Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Related Silver and Stock Ratio Analysis

Commodities / Gold and Silver 2010 Dec 15, 2009 - 08:33 AM GMT

By: David_Petch

Commodities

Diamond Rated - Best Financial Markets Analysis ArticleThe daily chart of the gold/silver ratio is shown below, with upper Bollinger bands in close proximity to the ratio, with lower 21 and 34 MA BB’s in close proximity to each other and the lower 55 MA BB starting to curl down, indicating the potential for further upside. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in all three instances. Based upon extrapolation of the %K in stochastic 1, there is the potential for the ratio to continue heading higher over the next 1-2 weeks before topping out. Generally, the gold/silver ratio rises during periods of economic weakness and declines during economic stability.


Figure 1

The gold/oil ratio is shown below, with upper Bollinger bands rising above the index, suggestive a potential top was put in place. The lower 21 MA BB is rising to the index, suggestive the ratio has the potential for a 2-3 week decline.  The USD index is shown in black; generally there is a loose correlation between the USD and the gold oil ratio, but there has been a noted divergence since August of this year. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and above the %D in 2 and 3. There is the potential for the ratio to continue topping out over the course of the next week but a one month rally indicates a decline is imminent. The important item to note from this chart is the divergence between the ratio and the USD, as strength in the ratio normally indicates strength in the dollar.

Figure 2

The weekly chart of the HUI/gold ratio is shown below, with gold shown in black. Upper Bollinger bands are above the index, suggestive a top was put in place. Lower Bollinger bands are rising to meet the index, suggestive that further downside potential exists the ratio. Weakness in the HUI/gold ratio suggests that gold will continue to rise or exhibit greater strength in price relative to gold stocks. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and 2 and above the %D in 3.

Figure 3

Gold

The daily chart of gold is shown below, with upper Bollinger bands above the index, suggestive that a top was put in place. Lower Bollinger bands continue to rise, suggestive that further downside potential exists. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances. Based upon the sharp decline of the %K in stochastic 1, weakness in gold is likely to continue for another 1-2 weeks before basing and retracing the decline. Overall, weakness in gold could extend 6-8 weeks out based upon positioning of the %K in stochastic 2 if the dollar continues to exhibit strength. As before, it is not recommended to establish any long positions. I will update the Horizon Beta funds tonight for those wishing to have trading vehicles.

Figure 4

The weekly chart of gold is shown below, with a notable shooting star doji from a few weeks ago, indicating a potential top was put in place. Upper Bollinger bands are starting to rise above the index while lower 21 and 34 MA BB’s curled up, suggestive that a top was put in place. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in all three instances. There is a strong potential that a top was put in place based upon the technical’s; it is also important to note that the parabolic trend in place since April 2009 is in jeopardy of being violated with any further weakness in gold, which would indicate a potential decline to the breakout point, or between $950-1000/ounce; this is something to watch carefully over the next few days.

Figure 5

The monthly chart of gold is shown below, with upper Bollinger bands above the index, suggestive that a top was put in place. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in 1 and 2 and beneath the %D in 3. Although there is weakness on the daily and weekly charts, it is better to use positioning of the stochastic on them than the monthly due to the longtime frame required to indicate a switch in trend. If there is further weakness in gold, it is highly possible that another 1-2 months of topping action occurs before any decline to test the breakout occurs. For now, based upon the gold charts, particularly Figures 4 and 5, weakness in gold is likely to persist for at least the next two weeks.

Figure 6

The short-term Elliott Wave count of gold is shown below, with wave C potentially forming. If this count is correct then gold should have significant upside after it is complete. As mentioned earlier, gold must show some strength over the course of the next 4-6 trading days so the parabolic trend line (not shown) is not violated, otherwise the count shown below is valid and in effect. If in effect, weakness in gold could persist for a 2-3 month period.

Figure 7

The mid-term Elliott Wave count of gold is shown below, with wave (Y).[A] likely forming. I am also going to do the USD again tonight to provide a better indication of what exactly is going on. If weakness in gold persists through next week, then probabilities arise that weakness persists 2-3 months out before a bottom is put in place.

Figure 8

By David Petch

http://www.treasurechests.info

I generally try to write at least one editorial per week, although typically not as long as this one. At www.treasurechests.info , once per week (with updates if required), I track the Amex Gold BUGS Index, AMEX Oil Index, US Dollar Index, 10 Year US Treasury Index and the S&P 500 Index using various forms of technical analysis, including Elliott Wave. Captain Hook the site proprietor writes 2-3 articles per week on the “big picture” by tying in recent market action with numerous index ratios, money supply, COT positions etc. We also cover some 60 plus stocks in the precious metals, energy and base metals categories (with a focus on stocks around our provinces).

With the above being just one example of how we go about identifying value for investors, if this is the kind of analysis you are looking for we invite you to visit our site and discover more about how our service can further aid in achieving your financial goals. In this regard, whether it's top down macro-analysis designed to assist in opinion shaping and investment policy, or analysis on specific opportunities in the precious metals and energy sectors believed to possess exceptional value, like mindedly at Treasure Chests we in turn strive to provide the best value possible. So again, pay us a visit and discover why a small investment on your part could pay you handsome rewards in the not too distant future.

And of course if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these items.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2009 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

David Petch Archive

© 2005-2022 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