Best of the Week
Most Popular
1.Gold Price Trend Forecast, Where are the Gold Traders? - Bob_Loukas
2.Stocks Bear Market of 2017 Begins? Shorting the Dow At its Peak! - Nadeem_Walayat
3.Betting on President Trump Leaving Office Early, Presidency End Date - Betfair Market - Nadeem_Walayat
4.Why Stock Market Analysts Will be Wrong About 2017 - Clif_Droke
5.Is This The Best Way For Investors To Play The Electric Car Boom - OilPrice_Com
6.Silver Price 2017 Trend Forecast Update - Video - Nadeem_Walayat
7.Gold Price Set For Very Bullish 2017, Trend Forecast - Austin_Galt
8.10 Things I learned From Meetings With Trump’s Transition Team - - John_Mauldin
9.How Investors Can Profit From Trumps Military Ambitions - OilPrice_Com
10.Channel 4 War on 'Fake News', Forgets Own Alt Reality Propaganda Broadcasting - Nadeem_Walayat
Last 7 days
Gold’s Fundamentals Strengthen - 18th Feb 17
The Flynn Fiascom, the Trump Revolution Ends in a Whimper - 18th Feb 17
Not Nearly Enough Economic Growth To Keep Growing - 18th Feb 17
SPX Stocks Bull Market Continues to make New Highs - 18th Feb 17
China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors - 18th Feb 17
Gold Stock Volume Divergence - 17th Feb 17
Gold, Silver, US Dollar Cycles - 17th Feb 17
Inflation Spikes in 2017, Supporting Gold Prices Despite Increased Odds of March Rate Hike - 17th Feb 17
Roses Are Red... and So's Been EURUSD's Trend - 17th Feb 17
Gold Trade Note Sighted - 17th Feb 17
Gold Is Undervalued Say Leading Fund Managers - 17th Feb 17
NSA, CIA, FBI, Media Establishment 'Deep State' War Against Emerging 'Trump State' - 16th Feb 17
Silver, Gold Stocks and Remembering the Genius of Hunter S. Thompson - 16th Feb 17
Maps That Show The US’ Strategy In Asia-Pacific - 15th Feb 17
The Trump Stock Market Rally Is Just Getting Started! - 15th Feb 17
Tesco Crisis - Fake Prices, Brexit Inflation Tsunami to Send Food Prices Soaring 10% 2017 - 15th Feb 17
Stock Market Indexes Appear Ready to Roll Over - 15th Feb 17
Gold Bull Market? Or was 2016 Just a Gold Bug Mirage? - 15th Feb 17
Here’s How Germany Buys Time From China - 15th Feb 17
The Stock Trader’s Actionable Guide to Trump - 15th Feb 17
Trump A New Jacksonian Era? The Fourth Turning (2) - 14th Feb 17
Stock Market Yet Another Wall Street 'Witch's Brew' - 14th Feb 17
This Is Why You Don’t Own A Lot Of Stocks - 14th Feb 17
Proposed Tax Reforms Face Enormous Headwinds - 14th Feb 17
BBC Inside Out Tesco Rip off Offers - Determined to Lose Big Spend Customers! - 13th Feb 17
Is the UK An Economy Built on Debt? - 13th Feb 17
Stock Market VIX Cycles set to Explode in March/April 2017 – Part 2 - 13th Feb 17
Stocks At Record Highs - Will Uptrend Accelerate? - 13th Feb 17
US Dollar: 'Rumors of My Death are Greatly Exaggerated' - 13th Feb 17
Is This The Top Commodity Play For 2017? - 13th Feb 17
Trump a New Jacksonian Era? - 13th Feb 17
Stock Market at High Tide - 13th Feb 17
Channel 4 War on 'Fake News' Ends - The New News Age - 12th Feb 17
Uptrend in Silver (XAG/USD) Continues to Strengthen - 11th Feb 17
Greece Debt Crisis Outrageous Malevolence - 11th Feb 17
SPX Stock Market 1-year Anniversary New Highs - 11th Feb 17
Gold and Gold Stocks Hit Upside Targets. Now What? - 11th Feb 17
Moving Stock Market Targets: Investors Need to Discriminate! - 11th Feb 17
Sheffield Trees Felling Crisis, Police Dawn Raids and Arrest, Amey £2bn PFI - 11th Feb 17

Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

Gold and Silver Rally Lacks Momentum

Commodities / Gold and Silver 2011 Mar 27, 2011 - 10:24 AM GMT

By: Merv_Burak

Commodities

Best Financial Markets Analysis ArticleThe precious metals had a great week, so why is the momentum of these moves so lacking in strength?  Speculators who can move prices seem not yet to be convinced that gold stocks will continue zooming into ever higher ground.  Is there peace in the oil fields or something? 


GOLD LONG TERM

Nothing lately has affected the long term indicators or ratings for gold.  Before checking out the indicators what’s the latest with the long term P&F chart?  Well, from the previous analysis from the 05 Nov 2010 Commentary we have our next projection level at $1600 (actually at $1575 but what the heck, so many are saying $1600 I might as well also).  After that we have the next one at $2050 and then on to $2600.  Should things not turn out as projected on the up side, well the P&F support is now above the $1300 mark so a move to $1300 would be a bear.  The present projection on the down side would then be $1025 but that would most likely change by time a break might come.

Gold continues to trade above its positive sloping long term moving average line.  The long term momentum indicator remains in its positive zone but showing weakness in its strength versus that shown for the price action itself.  This suggests, to me, that the internal strength is getting weaker and speculators are not as enthusiastic about the up side as they were earlier.  The momentum indicator has just dropped below its trigger line and the trigger has turned downward.  The volume indicator is still showing strength and is in new high levels above its positive trigger line.  Now, volume is always a good indicator of speculative interest BUT I always remember that too often volume is the last indicator to go negative AFTER a top had been formed and prices are falling.  Bullish investors are not looking at the technical charts and continue buying even after the top has occurred.  For now everything is still BULLISH on the long term.

INTERMEDIATE TERM

Everything still looks great on the intermediate term but there are signs that a change may not be far away.  Yes, I know.  Everyone is saying that gold is going through the roof and you should jump on the bandwagon.  I wish it was so.  What I am suggesting here is that the momentum of the price move is not all that great and although the price could continue to go higher, much higher, with lower momentum it is something to keep in mind and be prepared, JUST IN CASE.  For now gold is still above its positive sloping moving average line and the momentum indicator is still in its positive zone above its positive sloping trigger line.  The two, momentum and trigger, are very close and one more negative day would see the momentum drop below its trigger.  For now it’s still positive.  The volume indicator continues strong and is above its positive trigger line.  The positive volume indicator may be a little misleading as you’ll see in the short term comments below.  Putting all these intermediate term indicators together the intermediate term rating remains BULLISH.

SHORT TERM

The chart shown here is more of an intermediate term chart and includes my intermediate term momentum indicator (the 50 day RSI).  As one can easily see, as the price of gold made increasingly higher prices the momentum indicator continually peaked at a lower and lower level.  Something’s gotta give.  Either the price of gold turns lower and goes into some kind of reversal mode pulling the momentum into its negative zone OR the price does in fact take off and the momentum then strengthens and starts to make higher peaks again.  Which will it be is anyone’s guess.  I hope for the up side but in the end I let the market tell me what it is doing, I’m not about to tell the market what it should do.

So, what IS the market for gold bullion doing at this time as far as the short term perspective is concerned.  Well, we had a short term rally in progress during the week but by the end of the week things started to deteriorate.  The gold price is still above its positive sloping moving average line but the two are closing their gap with the price starting to head lower.  The short term momentum indicator is giving us a slightly different message than the intermediate term momentum did.  During the price peak in early March the short term momentum indicator (13 day RSI) did exceed the previous peaks (except for the highest peak in early Oct) but the slightly higher price this past week had seen a severely diminished momentum.  The short term momentum is once more suggesting weakness although it did strengthen there for a few weeks.  The daily volume action is giving us a different story from that given by the volume indicator.  On a daily basis the volume seems to be weak during the rally period and increase as the price turns around and moves lower.  Not an encouraging scenario.  Still, when putting all the indicators together we get a short term BULLISH rating.  The very short term moving average line has moved above the short term line for a confirmation of this bull.

SILVER

          

We have here a direct comparison between the price and intermediate term momentum action for silver versus gold.  One can quickly see the better performance that silver has been giving versus gold.  The momentum indicator, although also showing some weakness, is not as weak as that of gold.  We had the negative divergences leading up to the 03 Jan 2011 price high but the recent early March action once more put life into the price move.  Unfortunately, the move to new highs this past week has once more shown a momentum weakness.  I guess we’ll just have to wait and see how this plays itself out.  For now the rating for silver remains BULLISH for all three time periods.

PRECIOUS METAL STOCKS

Despite the fact that gold moved very slightly into new all time high territory this past week NONE of the major Gold Indices, North American or Merv’s, made it into new high levels.  Speculators, especially those who have the resources to move prices, seem not to be that gung-ho yet despite all the commentators and analysts screaming that gold is ready to zoom into the stratosphere.  Maybe they are just holding back for another week or so to see what really will develop in the Middle East and elsewhere.  For now they do not seem convinced that the new continuing highs in gold will have longevity.

Most of the Gold Indices made their highs during the first days of the new year.  This included new highs in the long term momentum indicators.  The rally of a couple of weeks ago did not reach new highs and was accompanied by a serious weakness in the long term momentum.  Only the Silver Indices and the Penny Arcade had reached new peaks recently.  In these cases the long term momentum indicators had shown negative divergence versus the Indices highs.  So, even here where we still see strength, we also see weakness in the background.

Looking through my universe of 160 gold and silver stocks we had 138 (86%) advancing this past week and only 20 (13%) declining.  With a ratio like that, one would be very brave to say that things are looking bad.  I’m not all that brave but will only caution that things may not be all that good.  The Penny Arcade, which is still in a bullish mode, is showing weakness not only in its momentum but also weakness versus the other Indices.  This just may be the start of an early warning process but has not yet gone to the point of an actual warning, just an initial caution.  Something to keep a watch on.

Merv’s Precious Metals Indices Table

Well, that’s it for this week.  Comments are always welcome and should be addressed to mervburak@gmail.com.

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Merv's Precious Metals Central

For DAILY Uranium stock commentary and WEEKLY Uranium market update check out my new Technically Uranium with Merv blog at http://techuranium.blogspot.com .

During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician ( CMT ) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada 's Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE .

To find out more about Merv's various Gold Indices and component stocks, please visit http://preciousmetalscentral.com . There you will find samples of the Indices and their component stocks plus other publications of interest to gold investors.

Before you invest, Always check your market timing with a Qualified Professional Market Technician

Merv Burak Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Connor S
27 Mar 11, 18:31
Huh?

So this article looks like a UK source. I just read inflation is 4.4% in your country and people on that side of the pond are people are still doubting the coming hyperinflation? People, you're already balls deep. What do these people think will happen to gold and silver when hyperinflation kicks into a higher gear? The Pound and the USD are going to take their rightful place in history with the long list of other fiat currencies. Wake up sheeple.


Post Comment

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

Catching a Falling Financial Knife