Let's Make Some Sense of Today's Gold Market

Posted on by The INO.com Team

It's been about eight days since we did a video on gold, and given the market action today I thought I would look at what is causing the downward pressure in this market.

If you did not watch my last video on gold, I strongly recommend you click here to watch the video titled "Five Reasons Why Gold Will Not Make a New High This Time" as it will give you a bigger picture of how we see this market playing out in the next 12 months.

In today's short video we look at an indicator that we have not talked about before in any of our videos. The indicator, which is an overlay on top of the chart, is called the Donchian Channel Indicator.Richard Donchian, who has since passed away, came up with this indicator in the late '40s. The reason why I like this indicator is the fact that it has successfully stood the test of time. I think you'll really enjoy seeing how it can help you make money in the gold market.

Also in this video, I point out one very important cycle that is in play now and where I think the next tradable low is coming into this market.

As always our videos are free to watch and there are no registration requirements. I would really like to hear back from you, with regards to your thoughts on the gold market. You can comment quite easily on our blog.

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

16 thoughts on “Let's Make Some Sense of Today's Gold Market”

  1. Doctor Stock,

    Thank you for your feedback.

    These are simple observations of market movements. There is some very well known and documented cycles in the stock market. These cycles tend to expand and contract as time goes by.

    In regards to Gold whether or not this cycle works remains to be seen. I did however make a longer-term analysis based on longer-term gold cycles. You can watch that video here:

    http://club.ino.com/trading/2010/02/five-reasons-why-gold-will-not-make-a-new-high-this-time/

    All the best,
    Adam

  2. I'm not an expert on the commodity cycles; however, I'm not sure it is as simple as looking at the last two highs and lows assuming the third set will follow the first two. Why? Can you assist me? If it was that simple and predictable, wouldn't everyone be selling it now and buying in about 14 days?

  3. Adam,

    I'd be interested in the same analysis being applied to oil. The oil ETF (hou.to in Canada) recently produced a negative monthly trade triangle. As the chart shows, monthly triangles are rare. So this looks like a lady dancing on the table to me.

    As usual, of course, the ETF strengthened after the monthly indicator(see Google where same thing happened before it trended down).

    If you have time, I'd love to see an update on this oil action after your previous video predicted lower levels and then the negative monthly triangle seemed to confirm the trend, despite oil being up 3.25% today.

    Regards

  4. I keep hearing early to mid 2011, yet we've seen a lot of gold just sit on the market. With no takers and investor confidence falling, it took a rumor and a whole new batch of speculation to pull out of this weeks fall. As it turns out, China isn't buying the gold.

    In a falling market the seller takes the gains.

  5. Witty,

    Thanks for your feedback and thoughts.

    I think that the gold market is more in a trading range than a downtrend. Not sure if you watched my earlier video on gold "5 reasons why ..." but I think that gold should make new highs in 2011 based on cycles repeating.

    All the best,
    Adam

  6. I have different point of view.

    From Elliott's wave, in weekly chart of gold, I believe that we are in b of 4th wave or 1st leg of 5th wave. Now gold has retraced 50% from up leg on Feb 5 to Feb 22 and may be turning up again.

    If u draw down trend line from historic high on Dec 11 to Jan 3, u would find that gold break the line up. So I don't think we are on down trend like your opinion.

    I may not be right, just want to exchange idea with u.

    Thanks,

    witty308

  7. Charts and indicators aren't all there is to life. Any major event could render any of those things useless.

  8. Hi Adam,

    Gold price moves are not just about technical and charts, there is just more to it than meets the eyes. Here is an interesting article that
    makes my point,

    Ignore the IMF sales - Soros is right about gold
    http://www.moneyweek.com/investments/precious-metals-and-gems/imf-soros-gold-price-00807.aspx

    Last month, at the World Economic Forum in Davos, Switzerland, he declared that gold is "the ultimate bubble". Fears were quickly sparked that the precious metal would tumble.

    Various writers, fund managers and investors worked themselves into a frenzy. Many jumped ship and within a week we were trading down to levels last seen in October, almost $1,050 an ounce.

    But one canny investor, it seems, was buying. George Soros…

    Enjoy!
    Bruce

  9. Interesting that gold is up! Interesting also that the most recent F-13 submitted by George Soros indicated he recently bought a bunch of gold while giving the head fake that it was a bubble. Russia bought more and rumor has it that China bought all the IMF had left! In times when we worry about Soverign debt no fiat currency is safe. Gold is the safest place to be for now and for several years.

  10. Adam,

    Many thanks -
    i like your approach -
    make sense to me and in general i agree

    Thanks for a novel behaviour of passing on the word

    Kind regards,
    Yoav

  11. Very interesting way to look at the Gold Market...thank you.
    It sure doesn't hurt to have another arrow to pull out and use in a calibrating way.
    The most useful information for investors will be using the tools to catch tradeable set-ups in this consolidating market.
    Looking forward to seeing it play out.

  12. What's the difference between Donchian and Bollinger Bands? Does this same interpretation hold true for gold and platinum stocks as well?

    How do you set it up? As you noted you can adjust the band width on the fly, same as B Bands. Seems you can get it to tell you what ever you want if to tell you. Don't want it to be in a down trend, then just widen the bands so it does not touch and walla you maintain the uptrend. Of course, you may end up losing your arse, so what's the magic setup? Are you making this sound too much like science?

    1. Rick,

      Thanks for your feedback.

      The difference between Bollinger bands and Donchain channels is this. Bollinger bands use a percentage from a centered moving average line. Donchain channels on the other hand use the highest or lowest point for X days. That is the fundamental difference between the two.

      Technical analysis is part science and part art and a whole lot of interpretation in between.

      All the best,
      Adam

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