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
Stocks Correct into Bitcoin Happy Thanks Halving - Earnings Season Buying Opps - 4th July 24
24 Hours Until Clown Rishi Sunak is Booted Out of Number 10 - UIK General Election 2024 - 4th July 24
Clown Rishi Delivers Tory Election Bloodbath, Labour 400+ Seat Landslide - 1st July 24
Bitcoin Happy Thanks Halving - Crypto's Exist Strategy - 30th June 24
Is a China-Taiwan Conflict Likely? Watch the Region's Stock Market Indexes - 30th June 24
Gold Mining Stocks Record Quarter - 30th June 24
Could Low PCE Inflation Take Gold to the Moon? - 30th June 24
UK General Election 2024 Result Forecast - 26th June 24
AI Stocks Portfolio Accumulate and Distribute - 26th June 24
Gold Stocks Reloading - 26th June 24
Gold Price Completely Unsurprising Reversal and Next Steps - 26th June 24
Inflation – How It Started And Where We Are Now - 26th June 24
Can Stock Market Bad Breadth Be Good? - 26th June 24
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Stocks Maintain Long-Term Support

Commodities / Gold & Silver Stocks Sep 23, 2011 - 06:39 AM GMT

By: Jordan_Roy_Byrne

Commodities

Best Financial Markets Analysis ArticleNow that we are past the Fed circus we can get back to reality. But what is reality? Is it inflation? Deflation? A repeat of 2008? What matters is the message of the markets and the correct interpretation of the message. With regards to the mining stocks we are seeing a stark contrast relative to the rest of the stock market. This positive divergence has been strengthening and remains well intact despite Thursday’s sudden Fed-induced selloff.


In the chart below we graph GDX (gold stocks) and SIL (silver stocks) at the top followed by the S&P 500, EEM (emerging markets), CRX (commodity stocks) and XLE (energy stocks). In each graph (but SIL) we show the 400-day moving average. The 50 and 200 day moving averages are important but in my opinion the 400-day moving average is the most important when dealing with the primary trend.

The 400-day moving average has been significant for each market as it easily distinguishes between bull and bear markets. Each market, with the exception of the precious metals stocks has broken its 400-day moving average. Equities, emerging market equities and commodity stocks are now in a cyclical bear market. This doesn’t mean these markets will fall another 20%. I think they’ve seen most of their downside. The key point is that these markets won’t make a new high anytime soon and will likely remain in a trading range over the next 12 months.

Meanwhile, despite Thursday’s drubbing, the gold and silver equities remain healthy from a long-term technical perspective. GDX would have to fall another 10% to test its 400-day moving average. SIL doesn’t have 400 days of history but its holding 6% above its 350-day moving average. Back in the summer of 2008, the mining stocks plunged through support alongside commodity stocks and emerging market stocks. Today we continue to see an entirely different picture.

The gold and silver stocks are right where they need to be, holding up well amid a summer swoon that likely ends next month. There may be some more downside for these shares but don’t expect a penetration of long-term support. These stocks have held up well for fundamental reasons. Metals prices are up significantly on all time frames while cost pressures are abating. That is a recipe for higher profits and higher share prices. As we near 2012, a peak in bonds and bottom in equities will send money flowing into the gold and silver stocks.

If you’d be interested in professional guidance then we invite you to learn more about our service.

Good Luck!

Jordan Roy-Byrne, CMT
Trendsman@Trendsman.com
Subscription Service

Trendsman” is an affiliate member of the Market Technicians Association (MTA) and is enrolled in their CMT Program, which certifies professionals in the field of technical analysis. He will be taking the final exam in Spring 07. Trendsman focuses on technical analysis but analyzes fundamentals and investor psychology in tandem with the charts. He credits his success to an immense love of the markets and an insatiable thirst for knowledge and profits.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Chad
23 Sep 11, 16:31
Silver

The COMEX spot price will become irrelevent as no one will sell at their ridiculously low "Spot" prices

http://www.moneyteachers.org/October+Silver+Futures.htm


Post Comment

Only logged in users are allowed to post comments. Register/ Log in