-- Posted Tuesday, 3 May 2011 | | Source: GoldSeek.com

Silver and Gold got thrashed yesterday, the latter falling hard in off-hours trading after the June Comex contract surged to a record high Sunday night at 1577.40. We’d warned subscribers of a potentially important top at 1581.20, a target derived from our proprietary Hidden Pivot Method.  The actual peak came close enough to the target to suggest that a significant correction may be under way. We give the pullback a good chance to at least equal last winter’s correction, which saw June Gold fall from 1437 to 1310, or about nine percent, between early November and February. Silver, meanwhile, sputtered out well shy of an equivalent Hidden Pivot target north of $50, and it got hit much harder than Gold in percentage terms. At day’s end, the May contract had fallen as low as 42.190, down 15% from last week’s 49.820 peak and as much as $6 intraday.

Whatever happens in the days and weeks ahead, we seriously doubt that the long-term bull-market in precious metals is in jeopardy, since none of the fundamental factors that have been driving bullion quotes higher have changed.  In particular, we expect Fed easing to continue until the dollar collapses, taking the financial system with it. As for the odds of European-style austerity taking hold in the U.S., it’s a non-starter as far as we’re concerned – about as likely as the Fed pursuing the strong-dollar “policy” that Geithner and his predecessors have been blathering about for more than a decade.

We use purely mechanical means to forecast the ups and downs of stocks and futures, and that helps us stay calm whenever the markets are said to be at the mercy of inscrutable or even violent forces.  For instance, if May Silver were to show some pluck at 42.37, a Hidden Pivot support that is our minimum downside target for the moment, we’d infer that sellers were already starting to run out of ammo and enthusiasm. And we’d be even more confident about this if a bounce from 42.37 were to exceed a couple of small peaks recorded on the hourly chart on the way down. As for June Gold, we’d start to worry only if it falls to 1444.90, nearly $100 below current levels, without an upward retracement. To find out why, or if you’re interested in the upcoming Hidden Pivot webinar at the end of May, click here.  If you are more concerned about what Silver and Gold are about to do, you can get a free week of Rick’s Picks forecasts and trading recommendations by clicking here. This will also give you access to a 24/7 chat room that draws experienced traders from all over the world.

-- Posted Tuesday, 3 May 2011 | Digg This Article | Source: GoldSeek.com

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