THE MICIK MARKET LETTER
Gold Update

Alan Micik snippet
Posted Nov 5, 2012

In our September 17, 2012 “QE Forever” 321Gold post MML noted that the “news” of QE Forever might now be priced into the gold ($1,771) and silver ($34.37) markets, and that there will be corrections, consolidations, and shake-outs along the way to the end game of Fiat currencies. We also noted that “QE Forever” was long-term bullish for gold.

Markets usually anticipate and “price in” good or bad news well before it is announced, and that was the case for gold as it rallied from $1,586 in August to a $1,775 high on the announcement of QE III high by the FED. The subsequent high for that move in early October fell short of $1,800 as gold peaked at $1,798.

However, as MML observed other markets from September 17th such as DIA, SPY, PPLT, PALL, JJC, GSG, and OIL, we began to notice that ALL of these markets, on average, stopped advancing on the QE III “news” around mid-to-late September. On the day of our Post WTI Oil dropped $3 a barrel in 30 seconds as it broke support that day and it is still trending lower as we write. MML began to alert Subscribers that the QE III “news” may have become a “Cover Story” for Tops in most major markets as the “All the Same Market” (ATSM) syndrome might be reappearing due to liquidity and/or credit issues (or something else). Simultaneous Tops (or individual ones) typically have a shared characteristic and that is complacency which can often be generated by such QE III type of “news.” We turned defensive toward all markets as a result.

In our October 15th 321Gold Update ($1,739) MML noted that Speculators had increased their net long position to the highest level in all of reported COT data, so Speculators in gold were “all in,” and the same was true for silver. We noted that Subscribers would be updated on the prior average “price” percentage drops on this record gold COT cycle, and that was sent to Subscribers on October 7th, and the “time” required to complete such a cycle was sent on October 10th, well before gold began this current decline.

On October 7th, MML alerted Subscribers that the Dow Jones Average (DIA) had made a “Solitary Walk” to a new high and that this was a “classical” technical sell signal in a secular Bear Market for U.S. Stocks. Given the record Speculator COT “all in” net position, universal market complacency due to QE III, and the suspected ATSM syndrome, we took this U.S. Stock signal quite seriously for gold and silver.

Unfortunately, the CB’s have once again leased more gold into the marketplace, and that was especially near-term bearish for gold this last Friday. While such schemes can temporarily drive gold lower, it can never stop the long-term trend or gold would not be at its current price. This is yet another short-term shake-out by the CB’s in our opinion. In our 10/31/12 Subscriber Update ($1,719) we stated that:

Another "takedown" of gold below $1,700 is likely being signaled by this week's Central Bank (CB) Gold Lease Rates, just as a "takedown” was signaled on October 1, 2012. Compare gold’s movement vs. that date on your charts. For 321Gold readers, this could be another difficult week for gold and silver, as our COT Model for a “price and/or time” low has not yet been completed. Offsetting this bearish COT model is gold’s bullish seasonal tendencies around this time of the year, and the fact that our proprietary cycles indicate further upside for gold down the road a bit. Perhaps, that is why the CB’s have once again attacked the thermometer (gold) instead of curing the patient (governments).

MML’s “hedging” positions now have closed profits against our physical gold of $163 per ounce for Investors, and our closed Aggressive Trader’s profits are now >$85 per ounce in 11+ months.

If you would like to review our current MML forecasts for gold, silver, the $U.S., $U.S. Stocks, or $U.S. Bonds, consider a subscription (details are listed below). Note that unlike other market reports, we do not have regular “publication” dates as the markets create the dates of action, and thus the communication to our subscribers. In deference to our subscribers, we have a 4 day calendar “Quiet Period” from all Updates before any Posts.

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Al Micik
email: atmmail@sbcglobal.net

The Micik Market Letter (MML) covers opportunities in any market sector when low-risk opportunities are identified for the investor and/or trader. Ongoing coverage is provided for gold and physical gold hedging strategies. Silver & GDX are periodically covered when low-risk opportunities occur. MML uses proprietary indicators combined with technical analysis, and contrary opinion. Unlike other market reports, we do not have regular “publication dates,” as the markets create the dates of action, and thus the communication to our subscribers. Individual shares in any sector are generally not covered, but nor are they excluded. By using baskets of stocks (ETF’s), we seek to decrease our risks and have improved liquidity when it’s time to exit a position. This enables us to use reasonable Stops, and we use them on every single trade in order to limit our own emotions. This is a new 2011 publication, but the editor has 36 years of market experience.

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