Minor wave'5 due, before significant move higher?

Gold and Silver could easily be tracing out a 5 wave pattern, as part of a very large multi-month bull flag formation. A final fifth wave to the downside could be imminent, before a much bigger rally, taking GLD and SLV above 175 and 34 respectively.


GLD, daily

SLV, daily

Summary

I've not added it on the daily charts, but you could easily count 4 small waves lower from the highs of last September. A final fifth wave might easily be very minor though, and could even truncate, with a slightly higher low than the fourth.

What is clear, the bigger weekly charts are highly suggestive of what still appears to be a giant bull flag...


GLD, weekly2, rainbow

SLV, weekly2, rainbow

Both Gold and Silver look set for a major move to the upside. I certainly don't expect new historic highs in 2013, but the highs from last September look set to be tested..and probably broken this Spring/early Summer.

Metals holding above the summer lows

The precious metals remain comfortably above their summer 2012 lows. Since Bernanke announced QE3 in September, the metals have (to the surprise of many) declined, but this whole 3-4 month price formation could merely be a giant bull flag.


GLD, weekly2, rainbow

SLV, weekly2, rainbow

Summary

Gold remains stronger than the more volatile - and industrial metal, Silver. It would seem that in any future 'currency worries' moment, the flight to safety will most definitely be to Gold.

The underlying MACD (green bar histogram) weekly cycle looks very much like its levelling out. Although its still very much in negative territory, but we might see the first up tick next week..


Key levels in the mid-term

GLD, >170, and then 175. A break over 175 opens up a challenge of the all time high..and the giant 'Gold $2000' threshold.

SLV, >34, and then 40/42. It would seem very difficult for Silver - unlike Gold, to break to new historic highs this year.
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As ever..physical metals remain the ultimate personal insurance against the printing of the central banks..and indeed..the reckless over-spending policies of most national Govt.

A choppy week to start the year

Despite the indexes seeing a near hyper-ramp to begin the year, the metals failed to participate, and closed the week largely flat. The weekly momentum is still negative, and with the monthly charts similarly still pushing lower, the general pressure remains somewhat to the downside.


GLD, weekly

SLV, weekly

Summary

The week closed with something of a recovery for the metals. With an early Friday drop of $32, Gold managed to close the day down just $7.60, and Silver actually managed to close a touch higher.

The near term trend is still somewhat to the downside, and this is especially the case since the big monthly trend is also pushing down.

The big unknown is whether the summer 2012 lows will be tested..and/or broken.

As was again displayed today, the metals will greatly react to how the US dollar trades. Were we to see a renewed continuation of the dollar - post spring 2011 rally, then the metals will likely break below the summer lows.

Primary target would then be GLD 140/130, with SLV 22/20 The latter of course would assume a particularly weak/deflationary economic outlook, despite an annual 1trn paper printing policy by the Federal Reserve.