Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Miners Outperform Once Again

Commodities / Gold and Silver Stocks 2014 Apr 23, 2014 - 03:05 PM GMT

By: P_Radomski_CFA

Commodities

Briefly: In our opinion no speculative positions are justified from the risk/reward perspective.

Yesterday’s price action in the precious metals market might seem perplexing to some investors and there’s good reason for it. Gold declined, but silver didn’t, and mining stocks actually managed to rally more than 1%. Let’s take a closer look (charts courtesy of http://stockcharts.com).


What we wrote yesterday about gold remains largely up-to-date:

Gold moved to its recent lows, but didn’t move below them. Technically, the situation hasn’t changed because of that, and thus, the outlook remains bearish, but it’s still possible that we will see some sideways movement or a small move higher before the decline really continues.

We still haven’t seen any breakdown, but we saw an attempt to move below the recent lows – a failed attempt. The latter is a bullish sign for the short term, even though the medium-term trend remains unaffected and down.

Moreover, please note that the GLD ETF has just formed a reversal hammer candlestick.

Gold priced in the Australian dollar moved lower as well and in this case we saw a completion of the bearish head-and-shoulders formation. Naturally, that’s a bearish sign. The move below the neck level of the formation is not huge yet, so the breakdown is not yet confirmed, but the situation is still more bearish than not.

Meanwhile, the platinum market still provides us with bearish implications. We saw a second daily close below the neck level of the head-and-shoulders formation. One more and the move will be confirmed.

Mining stocks, however, paint a quite different picture for the precious metals sector. Miners moved higher on Tuesday, despite a move lower in gold. This is a rather significant bullish sign for the short term. The volume was not huge, but the fact that miners managed to outperform gold so visibly is meaningful on its own anyway.

The situation in the USD Index remains very tense as it remains between two important lines (the declining resistance line and the rising support line). What we wrote yesterday in our gold commentary remains somewhat up-to-date:

The USD Index moved higher this week, but not high enough to do 2 things: to invalidate the move below the rising support line and to move above the declining resistance line. With the situation being unclear here, it seems no wonder that there was no decisive move in metals and miners. Once the USD rallies above the support/resistance levels, breakdowns in metals and miners are likely to follow, just as platinum suggests.

In general, the outlook for the precious metals sector remains bearish, but we may see a couple of days of sideways movement or slightly higher prices.

Only “somewhat” because of what we saw in the mining stocks and in gold. The precious metals sector looks ready to move higher in the short term (perhaps only a few days, but it seems very likely at this point), so even if we see a small move lower in the USD Index, it could trigger a visible move higher in the precious metals sector.

While the above is not enough for us to consider opening long positions (as the medium-term trend remains down), it does seem that the situation is no longer bearish enough for the short term to justify keeping open speculative short positions. Consequently, we are taking profits off the table (these were full short positions, so the profits are meaningful) and are getting ready to re-open short positions in the coming days (more likely) or weeks (less likely). We are focusing on short positions because we think the medium-term trend is still down, and thus (at least as far as short-term trades are concerned) short positions are less risky than long ones.

We previously opened short positions on March 5 with gold at $1,337.50, closed them on April 4 with gold at $1,297.25 and re-opened shorts on April 10 with gold at $1,320.50). We aim to repeat the above and we think that the circumstances now favor staying out of the market once again – for the record, gold closed at $1,283.10, so once again a short position was closed with the yellow metal almost $40 lower.

To summarize:

Trading capital (our opinion): No positions
Long-term capital (our opinion): No positions
Insurance capital (our opinion): Full position

You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.

As always, we'll keep our subscribers updated should our views on the market change. We will continue to send them our Gold & Silver Trading Alerts on each trading day and we will send additional ones whenever appropriate. If you'd like to receive them, please subscribe today.

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments - SunshineProfits.com
Tools für Effektives Gold- und Silber-Investment - SunshineProfits.DE

* * * * *

About Sunshine Profits

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA 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, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, 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

© 2005-2022 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