Gold and Silver

Update 17th of June 2013

Gold Weekly Chart

Gold Daily Chart

Dow Jones/Gold ratio Weekly Chart

Arguments for lower prices:

  • Still valid MACD sell signal for Gold on the monthly chart.
  • Gold still in well defined downtrend.
  • If Gold moves below US$1,340.00 we should see a test of US1,320.00 followed by a break of the multi-year uptrend. Already hourly close below US$1,359.00 would be critical.
  • Investors still moving out of Gold ETFs. The SPDR Gold Shares Fund (GLD) is now holding only 1,003.53 tons of Gold .350 tons of Gold have been sold since beginning of this year.
  • During Fed Meetings Gold tends to be very weak.The next FOMC Fed Meeting will be held this week during June 18th & 19th. The rate announcement will be on wednesday 19th of June.
  • India increases tax on Gold imports again. This could cut down indian gold demand by up to 75%.
  • Although gold and silver performed contra-cyclical in recent months (when compared to stocks), the correction in equities could push down precious metals as well (risk off…).

Arguments for higher prices:

  • Gold seems to be working on some kind of double bottom. Confidence in a new rally is still very small therefore every attempt to rally is quickly being sold. But despite the recent sell off one week ago, gold is holding well above US$1,375.00 so far. As well US$1,340.00 has not been violated. Gold is producing first series of higher lows and higher highs…..
  • Bollinger Bands are tightening. Current range is US$1.361,87 to US$1,416.31. A big move is brewing.
  • Weekly SAR indicator gives a buy signal with a weekly close at US$1,423.00. This would be first buy signal since october 2012 !!
  • Potential W-formation shaping in gold. Confirmed if gold closes above US$1,480.00.
  • On the daily chart for the Dow Jones/Gold ratio the indicators MACD & RSI are not confirming latest new high at 11.30 points. Negative divergence points to a trend change!!!! Between mid of november 2012 and mid of may 2013 the Dow Jones Index outperformed Gold and the ratio went from 7.286 up to 11.297 points. The RSI indicator on the weekly chart for this ratio has never been more overbought since mid of 1999 !!!!
  • Strong positive divergences (RSI & MACD) in HUI Gold mining-Index increases chances that the bottom indeed is in place. Short-term we are seeing some weakness but after current minor correction the index should soar.
  • The latest Commitment of Trade (CoT) reports have improved again (especially for silver). According to sentimenttrader every time speculators were holding a combined position below 75,000 contracts Gold was on average 22.2% higher a year later. Personally I haven’t seen a more bullish setup anytime in the last 10 years. Sentiment continues to be at oversold extremes (Gold Public Opinion & Hulbert Gold still at multiyear lows).
  • If gold & silver should continue to move contra cyclical towards stock-markets, a recovery is in the cards as the stock-markets are starting to correct.
  • Germany changes VAT for silver coins. From 1st of January 2014 germans will have to pay 19% VAT on all silver coins. The new tax rate applies to silver bullion coins such as Chinese Panda, Australian Kookaburra, the austrian Silver Philharmonic and as well on silver collector coins. It could lead to a spike in silver coin demand in Germany until end of the year.

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