LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek.com to Launch New Website
By: GoldSeek.com

Is Gold Price Action Warning Of Imminent Monetary Collapse Part 2?
By: Hubert Moolman

Gold and Silver Are Just Getting Started
By: Frank Holmes, US Funds

Silver Makes High Wave Candle at Target – Here’s What to Expect…
By: Clive Maund

Gold Blows Through Upside Resistance - The Chase Is On
By: Avi Gilburt

U.S. Mint To Reduce Gold & Silver Eagle Production Over The Next 12-18 Months
By: Steve St. Angelo, SRSrocco Report

Gold's sharp rise throws Financial Times into an erroneous sulk
By: Chris Powell, GATA

Precious Metals Update Video: Gold's unusual strength
By: Ira Epstein

Asian Metals Market Update: July-29-2020
By: Chintan Karnani, Insignia Consultants

Gold's rise is a 'mystery' because journalism always fails to pursue it
By: Chris Powell, GATA

 
Search

GoldSeek Web

 
Gold & Silver Trading Alert: Critical Support in Silver


 -- Published: Monday, 19 May 2014 | Print  | Disqus 

Briefly: In our opinion speculative short positions (half) are justified from the risk/reward perspective in gold, silver, and mining stocks.

 

The previous week started quite favorably for precious metals bulls, but as the week progressed, the situation became less bullish, and finally we saw some bearish signs. Overall, the previous week didn’t change much. Let’s take a closer look (charts courtesy of http://stockcharts.com).

 

 

In the previous alerts we wrote a lot about gold, silver and miners’ reaction to the dollar’s rally (more precisely: about the lack of reaction) and the strength of the implications. In short, we didn’t think that the consequences were really bullish, because there had been many cases when the precious metals’ reaction was simply delayed, not absent. We saw some other bearish signs, but we’ll move to them in the following part of this alert. As far as the USD Index is concerned, we saw a pause after a strong rally. It was nothing surprising, as the previous rally was quite sharp and the index moved to the short-term resistance line.

 

What’s interesting is that while the first part of the last week was rather bullish for metals – they didn’t decline despite the dollar’s rally – the final part of the week was bearish as metals declined without a rally in the dollar. It could be the case that metals are starting to catch up as far as their reaction to the dollar’s rally is concerned.

 

Has the USD Index really paused or is the rally already over?

 

 

The medium-term chart suggests that the move higher has just begun as we saw a breakout above the important resistance line, and we saw a weekly close above it. Another move higher will further confirm the breakout and likely convince more traders that the currency is really about to rally substantially in the coming weeks.

 

This means that the biggest (bearish) impact on the precious metals sector is still ahead of us.

 

 

The situation in the gold market didn’t improve on Friday, and what we wrote in Friday’s alert remains up-to-date:

 

Yesterday, we wrote that GLD ETF had moved higher on tiny volume, which was a bearish sign. Another bearish sign (or more precisely: not a bullish one) was that we didn’t have gold above the previous local high. Moreover, we emphasized that this week’s small upswing hadn’t made gold move above the 50-day moving average and that the small move higher still seemed to be a counter-trend move.

 

The above is up-to-date and yesterday’s session confirms it – the GLD declined on volume that was significantly bigger than the volume accompanying the previous daily rallies.

 

The price-volume signs continue to point to lower prices in the coming days.

 

 

Mining stocks moved lower even more visibly than gold did. In fact, please note that while gold is above its March and April lows, the GDX ETF has just closed slightly below them. Mining stocks are showing weakness and suggest that another move will be to the downside.

 

What we wrote previously about the mining stocks sector remains up-to-date:

 

The “lower highs” observation applied to the mining stocks sector and the bearish price-volume implications were seen here as well. Just as it is the case with the gold market, the situation remains bearish, and yesterday’s decline on relatively big volume confirms it.

 

The precious metals sector usually declines in the middle of May, so we have bearish implications also from this perspective.

 

Before we summarize, let’s take a look at the long-term silver chart.

 

 

In the May 15, 2014 Alert we wrote the following:

 

Silver, on the other hand, has moved visibly higher this week. Is this a bullish factor? Not necessarily. Silver’s outperformance used to be a very bullish signal in the past years, but that was not the case in the more recent past. Since March all cases of silver’s outperformance (and many cases before that) have been the final sell signals for the precious metals sector.

 

History – the recent history – seems to have repeated itself once again. Silver moved sharply higher only to disappoint in the following days. Overall, the white metal moved higher by only $0.15, which means that it was basically flat.

 

The important factor to keep in mind here is that silver was (at the beginning of the week) and once again is right at its rising support line. Once this line is broken, we can expect a big (say, more than $1) move lower. It’s quite visible – many traders realize this. With this in mind, it’s no wonder that the current support was the start of a sharp rally. However, the fact that the rally was only very temporary and followed by an immediate move back to this line means that the strength of buyers is smaller than the strength of sellers.

 

Summing up, the outlook for gold, silver, and mining stocks remains bearish, but not extremely bearish, which means that we don’t increase the size of the short position just yet. Precious metals are not responding strongly (we saw some reaction in the final part of last week, though) to the dollar’s rallies so far, but it seems that investors and traders are simply waiting for a confirmation of the breakout in the USD Index (there have been cases when the metals’ reaction was delayed in the past). Plus, silver’s strong performance and the lack thereof in the case of mining stocks, plus lower highs in gold and mining stocks, are a bearish combination.

 

To summarize:

 

Trading capital (our opinion): Short positions (half) in: gold, silver, and mining stocks with the following stop-loss orders:

 

- Gold: $1,326

- Silver: $20.30

- GDX ETF: $25.20

 

Long-term capital (our opinion): No positions

Insurance capital (our opinion): Full position

 

Thank you.

 

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments - SunshineProfits.com

Tools für Effektives Gold- und Silber-Investment - SunshineProfits.DE

 

 

* * * * *

 

 

Disclaimer

 

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 


| Digg This Article
 -- Published: Monday, 19 May 2014 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.