Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21
Ultimate Gaming and Home Working PC System Build 2021 - 5950X, RTX 3080, Asus MB - Scan Computers UK - 7th Jan 21
Inflation the bug-bear looking forward through 2021 - 7th Jan 21
ESG ETF Investing Flows Drive Clean Energy to Fresh Highs - 7th Jan 21
5 Financial Market Surprises in 2021 - 7th Jan 21
Time to ‘Reset’ Your Investment Portfolio in 2021? - 7th Jan 21
Bitcoin Price Collapses almost 20% at the start 2021 - 7th Jan 21
Fed Taper Nervous Breakdown - 6th Jan 21
What Will the U.S. Dollar Ring in for 2021? - 6th Jan 21
Stock market frenzy- Ride the bandwagon but be sure to take along some gold coins - 6th Jan 21
Overclockers UK Custom Build Gaming System Review Heat Test and Final Conclusion - 6th Jan 21
Precious Metals Resuming Bull Market, Gold, Silver, GDX Trend Forecasts 2021 - 5th Jan 21
Trump’s Iran-COVID-Gate Anniversary  - 5th Jan 21
2021 May Be A Good Year For The Cannabis / Marijuana Sector - 5th Jan 21
Stock Market Approaching an Important Target - 5th Jan 21
Consumer Prices Are Not Reflecting Higher Inflation; Neither Is The CRB - 5th Jan 21
NEW UK Coronavirus PANIC FULL Lockdown Imminent, All Schools to Close! GCSE Exams Cancelled! - 4th Jan 21
The Year the World Fell Down the Rabbit Hole - 4th Jan 21
A Year Like No Other for Precious Metals… and Everything Else - 4th Jan 21
The Stocks Bull Market is Only Half Completed - 4th Jan 21
An In- Depth Look At Gold Price Trend - 4th Jan 21
Building America Back After a Dark Covid Winter - 4th Jan 21
America's Dark Covid Winter Ahead - 4th Jan 21
Buy a Landrover Discovery Sport in 2021? 3 Year Driving Review - 3rd Jan 21
Stock Market Major Peak in Early April 2021 - 3rd Jan 21
Travel and Holidays 2021 - Flight Knight Cabin Bag Review - 3rd Jan 21
�� Happy New Year 2021 Fireworks and Drone Light Show from London and Sheffied - BBC�� - 2nd Jan 2
The Next IMMINENT Global Catastrophe After Coronavirus - 1st Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold and Silver Summer Trend Update

Commodities / Gold and Silver 2011 Jul 12, 2011 - 02:19 AM GMT

By: Peter_Degraaf

Commodities

Diamond Rated - Best Financial Markets Analysis ArticleHistorically the precious metals prices drift lower during the summer months, with a bottom in July, although sometimes not until August. At this time of year demand from India is less because the festivals are over and demand from jewelers is low because of summer holidays. Investment demand is also down because buyers are expecting a correction.


This historical precedence (low summer prices), has been nourished by a number of analysts. (Any connection between the names used in this essay and living persons is purely coincidental). ‘Low-price Larry’ has predicted a collapse in the gold price since early this year. ‘Oriental Steve’ predicted on May 7th that gold and silver would drop to their 200 day moving averages by July 7th. In 2009, ‘craptal Dave’ predicted that silver would drop sharply. (The price rose instead). He called for a major long term top at the end of his 64 month cycle to occur in February of 2011. Gold refused to comply and has risen 10% since then. Last we heard of ‘craptal Dave’ he shorted gold at the end of June at $1515, hoping for a drop to $1462. It has been rumored that he considers his craptal system to be more effective than fundamentals.

We can only guess at why some analysts keep calling for major corrections and predicting ‘long-term tops’. Could it be that they get so wrapped up in technical analysis that they neglect to study the fundamentals? Applying technical analysis without considering the fundamentals is like driving your car while looking in the rear view mirror.

The fundamentals for gold and silver have never been as bullish as they are today. Money printing around the world is happening so rapidly there is some concern that we may run out of trees. Meanwhile Chinese and Indian investors are trading their Yuan and Rupee’s for something with more lasting value, gold and silver. Greeks and Italians are worried about the banking system and buying gold coins. Mints around the world are setting production records to fill orders from retail customers. Despite a record high gold price, new supply from mines is declining, due to the fact that the ‘easy to find gold’ has already been found. Comparing the current gold bull market to the 1970’s bull market we find that there are currently 2.4 billion people in the world who were not alive in 1980. That is an increase of 53%! A large percentage of this huge increase has occurred in china and India. By coincidence the people in those two countries love to own gold. Investment demand is increasing worldwide as more and more people begin to understand the steady decline in the value of their currency. It is a historical fact that once a country goes down the path of currency inflation, (instead of taxation in order to pay its debt), in every instance that currency eventually became worthless and had to be replaced. This has happened in at least 40 countries (including the USA), in the past.

Governments have two ways of robbing the people of the fruits of their labor: taxes and the systematic destruction of the purchasing power of their currency.

This next chart shows us that the trend of bond holders selling bonds to buy gold is again picking up momentum.

This chart features the index that compares gold to bonds. The blue channel is rising by 25% per year. As long as price remains in this channel those who own gold will earn 25% more than those who hold 30 year bonds. The supporting indicators are positive (green lines), with room to rise. The 50 week moving average is in positive alignment to the 200 week moving average (green oval), and both are rising. All of this makes for a bullish trend.

In 1953, during the last audit of the U.S. gold reserves, the gold was referred to as ‘Gold Bullion Reserves’. Then in 2001 the description was changed to: ‘Custodial Gold Bullion.’ Six months later the description changed to: ‘Deep Storage Gold’. Could this mean that the above ground gold is gone and replaced by gold that is yet to be mined?

This chart courtesy Federal Reserve Bank of St. Louis tracks the M2 money supply. The latest reading was reported on Friday and shows quite a jump – from 9068 billion dollars on June 20th to 9144 billion on June 27th. This is an increase of 76 billion dollars in just one week. Could this be the result of a “new QE program?”

Monetary inflation is like toothpaste. Once out of the tube, it cannot be put back in. It would require withdrawing money form the economy which would cause serious social unrest.

Featured is the weekly gold chart. Whenever the RSI rises from ‘50’ and the CCI for ‘0’ you can usually count on a multi-week rally. According to the International Strategy and Investment Group (ISI), gold makes up 0.07% of total global assets. In 2001 it was 0.3% (the all-time low). In 1980 while gold peaked, the ratio rose to 3%. In 1968 during a gold bull market it rose to 4.8%. For the current 0.07% to double, would require 10 years of gold production.

“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it." Frederic Bastiat (from his booklet: “The Law”)

Featured is the daily bar chart for PHYS the Sprott gold trust. Price is preparing to scale new heights. The supporting indicators are positive with room to rise and the moving averages are positive and rising. Any dips to or below the 50 day moving average are likely to turned out as opportunities to buy.

In 1929 Homestake Mining, a gold producer, traded at 4.19. By 1935 the share price rose to 495.00.



Featured is the gold price in Euros. We alerted our subscribers last week that a breakout at the blue arrow would be very bullish, with a target at 12.3 Euros. Price has now produced a breakout, and closed at 11.04. It is quite likely that the gap produced on Monday will be filled, but as soon as price confirms the breakout by closing above the green arrow, the rally to 12.3 will be underway.

“There is no subtler, no surer means of overturning the existing basis of society, than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” …..John. M. Keynes.

This chart courtesy Federal Reserve Bank of St. Louis shows the duration of US unemployed workers which continues to lengthen. As tragic as this is for those who are unemployed, there is no mistaking that this trend is bullish for gold and silver, as it persuades politicians and the Federal Reserve to run the printing presses, to pay for unemployment benefits and food stamps and welfare payments.

“The same central banks that sold gold at bargain prices, will at some point try to replace their gold reserves. They will use the printing press to accomplish this goal.” ….. Ferdinand Lipps. (Veteran Swiss banker).

Featured is the weekly silver chart. Price has just broken out from beneath resistance and the supporting indicators (SIs) are turning positive. The RSI looks very similar to the August 2010 chart pattern. Silver back then rose for several months.

According to the Silver Institute, Industrial demand for silver is expected to rise to 666 million ounces by 2015. This is a 36% increase from 487 million ounces in 2010.



This chart courtesy Cotpricecharts.com shows the ‘net short’ position to be at 33 after reaching a long-time low of 29 last week. It shows reluctance on the part of commercial silver traders to add to their short positions. The last time we were at 33 was in July of 2008. Silver was trading at 13.87 back then and rose to 17.66 by October. The current ‘net short position’ in silver is too large to be bought back. It currently totals over 200 million ounces of silver. The bullion banks involved are trapped. All they can do is attack the silver price with ‘paper silver’ every now and then in an effort to shake some ‘weak hands’ out of the market. Until this short position is covered, the main trend in silver is up – up – up!

Summary: A good analyst would never tell his subscribers to short gold or silver during a bull market. For one thing it plays into the game plan of the central banks that have a vested interest in keeping prices down. Scaling sell orders into rallies, after scaling in buy orders during a pullback is the perfect way to play a bull market. Anything else borders on greed. Hedging a long position with a shorting ETF or with distant puts makes sense for experienced traders but going short in a bull market can be financial suicide for investors. My investment performance is posted at my website under ‘Stock Pick of the Week.’

Happy trading!

By Peter Degraaf

Peter Degraaf is an on-line stock trader with over 50 years of investing experience. He issues a weekend report on the markets for his many subscribers. For a sample issue send him an E-mail at itiswell@cogeco.net , or visit his website at www.pdegraaf.com where you will find many long-term charts, as well as an interesting collection of Worthwhile Quotes that make for fascinating reading.

© 2011 Copyright Peter Degraaf - All Rights Reserved

DISCLAIMER: Please do your own due diligence. I am NOT responsible for your trading decisions.

Peter Degraaf 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