Best of the Week
Most Popular
1.Oil Wars 2016 - US vs Russia vs Saudi Arabia vs Iran - Nadeem_Walayat
2.Crude Oil Price Crash Triggering Global Instability, Trend Forecast 2016 - Nadeem_Walayat
3.Stock Market Crash - Last Week was The 2nd and Final Warning... - Clive_Maund
4.Stock Market Crash Apocalypse or Bull Market Severe Correction? - Nadeem_Walayat
5.TShipping Said to Have Ceased… Is the Worldwide Economy Grinding to a Halt? - Jeff_Berwick
6.Crude Oil Price Crash Catastrophe, Independant Scotland Literally Begging to Rejoin the UK - Nadeem_Walayat
7.Summers: Global Economy Can't Withstand Four 2016 Fed Hikes - Bloomberg
8.Gold And Silver: New World Order: Public Be Damned, Preferably Dead - Michael_Noonan
9.Rigged U.S. Ttreasury Bond Market Double Barreled Hidden Q.E. To Infinity - Jim_Willie_CB
10.Major Stocks Bear Market Awakening - Zeal_LLC
Last 5 days
Is This the Debt Bubbles Last Rattle? - 12th Feb 16
Gold Stocks Upside Targets - 12th Feb 16
Stock Market Observations - 12th Feb 16
Will Capital Controls Return? - 12th Feb 16
Gold, Gold Stocks, and the End Game - 12th Feb 16
Canadian Dollar Now Even Less of a Haven from US Dollar Collapse Than Before - 12th Feb 16
The Stock Market Dow Elevator; 18, 17, 16.... - 12th Feb 16
Will Harry Dent Eat Crow on His $700 Gold Price Prediction? - 12th Feb 16
Where to Hide Your Money From Reckless Governments - 12th Feb 16
The War on Cash is About to Go into Hyperdrive - 11th Feb 16
More Bankruptcy For Your Retirement Portfolio - 11th Feb 16
2016 - Gold & Silver Rising: A Gold And Silver Bottom May Be In - 11th Feb 16
Gain Trading Confidence by Improving Your Elliott Wave Analysis Skills - Video - 11th Feb 16
With A Gloomy Start To 2016, A Bust Seems Just Around The Corner - 11th Feb 16
UK Interest Rates, Economy Forecasts 2016 and 2017 - Video - 10th Feb 16
World Markets Are in Sync - 10th Feb 16
If You Miss Buying Gold – You Will Regret, it Later - 10th Feb 16
The Fed Doesn't have a Clue! - 10th Feb 16
How Far Can Gold Price Go? - 10th Feb 16
It's Stock Market Panic Time! - 9th Feb 16
Gold Stocks Picks for Patient Pickers - 9th Feb 16
Oil Price Collapse U.S. Recession Odds 2016 - 9th Feb 16
Preparing for Crisis - It's About Risk Mitigation and Capital Preservation - 9th Feb 16
Top Silver Mining CEO: Don't Laugh, We Could See Silver $100+ - 8th Feb 16
Gold, Investment Leadership Changes Permanent? - 8th Feb 16
Stock Market Panic Decline Begins... - 8th Feb 16
How to Save Money By Growing Your Own Homegrown Tomatoes Indoors From Seeds - 8th Feb 16
US Economy Slides One Step Further Towards A Recession - 8th Feb 16
Gold Bear Market Bottom : Mr. Bear has left the PM Sector for Greener Pastures - 8th Feb 16
Stock Market At Important Support - 8th Feb 16
David Cameron Humiliated in Poland Over Refusal to Stop Taking UK Benefits, BrExit or Super State? - 8th Feb 16
Why Crude Oil Prices Could Continue FALLING From Here - 7th Feb 16
Stock Market S&P, NAS Best, Most Reliable Answers Come From The Market And You - 7th Feb 16
Stocks Bear Market Continues - 7th Feb 16
Silver COT Paving Way for Sustained Upside Breakout Sharp Rally - 7th Feb 16
US Dollar Double Top, Gold Prospects Brightening Rapidly - 7th Feb 16
Gold And Silver - Is A Bottom In? Nothing Confirmed - 7th Feb 16
Gold Stocks Something has Changed - 6th Feb 16
UK Interest Rates, Economy GDP Forecasts 2016 and 2017 - 6th Feb 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Global Financial Crisis 2016

Gold and Silver Marketwatch- This Time It's For Real...

Commodities / Gold & Silver Stocks Jul 22, 2007 - 02:04 PM GMT

By: Clive_Maund

Commodities The powerful rally by large Precious Metals (PM) stocks over the past couple of weeks is believed to be the start of a "breakout drive" that will vault the sector indices out of the large holding patterns that they have been stuck in for past 18 months, for these patterns date back further than the actual highs to the start of last year, ushering in a period of rapid and substantial advance.


There are two crucially important points to appreciate at this juncture. The first is that PM stocks, being the province of speculators much more than the PMs themselves, tend to lead the latter, so that the current vigorous advance in the big PM stocks can be expected to translate into strong rises in gold and silver soon, which are still way below their highs of last year. The second point is that the big PM stocks tend to take the lead and perform best early in a PM sector uptrend, while the small exploration stocks behave like the sediment at the bottom of a river - it takes quite a current to get them stirred up - and so they tend to perform best towards the end of a sector uptrend when the uptrend has been underway for sufficient time to attract increasing public attention.

This is why the largest stocks are performing really well at this juncture, which is made obvious by placing the charts for the HUI and XAU indices one beneath the other - the HUI index is comprised of lower cap stocks than the XAU. When we do this we see immediately that although the HUI index has not made a clear breakout above its key resistance level, it can be expected to do so shortly, because the XAU index has staged a clear breakout.

We had turned bullish on the sector earlier this month because of the substantial improvement in the COT charts for gold and silver, and because of the strong evidence of accumulation observed in the individual charts of large PM stocks, which is why a raft of large PM stocks have been recommended on the site over the past week or so. Both of these crucial factors have implications far beyond the rise we have witnessed thus far - A major uptrend is believed to have begun that is still in its infancy - and before its done it can be expected to take the sector indices - and most PM stocks way, way beyond the highs of last year.

For sure a short-term overbought condition has now developed that may lead to a reaction, and we will have to contend with various reactions as the uptrend progresses, but these reactions should for the most part be minor and short-lived, thus if the sector reacts next week the opportunity should be seized to complete desired purchases at better prices.

While it is interesting to attempt to figure out the fundamental reasons why gold and silver should enter a period of strong advance right now, and possible reasons are set out in a plethora of articles by other writers, technically, it is not necessary to know - regardless of fundamentals the language of the market itself is pointing to an imminent strong advance in gold and silver.

One potential big reason for a powerful advance by gold and silver is the lurking possibility of a disastrous breakdown by the dollar below its crucial long-term support at 80 on its index, which it is now just above. Such a development would be expected to lead to a rapid retreat by the dollar towards 70 that would send financial shockwaves around the world. It is simply not known if the PPT, the Plunge Protection Team, has the strength in the face of the enormously powerful bearish forces at work, to prevent this happening or at least put it off for a while longer. Currently, the dollar is very oversold on a short-term basis, so it is as good a time as any for the PPT to stage a rally.

Gold and Silver are both at a critical point having risen over the past couple of weeks to contact the Dome Distribution lines drawn on their charts in the last Gold and Silver Market updates.

While a short-term reaction is possible next week because of the oversold condition of the dollar, any reaction should be minor, after which they would be expected to quickly regroup and smash through the resistance. Once they break out above their dome patterns the rate of advance is likely to accelerate. Those who acted on the last Gold and Silver Market updates would have bought gold at about $665 with a stop below the early March low and be waiting on a breakout by silver above its dome pattern, maintaining stops below $12.

"Plenty of material has been amassed for another in the series "Now try telling me that charts don't work (Part N)", using examples of past stock recs on the site, the most recent addition to the collection being the rec to take profits in Golden Chalice last Wednesday - it caved in on Friday."

By Clive Maund
CliveMaund.com

© 2007 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2016 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

Biggest Debt Bomb in History