Calvin? Anyone Seen Calvin?
Meow! Looks like Calvin decided to show up this morning, right on time. Though this was predictable and somewhat of a relief to see, I wouldn't get too carried away just yet.
I once again attempted to draw the charts below as accurately as possible. The main takeaway here is that the lower end of the current down channel is the old down trendline from the highs of last August and November. Here, take a look:
In the grand scheme, really big picture, you must remember that this is exactly how this is supposed to work. When price moves through a down trendline, it typically springs higher and then retraces and "rides" the line lower, on the other side. We've talked about this phenomenon here at length on several occasion. As you can see on the weekly chart, gold is doing just that. Up until this week, the pattern was perfectly fine and gold looked ready to finally skip away from the line. Instead, here we are. It is faith in this pattern, however, that leads me to conclude that it is highly unlikely that gold will trade much lower than 1575, maybe 1550. The horizontal support there should be sufficient to allow gold to base between 1575 and 1625 and then, finally, break through and out of the channel.
Here's another look at the channel, this time on a daily basis:
Here's the best, longer-term silver chart I can give you. Note that The Battle Royale line continues to press silver lower, all the while anything from $30 down to $26 will see buying. This pattern will, eventually, be resolved but...as you can see...it could still be a while. Patience. Wait for the breakout or you risk getting whipsawed to death in the interim.
Just one, quick thing and then I've got to go. If you haven't read this yet, please do so now. David Stockman was Budget Director for Reagan back in the early 80s. Given that, this interview is rather remarkable:
Sorry for the brief note this morning but other duties call. More later. TF