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
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Prices Dead Cat Bounce

Commodities / Gold and Silver 2013 May 21, 2013 - 10:15 AM GMT

By: Bob_Kirtley

Commodities

On Monday, May 13, 2013 we wrote that Gold Prices would Re-Test $1350/oz level and so they did, trading sub $1340/0z at one stage. Gold had fallen for 7 straight days from $1470/oz before the slide was arrested earlier today with a bounce that pushed gold up to $1391/oz.


This move correlates inversely with the 7 day winning streak put in by the US$, which also came to an abrupt halt today when it fell 0.50% to close at 83.93 on the US$ Index. As far as we can ascertain there was a few frantic minutes of buying that moved gold higher by around $30.00. Such quick movement suggests that someone who was short wanted to close and close quickly, as gold was climbing slowly but surely at the time. The snap shot below depicts the day’s action:

This looks to us to be more of a Dead Cat Bounce for gold prices rather than a substantial change in direction.

The Gold Chart:

This capitulation in gold prices wasn't a total capitulation as gold rallied and tried to break through $1500 and challenge the 50dma. Gold then faded until today when it managed to bounce from below $1350 to close at $1391 as the chart indicates.

Having tested the support level of $1350 on two occasions and survived one could be tempted to feel a little more optimistic about the future price of gold and silver for that matter. After all QE is still the order of the day in the US and Japan has embarked on its own version of easing which has seen the Yen fall by 20% or so. The UK also has a bond buying programme and the ECB could soon follow suit. We should not be surprised if Mario Draghi announces such a plan of action just when the market is not expecting it. All of these actions are inflationary and therefore good for the price of gold. However, the official figures for what they are worth suggest that inflation has not raised its ugly head and the need for gold as a safe haven is not necessary.

Conclusion

This is not the best time of the year for gold as seasonally the summer doldrums arrive and gold prices drift lower until August. Today’s performance by gold is a one off event and should be viewed in the context of a bounce in falling gold market. The long term bull market is not over, but we do need to recognize that there is a short term downward trend in place and it should be taken seriously and acted upon in order to generate profits.

The time to go aggressively long is somewhere in the distance and could prove to be a wonderful buying opportunity for those who have the patience to wait for this down trend to exhaust itself.

Meanwhile we can still turn a profit by utilizing this downward phase to our advantage. You no doubt have formed an opinion as to which of the mining stocks you consider to be top quality and those that you wouldn’t buy even if we gave you the money. The latter group of stocks offers the opportunity to either ‘short’ them or enter the options market and purchase a few Puts on them. This strategy has enabled us to build cash at a time when the precious metals market is heading south. When the turnaround comes we will have a healthy balance sheet and be in a position to pounce on undervalued stocks. If you are not sure which stocks to short then you could take a look at some of the funds that are currently suffering as prices deteriorate. They should broadly reflect the markets movements.

The order of the day is to think short for the short term and wait until we are convinced that the bottom is in before reversing position and hitting the acquisition trail.

If you still believe in the precious metals bull market then the next few months should present you with some astonishingly low priced opportunities. The selection of quality mining stocks should remain a top priority as they will outperform the sector significantly. So, you have the time right now to do the work in preparation for a resumption of the gold bull market, consider it a gift, as your very own due diligence will pay off handsomely.

Take care.

Bob Kirtley
Email:bob@gold-prices.biz

URL: www.silver-prices.net

URL: www.skoptionstrading.com

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. Winners of the GoldDrivers Stock Picking Competition 200

DISCLAIMER : Gold Prices makes no guarantee or warranty on the accuracy or completeness of the data provided on this site. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This website represents our views and nothing more than that. Always consult your registered advisor to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this website. We may or may not hold a position in these securities at any given time and reserve the right to buy and sell as we think fit.

Bob Kirtley 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