Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Has the Gold and SIlver Parabolic Rally Come to an End?

Commodities / Gold & Silver 2009 Nov 27, 2009 - 06:36 PM GMT

By: Przemyslaw_Radomski

Commodities

Best Financial Markets Analysis ArticleGold has been moving parabolically in the past few months, but is this the final run up? I seriously doubt it, because the levels that I expect gold and silver to achieve (mentioned in the previous Premium Update) at the end of this bull market are still very far from where we are today.


Please keep in mind that the road to the top will not be a straight line, and since that is the case it makes sense to take advantage of the inevitable corrections. Let's examine the chart (charts courtesy of http://stockcharts.com) of gold to check if we are close to another buying or selling opportunity.

Once gold broke out of its resistance line, gold moved much higher (as suggested several days ago) and it has been moving in a parabolic fashion. This type of upswing is usually very profitable for those holding the metal, but confusing for those trying to time the top. This time is no different, as the short-term chart doesn't provide us with any reliable targets for this rally. On the other hand, gold appears to be the only part of the precious metals market that is really thriving. Such divergences are not really encouraging for anyone long gold, or any other precious metal, especially given their poor performance today.
 
Let's turn to silver and check what is the white metal likely to do next.

Silver has more than doubled in the past year, and it is finally very close to its 2008 highs. However, before these resistance levels are reached, silver much first breach through the rising red line that has proven a strong resistance many times in the past. The Stochastic Indicator is currently above the 80 level, which means that a top might be put here (it is a necessary condition, but not a sufficient one). The RSI is not in the "extreme overbought" territory yet, but it is now very close to it.

While it may make sense for super-aggressive speculators to wait for the final signal, from my point of view it seems that most Investors would be better off closing their positions a little earlier. The sell-offs in silver are usually very volatile and take the metal much lower in a short time frame, so unless you can monitor market almost constantly and sell during the early part of the plunge (its hard to get your orders filled during that time). Let's take a look at silver from the short-term perspective to see if we it confirms the above analysis.

The short-term silver chart confirms the points raised above. Apart from the fact that silver is now near the short-term resistance level (thin blue line), the additional signal comes from the volume. Please note that the volume was much higher on Tuesday, when silver declined than it was the case on Wednesday, when it moved higher.

The seasonal tendencies provide us with additional details. This time silver is already closer to the "top" area than it is to the "bottom" one. While the next vertical red line (topping area) is "scheduled" on second week of December, it is certainly possible for silver to top sooner. Please keep in mind that these tendencies have been very reliable, but often on a "top/bottom in near" instead of exact dates. So, if the top is to be reached soon (or it has just been reached), it would not invalidate the whole pattern.

Since this week's Premium Update includes the analysis of gold in currencies other than the U.S. Dollar, I believe it is a good idea to feature also similar analysis of the silver market.

The chart of silver is not that bullish, as it is the case with gold, because there is no visible rising trend channel. The late-February - today consolidation may be seen as flag pattern, which means that the rally following the breakout is likely to take the ratio much higher - taking into account the size of the October-2008 - February-2009 move preceding the consolidation. In this case the target would be above 0.75 - above the 2008 high. Naturally, I expect this to mean higher silver prices in USD as well.

However, this is not likely to take place immediately, as the ratio has just reached one of the important resistance levels - the July 2008 high. This means that we may need to see silver trade sideways before a more significant move. Today's price action seems to confirm this.

Moving on to the situation on the Dollar market, let's begin with the long-term chart.

There are no big changes on the above chart since I featured it in the October 30th Premium Update, but I decided to provide you with this chart anyway, as it helps to put things into proper perspective. The size of the current downswing is still not very big when one analyzes it from the very-long-term perspective, so I don't think that a rally from here is imminent. Consequently, gold and silver may rally in the long run despite their short- or even medium-term weakness.

The situation on the USD Index evolves in a predictable fashion. So far, the USD Index has been trading lower between two blue borders of the trading channel. The seasonal tendencies suggest that the U.S. Dollar is likely to put a top (more likely) or a bottom in the first half of December. This could mark the end of the correction in the precious metals, or at least the end of the first part of the correction. I will let you know, once we get more information.

Summing up, the bull market in the precious metals - including the silver market -is healthy, but it seems that the most probable scenario is the short term is a consolidation. The analysis of the cyclical tendencies in silver and the USD Index suggests that the first half of the December will include an important extreme for these markets. I will leave additional details for my Subscribers. I encourage you to join us today - this week's Premium Update includes detailed analysis of 19 charts, and as a Subscriber you will have access to all previously posted updates (including today's Market Alert!) with long-term price projections - not to mention Premium Charts, and Tools.

To make sure that you are notified once the new features (like the newly introduced Free Charts section) are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, I urge you to sign up for my free e-mail list. Sign up today and you'll also get free, 7-day access to the Premium Sections on my website, including valuable tools and charts dedicated to serious PM Investors and Speculators. It's free and you may unsubscribe at any time.

Thank you for reading. Have a happy Thanksgiving holiday weekend and a profitable week!

P. Radomski
Editor
Sunshine Profits

    Interested in increasing your profits in the PM sector? Want to know which stocks to buy? Would you like to improve your risk/reward ratio?

    Sunshine Profits provides professional support for precious metals Investors and Traders.

    Apart from weekly Premium Updates and quick Market Alerts, members of the Sunshine Profits’ Premium Service gain access to Charts, Tools and Key Principles sections. Click the following link to find out how many benefits this means to you. Naturally, you may browse the sample version and easily sing-up for a free trial to see if the Premium Service meets your expectations.

    All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

    By reading Mr. Radomski's essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw RadomskiArchive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules