In Wednesday's blog on gold and silver I wrote:
"...If the cycle bottoms are already in, gold and silver prices could continue up from here and "breakout" to begin that new long-term uptrend. A clear break above the $1300 level in gold would suggest that this is happening."
This scenario may now be unfolding. Gold and silver prices did not react strongly to the Federal Reserve's dovish policy statement on Wednesday, but a sharp drop in the U.S. Dollar Index showed that the dollar did not appreciate the Fed's "easy money" attitude. After digesting this information overnight, many precious metal investors apparently decided it was a good time to buy, and gold prices shot up over $30 on Thursday. Today gold is closing the week above $1300 and silver above $20.50, which is strongly suggestive of a breakout. Strong bullish momentum signals in gold charts accompanied yesterday's price surge making directional momentum in both gold and silver now mixed bullish and bearish (gold had been 100% bearish). This means we should now abandon any short-selling strategies and focus on finding a good entry point to go long in these metals. There are several technical and timing factors right now suggesting some sort of short-term pullback in prices. In fact, there is a possibility that this breakout could be a "fake out" and we could still get a correction to new lows, but that scenario seems much less likely now.
My strategy for precious metals will be bullish now, and I will be looking to buy any short-term corrections or dips in both gold and silver. On the sidelines and waiting to buy.