Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold and Silver Crossing Halfway on an Annual Race

Commodities / Gold and Silver 2011 Jul 02, 2011 - 03:24 AM GMT

By: Przemyslaw_Radomski

Commodities

Best Financial Markets Analysis ArticleThe first half of 2011 is over. With the summer solstice just behind us we would like to review the first half of 2011 and look at what is ahead. Last year gold gained 26%, its third double-digit gain of the last four years. So far this year has been choppy. The yellow metal has risen 19.5 per cent this year to trade at about $1,500 a troy ounce buoyed by the emergence of sovereign debt concerns in the US as well as Eurozone debt woes. Since 2011 has begun, gold prices got hit with double-digit selloffs and rallies. The common culprit is the so-called “rebalancing", which is when traders who bought gold at the end of the year to show they owned it, dumped it in 2011 to take a profit. The same traders jumped back into the gold trade in February and March as violence exploded throughout the Middle East and North Africa region and Japan contended with its worst disaster since World War II.


Last year Eurozone concerns dominated the gold trade in the first half of the year. All the factors that drove gold higher last year – fear, uncertainties, lack of confidence in the dollar, gold as the ultimate currency, buying by newly wealthy Chinese families, sovereign troubles in the euro zone, central bank purchases, high unemployment in the U.S. – are still in place. Has anything really changed?

The US dollar has slid 5 per cent so far this year and is trading close to its lowest ever level against a basket of the world’s major currencies. This is biting into its status as the global reserve currency. Holders of large dollar reserves, notably China, have been diversifying away from the dollar. In the first four months of this year, three quarters of the $200 billion expansion in China’s foreign exchange reserves was invested in non-US dollar assets.

We once wrote that if we got an ounce of gold for every time we wrote the word “Greece” we would have a nice pile by now and would seriously consider retiring (just kidding, we like what we do too much). Greece dominated the financial news space these days as it pulled back from the brink of default and averted a larger Eurozone crisis after passing sweeping austerity measures. However, the possibility of a default remains a fear that troubles the sleep of many investors (for sure, those who don’t own gold.) Europe’s debt crisis, along with fear of natural disasters and political uprisings and upheavals, are prompting investors to seek out investments that promise to protect their portfolios in the event of economic meltdown.

The one thing we can safely predict is that the rest of 2011 will be as unpredictable as the first half. We will hope for the best and at the same time be prepared for the worst by tracking the price of gold and silver and making detailed analysis. So, let’s begin this week's technical part with the analysis of the Euro Index. We will start with the long-term chart (charts courtesy by http://stockcharts.com.)

Look at the chart; the euro has rallied and this can most likely be attributed to the situation in Greece. The Greek Parliament agreed to cut spending and take a measured approach towards the economy. Investors cheered this news and appear to have bought euros which they had previously sold during a time of uncertainty. Optimism has now increased significantly and the result can be seen with the Euro Index recording more than a 2% gain during last week of June. When the Greek Parliament accepted the savings plan, the appetite for the euro and for stocks increased; however, gold reacted mildly to the news.  The medium-term picture for euro is now slightly bullish.

What about the Dollar Index?

In the long-term USD Index chart, we see that there was no breakout above the declining medium-term trading channel. Instead, we have seen a move lower after the index touched the upper border, but this decline was stopped by the short-term rising support line and the 2009 lows.

The situation here is mixed, and whichever way the USD Index breaks is likely to determine the next big move for the dollar. The implications for gold are not obvious at this time. The situation for gold, however, is clearer than it is for the currencies at this time.

Overall, the situation for the Euro Index is more bullish than it has been in recent past. The opposite is true for the USD Index. There is little bullish news at this time for gold which simply is not reacting to the euro strength.

Keeping the uncertainty associated with the short-term moves in precious metals, let’s see what does Sunshine Profits Gold Bottom Indicator suggest at this time?

The SP Gold Bottom Indicator has just flashed a long-term buy signal. This indicates that gold is not at an exact top and that being completely out of the precious metals market is not the best idea. However, we don’t view this as invalidation of points made in our previous gold-related essays and we don’t think it makes the temporary decline in gold less probable. We’re neither at the top, nor at the final bottom.

The reason for the above skepticism is the fact that this indicator has been particularly reliable in situations that are not similar to the one we have today. In case of the similar situations, signals were quite imprecise. Here’s when we’ve seen previous long-term buy signals from the above indicator:

  • 1/24/2011 - close to the bottom, right before it was seen – situation not too similar to the one we have today as price was far from 50-day moving average and very close to the 150-day one,
  • 7/6/2010 - after the first part of the decline, followed by a similar decline. This situation is very similar to the one we have now – the signal was preceded by a move below the 50-day moving average,
  • 5/21/2010 – important local bottom, but not the final one – not too similar to today’s situation, as price was above the 50-day moving average and it was right a spike high,
  • 12/9/2009 - middle of the first part of the decline – similar situation, gold was close to its 50-day moving average.

Overall, the situation is still quite bearish and taking the above indicator into account does not contradict the outlook for lower gold prices.

Summing up, recent events in the capital markets appear to have been greatly influenced by the developments in Greece. Considering both the currency indices and the SP Gold Bottom Indicator, long-term trend appears positive at this juncture, but a medium-term correction is still not over. Please be particularly careful if you plan to add to your positions right now, as it seems that waiting for lower prices is a good idea right now.

To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It's free and you may unsubscribe at any time.

Thank you for reading. Have a great and profitable week!

P. Radomski
Editor
Sunshine Profits

    Interested in increasing your profits in the PM sector? Want to know which stocks to buy? Would you like to improve your risk/reward ratio?

    Sunshine Profits provides professional support for precious metals Investors and Traders.

    Apart from weekly Premium Updates and quick Market Alerts, members of the Sunshine Profits’ Premium Service gain access to Charts, Tools and Key Principles sections. Click the following link to find out how many benefits this means to you. Naturally, you may browse the sample version and easily sing-up for a free trial to see if the Premium Service meets your expectations.

    All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

    By reading Mr. Radomski's essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski 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