Has The Secular Gold Bull Market Ended?

Author Patrick MontesDeOca, Director of CMT Group

Posted: 31 Mar 2012

In looking at the secular bull market in gold, we can clearly see that if you had held your core cash position in gold at the beginning of this bull market since October 1, 1999, at the 25 year low of $252.50 per ounce, the net worth of your principal investment would have produced some truly remarkable results.  With gold currently trading in the mid $1660’s per ounce levels, that is a magnificent return of north of 565% since 1999, or an average of 44% annualized return.  


A truly unprecedented historical move for gold against any other investment class assett during the same time comparison.

According to the fundamental data provided by the World Gold Council it appears the answer is a resounding no!  It implies that technically, the structure has entered a new price fractal that is taking into account the current fundamentals ofsupply and demand as well as the geopolitical  and global economic condition, suggesting much higher prices and volatility over the next few years.


Global demand for gold in 2011 rose to 4,067.1 tonnes (t) worth an estimated US$205.5 billion – the first time that global demand has exceeded US$200billion and the highest tonnage level since 1997, according to the World Gold Council’s Gold Demand Trends. The main driver for this increase was the investment sector where annual demand was 1,640.7t up 5% on the previous record set in 2010 and with a value of US$82.9 billion.

The pre-eminent markets for investment demand in 2011 were India, China and Europe.

China and India remain the cultural heartlands of gold, generating 55% of global jewellery demand and 49% of global demand:

  • India remains the largest country for demand with 933.4t, which is notable considering the volatility of the gold price and the weakness of the Indian rupee against the US dollar during the second half of the year. Gold jewellery accounted for over 500t and the investment market demand reached 366.0t. Indian demand accounted for 25% of total bar and coin demand worldwide.
  • In China, annual demand of 769.8t was up 20% year-on-year as a result of increases in both jewellery and investment. The largest rise was in investment, where demand of 258.9t with the value of RMB84.5billion leaped 69%. China jewellery demand increased every quarter of last year and was the largest single jewellery market worldwide for the second half of 2011.


There was also a surge in demand in Europe with the region posting its seventh consecutive annual gain to 374.8t. Germany and Switzerland were the main drivers of growth in the region as the eurozone remains in turmoil and the need for asset protection continues to be a priority.


Central banks continued the trend established in 2010 of being net buyers of gold. Purchases by central banks soared from 77.0t to 439.7t. This reflects the need to diversify assets, reduce reliance on one or two foreign currencies, rebalance reserves and ultimately protect national wealth.


Marcus Grubb, Managing Director, Investment at the World Gold Council remarked,

“What we can see from these 2011 figures is that there were two main factors driving the results: Asian growth and optimism on the one hand and western desire to protect assets against uncertainty on the other. Looking particularly at Asia, there was a major boost to the overall figures from the increase in Chinese demand, which is a trend that we see continuing over the next year. It is likely that China will emerge as the largest gold market in the world for the first time in 2012. What is certain is that the long-term fundamentals for gold remain strong, with a diverse and growing demand base, coupled with constrained supply side activity.”

Gold Demand Statistics for 2011

  • On the supply side, gold mine production reached a new annual record of 2,809.5t, 4% up on 2010. Recycling was down 2% year on year to 1,611.9t, which when average price rises of 28% are taken into account, indicates that near-market supplies are drying up and that consumers may be holding on to their gold in the expectation of higher prices.
  • Gold used in electronics was up 1.1% to 330.4t worth a record US$16.7billion, which is unexpected considering the increase in cost. Annual demand for technology as a whole was steady at 463.5t due to growth primarily in the Chinese market. The value of this tonnage increased dramatically by 28% to a record US$23.4billion.
  • The value of jewellery demand in 2011 reached a new annual record of US$99.2billion. India and China continue to believe in both the intrinsic and emotional value of gold jewellery which explains why overall global jewellery demand was resilient despite high gold prices, difficult economic conditions, volatility and currency weakness against the US dollar. Annual demand was 1,962.9t down 3% from 2010.
  • One major element of fourth quarter investment relates to the significant increase of inflow into gold ETFs to 86.8t in Q4 2011 compared to just 22.3t in Q4 2010. The annual comparison is much weaker as inflows of 154.0t for 2011 are significantly lower than 367.7t for 2010, although this should be seen in the context of 2010 being an exceptional year.
  • Demand for gold bars and coins continues to be robust and was another major contributor of the increase in investment demand, which climbed 24% to 1,486.7t.
  • A record gold price of US$1,895/oz was set on the London PM fix on September 5th and 6th 2011.


A copy of full year 2011 Gold Demand Trends report, which includes comprehensive data, can be viewed at:



The current long term wave count indicates gold will reach above $2500 per ounce by 2016.

The intermediate wave count indicates gold will reach above $2200 by July 15, 2012 and go into an ABC correction for the rest of the year.  The capitulation of this correction should unfold by November 15th, from which level we could experience unprecedented volatility that could propel gold well above the $3200 per ounce level over the next following years

The current short-term wave count indicates the completion of the first leg of a five wave count pattern unfolding for 2012 took place as of February 29th 2012, near the $1800 per ounce level.  This pattern completed the first leg or wave count that begun on Dec 29, 2011 at $1535 per ounce.


The second (corrective) wave count is currently completing all Fibonacci retracements as expected.  Once we can clearly confirm and identify the third is on the way, we can put into perspective the $2200 target objective into the picture for the summer of 2012.


With the current price around the $1660 per ounce level look for a weekly confirmation on a close above $1680 for the trend to turn bullish.


Major Physical support has surfaced in the $1650 per ounce range.  

John Embry’s EXCLUSIVE Interview With Patrick MontesDeOca on 2012 Gold Outlook!

Author Patrick MontesDeOca, Director of CMT Group

Posted: 30 Mar 2012

By Patrick MontesDeOca

On today’s interview we headed out to Palm Springs for the 2012 Cambridge House Economics Seminar. There we had the opportunity to chat with John Embry from Sprott Asset Management.

I have the enormous pleasure of having with us today mister John Embry. John is the chief investment strategist at Sprott Asset Management where he joined the now 10 Billion dollar firm back in 2003. John is an expert in precious metals and has researched the gold sector for over thirty years.

PM: John, thank you very much for being with us here today. I know you just finished speaking at the summit here, could you give our viewers a brief synopsis of your key points what you had to say.

JE: Yeah, I tried to sort of put a different spin on it this time because I have kind of given the gold shortage and what have you. And this time I tried to get across the point that the underlying reason for why one must own gold and silver is the inevitable debasement of money because of a debt situation in the world to which there is no solution.

And I went through each of the various economic entities that are important in the world today and tried to make the case that every one of them there was a problem that could not be solved without either accepting a debt collapse or printing unlimited amounts of money to keep it’s insolvent banking systems and the bad dataflow.

My suspicion is we are going on the latter route and the implications for gold and silver in that scenario are huge.

PM: John, I’m intrigued by Asia’s continued and accelerated push in the precious metals why do you think that investors here in the west unlike their Asian counterparts are generally so underinvested in gold and silver.

JE: That’s an interesting question. I believe very simply that the western investors have been getting a really difficult story from the mainstream media. They’re telling a story that is incorrect. They are trying to suggest that gold and silver are in bubbles, that they are bad investments and it’s been ongoing through the entire bull market.

Nothing has really changed but at the same time there is this enormous volatility in the prices of gold and silver that are created in the paper markets and we put that together with this bubble story that is being told to the public, it just drives them away because they don’t have the background in monetary history to understand what is really going on. I feel very sorry for them. It is going to cost them a lot.

PM: So it is a question of education!

JE: This is very much so. One of the reasons I do what I do is… I am trying to get this across to as many people as possible. But it’s a hard story to sell because you’re going against the mainstream media and they have got a lot of power.

PM: Why are we being manipulated like this by the media?

JE: Well, I think that the powers that be in the west basically have put together a financial system that they want to keep intact and want to keep the U.S dollar dominant. The greatest risk t.o whole fiat money, money system is gold and silver because they are traditionally money and have been for centuries. And if people suddenly realized that this fiat is what it really is, and started abandoning the whole system that has been cobbled together would fall apart. It is going to fall apart anyways they are just putting off the inevitable.

PM: John the Chinese government encourages their citizens to own gold and silver. Should we be paying more attention to this proactive strategy?

JE: Yes, very much so. I think that the Chinese know full well what is unfolded and serve their best interests to employ tens of millions of new people from rural areas every year is required a manufacturing capacity that expanded dramatically. So basically they set up a situation by keeping their currency undervalued that they became the manufacturer to the rest of the world. and they were prepared because it was that these people be employed, the communists, it was the main plank in their whole approach. They basically set it up that they were prepared to take American money even though they knew ultimately this would be a problem. Now that stage is has been reached and they are basically taking steps clandestinely, basically to sort of diversify any from the American dollar. One of the ways they are doing it is having their public buy gold. I believe the government itself is buying gold, buying everything else under the sun they can get their hands on. They are very clever I think we are in a lot of trouble in North America because we have about a vision that is about this far in front of our noses. They are looking decades ahead at all times.

PM: John, with Asia’s continually increasing demand for physical gold and silver could we be nearing a point where this demand is overwhelming the physical and tangible supply of these metals?

JE: Yeah, that is going to be the thing to change as a whole pricing dynamic and that is what is not realized by sort of all the people that are talking negatively about gold. The fact is to date, the gold price has been set in the paper markets and the paper markets can be wildly manipulated with derivatives negative short selling all sorts of arcane strategies. The physical gold market is a different matter. There is only so much physical gold. And if the demand for it ultimately overwhelms that which is available, and it will take over as the pricing mechanism and the whole paper thing will blow up, and it is more important than that. One of the things even able to stay off the inevitable is they have created a numerous number of paper products that are backed by gold and silver that are hypothecated and re-hypothecated to the extent there is very little backing for most of these products. We’re coming near the end of that cycle to but at some point people are going to wake up and realize these gold vehicles, silver vehicles at the paper that they think they have for protection aren’t going to be for protection. That would be dramatic money shifting from that sector into the real stuff. I believe that’s coming before long, and that’s what’s going on in the Far East.


JE: ETF’s are vulnerable.

PM: Derivatives?

JE: Yes to all sorts of these things, your pooled accounts, gold certificates all of this stuff is backed by fractional gold backing, I call it.

PM: John, you mentioned the bubble and there are those that continue to say that gold could be still considered to be in a bubble. Isn’t equally fair to say that the equities market based on recent fundamentals in the global situation could be considered to be in a bubble as well?

JE: Well, that’s where the real bubble is. Because essentially you’ve got trillions and trillions of dollars of new debt paper being spewed out into the world by the sovereign government surroundings, somebody is buying it. I think a lot of it is being monetized by their various central banks. But that’s where the real bubble exists because US paper for five years at .85% is preposterous and even ten year paper at 2%. There is where the bubble lies not even in stocks, in certain stocks yes, but I think if my vision of the world un-falls which is increasing inflation, the place you want to be is precious metals and good quality dividend paying stocks.

PM: John, everything else being somewhat equal what do you think things are going to look like in 2014, when the Fed releases their lock on zero base interest rates what is the dollar inflation and the recovery in general going to look like?

JE: My feeling is that by then inflation genie will be out of the bottle and I don’t even think they can keep up which acronyms. I love zero interest rate policy in effect until then, for the simple reason people are going to realize I am not going to hold this stuff… why would I hold a depreciating asset with zero return so no, I’m not optimistic. I think that we will be facing an ongoing difficult economic situation with mounting inflation and that is the worst of all worlds.

PM: John, can you comment on the benefits of buying numismatic gold and silver coins versus gold and silver bullion, or is there a benefit?

JE: That’s an interesting question because I was chatting with a guy here at the show, more of an expert… certainly more so than I, he was pointing out to me that the premium on new numismatic coins especially old coins has collapsed in the sense that you’re paying seventeen hundred fifty dollars an ounce for a new gold coin which is minted. You’re only paying like fifty bucks more for an old coin that has been around for hundreds of years. Well that is not the case in history so I think there’s a huge revaluation as this whole game unfolds in these older coins with historic value numismatic type. So I think that’s an opportunity and I agree with this guy I was chatting with.

PM: John, do you see the US moving to the gold standard in order to protect the dollar as the world ‘s reserve currency?

JE: If they have the gold and the reserve they report to have that would be the absolute correct strategy. For some reason they have more gold allegedly than any other nation by considerable amount and to sort of gain credence for the currency as this happens and as the paper currency is defaced, I think it will take metal backing eventually to sort of regain confidence. So, I would envision that as a reasonable alternative. And it’s been interesting because people have been asking me the last time gold had a huge bull market, it went from 35 to 850 dollars then it got killed.

PM: What is going to happen this time?

JE: Well this time the situation is totally different. The system is so vulnerable that they will have to re-introduce gold into the system. So I don’t see the correction. I think basically at some point you’ll have gotten the maximum turn out of it and you will be able to… once the system is stabilized take your gold and sell it, which the authorities willingly will buy. Then you can go on and invest it in other things. So, I think it is totally different this time. I think we have a big move ahead of us and I don’t worry about a terminal downside issue.

PM: John, with all this bearish sentiment floating around the media is there a contrary view that we could be approaching possible turnaround here?

To be conservative, and I would say this is conservative though it might not sound conservative to a lot of people, I would be disappointed if in the next twelve to twenty four months gold wasn’t comfortably above the $2,500 maybe $3,000, and I know people smarter than I am saying it is going much higher than that. I don’t think it is necessary to say that at this point because as long as you can comfortably and confidently say it’s going $2,500 to $3,000, that’s good enough for anybody to own it in this environment because there aren’t many other things that are going to return, to provide that kind of safe return.

PM: We love the education and everything that goes along with Sprott’s Asset Management.

JE: Well thank you. It’s very kind of you to say that. I mean, Eric and I have made a conscious effort and we’re old enough now that we’ve seen it all and we really think this is important for people to protect themselves and we are dedicated to try to provide products and advice that will help.

The Easy Money Was Made On Gold!

Author Patrick MontesDeOca, Director of CMT Group

Posted: 14 Mar 2012

Looking back at the 2011 highs in gold of 1923.70, it seems the easy money for the yellow metal was made last year on Sep 6.

If we look at the chart above you can clearly see an ABC correction that bottomed on Dec 29, 2011 at 1535.50. One can also see a classic bullish pattern configuration that in technical terms is called a down flag formation within a potential head and shoulder bottom. This are very bullish patterns that identify any potential change taking place in the market cyclical trends, alerting us the secular underlying major long term bull market is intact and is getting ready to put into perspective and challenge the previous high made for this cycle top which took place in 2011 above $1900 per ounce.

What are these technical bullish patterns telling us after last week’s price action?

On February 29, the market broke more than $100 dollars during the day session with a high of 1792.30 and a low of 1688 closing at 1711.30 down $64.70 from the previous week.

This price action took place during a live televised broadcast by Ben Bernanke, after signalling the financial markets that based on the latest economic reports regarding unemployment and inflation there was no major need or concern by the Federal Reserve Bank to put QE3 back on on the table.

The media had a blast with this information and precipitated what appears to be is a massive maneuver of central bank intervention causing the price of gold to drop more than $100 per ounce and silver close to $1.50 per ounce in one trading day. This has all the signs of another concerted effort by the paper shorts to manipulate the price of gold by causing massive panic liquidation of speculative stop loss orders precipitated by algorithmic trading triggered by the negative sentiment created by the media.

All of this was taking place simultaneously as the ECB was injecting $712.4 Billion of liquidity to the euro-zone crisis, providing record low interest rate loans to member banks. This is the second infusion of liquidity or capital by the IMF and the US in the history of the financial markets according to James Sinclair, one of the world’s leading gold experts in an interview with king World News.

“If, in fact, what Bernanke attempted to tell the investment world today, that QE may not be necessary because of a modest improvement in the statistics of unemployment, if that was truly to be believed, then the stock market should have been off 800 points while gold was gold was down $100. Because the same thing moving the stock market is what’s moving the metals and that is pure liquidity
Click here to read the full interview…

In a King World News Interview, Michael Pento, who founded Pento Portfolio Strategies comments “Global central banks have now entered the twilight zone of monetary policy. Never before in the history of planet earth have we seen such a synchronized counterfeiting scheme to monetize insolvent sovereign debt!read more

As I mentioned earlier, the easy money was made in gold, but let me tell you where lies yet a hidden treasure and the best trading opportunity in decades… and that is in the silver market!


According to Eric Sprott, of Sprott Asset Management and the PSLV Silver Trust ETF, the Gold to Silver ratio should narrow to about 16 from the current levels around 50. This puts the Silver market fair value at around $100 per ounce and according to Mr. Sprott…this will be the decade for silver!…read more

Eric Sprott, had this to say about what took place the day of the plunge in gold and silver:

“I can only imagine it’s the same forces that for the last twelve years have been at work in the gold market, trying to keep the volatility very large on the downside. As you are aware, we hardly ever get days when you get an intraday $100 rise in gold. When we look back at what happened (on Wednesday) we saw huge sell orders in gold and silver.” Eric Sprott continues:


If we take a look a little closer at the weekly silver chart we can see the bottom of this leg was made on Dec 29, 2011 at 26.14. Since this low was made a rally ensued that produced a whopping $11.34 per ounce gain or a 43% move in just a couple of months. It is fair to say the market is overbought at these levels and testing previous levels of support could be very healthy for the bulls long term. As it consolidates at these levels it should continue to offer a major buying opportunity. This unprecedented move appears to confirm we could be looking at the first leg of the yearly cycle for 2012.

Using the high of 37.48 made on February 29th and the low made on Dec 30, 2011 of $26.14, we can identify the following Fibonacci support and retracement levels:

1. 33.10
2. 31.89
3. 30.40


Use any corrections into major support areas to accumulate the actual physical metals as the strong cash money or institutional physical buyers have stepped up their bids around the recent lows made last week.

A weekly close above last week’s highs of 37.48 would confirm the markets next upside target of 45.12 then 49.50, the 2011 highs made on April 29, 2011.



Author Patrick MontesDeOca, Director of CMT Group

Posted: 24 Feb 2012

This is a SPECIAL GOLD UPDATE for February 24, 2012.

As I write this report, the spot February Comex Gold contract due to expire soon, is trading last at 1778 on the Globex session or the Electronic session which trades gold futures 23 hours daily, except for weekends and holidays.

Needless to say, after looking at today’s session it appears the gold market has taken the leadership to the upside once again in 2012, by breaking above the resistance levels and Fibonacci targets of 1766 decisively, with a head and shoulder bottom confirmation.

The gold market has entered the acceleration phase that points to a short term objective of 1950 and then 2190, into the summer time frame.

According to the latest on the Euro-zone crisis, the ECB continue to kick the can down the road and more downgrades are expected. It seems they have lost control as it appears the system is broken and the inevitable may be so obvious that the gold action today might have shifted gears to accommodate what has become a very popular phrase called the “risk trade premium.”

I believe the gold market is looking ahead and has started to discount the worst deflationary case possible as a consequence of an official Greece default, or any other orderly default, masqueraded by any other name it is still technically considered a default and the consequences are extremely bullish for the yellow metal.

The IMF, ECB and the Chinese central banks have signaled clearly their position on maintaining interest rates historically low, in order to be able to print and finance as much fiat currency as it would take to stimulate the Euro-zone out of this economic malaise and pull the world economy out from under this deep recession.

The long – term risks unfortunately support historical levels of inflation with the possibility of hyperinflation as we approach the end of this ponzy scheme perpetuated by our own Government.

In looking at our own back yard and analyzing the US banking situation is another headline waiting to happen.

According to James Sinclair, one of the worlds leading gold experts, our banking system is about to collapse.

US banks currently have $250 million in derivatives controlling more than $30 trillion in credit default swaps. That is a staggering amount that is clearly out of the realm of reality with no probability of success.

With the US borrowing $2 trillion per year, same as the tax revenue of the US as a whole, borrowing as much as the tax revenue is a wash and the US will never be able to repay its debt with current dollars.

Maybe the US should start to sell Bananas instead of Bonds!

Precious Metals like gold and silver are offering opportunities of historical proportions!

Electronic Wisdom Cycles and Global Futures Presents a LIVE Webinar – Part 1

Author Patrick MontesDeOca, Director of CMT Group

Posted: 19 Feb 2012

Thank you for spending this time with me and I hope that I can live up to your expectations in sharing this incredible tool I discovered for the application of trading in the financial markets.

I also wanted to thank Global Futures for sponsoring this event and hopefully we can capture some informative quality time. I hope you had a chance to read how the Vedic Code Price Momentum Indicator came about.  It was through meeting, a chance meeting with Swami Ram Charran, a physicist, mathematician and experienced consultant in Vedic mathematics.

In sharing this information I was able to take this mathematical formula – that is basically an ancient formula that uses Vedic mathematics, and applies the basic Hindu Arabic mathematical system of 1 to 9. This form of mathematics is the basis of western mathematics, enabling me to integrate it with Elliot Wave principles and Fibonacci sequences, thus creating a proprietary algorithm for trading in the financial markets.

In using this formula I was able to essentially make an incredible discovery.  The application of this formula for the financial markets increased the standard deviation ratio from 50% to anywhere from 85 to 90%, which is phenomenal.

Let’s move on to taking a look at the beginning of the long-term cycle which started back in the 2008.  Basically what we’re looking at is a nine year cycle. The basis of this mathematical formula uses the nine year cycle you see on the chart below.


At the bottom of 2008, we experienced this massive financial meltdown, causing all class assets to collapse in value during the month of September of 2008.

I remember clearly… I’ve never had a gut feeling such as the one that I experienced in 2008, and that told me as a trader that we were beginning to experience something really unusual.   Since then, basically the market has followed through with the bullish energy pattern into 2009, as expected and as we look at the acceleration pattern in 2010, it exceeded the objective of 1,800 in 2011.

Now, what you need to understand is that this information is produced twelve months in advance on the yearly charts.  On the long-term charts it is produced nine years in advance.  And on the thirty day chart it is produced thirty days in advance. So, this information is prospective information that you would have been able to have access to before 2008, recommending you hold onto your position all the way till you met your objective and target of 1,800 in 2011.

This is where we are right now.  If we take a look at the long-term chart pattern in 2011, this is a second wave corrective pattern by integrating Elliot Wave formulas.  We have gone into a second wave ABC correction which according to this chart appears to be completed by the end of 2014.  We are in this first leg down from the 2011 highs above 1,800 made on September 6, and within this corrective pattern ever since.

Obviously in following this pattern, what I can say to you is that I have really some serious doubts, based on the recent resolution of the energy of this leg whether we will be able to get down to 1,300 level as opposed to what it appears to be developing, is possibly one of the strongest moves for this particular wave cycle year.

We will take a look at the yearly chart in a minute, but in completing this nine wave cycle gives us an idea in terms of the wave pattern that this code is following and it’s indicating that the completion of this corrective wave pattern should take place sometime in 2014, from which we are going to experience probably the biggest and the longest rally in this market prior to the culmination of what could be the completion of this long term wave cycle top in 2020 above 3,200.  We are looking at prices in 2016 to reach minimum levels of more than 2,500 dollars an ounce.

As you can see, the chart pattern in 2016 completes wave number IV, which is essentially setting the market up for what I believe to be a massive correction to the downside, very similar like the one we saw in 2008.

Let’s move on to basically a comparison of the Gold Vedic Code Price Momentum indicator for 2011, with the real-time chart comparison below and you can see that the actual energy of the real time chart is very accurate or similar to the Vedic Code energy chart that was anticipated twelve months in advance.

Here you can take a look at the top in April… the end of April, and in fact silver got up to about fifty dollars an ounce.  Look at the double top formation that gold made as of September 6, at 1,923.70, before the major downturn unfolded the rest of September.  What we see here basically is that the correction that we saw in April, 2011, was not as deep for gold as it was for silver. Silver came down about 8% while gold was down about 30%, then we saw this massive rally from around late June, early July lasting all the way to September.

I hope that most of you were able to capture this up move and were also able to capture the top of the market that was made on September 6, at 1,923.70.

In fact we documented this trade on our first YouTube tape posted on September 7.  You can follow the recommendations, confirmations that documented what this phenomenal code has produced since.

I want to move on to the next chart above and compare the chart to the real thirty days cycles that we use to capture tops or bottoms in the market as well as the acceleration patterns daily.

If we use the index which is the 1 to 9 axis on the left of chart, anything above 9 is completely overbought.  As the momentum indicator shows anything at 1 is oversold.
So, if you’re taking a look at the 9 year cycle and you are buying long term you would be buying into the corrections.  If you see the previous chart again, the long-term chart for a second, and the yearly chart, I want to point out to you that from this correction that ended December 15, it is the ABC completion of the 5 wave pattern in 2011, and essentially picks the bottom or the beginning of the wave currently unfolding as the first wave pattern for 2012.


Okay.   So let’s go back to the 30 day daily action chart above and I want to point out to you how accurate this was in today’s action.  If everybody was watching we saw a massive move to the upside today.  In fact we are looking at the 25th of January and the code is saying to cover short and reverse to long.  So if you are trading the long side of the market, use the low entry points or the lows of these cycles to buy into your positions.  If you are selling to take some profits use the high points in the chart to shave some profits.  Or if you want to add to your position based on the trend use the acceleration mode patterns.

I want to the move on to the real-time chart above, the weekly Gold Fibonacci Retracement that we published in Seeking Alpha Jan 22, which essentially reflects the Vedic Code Price Momentum chart using a line chart.  And you can see here just on the surface the first impression is very similar to the Vedic Code Chart produced twelve months in advance for the yearly charts.

So, it is pointing to us that here on this chart for example, using Fibonacci Retracements and breaking out of this pattern which seems to be a descending wedge, is a very bullish formation on the bigger picture.  Here from the high made in September to the low made on December 29, we have a bearish flag formation which is a highly technical indicator anticipating the market is about to break out to the upside with the 2011 high as a short term target.

Ladies and Gentlemen, this is indicating to us that we’re about to experience the most historical part of the gold market.  This is a historical buying opportunity and we are beginning to see the price and charts aligning themselves to the energy that has been prospectively forecasted months in advance.

Let’s take a look at the silver market in comparison to the gold Vedic chart above.  Now here let me show you how I am personally using the Vedic Code gold price momentum indicator to trade in the silver market.

To be continued…


Author Patrick MontesDeOca, Director of CMT Group

Posted: 18 Feb 2012


William D. Gann was a trader of the early 20th century. His abilities for profiting from the stock and commodity markets remain unchallenged. Gann’s methods of technical analysis for projecting both price and time targets are unique. Even today, his methods have yet to be fully duplicated.
Known as “The Master Trader”, W.D. Gann was born in 1878, in Lufkin, Texas. Gann netted over 50 million $ from the markets during his trading career, averaging a success rate for trades of more than 90%. It has been said that Gann could very well have been right ALL the time. Any losses incurred by him were only there by his own design and not because of any faults with his methods.
His successes are legendary. Gann literally converted small accounts into fortunes, increasing their net balances by several hundred percent. There are numerous examples of his trading successes, among which are these:
1908 – a $130 account increased to $12.000 in 30 days.
1923 – a $973 account increased to $30.000 in 60 days.
1933 – 479 trades were made with 422 being profitable. This is an accuracy of 88% and 4000% profit.
1946 – A 3-month net profit of $13.000 from starting capital of $4500 – a 400% profit.
The following paragraph appeared in the December 1909 issue of “Ticket” Magazine. It was written by R.D. Wyckoff, the former owner and editor of the “Ticket”, and describes Gann’s proficiency for projecting price targets forward in time:

“One of the most astonishing calculations made by Mr. Gann was during last summer (1909) when he predicted that September Wheat would sell at $1.20. This meant that it must touch that figure before the end of the month of September. At twelve o’clock, Chicago time, on September 30th (the last day) the option was selling bellow $1.08 and it looked as though his prediction would not be fulfilled. Mr. Gann said, ‘If it does not touch $1.20 by the close of the market, it will prove that there is something wrong with my whole method of calculations. I do not care what the price is now, it must go there’. It is common history that September Wheat surprised the whole country but selling at $1.20 and no high in the very last hour of trading, closing at that figure”.  Gann’s trading methods are based on personal beliefs of a natural order existing for everything in the universe.

Gann was part of a family with strong religious beliefs. As a result, Gann would often use Biblical passages as a basis for not only his life, but his trading methods. A passage often quoted by Gann was this from Ecclesiastes 1:9 – 10: “What has been, that will be; what has been done, that will be done. Nothing is new under the sun. Even the thing of which we say, ‘See, this is new!’ has already existed in the ages that preceded us.”
This universal order of nature also existed, Gann determined, and we have the same opinion now, in the stock and commodity markets. Price movements occurred, not in a random manner, but in a manner that can be pre-determined. The predictable movements of prices result from the influence of mathematical points of forces found in nature… And what is the cause for all this points of forces? Right… cosmos…universe… all planets around us. This Gann could say at that time.
These points of force were felt to cause prices to not only move, but move in a manner that can be anticipated. Future targets for both price and time can be confidently projected by reducing these mathematical points of forces to terms of mathematical equations and relationships.
The mathematical equations of Gann are not complex. They result in lines of support and resistance which prices invariably will follow.  Gann held that time is the most important element of trading. Time is the factor that determines the length of a commodity’s price trend. When time dictates that trending prices should react, prices may stabilize for a short period, or they may fluctuate within a tight range, but eventually they will react by reversing direction.


Author Patrick MontesDeOca, Director of CMT Group

Posted: 16 Feb 2012

TORONTO, February 15, 2012 – Sprott 2012 Corporation (the “General Partner”) is pleased to announce that Sprott 2012 Flow-Through Limited Partnership (the “Partnership”) has completed the first closing of its initial public offering of limited partnership units. The Partnership sold 924,181 units for gross proceeds of $23,104,525. The Partnership will have a second closing on or about March 15, 2012. The price per unit is $25.00 and the offering will be capped at $100 million.

Investment Objective of the Partnership

The Partnership’s investment objective is to provide for a tax-assisted investment in a diversified portfolio of flow-through shares and other securities, if any, of resource issuers with a view to achieving capital appreciation and significant tax benefits for limited partners.

Attractive Tax-Reduction Benefits

Flow-through partnerships are one of the most effective tax-reduction strategies that remain available to Canadians. Sprott Asset Management LP (“Sprott” or the “Manager”), the manager of the Partnership, anticipates that investors purchasing Units of the Partnership will be eligible to receive a tax deduction in 2012 that is approximately 100% of the amount invested in the Partnership, based on certain assumptions set forth in the Partnership’s prospectus dated January 27, 2012.

Resource Expertise

The Partnership will be managed by Sprott, an independent asset management company that is dedicated to achieving superior returns for its clients over the long term. Portfolio managers Allan Jacobs, Eric Nuttall and Jamie Horvat will co-manage the Partnership and will be supported by Eric Sprott, Charles Oliver, Paul Wong and Rick Rule. As at December 31, 2011, Sprott had $9.1 billion in assets under management in various mutual funds and hedge funds, including approximately $8.0 billion dedicated to investments in natural resources. Sprott specializes in investing in small and mid-cap stocks, and searches for opportunities that have material potential upside. Sprott emphasizes independent thinking and seeks consistently to be a leader in understanding macro trends and their implication for specific industries. The Manager also manages the Sprott 2011 Flow-Through Limited Partnership which had an investment portfolio with a net asset value of approximately $46 million as at December 31, 2011.


The offering is being made through a syndicate of agents led by RBC Capital Markets and included, CIBC World Markets Inc., TD Securities Inc., BMO Capital Markets, National Bank Financial Inc., Canaccord Genuity Corp., GMP Securities L.P., Scotia Capital Inc., Desjardins Securities Inc., Dundee Securities Ltd., Macquarie Private Wealth Inc., Manulife Securities Incorporated, Raymond James Ltd. and Sprott Private Wealth LP.

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Author Patrick MontesDeOca, Director of CMT Group

Posted: 13 Feb 2012

Click Here to Contact Us for More Information

The following was excerpted from R. N Elliott’s book “Nature of Things”

Human emotions, as mentioned in the preceding discussion, are rhythmical. They move in waves of a definite number and direction. The phenomenon occurs in all human activities, whether it is business, politics, or the pursuit of pleasure. It is particularly evident in those free markets where public participation in price movements is extensive. Bond, stock and commodity price trends are therefore especially subject to examination and demonstration of the wave movement. 

This treatise has made use of price movements in stocks to illustrate the phenomenon, but all the principles laid down herein are equally applicable to the wave movement in every field where human endeavor is registered.

A completed movement consists of five waves. Why this should be five rather than some other number is one of the secrets of the universe. No attempt will be made to explain it, although, in passing, it might be observed that the figure five is prominent in other basic patterns of nature. 

Taking the human body, for example, there are five extensions from the torso – head, two legs, two arms; five extension form head – two ears, two eyes, the nose; five extensions in the form of fingers, from each arms, and in the form of toes, from each leg; five physical senses – taste, smell, sight, touch, hearing; and so the story might be repeated elsewhere. 

In any event, five waves are basic to a completed social movement and can be accepted without necessity of reasoning the matter out.

Three of the five waves that form any completed movement will be in the direction of the movement; two of the waves will be in a contrary direction. The first, third and fifth waves represent the forward impulse; the second and fourth waves, the contrary, or corrective. Stated otherwise, the odd numbered waves are in the main direction; the even numbered waves, against the main direction.

 It is generally accepted as a truth that law rules the universe. Even if we do not understand why or how an exactly every event happens, we can use observation to predict the re-occurrence of an event. For example, we expect that the sun will rise every day, and by observing the changes in seasons, we can predict the time when it will rise. Man is a natural object, just like the sun, and his actions are also very predictable based on certain criteria (like the seasons).

Elliott’s Wave Principle is based on this scientific knowledge and additionally on the knowledge developed by Fibonacci on his sequence. What everyone does not know is where Fibonacci got the basis for his sequence.

The base of his knowledge comes from observations made and recorded thousands of years ago in the Vedas. The Vedas are the scientific and sacred books of the Hindus.

They are scientific treatises that systematically expose knowledge about mathematics, science, government and religion.  In Vedic Mathematics the energy of everything in the universe is measured in a scale from 1-9. These energies are called Vedic Wave Cycles.

These numbers represent the particular energy associated with every natural object including stocks of companies.

The complete understanding of this energy has been reserved for thousands of years to Hindu Sages and Priests. As our world changes, there is an opening of consciousness and knowledge and the opportunity exists to share this wisdom with a larger audience worthy of receiving it.

It’s obvious  from the above that Elliott had an idea of the Vedic Wave Cycles which represents the movement of all of life in 9 waves. Elliott as you can see above counted only EIGHT waves not NINE. He seemed very sure of the first 5 waves but careful observation of his writings will show that he was unsure about the movements of the last three, that is because he was missing a 9th wave movement in his theory. This affected his final conclusions about the nature of the universe and so was never able to accurately predict the full movement of the waves.

If we are going to track the movements of the universe in the form of waves we must consider the factor of “death” or “the end” or else we will never have a beginning.

Everything happens because of life and death which are the main points of any system that exists in the universe. Consider a complete line A-B at rest with no wave movement

                A    _______________________________________ B

A can be considered the birth of any system and B can be considered the death of that system. What happens in that system is a “rhythm” decided by the energy of the starting point. If A is a company that was formed at Point A then all the expenses, the employees, the funding and the players will depend on whether point A was aligned and began with good universal energy at that point.

If Point A was started at a negative “time” then it will affect the length of its life in such a way that point B can be shorter or longer relative to A. For greater understanding let us take a baby born on point A. Depending on the “time” it took birth when the mother was abused constantly by the husband, then obviously the success of the kid would be short-lived or difficult.  However if the mother was romanced and loved greatly by the husband, then the Point A conditions would be so energized with positivity that the length of the “Time Line” between A and B will be longer and much more prosperous for the Kid.

So as you can see the 9th wave determines the death point of the whole system. This final wave is missing in “Elliott Wave Theory” and so the death wave point is not identified in the system, so at some point the theory will advance perfectly up to the 5th wave but will fail in the 6th to the 8th. This will leave two unknown values: the starting point of the new system as well as the ending point of the old system after the 8th wave.

Between Point A which is ZERO and the last point B there will be only 8 wave movements which Elliott did identify but was unable to see the birthing point A and the death point B. If these points are identified then the 8 waves are easy to identify and analyze. An energy condition will be identified accurately.

Before we proceed to examine the method of finding these points we must first understand “TIME”, as waves cannot operate without it. If there is no time then the wave movement is just a dot (or particle). As you might have observed in the above writings , we placed the word time in quotations because this is a crucial factor to determining point A and Point B.

Time is not a tangible factor that can be identified easily as it is value is not fixed nor is it determined by a ruler of any kind. It is a perceptive value. It is this very factor called time that causes scientists in quantum physics get confused by the fact that Light energy photons acts as waves sometimes or as a particle other times. It is because when time is absent, it acts like a particle and when time is present it acts like a wave. Now we must look at how time affects all of life as well as the waves in the stock market.

A death point is determined by the perception of the observer. In any experiment the observer cannot take his perceptions out of the experiment, therefore every time an observation is made the result of that experiment would include the perceptions of the observer.

This is why scientists are confused with Nuclear and Particle Physics experiments. Their conclusions involve also the observer’s perception. The perception of the observer is further affected by his or her knowledge and what measurements he used to determine his or her results of the experiment. The same way the investor will have to measure the results by his method of measurement. He will have to determine the up and down movements of his investments by inserting the factor of time based on the type of measurement he wants to perceive those up and down movements of his investments.

For example if he is a weekly investor, only the beginning of the week or the end of the week matters. What happens in the middle week is immaterial. If the wave movement is from up to down then he will lose and if it is from down to up he will gain.

The same procedure would apply when if the Point A and B represented a month or period of one year or ten years. Whether the stock goes up or down the movement will not be considered part of the “time” perception.

It must always be remembered that the complete system is made up of the Vedic Code movements of 9 waves with the point B being the end of the system measurement choosen. The ending point being determined by the beginning point in a 9-wave system called the Vedic Code Waves.

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