Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Stock Market Seasonal Trend Analysis - 23rd Oct 19
Gold Prices Stand to Rally on Brexit Delay - 23rd Oct 19
US Stock Markets “Roll Over” On Earnings and Economic Data At Channel Highs - 23rd Oct 19
Yes, Gold “Just Sits There” and That’s Quite a Feat - 23rd Oct 19
Downsizing – What to Watch Out For - 23rd Oct 19
Gold Price Has Not Corrected Enough - 23rd Oct 19
U-Turn or Perfect Storm? Globalization at Crossroads - 22nd Oct 19
Stock Market Indexes Struggle and TRAN suggests a possible top - 22nd Oct 19
Fake Numbers Fueling the Wage War on Wealth - 22nd Oct 19
A Look at Peak Debt - 22nd Oct 19
The Coming Great Global Debt Reset - 22nd Oct 19
GamStop Became Mandatory - 22nd Oct 19
Learn to Spot Reliable Trading Setups: ANY Market, Any Market Time Frame - 21st Oct 19
How To Secure A Debt Consolidation Loan Even If You Have A Bad Credit Rating - 21st Oct 19
Kids Teepee Tent Fun from Amazon by Lavievert Review - 15% Discount! - 21st Oct 19
Stock Market Stalls: Caution Ahead - 21st Oct 19
Stock Market Crash Setup? - 21st Oct 19
More Stock Market Congestion (Distribution) - 21st Oct 19
Revisiting “Black Monday Stock Market Crash October 19 1987 - 21st Oct 19
Land Rover Discovery Sports Out of Warranty Top Money Saving Tips - 21st Oct 19
Investing lessons from the 1987 Stock Market Crash From Who Beat it - 20th Oct 19
Trade Wars: Facts And Fallacies - 20th Oct 19
The Gold Stocks Correction and What Lays Ahead - 19th Oct 19
Gold during Global Monetary Ease - 19th Oct 19
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

No Gold Summer Doldrums, End of Action for Mining Stocks?

Commodities / Gold and Silver 2011 Sep 03, 2011 - 03:13 PM GMT

By: Przemyslaw_Radomski

Commodities

Best Financial Markets Analysis ArticleThis will be an August to remember – no summer “dulldrums” this year. Gold has risen roughly 12% this month and nearly 30% year to date. Gold prices had a trading range of more than $300 in August.

Stocks are a different story. Wall Street ended the month with losses that came with an extended rout the first three weeks, with the current batch of gains only denting the damage. Since the start of July the FTSE 100 has lost 10.6%. The S&P is down 8.2%. The NIKKEI 225 has lost 8.8%, while the German DAX has plunged 22.6%. By contrast, gold prices have gained nearly 23% over the same period.


September is supposed to be the worst month on the calendar for stocks with losses averaging up to 1.2%, which, after a lousy August, does not bode well. By contrast, physical demand is likely to be strong for gold in the coming months due to expected strong buying from India, the world's largest gold market as the country begins its annual festival season.

Tuesday the price of gold price leapt 2.2% in less than an hour hitting $1832 per ounce - still 4.2% off last week's all-time high of $1,917.90. Gold rose on speculation that the Federal Reserve will further ease monetary policy to stimulate the economy. Minutes of the Fed meeting showed that a few members of the rate-setting committee “felt that recent economic developments justified a more substantial move” beyond the central bank’s Aug. 9 pledge to keep borrowing costs at a record low until mid-2013. This bias on the part of some Fed officials toward providing more easing was due to deep concern about the long-term unemployment.

Chicago Fed President Charles Evans said Tuesday in an interview that “We need to do more.” Just that statement was worth $38.20 in the price of gold. This is after Fed Chairman Ben S. Bernanke refrained from announcing additional stimulus last Friday at a meeting of central bankers in Jackson Hole, Wyoming.

Wednesday gold futures fluctuated between small gains and losses keeping above the psychologically important $1,800-an-ounce mark.

Gold has risen roughly 12% so far this month and nearly 30% year to date. At its record high on Aug. 23, the spot price of gold was up 18% from the beginning of August and 35% year to date. It dropped 11% to just over $1,700 within two days of hitting the high. This was no big surprise if you had considered what we had written on August 16th in our essay on top in gold:

(…) the overbought situation comes at a time when price levels are at or near very strong long-term resistance lines. It does appear that we are quite close to an important top (…) and long positions in gold at this point seem very risky at least for the short term.

Although plunges can be scary, it gives one perspective when you consider that the correction took gold no lower than it had been trading just two weeks earlier.

If your curiosity is aroused by what might happen during the following week, we’ll begin this week's technical part with the analysis of the XAU Index. We will start with the long-term chart (charts courtesy by http://stockcharts.com.)

In this week’s very long-term XAU Gold and Silver Index chart, we have a situation which is quite mixed once again. The sideways price movement has been seen since late 2010 and attempts to move above the level of previous highs continue to be seen. A powerful rally would likely follow if this move is seen but our skepticism continues until such a breakout is seen.

In this week’s long-term HUI Index chart, we did not see the plunge which would be in perfect tune with the symmetric pattern. However, this symmetry does not have to be perfect. The single spike high did not appear as in the past, but if gold stocks decline from here, the price action will still be similar to the previous decline. Based on this chart alone, the situation is bearish as no breakout has been seen and the basic symmetric pattern is still in place to some extent.

In this week’s short-term GDX ETF chart, we actually see some bullish price pattern in the form of a reverse head-and-shoulders formation. If this pattern is completed, it will likely lead to much higher prices but we would need to see gold’s stocks move above previous highs and verify the breakout.

Based on this chart alone, a rally appears likely due to the recent trading pattern. However, there is also a possibility that we are seeing a double top right now. We are truly at a crossroads and the breakout or breakdown which is yet to come will likely determine a much bigger move in the same direction.

Summing up, the situation for mining stocks is mixed overall. The recent move to previous highs is bullish since the underlying metals did not follow or lead the mining stocks. A truly bullish situation would be a move above previous highs here and a verification of this breakout. This has not yet been seen, so the situation remains mixed.

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