Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
BREWING FINANCIAL CRISIS 2.0 Suggests RECESSION 2022 - 28th Jan 22
Financial Stocks Sector ETF XLF $37.50 Continues To Present Opportunities - 28th Jan 22
Stock Market Rushing Headlong - 28th Jan 22
The right way to play Climate Change Investing (not green energy stocks) - 28th Jan 22
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver, The Big Show

Commodities / Gold and Silver 2011 Apr 07, 2011 - 06:34 AM GMT

By: Anthony_J_Stills

Commodities

Diamond Rated - Best Financial Markets Analysis Article"Fear is a very foolish way to rule a nation, because fear is very tiring over time. No matter how tyrannical the despot, no matter how great the imposed terror; there comes a time when the people simply lack the energy to be afraid any longer, Fear vanishes from the population, and all that is left is blind uncompromising unquenchable rage." ~ Michael Rivero


It goes almost unnoticed that gold and silver are making new bull market highs on a weekly basis. Occasionally it will get an honorable mention in the press when they need to fill in some dead space. God forbid that an analyst actually recommends gold because they will suddenly find themselves "out of time". For weeks the commentators on Bloomberg focused on gold's failure to move above 1,440.00 and insinuated that this is what a top looks like. Yesterday they found out just how wrong they are and I feel that merits some comment along with some projections about what is coming down the road. So here it goes.

One of the prime movers in the price of gold is the US dollar and the dollar is headed lower as you can easily see here:

This was great support and now it is a warning

$USD Index

I realize that this is a simple six-month daily chart but in truth it differs little from a ten-year chart in that the trend is down. It's been headed down for a decade and it's headed down today. The greenback is the world's reserve currency and as it loses value, the world moves to the ultimate reserve currency, gold! Right now the dollar is distributing within a range (75.50 to 76.50) in preparation for a move down to the historical low at 70.70.

Gold is also influenced by what the European and Asian central banks do. The United States is finishing up with QE2 and debating whether or not to go ahead with QE3 and Europe is clearly headed toward a QE2 of its own with bailouts of Portugal and Ireland being finalized. Then you have Japan with a QE of its own, pumping out US $500 billion in the weeks following the earthquake. So for those of you who are looking for a fiat port in the storm, there aren't any so gold will be pushed higher that much more. The yellow metal isn't the only thing on the rise either. Silver is marching higher like the little drummer boy and yesterday the HUI broke out to a new closing high as seen here:

$HUI Index

That is the equivalent of a "confirmation" is Dow Theory with respect to the Dow and Transports. This is the first time in months that gold, silver and the HUI all made new closing highs on the same day, and it is a major buy signal as well.

With respect to the June gold futures contract yesterday was the first time that it was able to poke its head above critical resistance at 1,449.00 (1,447.50 in the spot price) and it closed well above it at 1,452.50 as you can see here:

Gold Dailiy OHLC Chart

This is a significant break out to the upside and it is extremely bullish that the June gold is up another 6.50 today at 1,459.00 and never bothered to look back at what was such strong resistance.

Now I know that you've seen the follow chart of gold twice but maybe the third time is a charm:

$Gold Index

Here you can clearly see how each leg up is followed by consolidation at the top of the range. This is as bullish as it gets! Now look at the far right of this chart and you can see that yesterday the spot gold broke out above that last area of consolidation (1,330.00 to 1,440.00) and today it moved even higher as the spot price is now at 1,460.00 as of 3 pm EST. That means yesterday's breakout was confirmed and that is very important. You should copy this chart and put it someplace where you can see it every day, because this is the reality and not the crap that spews out from your TV.

Then we have silver. Silver has been leading gold higher for weeks now and seems to be picking up more strength with each passing week as you can see here:

Silver Daily OHLC Chart

Counting today gold's poor cousin has made three consecutive bull market closing highs and four out of the last five sessions. That is strength and it is not done by a long shot since there isn't any resistance until it hits 43.71, and is still a ways off in the horizon. Below I have put all the relevant Fibonacci numbers for both spot gold and spot silver so you can follow along:

  SUPPORT RESISTANCE
SPOT GOLD 1,447.50 1,522.19
  1,372.81 1,596.98
  1,298.12 1,671.77
SPOT SILVER 37.95 43.71
  31.91 49.45
  26.48 55.21

 

and there is no telling where silver will stop even though it is overbought right now.

In conclusion gold will go to a minimum of 1,596.98 and will probably go higher while silver will go to a minimum of 43.71. How much higher each can go is anybody's guess right now. What makes top picking difficult is that a lot of people who want to be in the market were caught on the sidelines and now greed will make them pile in with too much and too late. Yes, I bough both gold and silver yesterday and today but I simply added a little meat to the bone of positions that I began to build two years ago, and I never liquidated along the way. Of course here are people out there calling for US $2,000.00 gold and US $75.00 silver on this leg up, and anything is possible but these are the same people who wouldn't even look at gold when it was at US $1,155.00 back in July of last year. Now they're all heroes!

Rest assured that gold and silver will have a substantial correction this summer but only a fool would give up his position that he struggled so hard to construct and my mother didn't raise any fools. Finally the volatility is only going to increase over the next month or so and that will cause all the traders to sell cheap and buy dear. Fear and greed act on the price of gold and silver like no other market so anyone who try's to trade these two will go broke! My best advise remains to buy a little bit of physical gold and silver (coins whenever possible) every month and watch the food channel when you turn the TV on. Occasionally scan the Sunday paper and look at the price of gold and then go straight to the comics. You'll grow rich and you'll be happy!

Anthony J Stills                                            Steve Betts
as@theablespeculator.com                      sb@theablespeculator.com

www.theablespeculator.com

© 2011 Copyright Anthony J. Stills - 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.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

peter
07 Apr 11, 13:13
Gold confirmed highs

Thanks for pointing out that gold,silver and the HUI all made new highs on the same day. I was so exiceted about the obvious breakout of gold that I failed to see the additional confirmation. Not that it changes anything, but its a good confidence booster. Yes, silver is going parabolic here. This is going to be a wild ride from here on in with shorter and shorter pullbacks.


Post Comment

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