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loki01

11,124 Posts.

632

09/10/16

11:47

Post #: 19726298
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Originally posted by V* ↑

This is going to be a monster.

Longs in BDR have all suffered greatly at the hands of what is a clear pushing down of POG in recent months, despite many of us here seeing the bad economic data, believing this is a reason to run to the 'safety' of gold, but that's not happening anymore.

Friday night's bad data not giving POG the lift many of us think it deserves shows the bears now have the upper hand, and we have witnessed this 'opposite effect' in POG's reaction to economic news coming out of the US a few times in the recent past now, so excellent post Col. Let's keep perspective of your sentiment here. This why I posted in great frustration Saturday AM for why I'm feeling like 'giving up on gold', it's not behaving how I think it should anymore.

Charts:
(this will be a long one, apologies - focus on daily bars)
I see right now 2 intersections of current support. Currently the lower side of this diagonal up channel, and the current support level at around $1,250 (lowest point on the day of Brexit).

Despite a dip under that level on Friday night, it's currently holding, and the dip under both supports could be considered to be a 'spring'. @Jako64 from the XJO daily threads kindly explained springs to me in a brief way that seems better than my google searches for the term, many are out there. Take a read of that if you have no idea what a spring is.

Respected posters (@AverageJoe and @wombat53) have repeatedly told me not to rely on diagonal lines in my analysis, and this may be where I finally have to concede they are spot on. I notice also that Jako in XJO nearly every day focuses on these horizontals, so POG's continuing falls may keep going and this may end up being a very tough lesson where I realize I have to give up using them!).

However, in the support of diagonals - The diagonal downtrend from the $1900 peak in 2011 (top red line in above chart) is precisely where our highs for the year have found trouble breaking! Each and every time POG approached that line, it refused to break through. Coincidence that it matches exactly to a diagonal trend? I think that gives diagonals some credibility here).
**The almighty wedge formed by this lower green and upper red look like they come to a head around end Jan/start Feb.

If we focus on something like moving averages instead, it appears the diagonal haters are on the money.

Look at an example from the past, say, the huge run up to US POG's all time high, you can see that it was always above the 200 day moving average (the blue line), so POG this week breaking that is quite scary for gold longs. In this chart below (daily), once the 200MA broke we saw years of POG turning (predominantly) down. A massive slide from $1,900 to $1050. This chart is a good argument for getting out of goldies now.

Now a look at the more credible horizontal. and this is where POG longs must see it hold right now.
It is still holding if you consider the dips under as a spring, and the number of times POG poked it's head above the 2011 downtrend only to fail breaking through, so too here could any dip under this support be considered temporary in nature).

Specifically looking at the current area - these 2 horizontals is where it's currently battling, and longs need to see this break to the upside. With bears in control, it's not encouraging, but a fighting chance ATM. I reckon a break downside of this area will see a whole new lot of longs throw in the towel and we could see another brutal sell off.
(hourly)
look at this red line. support twice in the past.
It looks dangerously like a resistance right now.

that's pretty much it.

So for BDR holders, we have to now hope for:
1) China coming on Monday to buy POG back up.
2) Drill results, and quarterly to meet or exceed forecast. A good drill result monday could be a nice way to offload a few, LOL, along with everyone else!!
3) A bounce from POG so very oversold and the intense and mostly all down moves the past 1-2 weeks.
4) We need POG onside for this but currently BDR is touching a double bottom at 35c.

I'm not feeling very positive, but that's the way I see it at the moment.
and at what point will investors stop moving with every downthrust in POG and focus on the fundamentals? IF BDR lose 1c for every $10 drop in POG, the share price hits ZERO when POG touches $910, LOL. We are still making a small profit there
If we were seeing the same income vs expenses in any other company (underwear, pizzas, anything!!) then BDR is surely going to have to move up a bit soon. but all eyes are on where gold is going to so if that keeps going down, we are all screwed. Let's see how it pans out...
IS the bull run dead yet? We won't know till it retraces 20% to $1,100 an ounce.
I hope this is a corrective retrace that runs hard again, but not likely to see a new upmove until elections are over and the US has a rate rise!!!!

View attachment 285155

Expand

V

I think there should be a bit of a move back up towards USD1300 coming later this month, but I do not know if the gold price will be back over this level until after the US Fed has had its one per annum 0.25% rate hike in December, when I think there will be some extreme volatility for all asset prices.

Chindian retail gold demand is weaker this year, but Chinese gold investment demand is strong. Indian farmers are/will be using their savings from a much better harvests (end of 2 year drought conditions) to repay borrowings, while I suspect the average person in China is struggling with incomes not rising like they used to. Gold demand from the middle east is also low due to poorer oil prices. What has saved gold this year is the much higher investment demand for gold, which is partly driven by momentum speculators, who will fear the effect of the rate rise given the way the market played out late 2015/early 2016.

Interestingly, the commercials liquidated 54k short contracts for the week ending last Tuesday (US time), and its possible that more of their contracts were closed since then - see link - this is usually a positive sign.

http://news.goldseek.com/COT/1475868761.php

I am expecting some improvement in the gold price once the Chinese holidays end tonight, so given the US is on holidays on Monday the gold price should drift up.

For the downside, if the USD1180-1200 region does not hold then I suspect goldies are in real trouble.

At this stage I would not be jumping off any bridge. If BDR meets its targets then the market will take notice and give the share price a bit of lift - but this info is not at hand at present.

You may want to reduce your exposure to goldies if there is a good rally so you can sleep more comfortably. Like I said we do need that rate rise decision out of the way plus a return of Chindian retail gold demand for the gold price to rise appreciably (baring some black swan event or higher inflation).

Good luck.

loki (still holding many goldie shares including BDR, plus a useful cash stash for emergencies)

BDR Price at posting: 35.5¢ Sentiment: None Disclosure: Held
16 Upvote

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