Friday 31 August 2012

Metals - Breakout

Even though nothing actually changed in direct policy/intervention, as a result of today's speech by the Bernanke, the metals ramped, and closed well above key weekly cycle resistance.

Without doubt, we have a breakout for both Gold and Silver.

GLD, weekly

SLV, weekly


Its quite amazing what mere words can do. The Bernanke has indeed inspired the metals to successful breakouts today. Both Gold and Silver are pricing in a much anticipated QE3. The key questions are how much QE is coming, and how much is already factored into the metal prices? Both are impossible to know of course, QE3 itself could easily be some months away.

From a MACD (blue bar histogram) cycle perspective, we're pretty high on the cycle, but there is absolutely no sign of levelling out, never mind an actual turn lower. With the breakout - and strong weekly closing in actual price, it'd be natural to expect further price rises.

So, we have a provisional breakout for the metals, the gold bugs should now look for confirmation a week from today, and also more importantly, at the end of September.

Upside targets
Gold, the high of February, GLD @ 174, some $100 higher
Silver, the high of February, SLV @ 36.44, some $5.50 higher
A retrace back to the weekly 10MAs would probably act as very good initial support for Gold and Silver next week, and across all of September.

Tuesday 28 August 2012

Metals getting toppy

There remains a great deal of hysteria surrounding the precious metals of Gold and Silver. The infamous gold-bugs continue to tout future price targets for gold of anything from 5k to 20k, yet here we are, with great economic uncertainty - not least concerning the FIAT currencies, yet Gold remains well under $2000.

We've certainly seen a strong little ramp across the last two trading weeks, yet its starting to look pretty toppy. A pullback looks due.

GLD, daily

SLV, daily


The monthly and weekly cycles are still broadly downward since spring 2011, yet we're close to breaking out. It remains a 'marginal' situation, regardless of what the gold-bugs might like to believe.

Sure, if we see GLD 165, and SLV 33, then things can be said to be breaking out. For the moment, the cycles are mixed.

The daily cycles are now very clearly at the top of the range, both in RSI - and other indicators, I'd expect a pullback of 2-3% at least in the coming 3-7 trading days.

Lets see if we can put in a higher low at the next pullback, that does seem very likely right now.

Tuesday 21 August 2012

Metals climbing towards resistance

With the main equity indexes climbing in the past few weeks, Gold and Silver have been building pretty solid floors, and are now climbing towards key trend line resistance.

Primary trend remains down, however, at the current rate of increase, a bullish breakout will be seen within the next 2-4 weeks.

GLD, weekly

SLV, weekly


The metal bugs are starting to get a real justified reason to get a little excited. After a 12 month decline in prices, both Gold and Silver are again attempting to break upward, and outside of the down channel. This down channel - could easily be one giant bullish consolidation flag.

Bullish breakout 'chase it higher' levels are pretty clear...
GLD - 165
SLV - 32

Bulls should look for a good monthly close for August, but we won't really know for sure - whether this up trend is sustainable, until the close of September.

So...for the bulls..some patience is required.

As ever, the actions - or inaction, of the US and European central banks will be pivotal to the metals in the coming weeks. In 2010, the metals soared after Jackson will be fascinating to see what happens this time around.

Friday 10 August 2012

Metals crawling slowly higher

Whilst the main equity indexes have seen some significant gains since the June low of sp'1266, the metals remain in a very tight trading range. Both Gold and Silver are so far seeing net gains this August, but it is literally a mere half of one percent.

GLD, monthly

SLV, monthly


We're getting very close to a breakout, after an 18 month decline.

Bullish break levels, Gold, 1600, and Silver 28.50*
Bearish break levels, Gold 1475   Silver, 25.25
*note that I use the terms Gold/Silver interchangeably for GLD/SLV.

I still think there is a fair chance of further downside in the metals, but if we do break a little higher, then those downside targets of $1300 and $22 can be taken off the table.

Bernanke & QE3

It still seems inevitable that the Fed' will spool up the digital printers at some point, although they may well wait until post US elections to look impartial. The effect of further QE on the metals seems at least moderately bullish, but the wide consensus of many economists is that the metals are not going to break the highs of 2011 for some considerable time (as in... years) to come.

Regardless, physical metals remain one primary means to have an insurance policy against the printing maniacs.

Wednesday 1 August 2012

The Fed fail to inspire the metals

With the FOMC deciding not to do any new QE, the metals showed some moderate weakness today. Certainly it was nothing dramatic, but then what do the metal bulls now have to look forward to this August?

Both gold and silver remain in mid-term down trends, and show no sign of a turn.

GLD, monthly

SLV, monthly


With major QE3 off the table until at least mid September -if not post US November elections, the metals are failing to ramp up despite a lot of pro-metal talk out there.

The levels are clear, as are the targets...

I remain holding to targets of $1300 and $22 for Gold and Silver respectively.

There appears to be nothing in the near term to reverse what remains a significant down trend. Considering the fact that both equities and commodities are yet to show some kind of capitulation floor, if the main markets do see a major wave lower, the metals will be severely whacked lower - at least to what I consider to be pretty fairly balanced targets.