 week rally. So far, that recommendation has worked out very well, as Gold rallied to a high of 1250.30 on October 15, and is testing the 1250 mark again ydy October 20. However, both Gold and Silver are in danger of falling to new lows unless this rally can extend beyond the 8th week of this primary cycle.  Longer-term, Gold remains in the time band for its 17- and 34-month cycle lows, which overlap August 2014-February 2015. It is possible therefore, that the low formed on October 6. However, as posted last time  “The only problem (for bulls) is that the 34- month cycle is bearish, which means the lowest price will not happen until the cycle ends. Therefore, Gold would – could – break the 1179-1181 double bottom lows of 2013…. If the 1180 support level breaks, then we shift fully to the idea that a 34month cycle phase is occurring, and its due date is October 2014 +/- 6 months. The price target would be 975.70 +/- 111.80… (or) All of these price targets overlap at 868 – 931.30.” Another problem for Gold is that the low of October 6 fell in the 18th week of its 15-21 week primary cycle. That makes it a “normal” primary cycle. When longer-term cycles unfold, we like to see a contraction of 11-14 weeks. Since that was a “normal” primary cycle, and since its trend was bearish, we have to be prepared for a “normal” corrective rally of 2-5 weeks to the crest of the new primary cycle. That time band begins now, October 20, and the price target is 1265.40 +/- 19.40. At the high, Gold would likely test or exceed the 45-day moving average, which is now at 1244. It is doing that as we approach the October 27 critical reversal zone. In order to begin to look bullish, this rally will have to last more than five weeks and exceed 1290, before falling below 1180. It is not impossible, but it has to prove it is bullish before I can proclaim the longer-term cycles are in.

Gold is trending in a downward channel. The top end of the channel is slightly above 1300. A break above here is also needed to support the bullish argument for Gold. It would also be constructive if the 15-day moving average would move back above the 45-day moving average. Until these things happen, Gold is still bearish, despite the case of intermarket bullish divergence to Silver on October 3-6. But once those things happen, we can begin to look for much higher prices in Gold, maybe even new highs, although our first target would be 1550 +/- 87.50 for the next 34-month cycle crest, due 4-12 months after the low. If prices break below 1180, then that upside price objective will have to be modified lower. Trading Strategies for Gold: Investors may maintain long positions with a close below 1179 as given previously. However, it would be wise to either cover some of those positions, and/or hedge them until the 34-month cycle is confirmed, or prices close back above 1300. Position traders are also long via our special update of October 6, with a stop-loss on a close below 1179. However, look to exit and sell short on this current 2-5 week rally back to 1265.40 +/- 19.40, with a stop-loss on a close above 1300. In the event that prices break below 1179, all traders may go short with a stop-loss back on a close above 1220. Aggressive traders are in the same position as position traders, and are advised to sell short on this rally with a stop-loss on a close above 1300. If prices fall back below 1215, bring your stop-loss down to a close above the high of the move since October 6. If the market is bearish, then the primary cycle crest is due within the next three weeks, in this first 5-7 week  major cycle phase. Silver formed a new 4-year low on October 3 at 16.64. As stated in our special Silver issue in May 2014, “The downside price target could be as low as 13.12 +/- 2.87 (due 2014-2016), and even a re-test of the 8.40 low of October 2008.” However, there is a slight possibility that this long-term low happened October 3. It will take some time to confirm that, and prices will have to rally to new cycle highs after the 8th week to support that possibility. Until then, Silver (like Gold) is in a time band for a primary cycle crest 2-5 weeks after October 3. October 20 begins the third week of that time band. Prices did rally to a cycle high of 17.82 on October 15, the midpoint of the Mercury retrograde. That could be the high already, although that cannot yet be confirmed. Although we prefer to see prices test the 45-day moving average first. A break below 16.64 would confirm the high is in

As indicated earlier, October 20 begins the 3rd week of Silver’s 13-21 week primary cycle following the low of October 3.  We note that Venus was in Libra then, a sign that has a high historical correlation to primary cycle troughs in Silver, as reported in last year’s Forecast Book. A normal corrective rally in a bear market would be completed between the second and fifth weeks, at a price target of 19.15 +/- .59 We note from the daily chart above that the CCI is now trending up from an oversold condition (200+) a few days before the October 3 low. We would like to see CCI get overbought, above +200, for a top. But it doesn’t always happen that way. It could struggle slightly above the zero area. The dotted line on the daily chart represents the 45-day moving average, currently at 18.28 and falling. Ideally, Silver would at least test that level as the primary cycle tops out.

Trading Strategies for Silver: All traders (and investors) are advised to hedge any long positions until Silver’s longer-term cycle lows are completed, as discussed last issue. Position and aggressive short-term traders may look for signs to get short anytime in the next three weeks, especially if Silver stalls below 20.00. Perhaps 18.25-19.00 is a good place to look for that top if it happens during this current geocosmic critical reversal period (October 27 +/- 3 trading days).
Short-Term Reversal Dates... in Silver: Look for isolated highs or lows in Silver (and probably Gold) in these solar-lunar time frames, and from which prices reverse at least 2.5% (and better if 4%): 

Oct 20** Oct 21-22 (maybe 23 too)**
Oct 30-31* 
Nov 10-12***
Nov 17* Nov 20-21*
Nov 24-26* Nov 27-28*