Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold, Silver Prices and Mining Stocks Sector Have Not Bottomed Yet

Commodities / Gold and Silver Stocks 2013 Nov 19, 2013 - 10:44 AM GMT

By: Bob_Kirtley

Commodities As a bull on both gold and silver I do expect that this sector will shine once again, hopefully in the not too distant future. However we are still of the opinion that this gold bull market remains in a bear phase for now. The timing of market directional changes is critical to the success of any investment. We all know that it is impossible to pick the very top or the very bottom of the market and so enter and exit the market with absolute perfection. That just does not happen, but it is incumbent on us to try and get as close as possible to these turning points in order to maximise our profits.


The June low for gold prices is widely believed to the bottom for gold and hence it is considered to be the very turning point that we need in order to trade with a high level of confidence.

Gold is trading around $100/oz above those lows, silver is about $2.00/oz above its low point and the mining sector as evidenced by the Gold Bugs Index, the HUI, is sitting about 40 points higher than it was back then.

So why the trepidation and unease about the current situation – well we will try and lay out some of the issues that concern us below and would ask that you add your opinion to this debate especially if you disagree with our premise.

If we can get a handle on the big picture then we will have set the stage for some profitable trading, if we get the big picture wrong then all the detailed analyses that flows from it will have been a complete waste of time, effort and capital.

Gold and Silver

Since the heady days when gold hit $1900/oz it has lost some of its luster, correcting by more than one third to trade at $1200/oz in June 2013. At this point a summer rally began; taking gold prices as high as $1420/oz in August 2013. Silver joined in the fun and followed gold to higher ground, as did the miners, although with a tad less enthusiasm. This was an unusual move in that the precious metals sector generally suffers from the summer doldrums and so it raised hopes for the fall which as seasons go, is one the best for gold prices. Since August gold has tried to rally but each time the rally has petered out. We are now well into the ‘fall’ season and it doesn’t look so good for gold prices.

The HUI

The performance of the mining sector is predicated on the performance of the underlying asset and once all the costs of have been covered these stocks can move in leaps and bounds on the back of higher metals prices. The summer rally from 205 to 280 generated great excitement as it had the appearance of a new dawn. Alas, as gold and silver drifted lower so the miners followed with the HUI now down to 226. The chart below depicts just what a torrid time the miners have been through and the summer rally looks more like it is flat lining rather than making substantive progress. A re-test of the June lows looks to be on the cards and should support fail to hold then it’s a case of look out below.

Conclusion

There are many positive factors that we can look to as being supportive of precious metals such as; mints running out of product, China buying by the boat load, the printing and debasement of paper currency, the dwindling supply, the increase in premiums for physical gold, etc. As logical and sensible as these arguments are the fact remains that gold and silver are not setting the world on fire with their performance.

There could be a myriad of reasons for this lack of progress but the two that get our attention are capitulation and QE.

Gold’s progress was characterized by a steepening of the curve and a final blow off when the price had ran too far ahead of itself. A similar occurrence usually takes place during a sell off, however, this sell off looks more like a slow drift south than a total capitulation. Gold’s inability to gain traction suggests that it could re-visit and test its old lows. Should this support fail then we could experience a rather disorderly sell off.

The debasement of the US dollar via Quantitative Easing has been, in part, the oxygen for the precious metals sector. The recently anticipated move to introduce some form of tapering of the bond buying programme put downward pressure on gold. When the time came the Fed decided not to implement tapering and gold jumped immediately and then fell back just as quickly. This behavior suggests that without an increase in QE gold will be starved of its oxygen. QE is data dependent in terms of inflation and employment. The employment figures suggest that things could be better, but they are heading in the right direction so there is little chance of an increase in QE. Additionally, the possibility of tapering will not go away and will be accompanied by much in the way of speculation regarding if and when it is to be implemented.

This sector is to some extent in the hands of Janet Yellen and The Federal Reserve. If the economy takes a turn for the worse and she behaves as dovishly as she is portrayed then we could see an increase in QE. However, if the employment figures continue to show slow but steady progress, then there will be no increase in QE and then the outlook for these metals will look less attractive. Should tapering be introduced the US dollar will appreciate and gold, having an inverse relationship with the dollar will suffer.

Got a comment, fire it in, the more opinions that we have, the more we share, the more enlightened we become and hopefully our ‘well informed’ trades will generate some decent profits.

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

6 Critical Money Making Rules