Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Gerald Celente: Why You Still Need Guns, Gold, and a Getaway Plan... - 23rd Jun 18
Cheap Gold Stocks Bottom Basing - 23rd Jun 18
A Trade War Won’t Be Good for the US Dollar - 23rd Jun 18
SPX/Gold, Long-term Yields & Yield Curve 3 Amigos Update - 22nd Jun 18
Gold - How Long Can This Last? - 22nd Jun 18
Dow Has Fallen 8 days in a Row. Medium-long Term Bullish for Stocks - 22nd Jun 18
Trouble Spotting Market Trends? This Can Help - 22nd Jun 18
Financial Markets Analysis and Trend Forecasts 2018 - A Message from Nadeem Walayat - 21st Jun 18
SPX Bouncing Above Support - 21st Jun 18
Things You Need To Know If You Want To Invest In Bitcoin Now - 21st Jun 18
The NASDAQ’s Outperformance vs. the Dow is Very Bullish - 21st Jun 18
Warning All Investors: Global Stock Market Are Shifting Away From US Price Correlation - 20th Jun 18
Gold GLD ETF Update… Breakdown ? - 20th Jun 18
Short-term Turnaround in Bitcoin Might Not Be What You Think - 19th Jun 18
Stock Market’s Short Term Downside Will be Limited - 19th Jun 18
Natural Gas Setup for 32% Move in UGAZ Fund - 19th Jun 18
Magnus Collective To Empower Automation And Artificial Intelligence - 19th Jun 18
Trump A Bull in a China Shop - 19th Jun 18
Minor Car Accident! What Happens After You Report Your Accident to Your Insurer - 19th Jun 18
US Majors Flush Out A Major Pivot Low and What’s Next - 18th Jun 18
Cocoa Commodities Trading Analysis - 18th Jun 18
Stock Market Consolidating in an Uptrend - 18th Jun 18
Russell Has Gone Up 7 Weeks in a Row. EXTREMELY Bullish for Stocks - 18th Jun 18
What Happens Next to Stocks when Tech Massively Outperforms Utilities and Consumer Staples - 18th Jun 18
The Trillion Dollar Market You’ve Never Heard Of - 18th Jun 18
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18
The Euro Crashed Yesterday. Bearish for Euro and Bullish for USD - 15th Jun 18
Inflation Trade, in Progress Since Gold Kicked it Off - 15th Jun 18
Can Saudi Arabia Prevent The Next Oil Shock? - 15th Jun 18
The Biggest Online Gambling Companies - 15th Jun 18
Powell's Excess Reserve Change and Gold - 15th Jun 18
Is This a Big Sign of a Big Stock Market Turn? - 15th Jun 18
Will Italy Sink the EU and Boost Gold? - 15th Jun 18
Bumper Crash! Land Rover Discovery Sport vs Audi - 15th Jun 18
Stock Market Topping Pattern or Just Pause Before Going Higher? - 14th Jun 18
Is the ECB Ending QE a Good Thing? Markets Think So - 14th Jun 18
Yield Curve Continues to Flatten. A Bullish Sign for the Stock Market - 14th Jun 18
How Online Gambling has Impacted the Economy - 14th Jun 18
Crude Oil Price Targeting $58 ppb Before Finding Support - 14th Jun 18
Stock Market Near Another Top? - 14th Jun 18
Thorpe Park REAL Walking Dead Living Nightmare Zombie Car Park Ride Experience! - 14th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Is Gold Really Strong?

Commodities / Gold and Silver 2017 Dec 09, 2017 - 02:23 PM GMT

By: P_Radomski_CFA

Commodities

Silver and mining stocks declined for yet another day, but this time gold ended the session with a (slight, but still) gain. How can we interpret the latter? Is it a sign of strength?

In short, not at all. In yesterday’s, alert we emphasized that gold’s breakdown was one of the key developments that one should consider while analyzing the precious metals market. The tiny upswing that we saw in gold yesterday was a classic example of a post-breakout pause. Let’s take a closer look (charts courtesy of http://stockcharts.com).


In yesterday’s alert, we wrote exactly the following:

Gold closed yesterday’s session below both rising support lines, but the most important thing is that it closed it below the line based on the daily closing prices (it’s currently at about $1,275) and that the move below it was rather significant.

The breakdown is not yet confirmed, but it appears that it will be confirmed shortly, especially if the USD continues to move higher. The next support is just above $1,200, so that’s where gold is most likely headed. As discussed earlier today, the bigger the consolidation, the bigger the move is likely to follow and in this case, it means that gold should move visibly lower, not just several dollars lower. Again, it doesn’t seem that the decline is close to being over – at least not in terms of price.

Another daily close below both rising support lines is a step closer toward a confirmation of a breakdown and the fact that the volume was low adds to the credibility of the bearish case. The same goes for today’s pre-market action. At the moment of writing these words, gold is about $5 lower, so the odds are that the session will end below the rising support/resistance lines once again and that the breakdown will be fully confirmed.

The mentioned lines are clearly visible, so it’s very likely that this breakdown will be viewed as a key technical development for many traders and that it will result in lower prices relatively soon.

Meanwhile, the price of silver continues to march lower, just as we had expected it to. The one thing that we would like to add today is that silver just broke below its May bottom and since it continues to move lower in today’s pre-market trading, it seems that the breakdown will be confirmed.

Mining stocks continued to decline and underperform gold and it can’t be explained by looking at the general stock market – it paused yesterday and the past few months saw almost consistently higher S&P 500 levels. The implications of yesterday’s session are clearly bearish. Moreover, we realize that we wrote this dozens of times, but it’s worth repeating once again – the extent to which mining stocks underperform gold and the time in which they’ve been doing so (months) is a major confirmation of the analogy between the current situation and the pre-2013 slide. The implications are extremely bearish for the following weeks and months… Especially that we just saw a major breakdown in the HUI:gold ratio.

The breakdown below the 2016 low in the gold stocks to gold ratio was already visible based on Tuesday’s closing prices, but it was tiny. It was yesterday’s price action that made it clear.

The long-term chart shows that the implications are much bigger than it might appear at first sight. The reason is that there is almost no important support all the way down until the 2015 bottom (below 0.1) with the small exceptions of the 2000 low and the 2014 low.

Interestingly, both mentioned lows took place in the final part of the respective years, which makes it quite likely that we could see a temporary turnaround from those levels this month. If the ratio was to temporarily (!) bottom at about 0.13 and gold was to bottom at about $1,220, then this implies a target for the HUI Index just a little below 160. In yesterday’s alert, we wrote about 163 as the likely temporary target based on a dynamic analogy to the size of the decline that we had already seen (by the way, we also discussed the target for silver). The above charts seem to confirm it.

Summing up, it seems that the decline in the precious metals market is not very close to being over in terms of price. We might see a visible corrective upswing next week, but this correction could start at much lower levels based on the breakdown in gold and the way PMs react to the changes in the USD Index. For now, the outlook remains bearish as there are myriads of signals that support a decline in the price of gold in December.

Thank you.

Sincerely,

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

© 2005-2018 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