When Technicals Fail, Gold and Silver Investors are Better Served

By: Dr_Jeff_Lewis

Perhaps more now than ever in history (save for a few depressions), technical levels on everything from stocks, bonds and even precious metals have disappeared.  No longer are support and resistance lines, moving averages, or oscillators stealing the show.  Instead, investors are buying and selling with their gut, and overall, it’s probably for the better.

Investing by the Gut

Gut feelings may be the fear of short-term traders, but for long term investors, it’s entirely positive.  The fact that the market is no longer responsive to long range trends and short term support and resistance lines indicates that investors are looking towards the future and have nearly forgotten the past.  In just the last few weeks, gold has made a new high, silver has risen through various trend lines, and the technicals have all but been thrown out the window.  Today is a great day for long term investors.

Why Technicals Matter

Whether you're a technical analyst or an investor just looking to beef up your retirement nest egg, technicals are important.  Long term investors need not pay much attention the short term tops and bottoms and ebbs and flows of the market, so it is good to see short term investors ignoring them just as well.  

When the technicals begin to fail, it shows two things. First, investors don't care about past history and certainly aren't applying it to future results.  Second, investors are more cautious and concerned about future activity. 

We first saw the technicals fail during the midst of the financial crisis when support line after support line fell to sharp selling.  Less than two years later, we're watching as gold and silver push through recent highs without pause, showing that investors are no longer making decisions on price, but on quality.  Investors want peace of mind at any cost, which is why today they're paying far more for gold and silver than they were in recent history.

The Future Outlook

Gold and silver smashing through historical highs shows us that investors are looking towards higher prices in the future and have since moved on from the “invisible wall” that all but a few stocks, equities or commodities fail to break. 

Just a few years ago, investors were considered crazy to believe gold would once again reach highs set in the 1980s, and it was only a decade ago that a dollar bought four times as much silver. 

The era of cheap prices is over.  Gold and silver investors have moved on to a new economy, a brittle economy built on cheap credit, massive debt loads and unstable currency.  The economy is fine, of course, if you're protected because it won't be the gold and silver investors who pay for the crumbling house of cards.  No, it will be those saddled with debt, those invested in weak companies, and those who have yet to prepare for an onslaught of even more of the problem of cheap credit and inflation. 

Protect yourself and protect your future from the obvious.  A solid position in gold and silver will give you the peace of mind that tomorrow can always be a better day for your financial standing.

By Dr. Jeff Lewis

Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

Copyright © 2010 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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