Gold and silver continued dropping today with silver nearly touching its $22 crash low and gold rapidly approaching its $1321 crash bottom (dropping to $1360 intraday). If these crash bottoms hold, we may see a significant rally that could mark the start of a new long-term cycle in the precious metals, which would be a very bullish development.
Bearish momentum, however, is still very strong in both metals right now and we want to see some sign of upward momentum before going long. We are still holding our short position in gold (which is doing well) and will stay with this for now. A recent development that does not bode well for gold and silver is the strong breakout of the U.S. Dollar from a chart pattern that was looking very bearish but is now quite the opposite. This sudden rise in the U.S. Dollar is likely due to global funds fleeing the current chaos of Japanese and European economies, with U.S. currency being perceived as a better alternative to the rapidly disintegrating financial systems of those countries. (This dollar surge is what forced us to bail out of our recent long positions in the Swiss Franc.) A rising dollar usually forces the price of precious metals down, so if this dollar rally continues to gain strength, it's possible we could see the recent crash lows in gold and silver eventually break. This is all speculation at the moment and our present short-term strategy is anticipating a bounce soon in the precious metals when we will switch out of our short gold position and go long gold or silver (or both). The critical thing to watch are those lows at $22 in silver and $1321 in gold which, if they hold, will serve as stop loss points for any long positions we establish. Still holding our short gold position and out of silver for now.
The broad stock market refuses to give us a corrective entry point to go long, but it seems to be leveling off a bit and there are still several factors pointing to some sort of imminent correction. We will stay on the sidelines for now.
Crude oil seems to be taking its bullish cues from the stock market and is rising steeply from its near $92 low on Wednesday. That $92 price was not low enough to buy into as it was too far above our $89 stop loss support for my taste (or risk tolerance). If the broad stock market makes a correction here, crude would likely follow and if so it may move back down to that $90 area again where we will consider going long. Still out of this market.