Louise Yamada is hands down one of my favorite Technicians of all time. Since I first got into looking at charts to supplement my market analysis, I have looked up to her as a mentor. I’ll never forget the first time I saw her speak to the Market Technicians Association years ago. We were in the huge conference room up on the 6th Floor of the Bloomberg Building, and after several speakers went up with their elaborate power point presentations, it was Louise Yamada’s turn to do her thing. She completely ignored the computer provided for all of the speakers and pulled out these huge hand drawn historic charts of Citigroup and General Electric. The charts were bigger than she was. She held them up over her head proudly and completely crushed the dreams of the $C and $GE bulls in the room. This was back before they crashed – she nailed it.
This week she sat down with King World News to discuss her outlook on precious metals, Inflation and the US Dollar:
“Gold continues to be in an uptrend in our work. You had a little bit of a consolidation, seasonality would suggest a rise into the fall. The primary support level remains at $1,475…Our next target is $2,000, and we did a gold special in our last piece that suggested from a very long-term perspective…we could see $5,200 on gold.”
She has been bullish on Gold for a long time. Here at Allstarcharts, we have been discussing Gold for a while, but its Silver that gets the Volatility. It’s Silver that gets the headlines. It’s Silver that people want to know about:
“We hit part of our silver targets at $50, (expect) $65, even $80, $85 over time. We had an 88% rally in a very short period of time from January and a one third retracement, 34% down, so that was pretty normal. We saw some support at $33 and would loved to have seen it go sideways a little bit longer to be honest with you.”
But lets talk a little bit about the Denominator in this whole thing. The bottom half of these ratios are just as important as the top half. The US Dollar as we all know doesn’t stop going down. Literally, we’re going on 10 years of declines:
“I think that one of the observations that one has to take into consideration is that with each of the Euro financial crises and our own financial crisis in 2008 to 2009, the dollar has rallied less!
In other words you had a rally in 2009 that carried 25%, then in early 2010 the rally was only 19% and the second one in 2010 was only 7% and this time you haven’t even seen 7% with the crisis that has evolved. So that suggests to us that it (the dollar) is becoming less and less considered a really safe haven. Bear in mind that the 80 level for the US dollar is a major 34 year resistance level now having broken down through that in 2006, 2007. So our longer-term declining dollar profile remains in place.”
There you have it. Directly from the horse’s mouth. A legend in the field of Technical Analysis telling it how it is. We’ll keep watching these charts closely for any signs of a major change. Meanwhile, I think it’s best to stick with the major trend that has been in place, is currently in place, and will stay in place until proven otherwise. I’m not in the business of fighting these monster themes.
Go check out Louise Yamada Technical Research Advisors, LLC