GOLD TRADE ALERT (3:00 pm EDT)
We've been waiting for the final medium-term cycle bottoms in both gold and silver, and it's highly likely they are happening now. As I wrote in last Thursday's blog:
"The final cycle top in gold was most likely on May 20 at $2449, and for silver it was $32.38 on May 21. We usually expect a 2-5 week decline from the top to the final bottom, and we are now in the 3rd week for both metals. We note that we are now entering a strong reversal zone that continues through the end of next week. This would be the ideal time for a final cycle bottom."
Last Friday's low in gold ($2287) is holding, but silver is breaking to a new weekly low today ($28.72). This gives us a case of bullish divergence between the two metals with silver's low happening 4 weeks after its cycle top. The lows for both metals are inside a general reversal zone (June 6-14) that ends tomorrow. This looks like a good time to buy.
I am going to buy gold and stay out of silver for now. Why? Right now silver has the potential to fall considerably lower, but even if the medium-term cycle bottoms here, there's a good chance the next medium-term cycle will be bearish and not exceed the $32.38 high silver made on May 21. Gold's prospects look a little more bullish at the moment, and there's a good chance gold could make a new all-time high in its next medium-term cycle. For these reasons, I am going to enter a long position in gold today and remain on the sidelines of silver. There's a chance gold could dip lower tomorrow and maybe even make a new weekly low. We won't worry too much if this happens, but if prices push lower next week (after leaving the reversal zone), we may have to pull out of our trade. In other words, our initial stop loss will be based on prices falling below $2287 next week.
We've been waiting for the final medium-term cycle bottoms in both gold and silver, and it's highly likely they are happening now. As I wrote in last Thursday's blog:
"The final cycle top in gold was most likely on May 20 at $2449, and for silver it was $32.38 on May 21. We usually expect a 2-5 week decline from the top to the final bottom, and we are now in the 3rd week for both metals. We note that we are now entering a strong reversal zone that continues through the end of next week. This would be the ideal time for a final cycle bottom."
Last Friday's low in gold ($2287) is holding, but silver is breaking to a new weekly low today ($28.72). This gives us a case of bullish divergence between the two metals with silver's low happening 4 weeks after its cycle top. The lows for both metals are inside a general reversal zone (June 6-14) that ends tomorrow. This looks like a good time to buy.
I am going to buy gold and stay out of silver for now. Why? Right now silver has the potential to fall considerably lower, but even if the medium-term cycle bottoms here, there's a good chance the next medium-term cycle will be bearish and not exceed the $32.38 high silver made on May 21. Gold's prospects look a little more bullish at the moment, and there's a good chance gold could make a new all-time high in its next medium-term cycle. For these reasons, I am going to enter a long position in gold today and remain on the sidelines of silver. There's a chance gold could dip lower tomorrow and maybe even make a new weekly low. We won't worry too much if this happens, but if prices push lower next week (after leaving the reversal zone), we may have to pull out of our trade. In other words, our initial stop loss will be based on prices falling below $2287 next week.
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