Gold and Silver

Update 2nd of June 2013

Weekly Gold Chart

Daily Gold Chart

COMEX Gold Shorts Chart

Arguments for lower prices:

  • Despite increasing intraday volatility gold continues to behave weak. Friday’s monthly close was below US$1,400.00.
  • Still valid MACD sell signal on 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 multiyear uptrend. Already hourly close below US$1,359.00 would be critical.
  • Although gold and silver performed contra-cyclical in recent months (when compared to stocks), a very likely 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.
  • So far US$1,340.00 has not been violated. Gold is producing first series of higher lows and higher highs…..
  • Potential W-formation shaping in gold. Confirmed if gold closes above US$1,480.00.
  • Strong positive divergences in HUI Gold mining-Index increases chances that the bottom indeed is in place.
  • COT constellation for gold and silver has strongly improved again. Commercial short position at lowest level last seen during deflationary crash in 2008. At the same time the non-commercial & small trader have built up the highest short position ever …
  • Sentiment continues to be at oversold extremes (Gold Public Opinion & Hulbert Gold still at multiyear lows).
  • IWF predicts that central bank gold demand could increase up to 550 tons this year.
  • Physical gold market seems to be detached from paper speculation. Premiums especially in asia are high. ETF sales responsible for falling gold price while worldwide physical market is strong.
  • 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.

Conclusion

  • The last two weeks have been pretty volatile but gold managed to climb higher towards US$1,420.00. On Friday gold gave back all the previous gains.
  • As long as gold manages to hold above US$1,375.00 the positive outlook remains valid. Gold should then be able to challenge the lower down trendline around US$1,440.00 soon. As well US$1,485.00 and even US$1,525.00 are possible targets within the next two months.
  • Any daily close below US$1,375.00 shifts my focus towards US$1,340.00. If this support fails the correction will continue and gold will break down below US$1,300.00.

Long term:

  • Nothing has changed
  • Precious Metals bull market continues and is moving step by step closer to the final parabolic phase (could start in autumn 2013 & last for 2-3 years or maybe later)
  • Price target DowJones/Gold Ratio ca. 1:1
  • Price target Gold/Silver Ratio ca. 10:1
  • Fundamentally, Gold is still in 2nd phase of this long term bull market 1st stage saw the miners closing their hedge books, 2nd stage is continuously presenting us news about institutions and central banks buying or repatriating gold. 3rd and finally parabolic stage will bring the distribution to small inexperienced new investors who then will be acting in blind panic.
    Source: http://www.safehaven.com/article/30011/gold-and-silver

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>