A strong quarter for the precious metals

With the third quarter ending, we can most certainly say that the metals had a strong Q3. Gold closed September up $76 (4.7%), with Silver rising $2.69 (8.7%).


GLD, monthly, 2yr

SLV, monthly, 2yr

Summary

Gold is back to the highs of February, although Silver is lagging a little behind. Again, this would arguably because Gold is seen as a better monetary store against depreciating currencies than the more industrial Silver.

*Silver - as usual, rose around twice as much as Gold, so at least the 1.5-2.0x historical ratio of loss/increase remains intact.
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October will be a critical month for both the equity and commodity market. The most interesting aspect of everything right now is that the great uncertainty of 'when will the Bernanke start QE3' is done. That sure does make things a lot simpler.

With QE3 surely priced in, what direction (other than down), could both stocks and commodities go this Autumn? Considering the recent econ-data - most notably GDP and Chicago PMI, both are indicative of a US recession having probably now started.

The Bernanke clearly is going to fight the 'big bad' deflation all the way, yet those deflationary pressures sure are powerful.


Metal break/snap targets for the deflationists

GLD <160
SLV <30

If we can attain those closes at the end of October, then a very viable secondary deflationary wave could indeed be underway - one that would likely last well into summer 2013.

Good wishes

Metals pulling back..a little

With the broader market still adjusting to the notion of an open-ended QE3, the metals have been cooling off. The pretty fierce up trend that started in mid-August has concluded, and we're now clearly pulling back a little.


GLD, daily

SLV, daily

Summary

So far though, the declines are very minor, and even if Silver pulled back to 31/30, it'd still well within a generally bullish outlook.

Clearly, only with a break back into the 28/27s, could I be bearish on Silver across the longer term.

It will be particularly interesting to see how the metals perform this Autumn. There is no doubt the global economy is weakening, but the central banks are printing..faster and faster. The issue is which of those two mighty forces is the more powerful.

Metals remain in a strong up trend

Both Gold and Silver remain in essentially identical up trends. The fact that the Bernanke has now announced QE is only adding to the long term upside momentum for the precious metals.


GLD, daily

SLV, daily

Summary

Despite the strong up trend, nothing goes up in a straight line (well, usually), both Gold and Silver are putting in arguably multi-day flat tops again, although we've been through this a few times lately, before the up trend resumed again.

The underlying MACD cycles are looking toppy, and at the current rate of decline, we might go negative cycle by the middle of next week.

So, near term..a pullback seems very viable, but both the weekly and monthly cycles are pushing strongly higher. Considering the fact that QE3 is now underway, and monthly purchases by the Fed are likely to be further increased next spring

As ever, physical metals, rather than the paper ETFs remain the ultimate long term 'hedge against the paper printing maniacs'.

A tremble in the metals market

Today's sharp morning sell off in the metals market gave a fair few metal-bugs a bit of a scare. Sure, the drop was only a few percent, but it was a useful reminder that when the metals snap lower, they do so fast, and hard.


GLD, daily

SLV, daily

Summary

The daily cycle is clearly VERY toppy for silver and gold, and I'd expect near term sharp declines. Those could easily come AFTER the FOMC announcement tomorrow.

With the weekly and monthly cycles now pointing upward though, the original lower targets of $1300 and $20 for Gold/Silver respectively look out of reach, baring a major deflationary wave - despite any further QE.
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So, near term weakness still looks due, but if both Gold and Silver can put in higher lows, then a continued ramp to the February 2012 highs seems at least likely within the next few months.

Strong follow through for the Metals

This week was an important one for the metals. Both Gold and Silver saw reasonable gains, and these gains are arguably good confirmation that a new up trend of some degree is well underway.


GLD, weekly

SLV, weekly

Summary

Gold and Silver climbed 2.5% and 6% respectively this week. The Silver 2x ratio of increase - relative to Gold, is again pretty normal.

Trading volume for GLD and SLV remains relatively light. There is certainly no hyper price ramp/volume spike as we saw in April/May 2011. That is a good sign for those holding and seeking further gains.

Natural first targets are the February 2012 peaks, that is another $3.50 for silver, and $55 for Gold.

*re: the silver downside targets. I've left them on, but clearly, they are no longer due within the near/mid-term. Its possible we won't get down to those levels again..ever, and that should be a scary thought to everyone.
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