Saturday 28 July 2012

Minor break higher for the metals

After trading largely sideways for two months, the metals are breaking to the upside. Is this just a short term tease to the Gold/Silver bugs..or is it the start of something major?

With rumours of QE3 in the coming week - or at least within the next 2-3 months, the metal bulls are looking for a major snap higher.

GLD, weekly

SLV, weekly


We have indeed seen a minor bullish break higher, but so far its still well within the broader weekly down cycle.

Only if GLD can break above 165 could I get bullish, and $31 for SLV.

We are some ways away from hitting those levels, so the metal bears still have a significant buffer zone for any longer term short positions.
Downside targets remain $1300 for Gold..and $22 for Silver.

The deflationary 'doomers' would be seeking Gold $1000 and Silver $17.50. That only seems viable if the economy suffers consistent weakness all the way into early 2013, and if the Bernanke refuses to do any major QE.

Considering the last few years of Fed intervention, I'd have to guess the Fed would step in if the SP'500 is in the low 1100s - which would equate to the $1300 level for Gold.

Wednesday 18 July 2012

Metals all primed to break

The metals have been largely flat for the last 10 weeks or so. Whilst price has remained flat, underlying momentum/trends have been resetting, and are getting close to an attempt to break upward.

Even with a break higher though, any move higher could quickly fail, and get stuck around the top bollinger band.

GLD, weekly

SLV, weekly


From a MACD cycle perspective, the metals are due to break +cycle in about 3 or 4 weeks. We've not seen some good upside in the metals since the start of the year, so we're certainly 'over-due', but that is of course no guarantee.

The problem the metals still face is that the monthly cycles remain weak, and in a broad downtrend - as is also clear from the weekly cycle perspective.

Right now, I could only get bullish on Silver above 32/33 - and even then, I'd want a VERY tight stop on any new long positions added at such a level. For Gold, I'd only be bullish over $1650, and again..only with a super tight stop.

If the main equity market gets upset in August - as some believe, then the metals are going to find it VERY difficult to maintain current levels, even if there is concern over the 'dirty paper' that is the European currency.

As ever..physical metals remain the ultimate insurance against the money printing of the central banks. Any further declines should be seen as a bonus discount to all those not already aboard the silver/gold train.

Thursday 12 July 2012

Gold and Silver waiting for the next big move

Its now almost mid July and the metals have been largely flat so far this month. There is increasingly a lot of feisty pro-metal posters out there on the endless message boards. Many are calling for a Silver hyper ramp to $50..and higher, as early as this the end of this year.

There are also some really strong deflationists out there, touting a break under the big $20..with targets in the 17.50 to $15 range. For the moment, I remain part of the latter group.

GLD, monthly

SLV, monthly


I remain seeking a significant snap down in the metals later this July and into early August.

Primary target for Gold and Silver remain $1300 and $22 respectively. Those levels might not be fully achieved until late Oct/November time, much is dependent on whether the Bernanke appears to do QE3 in early August - now increasingly less likely, or if he waits until the US election is completed.

In the near term, look for GLD to break under 148, which should occur as part of a very sharp drop.

Thursday 5 July 2012

Minor bounce in the metals

Whilst the main markets have surged since early June, the metals have really not had such a great time. Both Gold and Silver remain in broad mid-term down trends.

GLD, weekly

SLV, weekly


There is nothing in the near term to make me bullish on the metals, not least with the Dollar still looking strong on a multi-month basis.

There remains a VERY serious possibility of a huge snap lower this month. Gold is especially clear as crystal on the snap level. A move under $1470..and there is immediate downside to $1300 - which would equate to around $22.50 for Silver.