Saturday, November 12, 2011

$1764 Update

Back on September 7, I wrote an article on Jim Sinclair's projections on gold Sinclair's Point Well Taken. He caused quite a stir in gold bug world a month earlier with his August 6 article at his website and an interview with James Turk. This all involved his analysis about the $1764 level in the gold price. As my article explained, back in 2005, Sinclair made a bold prediction about his "angels" or levels of gold's advance where critical resistance is broken. There are several of these, but the one at $524 he viewed as a "swing point" where the rate of gold's climb was to change. This is what happened:

As the moving averages show, he was so right. Gold has been in a steeper climb since the break of the gently rising resistance line shown above in blue. He bases this on the squares method that Jesse Livermore used with stunning success decades ago. Sinclair's father was a business partner of Livermore, who is considered by some the greatest trader of all time.

Anyway, Sinclair is causing a stir because he is now saying the same thing about the $1764 level that he said about $524. When gold shot beyond $600, the common take was that this bubble was about to burst. In his August 6 article, he stated that at the then price of $1650, a top in gold was nowhere in sight. This was before the break to $1930 and the big smackdown that followed. In the August alert, he said:

The key number in the gold market is $1,764. As gold approaches that number you can anticipate furious but very short price reactions ... Dean Harry Schultz said that I should call him when gold trades at $2,400. Stay near your phone my dear friend of more than 45 years, Dean Harry.

So, what has transpired since then?

The date of Sinclair's article is shown by the circle. Gold immediately burst to over $1900 and we began the "furious but short" push backs around this critical swing point - 8 crossings of the $1764 level shown (plus one more since I made this graph). This guy Sinclair is a little freaky. I somehow suspect we're going to get maybe one more knock down to the 140 ema area and maybe a scary break of it before we're through, which would complete a pennant formation forming now. But then again, gold could explode to the noted $2400 level quicker than any of us sensible people think. It's getting into a phase where you may just want to take a seat and hang on.

No comments:

Post a Comment