Metals end a three month ramp

With October coming to a close, we now have clarification that the multi-month ramp since the May lows has likely concluded. Gold lost $50 across October, with Silver lower by $2.20.


GLD, monthly3, count

SLV, monthly,

Summary

So, Gold lost around $50 on the month (3%), with Silver down $2.21 (6.6%), those declines are 'interesting' but we still closed above the monthly 10MA, which is now the first line of soft support.

For the deflationary doomer bears who expect much lower metal prices, we're going to need to see November close back under the 10MA. Even then, it might merely be a brief move lower, before a further surge higher.

With currency concerns across the western world, the metals remain very tricky commodities to predict.

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*special note on the GLD chart. The 123/ABC count as indicated on the monthly chart should be considered a 'vague' scenario. It would require a very significant deflationary wave into spring 2013 to have any chance of occurring.





A Santa metal rally?

In recent years, the last few months of the year have often been a gloriously bullish time for the metals. Yet, the action in October is suggestive of...trouble.  As ever, it will be fascinating to see how this all pans out.

Metals continue to slide

With equity and commodities sliding, the metals are reflecting this broader downward trend. So far this week, both Gold and Silver continue to slide lower.


GLD, daily

SLV, daily

Summary

There really isn't too much to say. The downward trends are pretty consistent, and we are coming down from what is a very rounded top.

The issue is where will this down move stop? The Gold Bugs are going to get really rattled if GLD breaks <162, and are going to panic if GLD <155.

Any move <155, likely portends for much lower levels in spring 2013. Such an outlook is of course heresy to the Gold Bugs.

These downward moves are truly ironic, considering how QE3 was annouced just over a month ago. With global economic weakness, the metals sure do look weak, and are likely to follow Oil (as is often the case), which is falling even faster in recent days.

Rough week for the Metals

With the broader equity market rolling over in the latter part of the week, the Metals were similarly marked lower. The notion that QE3 will keep pumping asset prices higher...so far, its certainly not being seen.


GLD, weekly, 2yr

SLV, weekly, 2yr

Summary

We have clear rollovers on the weekly charts for both Gold and Silver, and there is no sign that prices are levelling out. In fact, we are due to go negative cycle on the MACD (blue bar histogram0 in about 2-3 weeks, that will be the prime time for a major snap lower.

First target on GLD is 162, and then 158.

SLV, 30, and then 27.

It will be very difficult for the deflationary bears to see Gold break back under $1500, but it is a possibility than even the most permabullish Gold bugs should consider across the next few months.

Metals continuing to weaken

Whilst the equity market saw moderate gains, the Metals were especially weak from the open, and despite a minor intra-day rally, both Gold and Silver closed the daily significantly lower.


GLD, weekly

SLV, weekly

Summary

First target on GLD remains 162. What happens then will be crucial to whether there is still a chance for early 2013 declines, or whether we'll quickly rally to new all time highs

SLV is performing normally, and is roughly sliding twice as much as Gold.

At the current rate of trend, we're set to see the underlying momentum go negative cycle by mid November.

Late autumn metal massacre? It sure would make things interesting, and offer far better 'stacking' opportunities for those who like 'the shiny things'.

Metals close the week...weak !

Both Gold and Silver closed the day lower, and are continuing to present a rollover on the bigger weekly cycle.


GLD, weekly

SLV, weekly

Summary

A pullback is underway, the only issue is how far down do we retrace.

First target for GLD is around 166, and then 162. I believe the latter - also where the 200 day MA lies, will be hit in November. Whether we go below that, is very dependent on the global mood as we move into the Christmas shopping season of December.

The deflationary doomers will be looking for the May low of 148 to be taken out sometime in the next 3-6 months.

With QE3 underway, many are hyper-bullish on the precious metals, but they are clearly rolling over.

Precious Metals losing momentum

With QE3 (without end) announced by the Ben Bernank', the metals have been stuck in a very tight range for over a month. Underlying momentum is still positive, but is clearly weakening. A pullback in prices seems very likely at some point this Autumn.


GLD, weekly

SLV, weekly

Summary

Since the lows in June, the metals have had a pretty good run. No doubt, much of it was all about pricing in QE ahead of the actual announcement. So, is it all priced in, if so..then where now?

A very natural pull to $160 for GLD and $30 for SLV seems very reasonable to expect in the coming 4-6 weeks. That level of decline would not damage the underlying new upward trend

Only with a break below the summer lows of $148 and $25 would it be confirmed that the recent move was merely a 'correction wave'.

Again, for the longer term traders/investors, it really comes down to the ultimate question of which is the more powerful force right now - inflation..or deflation.

I'm still inclined to go with the latter, at least whilst the velocity of money continues to decline, and whilst the banks (and most corporations) hoard their cash.

A narrow trading range for Gold and Silver

The precious metals have now been stuck for around three weeks. If this is just a sideways consolidation, then we should soon see much higher prices in late October and into the post US election period. If however we are simply not able to break any higher, then likely downside is a significant 7-10% or so.


GLD, daily

SLV, daily

Summary

Gold and Silver are trading very similar in style, Gold still seems to be stronger, and that's largely due to it being seen as a safe haven against the depreciating currencies.

From a MACD cycle perspective, we're very low on the cycle, and there is great potential a multi-week move higher - although the weekly cycle would argue against this, whilst the monthly cycle would support it.

With QE3 announced, there is still a feeling of 'ohh, is that it?', especially for the metals and Oil - which is starting to break lower.

What is clear, prices are going to break significantly..and soon. We sure won't be staying in this tight a trading range for much longer. The direction in which we break will probably hold for some weeks, perhaps all the way in early 2013.