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September 14, 2014

Gold is Lead-Footed

Gold is beginning to sport that 2013 feel, the day-by-day slippage that occurs while the whole world is bottom calling. The Docfolio has been short this metal since July 24 (Time to Short Gold), and I do not anticipate abandoning the trade any time soon. In fact, gold just delivered yet another bearish indication.

As Members know, a close below the LowerBand (LB) indicates a weekly downtrend. This result is not surprising considering the fact that gold's weekly cycle had already confirmed a decline with a failed daily cycle. Gold still needs 4-10 weeks to find a weekly cycle low, so a crash through the twin, 2013 lows is likely.

Many gold bugs were pointing to the relative strength of mining shares as evidence that gold would find legs. Well, those legs are being knocked out from under the market.

I am afraid the technical setup just isn't there for an imminent precious metals rally. A crash through $1180 and a revisit of a major pivot near $1000 seems much more likely for gold.

 

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