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July 24, 2014

Time to Short Gold

With Apologies to Rick Rule and Peter Schiff

Gold took a turn for the worse today, finally resolving its daily cycle configuration with a break of its lower TrendBand. We can now have confidence in the view that gold has entered an intermediate cycle decline.

The Docfolio is now short the yellow metal. Gold has 11-17 weeks to find its next ICL within the normal timing band. Given such a long stretch of time, price could easily crash the dual 2013 lows. A close below the weekly LB would deliver further confirmation of gold's bearish configuration. Meanwhile, a close back above the daily UB would stop me out.

Gold's turn for the worse is not surprising given the dollar's continued strength.

With another RT daily cycle in the making, my dollar long will stay in place through the next daily cycle decline and perhaps even be augmented once the next DCL is identified. I will also note that the dollar is threatening to turn its weekly TrendBand configuration bullish.

Despite all the predictions of doom for the U.S. dollar... including from some very smart people... my charts are telling me to brace for a rally. Rick Rule has stated repeatedly in interviews that he is preparing for the largest bull cycle in gold and natural resources of his career. He has hedged those comments by saying that he has yet to see the level of panic that usually accompanies bottoms. The dollar, as well as gold's own action, suggest that the stage may be set for that elusive panic.

Docfolio Update: Shorted gold

 

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