Gold Silver Review

Gold consolidation before........?

2012-02-09T19:24:00.000-08:00

Daily chart of the World Gold Index from March 2011.

Gold has been in rally mode since the start of the year as all of the selling for tax purposes was done in December. It has pierced through the fibonacci retracements of 23.6, 38.2, *50 and has stopped at the 61.8 resistance level.
It is trading above the moving averages which are in bullish formation with the 20 day over the 50 and the 50 over the 100. Stochastics are moving lower which may indicate a pullback.

Gold should consolidate here before a potential move up towards the all time high which was hit in August / Sept last year. Once this move is achieved, the Gold and Silver stocks should follow and may present some nice areas for profit taking before the seasonal summer downturn / consolidation.

Weekly Silver, bullish trend

2012-02-02T19:25:00.000-08:00

Weekly chart of the World Silver Index going back to mid 2002.

Major upper and lower trend lines have been drawn with the parabolic peaks shown with the month and year. David Morgan has mentioned that the short and mid term price can be 'manipulated', but not the long term trend.

You can see the overbought peaks and the oversold areas/periods. Each time the price has come back to trade between the upwards major trend lines. If the current rally brings the price to the midpoint between the upper and lower lines, it should be around the $42-$45 area.

Weekly Stochastics K and D lines are heading back towards the 80 level and based on past history, it has a little more to run before a pullback.

There was a triple bottom at the $26 area which may be the last time it dips that far going forward.

Silver is still a great value as Gold has breached it's 1980 price of ~$850 in 2008 and is currently trading around the $1750 area. Silver is still UNDER the 1980 price of ~$50 and is trading around $34.27.

Gold rally, pull back, rally

2012-01-29T18:02:00.000-08:00

Looks like the low for Gold that was hit in late December 2011 may be the low for the next 12 months??? Everyone with a 1/2 a brain is buying Gold now, China, India, central banks, etc... If you can debased your own currency and purchase Gold with it, wouldn't you do it? 'Print' your own currency, exchange it for US Dollars and purchase Gold. Legal counterfeiting..... what a joke....

Daily chart of the World Gold Index going back to the high of 1915 that was produced in August 2011.

Looks like it's all green lights to the upside since the sell off to the $1523 level.
It is currently trading above the exponential moving averages of 20, 50, 100 and 200.
The 20ema is about to crossover the 50 and 100ema, bullish.
It has broken through the downtrend resistance line, bullish.
Stochastics are embedded to the upside, bullish.
It is riding along the upper Bollinger band, bullish.
RSI is overbought... correction will occur...

The $1750 area is the 61.8% fibonacci pullback level based on the last major run-up in August. We may hit that area, pull back for a small correction back to $1700 and head higher in an attempt to reach the old high of $1915. We may see this before May of this year...? Then pull back for the summer months until Aug/Sept rolls around... We'll see, no one has a crystal ball. If someone has one, there is a crack in it...

Silver should follow Gold's path to the upside. The Gold Silver Ratio has been dropping with this early year rally and is current at 51.15 from a high a few weeks ago of around ~59.

The Gold and Silver miners are also rallying to the upside. Quarterly earnings should propel the stocks higher in the coming 1st and 2nd quarters.

David Morgan interview at Cambridge House

2012-01-26T22:23:00.000-08:00

The Silver Guru, David Morgan gives an interview while at the Cambridge House Investment Conference.

At the end of the interview, David mentions that he is invested in a company that supports mining companies. I am not a current subscriber to his newsletter so I do not know which company he is talking about. I did talk with a company at the SF Hard Assets Conference last November which was Energold Drilling. They rent drill rigs to mining companies and from what the spokesperson told me, they were really busy renting and flying in drill rigs around the world. They trade on the Canadian venture exchange, ticker EGD. For the U.S. it is traded on the Pinksheets market as EGDFF.

Not too shabby, a 28% gain over the past year and a nice move up since the SF Hard Assets Conference in late Nov............ This is not a buy recommendation as I am not a registered investment adviser or CFP. Disclaimer: I do not own any shares of Energold Drilling at the time of this writing.

Gold Silver Pop, HUI analysis

2012-01-25T20:15:00.000-08:00

After the fed mention that interest rates will be low until 2014, both Gold and Silver popped to the upside. Gold was up $44.40 to $1710 (2.66%), Silver was up $1.22 to $33.27 (3.81%). This may be the start of a solid 1st quarter upside rally...

As far as the Gold and Silver stocks, here is a weekly chart of the HUI

The HUI has been in a sideways consolidation since the 4th quarter of 2010. With both Gold and Silver prices higher than the 2010 prices, earnings for mining companies that are in production will be able to beat the 2010 and 2011 quarterly and yearly earnings. This should be enough to spark the miners to the upside sometime within the 2012 year.

A fibonacci retracement is drawn from the run-up in 2003 and the 423.6 level is around the ~735 area. This may be the next stop/resistance area for the HUI index.

Some have speculated that because of the Gold and Silver ETF's, the interest in mining stocks have gone down. There is less risk with the ETF's compared to the risks of holding onto a mining company which can report many negative items and issues with regards to their mining operation. There are risks with the ETF's, but those that are invested in them are most likely trading them and not holding them long term. If the ETF's start a divergence from the bullion prices, the hedge funds and all those on Wall Street will have their finger on the mouse button to exit first asap.

You also hear many analysists state that Gold is in a bubble and that it is going down. If these fund managers believe that Gold is in a bubble, do you think they will invest in a Gold or Silver miner? Probably not...

Gold Silver Ratio

2012-01-23T20:38:00.000-08:00

Silver has been outperforming Gold over the last few trading sessions and is seen as the Gold Silver Ratio gapped down towards the lower part of the sideways range and below the bottom trend line. It is now also below the 20 and 50 day moving averages.

A few weeks ago, there is a post on the divergence between the rising Gold Silver ratio and a declining RSI, which suggested a lower ratio. Well, we now have a lower ratio, but will it continue to decline? It needs to drop below the last significant low which was around the 48.5 area indicated with the orange horizontal line.

The MACD and RSI are also on the decline, so it looks like a lower ratio may be realized within the next few days/weeks.

Silver Jan 20th - speculators coming back?

2012-01-21T22:14:00.000-08:00

Friday was a pretty good day for Silver compared to the past several months of the downwards trend. The crooks at the bullion banks, CME, CFTC, hedge funds, ect.. probably are taking positions on the long side now. At least until they decide to short and bring the market back down.

Silver is now above the decending bearish trend line and above both short term and mid term moving averages. (20 and 50) Its trading near the upper bollinger band which may continue for a few more days, then a pullback within the bands possibly late next week. The stochastics are also above the 80 level which shows signs of real strength in the bullish move.

The high on Friday also hit the 161.8 fib level and then pulled back. The fib is drawn from the lows at the start of the bull market to the peak in 2008 which is the 100% level. Getting over this level would be good for those that are bullish.

Those that were short had to make a decision on Friday to cover which part of the reason for the strong move up. Another factor is the European debt issue that will become a major issue going forward. In 2008, Bear Sterns and Lehman Bro's took the market down, this time it may be entire countries.

Dow Gold Ratio - Long term bearish

2012-01-19T19:04:00.000-08:00

In 1980, the Dow/Gold Ratio hit a bottom of close to a 1:1 ratio with the Dow and Gold around the 850 level. Here is a long term chart provided by sharelynx.com which depicts the downtrend with this ratio since ~2000.

The ratio has pierced the green upwards channel to the downside and is currently at a ratio of ~7.6. Many believe that this ratio will equal the Dow for a ratio of 1:1. This may happen when (if) Gold goes into a parabolic frenzy with the Dow flat or dropping. Gold can be stable with the Dow crashing which is also a possible scenario.

A 3 year chart which shows the decline in the ratio:

Some people are looking at this ratio as a signal to exit the Gold market. I have heard one CEO of a mining company mention that he will start lightening up on his Gold positions when the Dow/Gold ratio is 2;1, then exiting his remaining position in increments all the way to the 1:1 ratio.

He stated that he would purchase undervalued assets like Real Estate at that time. Sounds like a good plan, especially if you can pull the trigger and execute. No one really knows what is going to happen with the price of Gold / Silver, especially when the governments around the world seem to make new laws on a whim.

Gold Silver miners lagging bullion, for how long?

2012-01-16T19:51:00.000-08:00

Since the 2008 financial crises, the Gold and Silver miners have lagged the bullion price quite a bit over the last several years.

Here is a 5 year daily chart of the (evil) ETF GLD and the Van Eck Gold Miners ETF GDX.

Over the last 5 years, GLD has returned 164%, the GDX has returned 45%. You can see that the GDX started to diverge from the gold price at the end of 2007, crashed in 2008 and has not recovered to the same level as the bullion price.

The top 10 holding for the GDX are:

A full list of Gold / Silver miners can be downloaded at the VanEck website. Will the Gold / Silver miners ever catch up to the bullion price? (As far as year over year returns?) I believe that they will, but we all need to be patient. I know most people are tired of hearing that and I am as well, especially because I am a holder of select mining companies. (Long)

One theory is that when Gold is in the latter part of stage 3, there will no longer be any physical Gold or Silver to purchase. If people still want to invest in this market, they can with the miners. They are essentially companies with money in the ground, it's a matter of extracting it. One could invest in an ETF, but by the late 3 stage of this bull market, the ETF's may have a significant downside divergence from the phyiscal metal prices. (Which may keep people away from investing in them)

With Gold trading above $1650 and Silver above $30, the miners should continue to produce outstanding quarterly earnings reports. 2012 may be the breakout year for the bullion miners.... time will tell.

Max Keiser interviews David Morgan

2012-01-13T21:21:00.000-08:00

Max Keiser Interview

Kitco Interviews Rob McEwen of US Gold and Minera Andies

Long term Gold

2012-01-12T07:55:00.000-08:00

Monthly chart of the World Gold Index going back to the lows in 2001. A fibonacci retracement is from the lows in 2001 to the peak in 2006. This projects a potential top / major resistance at the 423.6 fib level around $2275.

The white box is the range Gold has been in since the summer of 2011 and is consolidating before the next bull move towards the $2000 level. Short term, it is trading above the 200 dma which may indicate that the late December lows was the bottom of the downtrend.

Silver - Poised for 'another' move up?

2012-01-10T09:38:00.000-08:00

Daily chart of Silver since late Nov 2011 on the 'Think or Swim' platform at 8:45am PST on Jan 10th.

On a positive note, Silver has made it's way over the 20 day moving average. It's on a uptrend since hitting a low of 26.145 on December 29th, 2011. The momentum indicators suggest at least a short term rally from here. The next resistance will be at the 50 day moving average which is close to the fibonacci 23.6 retracement level of $31.81.

Hedge funds and bullion swing traders may be accumulating positions for this trend up. Gold is currently trading up $27 at $1635 an ounce.

Gold Silver Ratio

2012-01-07T21:38:00.000-08:00

1 year daily chart of the Gold Silver ratio with a 20 and 50 day moving average.

The RSI indicator above has a peak in late September 2011 and another during the latter half of December 2011. The trend line connecting these two points in on a downward trend, but the ratio depicted in the chart below is on a bullish uptrend.

This is what many technicians call a divergence which may signal a decline in the ratio going forward (?) When? It may be a little while as Silver needs more speculators to come into the market to push the price back up over the $30 level and then past the $40 level (again).

Hedge funds are most likely waiting for the Silver chart to start producing higher highs and higher lows before they invest capital back into this market.

US Dollar Index analysis (for Youtube viewer Robonza)

2012-01-06T19:05:00.001-08:00

2011 Year end returns bullion and mining indexes

2012-01-05T21:17:00.000-08:00

For Jan 5th, Gold closed at $1621 and Silver at $29.37. The short term downside may be over??? It is possible that the bullion banks may be setting up some long positions in the metals? Swing traders may want to take a look into solid mining companies that have been beaten down over the last quarter. There is quite a few with significant upside potential.

Returns for Gold and Silver over last 11 years

2012-01-02T20:42:00.000-08:00

Review of the returns for both Gold and Silver over the last 11 years, plus the Gold Silver ratio.

Dec 29th Gold - wheres the bottom?

2011-12-29T19:07:00.000-08:00

Gold was sold off again today which brought a close of ~$1546. The $1575 area did not provide much support (Fib 23.6 retracement and May 2nd peak), but when you have more sellers than buyers, the price will drop below significant support levels. Throw in price manipulation and you can throw technical analysis out the door. If the players with hundreds of millions of dollars want to make money on the short side, they will push the market down, then eventually go long. There may also be hedge funds selling to improve (and show) their profits for 2011.

Should the sell off continue, Gold may meet the July 1st low of ~$1478 which would be a 100% retracement of the move up during the summer. It's following the lower Bollinger Band to the downside and beneath the 20, 50, 100 and 200 day moving averages. (It is trading $75 below the 200 day moving average)

The MF Global fiasco may be influencing the futures markets in some way...? If your a futures trader and know that your clearing firm can go bankrupt at any time, take all of the cash in your account, lock you out from your hedged positions for a week, confiscate your Gold / Silver, would you continue to trade in those markets? And to top if off, the CME, CFTC and your Government will do nothing about it.

Gold is up about ~11.6% for the year which is better than most mutual funds and a savings account that is getting .05%. The S&P 500 is up about .43% year to date. We may look back at this time and see that Gold was a good buying opportunity.

Seeking Alpha article

2011-12-28T09:50:00.000-08:00

Here is a link to an article written by J.S. Kim posted on SeekingAlpha on Dec 27th which discussed the MF Global relationship to the price drop with both Gold and Silver. He also talks about the paper Gold and Silver products GLD, SLV, manipulation, comex default, etc...

http://seekingalpha.com/article/316197-bankers-precious-metals-and-mf-global

Silver - bearish

2011-12-23T15:12:00.000-08:00

In 2010, Silver was up about 75%, 2011 year to date Silver is currently down -1.9%. (Gold is up around 17.5% ytd)

When looking at the following chart without knowing what symbol it is, most technicians would tell you that it is in a downtrend as the price is trading below all moving averages. (20, 50, 100, 200). It is also producing lower highs since late April early May of this year.

The $29 level looks like it has some support, but when large sellers start unloading their positions, lower prices may be in the future (?) Does the chart above look bullish to you? It looks like it may be ready to drop another 5 bucks... (Check the double short Silver ZSL for any unusually high volume which may be an indicator that the crooks at the CME, CFTC and bullion banks are loading up before they sell off their futures contracts).

Here is a weekly chart of Silver (log scale) going back to 2003 with upper and lower trend lines indicating the long term trend:

Silver broke below the lower trend line in 2008 and it took close to 2 full years to break back above it. Silver now has pierced the trend line again with the latest sell-off and sideways action. What does this mean? Short to mid term downtrend / bearish, long term bullish.

Even if there is a shortage in the physical market, the crooks can still manipulate the spot price down as they can throw hundreds of million of digital fiat 'money' to knock the price down. (Counterfeited by the Federal Reserve, approved by the U.S. Government). This will come to an end once the Comex runs out of physical metal.

On a lighter note, Happy Holidays to all!

Gold still under the 200 dma

2011-12-21T19:36:00.000-08:00

Gold is inching its way back to the 200 dma which is currently at 1617. It may have found support from the peak made in late April, early May 2011. The MACD Histogram is heading up which may lead to slightly higher prices.

Even with the slight upwards trend, Gold looks like it will consolidate for the remaining 2 weeks of December between ~1575 to ~1650. Gold is currently up about 13.2% for the year. Silver is down just over 5%. What other investment is up over 13% for 2011?

US Dollar, Bullish?

2011-12-20T21:47:00.000-08:00

Here is a daily chart of the US Dollar Index going back to May 2010. It is easy to see the long term lower highs that was produced over the last 1.5+ years,,,,,at least until last week.

The $81.42 produced last Wednesday took out the last break high of $80.43. Technically, it is now producing higher highs and higher lows, at least for the short/mid term. Since the USD is viewed at the 'reserve currency', many people flock to it when all other assets seem very risky. That is just the way it is and we may see a short term uptrend as people do not know where to put their money. (Gold is in a bubble right? so why buy it)

It's hard to believe that people want to purchase the USD especially with all of the digital 'money' the Federal Reserve and this government has produced over the last 3 years. TARP, QE2, Operation Twist, Military Spending Bill (662 Billion), ect... It's just a matter of time before it reverses the trend and starts producing lower lows and lower highs. Do you think inflation is bad now? Just wait a few more years...

Gold Silver Ratio, PM flat markets

2011-12-19T21:32:00.000-08:00

The Gold Silver ratio is heading towards the top of the range and is currently at 55:1. The RSI is on an upwards trend and the ratio is also trading above the 20 and 50 dma. Silvers first trading day of this year closed at $30.67, if it does not rally higher than that within the next 2 weeks, it will be a negative return for 2011. (And it got up to $49.82! in April).

On a positive note, here is an interview with David Morgan, he sees a potential $60 Silver and $2500 Gold for 2012:

Gold & Silver Stocks, someones buying a few shares...

2011-12-17T18:33:00.000-08:00

The spot prices of Gold and Silver have been in a bearish trend over the last several months and especially this last week. The Gold and Silver miners have followed suit and have dropped as well. Last Thursday and Friday, some entity is purchasing select Gold and Silver stocks as the volume was double, triple, 4x + the daily average.

Contrarian investors want to get in when others are getting out and want no part of the investment. These types of investors are very successful, Rick Rule comes to mind. (Maybe James Dines too)

Here are a few of the mining stocks that I noticed with higher than average volume on 12/15-16/2011: (See green arrow pointing at the last few volume bars)

Alexco Resource

First Majestic Silver

Aurico Gold (Silver too)

Allied Nevada Gold

Richmont Mines

US Gold Corp

Midway Gold Corp

Is it a hedge fund loading up for a swing trade? (Anticipating a run-up into the 1st quarter of 2012?) Sprott Asset Management? Tocqueville? Casey Research? One of the Gold/Silver mutual funds like the Fidelity Select Gold Portfolio? Goldman Sachs? JPM?

In any case, it looks like someone with fairly deep pockets is speculating on select Gold and Silver miners and that a early 2012 rally may be in their 'crystal ball'...

Disclosure: At the time of this post, the author owns shares long of Alexco Resources.

Gold Dec 14th, 2011 - Bearish

2011-12-14T19:58:00.000-08:00

Daily chart of the World Gold Index for Dec 14th, 2011. Down $72 and change in today's trading to $1591.

The wedge pattern was pierced to the downside and has gone through the 200 dma. As mentioned in yesterdays post, when Gold has touched the 200 dma over the past 10 years, it has been a buy. It went below the 200 dma in the 2008 financial crises where all investors sold off just about everything they held onto. Many needed to liquidate due to margin calls. Will the European debt issue cause the same effect?

I personally believe that some large players (banks) want to exchange their fiat into Gold. (Especially when there is so much of the stuff sloshing around in the system due to TARP and QE2) If you are going to purchase a large amount of Gold, do you want to purchase it at $1850 or at $1550 and ounce?

They can start a sell off and cause others to liquidate their positions which will drive the price lower. They can then be able to purchase Gold at lower prices. So here is your chance to exchange paper/cotton fiat for a real asset.

There may be another day or two of lower prices, but it may be a sharp drop lower to a spike back up. It is difficult to time the market as most people are working during the day and cannot head down to the local coin dealer. (Buying ETF's or mining shares is much easier these days with a simple click of a mouse button). Stay long and do not worry, in 6 months, Gold may make new all time highs.

Gold Dec 13th short term bearish

2011-12-13T21:19:00.000-08:00

World Gold Index for Dec 13th, 2011. The wedge pattern was pierced to the downside today and may be heading towards the 200 day moving average of 1612. If you look over the past 10 years of how Gold has traded, it has been a buying opportunity each time it has reached the 200 dma.

10 year chart courtesy of Kitco.com, the green line is the 200 dma, blue is a 60 dma.

The average Gold price appreciation over the last 10 years is around ~17%. As of today, Gold is up approximately 19.7%. It is trading 2.7% above the last 10 year average.

Should Gold continue to trend down below the 200 dma, it may be a good time to accumulate and add to your current position. (We need to find more fiat paper to exchange!)