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
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Bounce Goes Nowhere

Commodities / Gold and Silver 2011 May 15, 2011 - 07:38 AM GMT

By: Merv_Burak


Best Financial Markets Analysis ArticleWell, the gold bounce went nowhere, momentum and volume action were unimpressive.  So, what’s next?  I would suspect more downside action before things settle down, consolidate and then move back into new highs.  But that’s only a hope, not a prediction; unless it happens in which case it was a prediction.  An analyst’s first priority is to write in such a way as to be able to say “I told you so” regardless of what happens.


 From the long term perspective gold is still not in much danger of a major trend reversal.  The price is heading lower but is still some distance above its positive sloping moving average line.  The momentum indicator is also moving lower and is already below its negative sloping trigger line, however, all this is still happening well inside the positive zone suggesting weakening but not reversal.  As for the volume indicator, it seems to be more into a lateral trend and remains above its positive sloping trigger line.  So, as far as the long term rating is concerned, at this point in time it remains BULLISH.


The intermediate term is still in positive shape but much closer to a possible reversal than the long term.  Here, gold touched my intermediate term moving average line the previous week and bounce up.  That bounce did not go far and it looks like gold may be ready to take another tumble on the down side.  For now it is still above its positive sloping moving average line.  As for the intermediate term momentum indicator, it is moving lower but remains above its neutral line in the positive zone.  It is, however, below its negative sloping trigger line.  The volume indicator remains positive above its positive sloping trigger line but not that much above.  A few days of negative action and it just might move below the line.  Today, the intermediate term rating remains BULLISH.  This is confirmed by the short term moving average line remaining above the intermediate term line. Here too things could change with a few days of negative action.


As we see from this week’s chart the bounce did not last long.  For those who look for such things the bounce looks very much like a 50% retracement of the previous plunge.  Nothing about the bounce was encouraging and the odds are for more downside action.

For today gold remains below its negative sloping short term moving average line.  The momentum indicator is back in its negative zone and below its negative trigger line.  The daily volume action has not been very impressive and needs to improve for any bounce or rally to have any longevity.  We see on the chart an upward sloping wedge pattern which unfortunately has a habit of breaking on the down side.  Putting it all together the short term rating is BEARISH, confirmed by the very short term moving average line.

As for the immediate direction of least resistance, baring any global upheaval during the weekend the direction of least resistance seems to be towards the down side and that’s the direction I would guess.


Silver has had a sharper plunge and a weaker bounce than gold.  Intra-day wise it even made a lower low versus the plunge low, during this past week.  I guess what goes up the fastest comes down the fastest.  By all accounts, looking at the chart action, more downside can be expected.  I would look at $27 to $31 as a range of serious support.  Baring that range the next step would have to be the $18 level.  Do we really think it would go that low? 


I know that probably 100% of my readers look to the major, most popular Gold Indices to get their bearings as to what is happening in the overall gold stock market.  I look at my own Indices and especially the Composite Index for an understanding of what’s happening, overall.  While the major Indices are now at a slightly lower level than their peak of early 2008 the Merv’s Composite Index of Precious Metal Indices is still some 32% above its previous peak.  This is the difference in overall average performance of the 160 stocks in the Merv’s Index versus the weighted performance of the few highly weighted stocks in the major Indices.  Precious metal stocks have been doing a lot better than these major Indices have let people to believe. 


The Merv’s Composite Index is, however, showing a real danger potential ahead.  Depending upon the indicators one uses the long term rating for this Index is now BEARISH.  However, to confirm such bearishness I would wait for the long term momentum indicator to drop into its negative zone (which could be momentarily) and for the Index to break below its resistance lines.  There are two of them but a move to the 450 level on the Index would break below both.  We have an up trending wedge pattern which is most often broken on the down side.  We have a support which may or may not hold.  So, I would still not be in panic mode but would be pretty close to it.  Of course, in the end one would look at the individual stocks before acting.  There are always stocks that move counter to the prevailing trend but I would not risk money on it.  Get out when the charts and indicators tell you to and protect your capital.  Precious metal stock speculation (and it is all speculation, even stocks such as Barrick) is a risky business, no need to take greater risks than you have to.

Merv’s Precious Metal Indices Table

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

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 .

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 . 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

© 2005-2019 - 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