Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

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

© 2005-2019 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