GOLD AND SILVER UPDATE (2:45 pm EST)
The bearish signals in gold and silver that I mentioned in yesterday's blog are turning out to be correct, and precious metal prices are indeed moving further down today. Gold has dropped to the $1330 area and silver is approaching the $22 area. Also important to note is that with today's steep drops medium-term momentum in both metals has shifted to bearish. Obviously, we are not going to buy under these conditions, but I want to emphasize here that we are likely seeing an ideal setup unfolding for a major buy spot in both these metals once the corrective bottoms have stabilized. As I've mentioned before (see Brief Overview of Financial Markets for second Half of 2013), gold and silver are in the process of forming major bottoms in their long-term cycles. These may have formed already with gold's low on June 27 at $1183 and silver's low that same day at $18.25, but it is still possible for them to go lower before the year is over. There are several important timing and cycle factors over the next two weeks that point to a significant bottom and subsequent strong rally in both gold and silver. It is important to realize that momentum in any market can be very bearish as a steep correction occurs (as it is now), but once a corrective bottom is established it will quickly turn bullish when a strong rally follows. So despite the bearish signals at the moment, the bottom line (pun intended) is that we are still looking for a bottom to go long in both gold and silver, and we could see this setting up over the next week or two. I might add here that the broad stock market's current bullish momentum could also change suddenly to bearish, and this could possibly coincide with a turn up in the metals. We also need to keep in mind that the situation in Syria is not fully resolved and, in fact, President Obama and Secretary of State John Kerry continue to remind the media in press conferences that, "... should diplomacy fail, force might be necessary". If the U.S. war drums begin beating again, it could be the trigger that again sends the broad stock market down and precious metal prices up. We will have to wait and see.
The bearish signals in gold and silver that I mentioned in yesterday's blog are turning out to be correct, and precious metal prices are indeed moving further down today. Gold has dropped to the $1330 area and silver is approaching the $22 area. Also important to note is that with today's steep drops medium-term momentum in both metals has shifted to bearish. Obviously, we are not going to buy under these conditions, but I want to emphasize here that we are likely seeing an ideal setup unfolding for a major buy spot in both these metals once the corrective bottoms have stabilized. As I've mentioned before (see Brief Overview of Financial Markets for second Half of 2013), gold and silver are in the process of forming major bottoms in their long-term cycles. These may have formed already with gold's low on June 27 at $1183 and silver's low that same day at $18.25, but it is still possible for them to go lower before the year is over. There are several important timing and cycle factors over the next two weeks that point to a significant bottom and subsequent strong rally in both gold and silver. It is important to realize that momentum in any market can be very bearish as a steep correction occurs (as it is now), but once a corrective bottom is established it will quickly turn bullish when a strong rally follows. So despite the bearish signals at the moment, the bottom line (pun intended) is that we are still looking for a bottom to go long in both gold and silver, and we could see this setting up over the next week or two. I might add here that the broad stock market's current bullish momentum could also change suddenly to bearish, and this could possibly coincide with a turn up in the metals. We also need to keep in mind that the situation in Syria is not fully resolved and, in fact, President Obama and Secretary of State John Kerry continue to remind the media in press conferences that, "... should diplomacy fail, force might be necessary". If the U.S. war drums begin beating again, it could be the trigger that again sends the broad stock market down and precious metal prices up. We will have to wait and see.
RSS Feed