Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Surprise Rally

Commodities / Gold and Silver 2012 Jan 27, 2012 - 02:48 AM GMT

By: Jeb_Handwerger

Commodities

Gold and Silver Surprise Rally

Best Financial Markets Analysis ArticleAt the end of 2011, Merkel and Sarkozy got together for an unusual emergency meeting. They pledged to come up with economic salvation. Immediately the equity markets mounted a year end "Halleluyah" rally. Bernanke followed Europe's footsteps in 2012 and expanded the horizon of record low interest rates from Mid-2013 until Late 2014.


We respond judiciously to this euphoria. Politician's promises are usually a thin blanket for an upcoming cold night. We have concluded since October that a surprisingly potent rise may occur which would be in reaction to the application of the stimulative paddles.

The European resolution was a response to the Franco-Belgium travails of the widely held Dexia Bank, which has tentacles into France and Germany's economic foundations. If this were not enough, the chronic Greek malaise indicated that Zorba was in need of another oxygen mask to rouse him from his hedonistically induced torpor.

A potent upward move in gold and silver in addition to the oversold miners (GDX) is just beginning to occur. Our scenario was to maintain our long term core precious metal positions even though such a posture was temporarily painful as many analysts concluded wrongly that deflation, bonds and the U.S. dollar were the only safe harbors.

What about the U.S. dollar now? Note all the media hoopla that regaled us with strength of the dollar recently. News from Europe and Washington appears to be melting the U.S. Dollar under the cover of all of this stimulative warming. We have called for this surprise rally we are observing in the face of all this dollar and treasury hoopla. How uneasy must be the shorts who have been caught by this recent rise. Short sellers went into October's market with the largest short position since 2008. Such a one-sided posture is often punished as the shorts run to cover and thereby add to the upward move.

Technically there have been gaps from 2011 that need to be filled on the upside in precious metals and miners. We note that institutions have been hit hard by the gold's price decline. Hedge funds must've been selling stocks that they held in common in order to meet margin calls. Additionally this consideration may have influenced collateral damage among investors. Perhaps the current rise may indicate the recent downtrend has been broken to the upside.

Silver (SLV) appears to have found support at its 2011 lows. There are downside gaps that should be filled to the upside. Silver will encounter resistance around $38. Silver has reached a record oversold level indicated by the RSI and MACD in 2011. This indicated an interim bottom in silver. Monitor the bullish crossover on the MACD which confirmed the already constructive reversal on the stochastic and RSI.

Gold appears to be making a reversal at oversold and long term support levels breaking a 5 month downtrend. Notice the strong volume accumulation as The Fed announces negative interest rates until late 2014. This is bullish for precious metals. In early August through October we advised a hold and urged caution. Since it pulled back it provided two secondary buypoints where we said it is buying time while others preached that the gold and silver market bull market had ended. Now gold appears to be bouncing off our buypoints similar to January 2011 and regaining its 50 and 200 day to the upside. Now the weak hands will come back at much higher prices.

Subscribe to my free newsletter to get up to the minute updates on rare earths, uranium, gold and silver.

By Jeb Handwerger

http://goldstocktrades.com

© 2012 Copyright Jeb Handwerger- 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.


© 2005-2022 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