28/01/2011 by Philinje.

Gold bounced on Wed as the FOMC meeting ended - actually the bounce started a couple hours before the meeting minutes were released. But then yesterday it got whacked again and hit a new low near $1310.

Technically, this looks bad, especially if price can’t get above $1320 today. Most people would think gold will touch the 200-day moving average at around $1280. But it doesn’t have to.

The 144-day moving average is the one that gold has been touching over the past couple years before moving back up. And guess what - that is currently at $1311, so gold just touched it!

Silver was supposed to be at a cycle low on Wed, which looked spot on. Then yesterday, it got taken down to a new low near $26.40, but just briefly, and it bounced back. Silver looks like it kept close to its low on Wed.

In addition, the gold stocks took a beating on Thursday but they did not give up all their gains from Wed. So they bounced and stayed above their Wed low.

Silver looks like it could bounce from here, and that might let gold bounce as well. Oil took a beating this week, as did commodities generally, and the Euro pushed above 1.37. But maybe the Euro has finally hit its local top and will start to fall. This should be gold-positive.

There is still a chance we will see one more rally in gold by mid-Feb. Equities might also rally and then a larger correction will happen in March-April. Silver is potentially due for a hard drop, as the silver:gold ratio has been showing weakness in silver. But it might rally first. The next couple weeks could be a good chance to sell into strength.

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25/01/2011 by Philinje.

Here is a piece that says gold will most likely hit $1300:

http://www.zerohedge.com/article/will-junior-mining-stocks-be-investment-2011?

However, there is the 200-day MA just beneath that at $1280. Timing-wise, the low could be this week.

The $1300 level corresponds to a reliable trend line and a MA that is slightly shorter than 200 days, which seems to be holding gold declines in the recent past.

In addition, there is a cycle low in silver tomorrow. The cycle low for gold was end of last week but obviously that spilled over to this week.

It’s time to think value. Gut-wrenching declines are the best times to buy.

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21/01/2011 by Philinje.

Last Friday did not look good and there was a minor recovery, then yesterday the big push came to drive longs out of gold and silver. Volume was relatively light in gold but high in silver, and everyone knows JP Morgan needs to cover its silver shorts.

Interestingly, the Euro is still rallying. It seemed like that would end early this week but it hasn’t. So gold in Euros has caved to under the 1000 mark and the dollar has stayed under 79, except for a brief spike yesterday.

So is the carnage over? Tough to say. The ABC correction became a five-leg move down. Sure it could go farther, but also this could be it.

According to Alf Fields, now the most respected Elliot Wave analyst alive because of his accurate call on gold from the beginning of this bull market, as long as gold stays above $1337 we are in a minor wave 5 up that has sub-divided into 5 small waves, and this is wave 4 down, to the region of $1337.

Alf thought wave 4 might have ended at $1355 before the pounding yesterday, so he is already slightly wrong. And if gold falls below $1337 then his minor wave 5 theory is blown away. But it looks feasible still and just about an hour ago gold just about touched $1337. It bounced quickly to $1345 and maybe today we’ll see it stabilize around there.

Ideally there will be a bounce to above $1356 today, but somehow that seems unlikely. Silver is not moving any lower today - its corpse has flatlined. So the bulls are in a temporary daze.

This reminds me of the bear raids of recent years. We saw one right on Jan 3 and now this one was designed to scare every weak hand. It will look bad on the weekly chart, and both metals just failed at the 50-day MAs. So technical signs are not good.

But keep in mind the Euro porblems are not going away. We have a temporary improvement in perception. Here is a view from inside Europe by James Turk:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/20_James_Turk_-_Gold_%26_Silver_to_Take_Off_Despite_Weakness.html

Short covering on the Euro will die out soon. Then there will be a reversal. And maybe some new spark of bad news will cause a new round of risk aversion, a crashing Euro and a spike in gold. It was a good time for JP Morgan to pull the pin on gold and silver - they have to pick their shots carefully.

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18/01/2011 by Philinje.

After some of the US took off Martin Luther King Jr day yesterday, traders are back in the markets and gold and silver have bounced.

Looking at the recent decline with fresh eyes, it’s possible an ABC correction ended on Friday with a decline to immediate support levels. The C leg was slightly shorter than the A leg. Actually, in gold the A leg was a ludicrous vertical drop followed by a modest B leg and then the C leg dropped a short distance to the same level as the A leg.

In silver, the decline looks more standard: the A leg was a normal decline, followed by a normal retracement, followed by a normal C leg that is onlly slightly shorter than the A leg - but it dropped to a new low at $28 yesterday (during a market holiday). In short, the decline in silver has much more of a classic shape and continued straight into yesterday’s thin market conditions. Gold got whacked by a baseball bat, tried to stand up then fell to the ground again.

This speaks volumes about the ability of the bullion banks to perform bear raids as time goes on. It’s become quite obvious that they have not been able to whack silver around like they used to. Instead, they are acting desperate with gold and hoping silver follows suit.

As proof of this view, here is an excellent article by a noted authority on precious metals, Adrian Douglas:

https://marketforceanalysis.com/article/latest_article_011511.html

Note the very clear signs that silver’s price is becoming more resilient. The author states that this is certain proof of a shortage of physical silver. This will cause a massive short squeeze long before the CFTC resolves the controversy over position limits.

In terms of mainstream articles, the following from Rich Dad, Poor Dad author Kiyosaki appeared in Yahoo Finance last week:

http://finance.yahoo.com/banking-budgeting/article/111838/sell-gold-buy-silver

This piece is not bad for explaining most of the situation with precious metas in layman’s terms. And obviously the message is to buy silver.

Finally, the Canadian authority on commodities Murray Pollitt offers this free summary of 2010 on the GATA website. It’s worth a quick read:

http://www.gata.org/node/9513

His conclusions for 2011 and beyond are very simple and straightforward - and quite likely spot on. Currencies are in a death spiral and gold is the answer. Well, silver is a better answer.

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16/01/2011 by Philinje.

Silver has not technically broken support but is resting on it, like the mining shares. But silver has stayed remarkably strong above $28.50, so it feels like it broke support.

Just as an update on a target price for gold, closer to $1330-40 may be more accurate. We’ll see. If silver breaks support here at $28.30, the next level of support could be in the neighborhood of $27.

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15/01/2011 by Philinje.

Friday’s action was not good. Gold and silver broke support and the mining stocks are resting right on support.

We have a cycle low coming next week. So we could get another decline to round off the ABC correction - A down last week, B up this week, C down next week. Some analysis is looking at the $1300 level in gold as a target. We might not get that low. And if we go below that, well, things could get ugly.

What’s really going on, I think, is that the Euro bounced hard after so much pessimism regarding Portugal and Spain’s bond auctions - the Chinese came to the rescue. And the Euro going up meant gold going down, which has been a bigger influence than the dollar of late.

Anyway, there could be good buying opportunities next week.

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11/01/2011 by Philinje.

Sorry for the long silence. I went on holiday at the end of the year and just got back.

Gold and silver spiked on December 31, as did lots of assets. But since then there have been some serious declines in commodities, including gold and silver. It seems there is growing belief in a full-blown economic recovery in the US, while there is renewed attention on the problems in Europe. So far that means the dollar rally is back on.

Today we’re seeing a bounce in gold and silver, but that could be a retracement of the recent decline. We might see some more weakness before the rally into mid-Feb, should that in fact materialize. If not, we could get a major correction in gold and silver, so be cautious. One way to play the current situation is to focus on Euro gold, which will be strong with a weak Euro.

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