Arabica futures failed to break out of the falling wedge yesterday and immediately knocked down 4.6%. Now moving up positively on the 15 minute chart.

     Although money has been in flight from mining shares, the same cannot be said of the metal. Allocation of funds to stocks is on the up, but via government interference, not from gold.

     The Dow/Gold ratio is rising short term, but long term this may not be significant by reference to past cycles. Measured by 1oz increase from previous lows:

18 years Dow/Gold 1915 to 1933 from 0.05 to a ratio of 14.3oz and back to -0.56.

46 years Dow/Gold 1933 to 1980 from 0.32 to a ratio of 25.48oz and back to -0.2.

33 years Dow/Gold 1980 to date from 0.05 to a ratio of 40.64 and back to 6.63.

     Perhaps this time it will be different, but my money will be on gold for a while yet'

Stats courtesy of www.macrotrends.org    

Hello zwyss,

I started trading coffee on the 4th Jan, now on my eighth trade. Mixed results so far, small profit overall, allowing for the paper loss on current position.

The overall pattern still seems to me to be part of the bottoming process, perhaps we shall see a double bottom. This is the time of year when coffee prices often improve, however I should expect to close out if it goes below the December low.

c32y7pr8

Several small trades in Arabica coffee starting from 4th January. Down 5% in two hours today took out my position, so went straight back in at the lower level. Some reasons to be cheerful:

seasonality, price often rises at this time of year

position covering by hedge funds, which have built up a historically large net short position in New York futures and options

"there is potential for a rebound in prices" ---- Barclays 24.DEC.12

Meanwhile Newmont has just broken out of its 2013 falling wedge.

You have an election over there?

A couple of weeks ago I placed a long at 9.12 with a wide stop. After falling to a low of 8.28 it has picked up and this week it is now challenging previous highs at the 9.70 level going back to July.

     I have been trying to identify miners based on price performance. It is difficult with all of them appearing terminally ill. Of the few that I cover regularly ARZ has been looking better than most in recent months. It is one that I have not traded much. Others showing relative strength are TNX, AUN and SVM, all of which I trade, and done well with AUN. On the whole I prefer silver and although not impressive at the moment I have until recently traded GPR many times with oustanding results.

Interesting chart. I notice that price is also ready to break out of a symmetrical triangle which started from 12.1.12.

Thank you Steve, quite neat. I didn't look at that one.

All three of these entered diamond patterns on 14th March, and price is now well into the right hand apex. These show well on the daily chart. A breakout could ensue before the end of this week. On the mining indices this only shows as an elongated hesitation area.

     My experience is with the purchase of Krugerrands. Many years ago it was a simple matter to buy over the counter from a number of dealers including Spink, and the spread was very low. More recently as the spread increased, I used Baird & Co. at Hatton Garden. That has all changed now. It is difficult to find anyone selling over the counter and the spreads are all unreasonable. The Royal Mail is now completely untrustworthy, as I have found to my cost recently.

     Baird & Co. only trade wholesale at Hatton Garden. Their retail is now in docklands, way over to the east of London, near Beckton. My last order was collect and it was a memorable James Bond sort of experience. Huge warehouses and masses of high protective fencing. No humans to be seen, a voice booming out instructions for entry over the Tannoy. As the automatic gates rolled behind me I wondered whether I should get out alive.

     The current Baird price on their website for a 1oz. Krugerrand is £1177.75. which is just over $1800

     Puma has commended William J O'Neil's 'How to Make Money in Stocks'. I have a copy of O'Neil's 'How to Make Money Shorting Stocks', which is packed with analysis of topping patterns breaking down.

     The development of SPX over this year has followed his anatomy of a short sale, with a late stage base failure at the beginnin of August and now on the daily chart the pattern is in the processof forming the three to four rallies above the 50MA, providing the 'proper' shorting point. He gives details as to which of these rallies is ideal to short.

     A couple of illustrations  of the many charts that he describes and which resemble SPX to date, are CISCO AND LUCENT in 2000 and again in 2001.

     Thank you for that jdaswani. Fundamentals is not one of my strengths. I am not alone with bad timing, only two weeks ago Credit Suisse reported an AEM upgrade from neutral to outperform, with an increase in 2011 EPS from 2.13 to 2.21.

     I find it hard to believe that a company with such a broad range of successful projects will remain long at this low level, unless they continue with disasters. Only last March there was the fire at Meadowbank, Nunavut.

     The 20% fall in AEM today is apparently due to closure of a mine, a high cost setback (to me as well because I hold positions). However, if as has been reported, the cost is equivalent to one dollar on the share price, what does the market think it is doing, marking it down 11.5 dollars?

     If this is just an expression of fear, then it is an opportunity. In an article yesterday Stewart Thompson wrote that Gold is not burning today. It's on sale.

     In any case I am a buyer at this level.

The breakout is upside so I am adding to longs.

AEM has formed a neat diamond over the last couple of days and appears to be about to fall out of it. Whichever way, sometimes AEM leads gold.

I sent a couple of posts drawing attention to this diamond reversal. It is a very tradeable pattern which frequently works well. 

I trade AEM continuously. It has been a longer wait for this wedge to break out than anticipated.

Last month I commented on Randgold, with a potential diamond pattern. A week ago there was a breakout downside which now looks to be false, as this weeks strong reversal may now confirm the bottom reversal that I previously envisaged. Not the best of examples of the pattern, but still validated if this rise continues.

Matt showed two TBT charts, numbered 23 and 24 in the newsletter, 30th May.

The daily chart of Randgold (GOLD Nyse, RRS Ftse) shows a potential diamond, quite well formed, nearing completion. I have had a high success rate with this pattern in the past both as continuations and as reversals. Bulkowski only classifies reversals, and classes continuations as failures, but then, his study presents a number of such idiosyncracies.

Barring a market upset, I should expect this to develop into a diamond bottom reversal.