Gold’s Daily Cycle (continued)

As expected, gold has formed an interim bottom near the 1409.90 level in line with the half-cycle frequency of 6.8 days (.5 harmonic), albeit almost a day later than anticipated. Given strong volume on an uptick testing this level, our point of reversal has been confirmed.

The next 6.8 day cycle ends on Thursday the 17th of March, and should yield new highs on or before this date.

Previous week posting:

The daily gold cycle averages 13.6 days. A cycle inversion is often the precursor to a significant upward move, following a retest of band support (~1400-1410).

The next two pivots should be half-cycles in accordance with the cyclical inversion, and thus the decline to 1400-1410 should bottom 6.8 days from the previous local high that occurred on March 2nd. Therefore, the low should arrive Wednesday or Thursday next week (the 9th or 10th), with a retest of 1440 the following week mid-week.

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An Adventure

Tochter aus Elysium, wir betreten feuertrunken,
Himmlische, dein Heiligtum!
Deine Zauber binden wieder,
was die Mode streng geteilt:
alle Menschen werden Brüder,
wo dein sanfter Flügel weilt.

 Joy, beautiful spark of the gods,
Daughter of Elysium,
Touched with fire, to the portal,
Of thy radiant shrine, we come.
Your sweet magic frees all others,
Held in Custom’s rigid rings.
All men on earth become brothers,
In the haven of your wings.

— Friedrich Schiller

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Technical Gold Chart – March 4, 2011

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Daily Gold Cycle

The daily gold cycle averages 13.6 days. A cycle inversion is often the precursor to a significant upward move, following a retest of band support (~1400-1410).

The next two pivots should be half-cycles in accordance with the cyclical inversion, and thus the decline to 1400-1410 should bottom 6.8 days from the previous local high that occurred on March 2nd. Therefore, the low should arrive Wednesday or Thursday next week (the 9th or 10th), with a retest of 1440 the following week mid-week. Following this, it is off to new highs.

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NFP and Gold

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The Recovery

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Silver Overnight – February 22, 2011

Silver saw a modest overnight correction, given up slightly more than $1.10 as of 5:40am Eastern Time. I have received a number of emails from those concerned this may be foreboding of a substantial correction. On the contrary, I believe this momentary weakness is one of the final opportunities the market will require to regain its composure, prior to igniting a multi-month rally in the entire metals complex.

As is the case in all markets, price studies are a matter of perspective. Long term trends always override short-term price action, and cyclical due dates always trump technical signals. For the gold and silver complex, a cyclically-defined intermediate term pullback is not due until the May timeframe, and may be shortlived at that. I anticipate this pullback to follow only after a breathtaking rally, largely in the process of being catalyzed by the emerging silver shortage. Through the employment of unique functional forms to fit each phase of a bull market, it is becoming quite obvious that silver is in the process of defining a higher-order trajectory. This means that the previous functional form governing its rally behavior, of the 2nd degree, is now becoming a higher order (3rd degree) function. Once previous resistance defined by the long-term 1st order and 2nd order trend lines is confirmed as support, it is off to the races.

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