Posted on 12/03/2014 9:09:20 PM PST by blam
December 03, 2014
By: Clive_Maund
Yesterday was an extraordinary day in the Precious Metals markets, with a good chance that it signals the reversal from the brutal 3-year plus bear market that so many have waited so long to see. The day started with gold and silver plunging on the news that the Swiss voted against backing their currency with gold, but later in the day they rallied strongly on heavy turnover to close with giant reversal candlesticks on their charts. Regardless of the reasons for this bizarre behavior, technically this action looks very positive, and this is written with the awareness that gold has reacted back this morning on dollar strength.
On gold's 6-month chart we can see how it approached its November lows in the early trade after the Swiss vote, but rallied strongly on big volume to close above its November highs, above the recently failed key support that is now resistance and above its 50-day moving average, which was quite an accomplishment, leaving behind a large "Bullish Engulfing Pattern" on its chart. This points to a probable strong advance dead ahead, so today's reaction should be used to clear out any short positions, and also to go long aggressively with stops below the November low. This action by gold, and by silver, suggests that the current bull Flag in the dollar, which is getting a bit "long in the tooth", may be about to abort.
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(Excerpt) Read more at marketoracle.co.uk ...
Gold has been dropping since mid-July. Commodities like gold, silver, and oil many times start recovering in price around mid-December.
Much of what is written in the parallel Gold Market update applies equally to silver, and it will not be repeated here.
On silver's 6-month chart we can see how it broke well below its November lows in the early trade yesterday, in response to the "No" vote in Switzerland on the referendum on whether to partially back the Swiss Franc with gold, but then it came back strongly on big volume to almost entirely erase Friday's sharp losses, leaving behind a large Bull Hammer on its chart. While the "tail" of this hammer is rather short in relation to its "real body", meaning the trading between the open and the close, the big daily range and massive volume means that it can be considered as a valid reversal hammer.
This action is indicative of an important reversal, and here we should note that it is normal for the price to back and fill for a little while after the appearance of such a hammer, before the nascent uptrend it signifies gets underway, which is why we are not concerned by today's reaction.
As we can see on the chart, the price is still being constrained by the downtrend line shown and the 50-day moving average, but these impediments should not stop it for long - once the price does break above them it should advance smartly, especially as sentiment towards silver has been terribly negative in the recent past.
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With Gold and silver hitting a hard bottom a few days ago, I find it a bit premature to call this a bear run.
It was merely regaining huge losses.
Your comment about mid-December rallies may be spot on, but I find the article humorous.
The person may be proven to be a sage, but his is definitely premature here IMO.
What is happening to gas prices. Prices in the Houston area have dropped from $3.35 to $2.29 and lower in just a few days.
Are the prices of gold and oil being manipulated so as to make the dollar look stronger?
Both gold and silver did bottom out in price around November 16th, but with the US Dollar index as high as it is I’m thinking that it will suppress any major rise in their respective prices.
I don’t know what determines the US Dollar’s index strength or weakness. It is around 89 right now, but has been much higher such as 115 in 2002 and and 130 in 1985.
Jack, on Monday silver hit $14.40 before rebounding. Last week it was mid $16.00, and today it was again.
I’ve been following it fairly closely for the last week. Metals interest me, although I don’t hold any right now.
With the dollar index high, it would seem that a down move could be expected related to it. I’m not super fluent in these terms, so I may have misconstrued what the dollar index actually indicates. It was my take that there is a stronger dollar right now. I know it has done quite well in the last month vs other currencies.
Oh, okay. I see what you mean. I found this chart here that’s a little more clear and explains exactly as you said it.
https://www.bullionvault.com/silver-price-chart.do
It’s amazing how fast it shot back up.
Check the silver prices by clicking the "One month" button. You can play around with other periods too. Monday it did hit $14.40 on the spot market.
That dip on Monday may not have even shown up in the futures market. If it did, it was probably not much. By Tuesday evening I think it was already at $16.00 or close to it.
Okay, great. Yes, I was talking about bullion.
I made comments above, but wanted to acknowledge your find and additional comments.
It is amazing how fast it went back up, but there was a blip on the radar and people panicked.
That’s the way it goes sometimes.
That $14.40 may be a hard bottom, so there may be upside potential. With the dollar hanging in there, I don’t see much, but if the past is any indicator, I may have just talked silver to $30.00 an ounce in a week or two.
I very much doubt it’ll go that high that fast, but you never know.
Goldbug ping.
Dead cat bounce. One of these days the markets are going to figure out that the only value of gold is for Indian weddings.
It’s my belief that the dollar is going to stage a jaw-dropping multi-year rally that will leave all other currencies in a smoking heap. Just my view.
I think that gold & silver will do essentially nothing in dollar terms, but that means they will rise in “other-currency” terms.
But I think the stock market is likely to be the biggest beneficiary, for the simple reasons that other currencies are going to degrade, and folks from all over the world can buy the finest companies in the world, with the best mgmt in the world, paying the best divs in the world, in the world’s strongest currency! People are going to have to buy dollars or be left behind, and while they might buy bonds versus stocks and will no doubt do so in many cases, I believe that bonds will not have to pay any reasonable coupon for quite a while.
My .02, and I am far from a permabull as you probably know from my prior posts. I think we are going to see a 30-40% USD rally over several years.
Sure wish Bullish would turn gold.
What influences the strength of the US Dollar?
IMO, the biggest factors are going to be:
Increasing energy exports or, non-imports, eg; the lack of need to import so much energy, and
The deterioration of all other currencies.
The Euro is approaching a tipping point, and indeed, tomorrow could and probably will be a critical day, because Draghi is likely to announce their version of QE; which Germany does not want them to do and actually is prohibited by their charter. But those pesky law thingys mean little to central bankers who think they are geniuses.
In this country, we are largely ignorant of the pretty damn bad shape of the Eurozone as far as eco growth. Basically, they suck. South America is moribund in socialist zombieland. Of course, Russia is sucking wind with this oil price plunge.
All of these factors lead me to believe that the USD will remain essentially the only game in town for a long, long time. And we will see massive, potentially frenzied buying of US assets; stocks being near the top of any such list. But it is also possible that we will see long, slow, steady, unrelenting buying of US stocks and it could grind on to DJIA 20K with nothing but the types of micro-corrections we saw circa this last October 15th, when the mkt corrected 10% and in two freaking weeks it was all fixed. What if that goes on/where will we be if that goes on for 2-3 years?
That’s what I think will most likely happen. Every market participant will be forced to buy the market at what they believe is too high a price. And if they don’t they can collect CD interest @ 0.3% or bond interest at 2.3% or sit on green cash.
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