Gold / Silver Update

GOLD CHART

Let’s look at the longer term today. Price is at major support levels where a lot of channels of long term duration have supported gold. The red channel line is a 20 year line and even though price has pierced it during weekly trading, it has yet to close below it on a Friday. The overall range is 1250-1320 with 1280-1320 the sweet spot. That dotted line at 1283 area is the Fibonacci 38% retracement of the entire bull market and strong bull market corrections usually test this Fib line or very close to it. Thus if we do get one more dip down, we feel that the market can penetrate it by a bit but overall we should expect strong support there and a turn point up. And that’s the same for these trend lines. At the April lows we got a 160 dollar bounce and this week’s 1337 low was a retracement where the market is attempting to do a double bottom.

Overall the medium term trend is down. What we think is developing is a low that will test the 1480-1520 area one more time before making its next medium term decision. Until we close back above that GREEN trend line above price on a monthly basis, the medium term will technically still be in a downtrend. In summary, gold has been in an almost two year correction, and our own trend indicators have been bearish since price closed below the moving averages near the 1640 area. The long term bull market is still intact and odds favor that gold is nearing an initial correction low from which it will try and rally from. The action in June regarding strength or weakness will help evaluate if the metals are going to continue lower in the 2nd half of the year. In summary, support is 1250-1320 and resistance is 1480-1520. Odds favor a early June bounce and we’ll see what the price action looks like.
On the short term support today is 1360-1370 and resistance is 1395-1397. The market is in a tight range. A move above 1398 favors 1404 and a close above 1404 favors a short term bull trend to the 1440-1460 area.

 SILVER CHART

One of the most difficult aspects of the markets that they operation on multiple time frames. But that is just a reflection of the different players. We have long term investors (primary) medium term investors (position) intermediate term investors (Swing traders) and short term (Traders). We even have hourly traders and some trade with a one minute chart, sometimes referred to as scalpers.

Then consider the different players. We have funds, institutions, commercials (producers & buyers) banks, individual traders, hedgers. Thus we have different time frames in which all of these players for various reasons trade on. Thus we have seasonal trends that develop. Christmas jewelry for instance gets going on a raw level usually in August. That is one of the reasons silver makes a lot of lows in July/August. We even have players who trade solely on seasonal trends. When we put all of these factors together (and there are more than just mentioned) a pattern of cycles develop.

During times of major tops and bottoms a majority of the players and events can come together and cause important turns in the markets. Many times a confluence of the different cycles created by the markets all align at one time frame. Such is the case with silver.

One of the reasons this time frame is so important is that silver has 4 out of 5 of its key cycles that are all lined up at the same spot on the chart. You can see on the chart below that these cycles are all coming together here at a time when silver just happens to be making a major two year low in price and a stunning 60% loss. With price action nearing the point of exhaustion, and having hit the psychological $20 dollar area in a washout type of price move on Sunday evening with a 10% drop followed by reaction move back up above 22 (previous support) and it makes a case that silver is looking at the best chance to establish a low point in the two years of this correction. This week marks a Fibonacci 34 weeks down from the October high also.

When we put all if these confluent factors together in addition to the physical demand we've seen in the metal, it makes a strong case that the odds that silver is putting in a bottom where price will at least rebound and attempt to rally out of this low point. As you can see when these cycles converge they can produce major turning points that include the 2008 crash low. Even the top at 50 was not that far off the cycle and instead of peaking at the cycle it inverted and went from 26 to 50 bucks in the next 10 weeks. The bottom line is that silver is poised and has its biggest opportunity and the highest odds in over two years to establish a major low point in this time frame and price area.

 

YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS 
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED. 

 Do your own due diligence. 

No one knows tomorrow's price or circumstance. 
 I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader. 
I do not accept responsibility for being incorrect in my speculations on market trend. 

 King Regards