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'.