Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Canadian Cannabis Stocks CRASH as Canopy Growth Hits a Dead End - 14th Dec 19
Retail Sector Isn’t Dead, and These 6% Dividend Paying Stocks Prove It - 14th Dec 19
Top 5 Ways to Add Value to Your Home - 14th Dec 19
Beware Gold Stocks Downside - 13th Dec 19
Fed Says No Interest Rate Hikes In 2020. What About Gold? - 13th Dec 19
The ABC’s of Fiat Money - 13th Dec 19
Why Jo Swinson and the Lib Dems LOST Seats General Election 2019 - Sheffiled Hallam Result - 13th Dec 19
UK General Election 2019 BBC Exit Poll Forecast Accuracy Analysis - 12th Dec 19
Technical Analysis Update: Tadawul All Share Index (TASI) - Saudi Arabia ETF (KSA) - 12th Dec 19
Silver Miners Pinpoint the Precious Metals’ Outlook - 12th Dec 19
How Google Has Become the Worlds Biggest Travel Company - 12th Dec 19
UK Election Seats Forecasts - Tories 326, Labour 241, SNP 40, Lib Dems 17 - 12th Dec 19
UK General Election 2019 Final Seats Per Party Forecast - 12th Dec 19
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Gold Next Strong Upleg May First Require Consolidation

Commodities / Gold and Silver 2010 Oct 07, 2010 - 03:53 AM GMT

By: Przemyslaw_Radomski

Commodities

Best Financial Markets Analysis ArticleThe concern in the U.S. is that if the Federal Reserve pumps more money into the system, its efforts will hurt the value of the dollar and possibly stoke inflation, two events that would drive demand for gold. Yet some investors are buying gold on concern that stimulus measures might fail, leading to even deeper problems for the global economy.

For many people buying gold is based on the lack of faith in conventional currencies. If the U.S. currency has the phrase “In God We Trust” printed on every dollar, some feel that an additional statement of belief should be added—“In Gold we Trust.”


The US Mint recently announced that it has run out of one ounce Gold Buffalo coins. Even the fact that the US Buffalo is priced about 20% over spot, and was last sold for $1,560, has not stopped the flood of retail buying. Gold wholesalers are raising premiums on gold coins and some are out of stock.
 
Gold is particularly attractive since the Fed has cut interest rates essentially to zero. Gold is more attractive than money in the bank since you earn zero percent on your cash in the bank, and earn zero percent on your gold. By holding gold today you don't give up any interest on your cash and you don't give up any "missed opportunity cost."

But it seems that gold will need to consolidate before going higher. Once the correction is done, it’s not out of question that the price of gold will reach $1,500. We seriously doubt that the recent run up is the final stage of the bull market. In fact, it seems that there are several more good years. We’re looking forward to it, especially in silver.

This week’s HUI gold stocks index (charts courtesy by http://stockcharts.com.) does not reveal a great deal of new information. Gold stocks are above the declining resistance level but have not surpassed the highs seen in 2008. Whether this will happen before or after gold’s correction is unclear at this point.

In this week’s XAU Index chart, we can see the breakout above the declining resistance level. This is bullish for the medium-term. Still - as mentioned in the previous paragraph - a consolidation could take place before the mining stocks breakout.

Precious metals could move above their previous highs (along with rallying metals) and then consolidate, or, mining stocks could under perform metals until the latter correct. Once the correction is completed, precious metals stocks would strongly break above their previous highs. As you may see, in either case, a second consolidation is likely to take place for the mining stocks as well as the precious metals.

The GDX ETF, which is a proxy for the mining stocks, provides us with details and positive confirmation of what we have discussed previously. The resistance and support levels are clearly visible and we note that recent moves have taken place on strong volume. The extremes of the trading channel have been touched on an intra-day basis, which is a positive sign for the weeks ahead.

Meanwhile, currencies have been greatly affecting the price of precious metals lately and if the USD Index starts to move up, it could ignite metals' correction. This is exactly opposite to the general stock market, which seems to be moving along with metals and miners.

This would support gold, silver and mining stocks in continuing their recent rally, consolidating and then moving higher - most likely much higher.

Since our update two weeks ago, the Euro Index has continued to rally as expected. The consolidation period, which ended several weeks ago, has been followed by a consistent upswing. The expected target for this rally is around the 140-level, which is also close to the 200-day moving average. Obviously the rally is expected to continue since this target is above today’s closing level. This also means further short-run declines for the USD Index as will most likely be seen on our next chart.

In the long-term USD Index chart, the recent downtrend is clearly seen and is bordered in the chart by the blue declining trading channel lines. We see a move below the August local bottom and also below the 80-level, which normally provides support. The target level for the current decline is close to 77 and a pullback/consolidation is probable once this level has been reached. This may be followed by further declines approaching the 2009 low, although perhaps ending slightly sooner - at the 75 level - when taking into account level pointed by Phi number applied to recent turning points.

The Euro Index conversely has continued to rally. Although the exact timing for the reversal of these trends is not easily identified, it could possibly be soon. Expected target levels for the dollar and the euro are 77 and 140 respectively. There is a good chance these will be reached in the next week or two and thus the trends will reverse temporarily.

We do not recommend trading the short-term move in precious metals as it is the final part of current rally, so chasing it could prove to be very tricky, however, if one will insist on doing so, it seems that silver should be preferred due to its behavior around local tops and the fact that the general stock market is also likely to move temporarily higher. It is important, however, to utilize protective trailing stops and stop loss orders to minimize one’s risk. We believe that the more profitable route is to wait for the next rally, which we expect to take place very soon.

To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, I urge you to sign up for my free e-mail list. Sign up today and you'll also get free, 7-day access to the Premium Sections on my website, including valuable tools and charts dedicated to serious PM Investors and Speculators. It's free and you may unsubscribe at any time.

Thank you for reading. Have a great and profitable week!

P. Radomski
Editor
Sunshine Profits

    Interested in increasing your profits in the PM sector? Want to know which stocks to buy? Would you like to improve your risk/reward ratio?

    Sunshine Profits provides professional support for precious metals Investors and Traders.

    Apart from weekly Premium Updates and quick Market Alerts, members of the Sunshine Profits’ Premium Service gain access to Charts, Tools and Key Principles sections. Click the following link to find out how many benefits this means to you. Naturally, you may browse the sample version and easily sing-up for a free trial to see if the Premium Service meets your expectations.

    All essays, research and information found above represent analyses and opinions of Mr. Radomski 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, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

    By reading Mr. Radomski's essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, 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

© 2005-2019 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