Investments: Gold and Silver.

Silver: Some views from Sean Rakhimov.

2012-03-04T13:33:00.001+08:00

1. Gold and silver are the only markets driven by fear, and fear usually does not emanate from the metals, but from other areas. A lot of the other assets are driven by greed.

2. Silver does display a high degree of volatility and I believe its fundamentals are far superior to those of gold due both to its industrial usage as well as price. Silver is far cheaper than gold and a lot of investment has been switching over to silver. For instance, Sprott says it sells equal amounts of silver (in dollar terms) to gold, which means in today's numbers, silver is selling 50 times more in ounces than gold.

3. I do think that the gold:silver ratio will get below 20, probably closer to 10:1. It's over 50:1 right now; so, that should be a good guideline.

4. Generally speaking, though, with silver, we are probably somewhere midway through the cycle and have another 10 years to go. Investors should constantly revisit their reasons for being in this space and what exactly they are looking to get from it. I think there's nothing to worry about in the volatile price action. Silver is about the most volatile asset that you can be in. Other than that, I think it is up and up from here.

Read complete article: here.

For quite a while now, I have not really talked about gold, preferring to look at silver because I think the upside for silver is far superior to that of gold over the longer term. I also blogged about the gold:silver ratio before.

Accumulating more silver if its price should test supports would be a good idea.

Related posts:
1. Gold or silver?
2. Buy more silver on weakness.

Silver: Trading above the 200d MA.

2012-02-25T13:47:00.000+08:00

Silver is at US$ 35.43 an ounce. Will it go higher?

The RSI has just tipped into overbought territory but this does not mean silver's price cannot go higher. It simply means that silver is beginning to be overbought. In very bullish conditions, silver could stay overbought.

I would pay more attention to the MACD which dipped but is once again rising as the 200d MA at US$ 34.92 was overcome by a long white candle. A bullish crossover is observed. Whether higher prices are on the horizon would depend on whether a higher high or a lower high is formed on the MACD.

If we should see a lower high on the MACD when a higher high in price has already been formed, we could be seeing the onset of a negative divergence which would be a precursor of a possible price correction.

Related post:
Silver: Broke resistance provided by the 50d MA.

Luring bullion refiners to Singapore.

2012-02-21T11:53:00.000+08:00

Gold is essentially a very old form of money and like many people, I have always thought that having a consumption tax on investment grade gold is incorrect.

With the government exempting investment grade gold and other precious metals from GST come October 2012, buying physical gold as a hedge against systemic failure in the world of fiat currencies will become less burdensome.

Singapore's investment gold demand nearly tripled to 3.5 tonnes last year, according to consultancy firm Thomson Reuters GFMS.
Refiners have been put off by Singapore's taxes, opting instead to mould and sell gold bars in Hong Kong, which does not impose duties on bullion, and Japan, where the consumption tax on gold is 5 per cent.

Industry sources, however, said at least one major refiner has shown interest in opening a factory in Singapore around the talk of the tax change.

More gold traders are expected to set up offices here and store more bullion, following JP Morgan Chase & Co which opened a precious metals vault in 2010.

"I think this is really going to change the landscape in Singapore. A lot of companies will find the incentive to start operations in Singapore," a gold dealer said.

"This news is going to draw attention to Singapore as a safe place to park funds. Asset managers will also be very excited.

"The trend in the last three years is that people are moving to physical hard assets from paper," the dealer added.

Singapore imports gold bars from Australia, Switzerland, Hong Kong and Japan, which are then sold to buyers in South-east Asia and India, the world's largest gold consumer.

Source: TODAY online, 21 Feb

Investment grade gold exempted from GST.

2012-02-17T20:28:00.001+08:00

As part of Singapore's Budget for 2012 announced by finance minister Tharman Shanmugaratnam, "Singapore is set to capitalise on the strong demand in Asia for gold as an asset. The government is exempting investment-grade gold and other precious metals traded as financial assets, from the goods and services tax (GST). This is already being done in a number of other countries such as Australia, the UK and Switzerland."

About time.

Silver: Broke resistance provided by the 50dMA.

2012-01-23T10:45:00.000+08:00

It is the first day of the Chinese New Year. This is the Year of the Dragon and silver roared with life as it broke the resistance provided by the declining 50dMA, forming a long white candle.

The next resistance level is provided by the 100dMA at US$33.17 an ounce. With the MACD on the verge of crossing into positive territory after forming a higher low as silver tested US$26.00 an ounce thereabouts late last year, the positive divergence could see silver's price pushing higher in time.

If the 100dMA should be overcome successfully, the next resistance is provided by the 200dMA and that is currently at US$35.93 an ounce.

Given the relative volatility of silver's price, look to the weekly chart for guidance as a longer term chart shows stronger supports.

The 100wMA is the crucial support to watch. In the last decline, this support was broken briefly and likely to have weakened. Despite the strength of silver's upmove in price, it is still in danger of forming a lower high which could see price retreating once more. Whether the 100wMA would then hold as support would be the question on everyone's mind.

If the 100wMA should break, the next long term support is provided by the 200wMA and that is at US$21.65 and that is some way to fall. However, expect very strong support at the 200wMA if it should be tested.

Jim Rogers on silver and gold.

2011-12-31T13:55:00.000+08:00

Jim Rogers sees long term trends and here is what he thinks about silver and gold:

"I think silver will be a great place for the next 10-20 years."

"It would not surprise me to see gold go to US$1200 – but if it goes that low I’d buy a lot more – gold has been up 11 years in a row it deserves a substantial correction."

Source: CNBC, 29 Dec 2011.

The story has not changed.

I am looking to buy more gold and silver on further price weakness.

Related post:
Silver: Searching for support.

Silver: Searching for support.

2011-12-30T10:36:00.000+08:00

Silver formed a white hammer in the last session, closing at US$27.70. This is a single candle reversal signal which has to be confirmed. If valid, we could see price heading higher and testing resistance provided by the declining 50dMA once more. The 50dMA is currently at US$32.05.

The 50dMA has proven itself to be a strong resistance, pushing prices lower in November and early December when it was tested. It would take some extraordinary buying pressure to break through this wall to go higher. I expect traders to recognise this as well and many sellers would be waiting to sell if the 50dMA should be tested.

Looking at the MACD, it is in steady decline in negative territory. However, not reaching the depths it did in October is promising. We could see the formation of a positive divergence. A lower low in silver's price with higher low in the MACD would be a buy signal for me.

If I do buy some silver upon sighting a positive divergence, would I hold forever? Probably not. It would probably be for a trade and I would probably sell at resistance. Why?

Looking at the weekly chart, the MACD is still plunging. Momentum over the longer term is clearly negative with no reversal in sight. Although decreasing volume with continuing price weakness is encouraging for long holders, price could drift lower. I would like to see major support provided by the 200wMA tested before making my next move.

What are Jim and Marc saying about gold?

2011-12-06T22:25:00.000+08:00

Investment gurus Jim Rogers and Marc Faber in recent interviews seem to agree on the dynamics in the gold market. Rogers says he’s not selling his gold and Faber says there is no bubble. But that doesn’t mean bullion is not still in a correction phase.

Dr Marc Faber, “when you buy gold, it’s an insurance against systematic failure and problems in the financial markets.”

Read full report: click here.

Silver is testing resistance.

2011-12-01T21:27:00.000+08:00

Silver has been forming higher lows. Could it form a higher high next?

Momentum oscillators have been exhibiting encouraging signs. We have a higher low in the RSI as well as the MACD. Indeed, the MACD looks like it is on the verge of a bullish crossover with the signal line. However, it remains in negative territory and we could be seeing just a rebound. The rising RSI is touching the 50% line which in this case could act as resistance.

Although forming a white candle in the previous session, price is still being resisted by the 50dMA. The 50dMA has, in the past, proven to be a formidable resistance which pushed the price down as it was tested repeatedly earlier in November.

With the MACD still in negative territory and the RSI coming up against the 50% line as resistance, the 50dMA could be hard to overcome once again. If, however, it should be overcome, expect resistance next at the 20dMA which is currently at US$ 33.30 an ounce.

Having said this, if the 50dMA could be overcome convincingly, resistance posed by the 20dMA should be less of a problem. We could eventually, then, see the 100dMA tested. That is at US$36.51 an ounce now.

Silver: Breaking the 20d MA support.

2011-11-18T10:51:00.000+08:00

Silver has been hugging the 20dMA for support but the declining 50dMA has proven to be much stronger and has pushed it hard enough to break the support provided by the 20dMA, forming a long black candle.

At the same time, RSI has gone below 50 which often acts as support in a declining market. It has some way to go before it becomes oversold. The MACD is forming a bearish crossover with the signal line and we could see momentum turning negative again as the MACD continues to dip. Overall picture, bearish.

As an investor, in situations like this, I would put silver higher up on my watchlist. If price were to decline further and possibly forming a lower low, I want to see a higher low on the MACD. A positive divergence is what I would be looking out for. This would be a signal to go long and I would increase my long exposure accordingly.

If we believe that the longer term direction for silver is up, there is no need to panic and we should view strong selling in the market as possible opportunity to load up instead.

Silver has broken out of resistance.

2011-10-26T09:50:00.000+08:00

I have not been saying much about silver in a few weeks because it was basing and there was nothing much to say. Silver touched a low of US$26 an ounce like I thought it would in Silver: Accumulate or wait and see?

Although it touched a low of US$26 an ounce, it also formed a long legged hammer, a bullish reversal signal which was confirmed as its price recovered. I said that the white metal was oversold and that a rebound was likely in Silver: Bouncing off the 100dMA.

Silver's price has been forming higher lows since my last blog post. In the last two sessions, it broke resistance provided by the 20dMA and this MA was successfully tested as a support in the last session. A resistance turned support. This is what long holders are looking for before adding to their positions. Indeed the rising MACD shows improving momentum although still in negative territory.

Further improvement in the price of silver is likely to meet resistance at US$37 an ounce or so. That is where we find the confluence between two declining MAs, the 50d and the 100d. Of course, price could turn south as well although the probability of an upside is somewhat better. Technical analysis is about probability, never certainty.

Silver: Bouncing off the 100wMA.

2011-09-27T10:19:00.000+08:00

Silver is currently at US$31.28 an ounce. I hear some people saying that if silver should go under US$30.00, we should cut short our long positions. I don't like to sell when prices are forming new lows. I like to sell on rebounds.

Silver did touch a low of US$26.00 an ounce but a long legged hammer formed on the daily chart. This is a bullish reversal signal. Although the MACD is plunging into negative territory, the RSI is now in the oversold region, something that has not happened in a long time.

Momentum is negative but the drop has been fast and furious. Such an aggressive drop is often followed by an aggressive recovery. The RSI suggests that currently the white metal is oversold and a rebound is likely.

On the weekly chart, momentum is still positive and it is quite clear that price bounced off the 100wMA at about US$26.00 an ounce. We could probably expect some resistance at US$34.44 an ounce which is where we find the 50wMA.

Related post:
Silver: Accumulate or wait and see?

Two videos and a quick TA on gold.

2011-09-24T22:46:00.000+08:00

22 September 2011, REUTERS.
Did the gold rush go bust?

22 Sep 2011, REUTERS.
Gold selloff normal, bull run still on, says Henwood.

I still believe that precious metals will do well over the longer term. I looked at silver's weekly chart in an earlier blog post today and the longer term uptrend is intact.

Gold's technicals look stronger than silver's and its price is still trading above the 100dMA at US$1,634.58. The 200dMA is currently at US$ 1,522.65 and would be the support to watch if the 100dMA should give way completely.

Silver: Accumulate or wait and see?

2011-09-24T07:41:00.000+08:00

At this moment, silver is trading at US$ 30.93 an ounce.

The 200dMA as a support has been compromised. The short term uptrend of the metal has been jeopardised.

Looking at the daily chart would sent jitters down the spine. Momentum has plunged into negative territory and one could only wonder if price is going to find a base soon.

Looking at the weekly chart, it is clear that the longer term trend is still up. It is also interesting to see that while negative divergences were quite clear in the daily chart, they are nowhere to be seen in the weekly chart. There is, therefore, no signal that silver's uptrend will have a major shift over a longer timeframe.

For anyone who believes that investing in silver is a hedge against the inherent flaws of fiat currencies and that much higher inflation is going to take place, any weakness in an uptrend is a buying opportunity.

Having said this, the flight to the perceived safety of cash especially the US$ amidst expectations of another recession and accompanying deflationary pressures will continue to see prices of commodities going down in the meantime. With people expecting prices to come down for all assets in a truly deflationary environment, gold and silver have not been spared.

It would certainly take some guts to continue buying more silver on further weakness in the near future. If the 200dMA is not recaptured as support, I will look to the 100wMA at US$26.21 as the next support and this is some way to fall.

Instead of buying at every drop in price, a wait and see approach might be prudent even for the very bullish.

Silver: Going through a rough patch.

2011-09-23T10:50:00.000+08:00

On 20 September, I mentioned that silver's price could be in for a rough patch and that we could see the support provided by the 200dMA tested. This is at US$36 an ounce. This has come to pass.

I am adding to my long position in the precious metal.

Could silver's price continue to weaken? Technically, it looks like it could. However, understanding that technical analysis is all about probabilities and never certainties, I am increasing long exposure based on fundamentals.

I am not going into why we should be buying gold and silver instead of hoarding cash. I believe that the topic has been beaten to death and, yes, I believe we should have some gold and silver.

Related posts:
Silver: Momentum could be turning negative.
Buy more silver on weakness.

Silver: Momentum could be turning negative.

2011-09-20T10:47:00.000+08:00

A lower high on the MACD was formed when silver broke US$44 an ounce in the second half of August. This gave a hint of impending price weakness which we are seeing now. With the MACD on the verge of dipping into negative territory, silver could be in for a rough patch.

When will I load up on silver again? If price should retest the 200dMA, I will most probably increase my long position in the precious metal. Currently, the rising 200dMA approximates US$36 an ounce.

Gold is not a bubble.

2011-09-06T23:22:00.000+08:00

There are many types of things we can invest our money in and I do not pretend to know all of these things. Indeed, I would have an extremely hard time trying to understand all kinds of investment in this world.

I try to keep an open mind about things and, indeed, if I did not, I would not have invested in real estate, gold and silver or even in stocks for that matter. I listen to reason, using insights from people like Marc Faber and Jim Rogers as compasses. Together with my limited knowledge of economics, I make my own decisions.

Although some think that gold is a bubble, I do not think so. In fact, as recently as yesterday, I was chatting in LP's infamous cbox when this topic came up again.

Gold is still nowhere near its peak in terms of real value. Real value? Yes, I am talking about gold's price adjusted for inflation. There is still some way to go.

“I don’t think that gold is in a bubble,” Faber, publisher of the Gloom, Boom and Doom report, said in a phone interview yesterday from Chiang Mai, Thailand. “When you buy gold, it’s an insurance against systematic failure and problems in the financial markets.” Read full article here.

Buying on weakness in an uptrend is the way for me.

Silver's long white candle.

2011-08-20T10:39:00.000+08:00

It would seem like a no brainer that with all the recent troubles with sovereign debt in Europe and the USA that smart money would flow into precious metals. Gold and silver have done exceedingly well this week. See chart below:

Silver's price action formed a long white candle in the last session. This is an affirmation of the breaking of resistance five sessions before as the 20dMA was broken. Silver has been trading above the 20dMA for three sessions now.

The 20dMA is a likely resistance turned support. So, for anyone who would like to buy at support, the 20dMA at US$39.90 an ounce is the price to watch for now.

RSI is rising but is not overbought yet. The MACD has formed a higher low and has just completed a bullish crossover in positive territory. Momentum is positive and we could see silver's price going higher in the meantime.

I wonder if silver could test the high achieved in late April earlier this year once more. If it does, I would probably divest some of my investment in the metal.

To anyone who bought more silver based on technical analyses in my last couple of blog posts, congratulations!

Related post:
Closing above the 100dMA.

Silver: Closing above the 100dMA.

2011-08-07T10:12:00.000+08:00

Two weeks ago, I mentioned that I would not add to my long position in silver at the price level then. For the reasons why, please refer to the blog post here.

Silver closed above the rising 100dMA at US$38.33 an ounce, forming a black spinning top in the process. The longer term trend for silver is still up although it is experiencing some weakeness in momentum now. The MACD has completed a bearish crossover with the signal line but it is still in positive territory suggesting that silver is experiencing a correction and nothing more. See the chart below:

For the more adventurous, buying more at current levels is definitely better than buying two weeks ago. For the less adventurous who wish to buy closer to the 200dMA which is currently at US$33.66 an ounce, why not? It could happen. Good luck.

Silver: Strong resistance.

2011-07-23T16:31:00.001+08:00

The last five sessions saw silver's price forming five candlesticks which clustered in a narrow range in the region of US$40 an ounce. It seems to have come up against a formidable resistance. Tension is building up.

With the RSI having formed a higher low, momentum remains strong. The MACD is still rising in positive territory. However, things could change quickly if USA's government should raise the country's debt ceiling. So, I would not add to my long position at these levels.

Any pull back to supports could see stronger buying interest. Immediate support is provided by the rising 100dMA which is approximating US$38 an ounce. This is followed by the rising 50dMA which is approximating US$36 an ounce. These would be more ideal prices to add to long positions.

Where do we find resistance in case price rose higher? After all, the RSI has yet to move into overbought territory. For silver, it seems that there is resistance at every US$2 interval. So, the next resistance level is at US$42 an ounce followed by US$44, US$46, US$48 and US$50 an ounce.

I would accumulate if supports were to be tested. If price continues to rise without a test of the supports identified, I would ready myself for further divestment of my long position.

Silver: Going higher?

2011-07-16T09:14:00.000+08:00

Three sessions ago, silver broke out of resistance provided by the declining 50dMA. This was done convincingly, forming a long white candle in the process. The question is whether it could go higher or whether it would retreat?

Prices climb a wall of worries and I would not be surprised if the price of silver should retreat to test supports before moving higher. For now, the momentum oscillator shows strength. The RSI bounced off the 50% line which acted as support. The RSI, still rising, is now approaching the overbought region. The MACD has crossed into positive territory and is still rising. Momentum is positive.

These are signs that market bulls need to confidently add to their positions. They could buy in if price should pull back to support next. Immediate support is in the region of US$38 an ounce while stronger support is found at US$36 an ounce which is where we find the former resistance provided by the 50dMA.

Bears would be watching the region of US$40 an ounce closely. If price is unable to go higher than US$40 an ounce over a prolonged period, we could see another round of selling. Breaking US$40 an ounce would be great news for bulls.

Silver: Stronger momentum.

2011-07-10T00:00:00.000+08:00

The price of silver has strengthened somewhat, closing at US$36.54 an ounce in the last session. How it performs in the next session is crucial in determining its direction in the near future. How so?

US$36.54 is where we find the 50dMA which has turned down and is declining. This MA is likely to exert some downward pressure on price.

Momentum has strengthened as the RSI broke 50% which often acts as resistance or support. The MACD although still in negative territory has also turned up and is rising towards zero.

Failure to overcome resistance and in moving higher could see the 200dMA tested as support in time. This is currently at US$32.01 an ounce.

Silver: Blog post in ASSI.

2011-07-02T08:24:00.000+08:00

I am trying to adjust to a new routine in life and have been waking up two hours earlier everyday for a week now. Trouble is I am still having difficulty sleeping earlier at night and I am suffering from lack of sleep.

I have a new blog post on silver today but posted it in my other blog, ASSI, by mistake. So, go ahead and check ASSI for my latest thoughts on silver.

Silver: Trying to find a base.

2011-06-25T18:00:00.002+08:00

What's happening to silver's price at US$34.64 an ounce?

One reason why I have not been blogging much about silver is because there is nothing very much to say. My last blog post on silver still says very much what I would say today.

The big difference is that price is no longer above the 100dMA and has to look to the 200dMA for support. Also, in my last blog post, I said that the 50% line in the RSI has been established as a strong resistance and that price could have a harder time climbing higher. This has turned out to be true.

If we look at the price action, it has formed a series of lower highs and we want to be cautious if we are on the long side. It suggests a lack of conviction on the part of buyers. What about sellers? It would not be wrong to assume that sellers are waiting for the long term support provided by the 200dMA to break before they take action. This is currently at US$31.63 an ounce.

What's my strategy? Wait and see.

Some numbers:
50dMA: Flattened and downturning. US$38.46 an ounce.
100dMA: Rising. US$36.63 an ounce.
200dMA: Rising. US$31.36 an ounce.

Related post:
Silver: Wait and see.

Silver: Wait and see.

2011-06-12T14:43:00.000+08:00

Silver closed at US$36.20 an ounce. This is closer to the support provided by the 100dMA at US$35.83 an ounce than the resistance provided by the 50dMA at US$39.22 an ounce.

The weakening momentum observed in my last blog post is confirmed by the RSI which has been unable to overcome resistance provided by its 50% line.

The 50% line is now established as a many times tested resistance and likely to be quite strong, therefore. This, in turn, suggests that price could have a harder time climbing higher.

Although the MACD has averted a bearish crossover with the signal line in negative territory, its distance with the signal line seems to be narrowing. The negative momentum although mellowed is still very much in force.

Since my last blog post, my strategy has not changed and I would wait and see.

Related post:
Silver: Weakening momentum.