UPDATE and COMMENT on GOLD and SILVER (3:30 pm EDT)
I would like to point out that our trading in the precious metals market at this time is generally short-term. There is a lot of divided opinion right now from gold and silver analysts, investors and traders on where these two metals are headed short-term, medium-term and long-term. As I stated in a recent blog (July 18):
"The long-term direction of these metals will be determined by what happens to global economies over the next several years, and specifically whether economies move towards inflation (possibly hyperinflation) or deflation (possibly a deflationary implosion). The bottom line here is that inflation will likely boost gold and silver prices and deflation could depress them...We need to be prepared and alert to whatever scenario unfolds."
Right now we are looking to buy any corrections in gold and especially in silver because gold is in the early phase of a new medium-term cycle and silver is about to start one (after it makes a correction). Early phases of cycles are generally bullish, but that bullishness can be short-lived if the overall trend turns bearish. In some recent blogs I pointed to the fact that the Commitment of Traders (COT) charts were showing that Commercial (i.e. "smart" money) short positions in these metals were at alarmingly high levels. That is still the case and it strongly suggests that a significant correction in the precious metals is imminent. We could get that now, especially as both gold and silver could be making double top formations in their current charts (at $1,375 in gold and $21 in silver). We can identify a general strong support level for gold around $1,300 and for silver around $19. If those supports hold, we will look to go long for some more rallying, but if they break, we might see a very severe correction kick in. If the metals do rally, those double top areas are important resistance, and we would want to see prices break through them to remain bullish. The end of this week and early next week could be a turning point for gold and silver so we will watch carefully how prices move into that time frame. On the sidelines of gold and silver.
I would like to point out that our trading in the precious metals market at this time is generally short-term. There is a lot of divided opinion right now from gold and silver analysts, investors and traders on where these two metals are headed short-term, medium-term and long-term. As I stated in a recent blog (July 18):
"The long-term direction of these metals will be determined by what happens to global economies over the next several years, and specifically whether economies move towards inflation (possibly hyperinflation) or deflation (possibly a deflationary implosion). The bottom line here is that inflation will likely boost gold and silver prices and deflation could depress them...We need to be prepared and alert to whatever scenario unfolds."
Right now we are looking to buy any corrections in gold and especially in silver because gold is in the early phase of a new medium-term cycle and silver is about to start one (after it makes a correction). Early phases of cycles are generally bullish, but that bullishness can be short-lived if the overall trend turns bearish. In some recent blogs I pointed to the fact that the Commitment of Traders (COT) charts were showing that Commercial (i.e. "smart" money) short positions in these metals were at alarmingly high levels. That is still the case and it strongly suggests that a significant correction in the precious metals is imminent. We could get that now, especially as both gold and silver could be making double top formations in their current charts (at $1,375 in gold and $21 in silver). We can identify a general strong support level for gold around $1,300 and for silver around $19. If those supports hold, we will look to go long for some more rallying, but if they break, we might see a very severe correction kick in. If the metals do rally, those double top areas are important resistance, and we would want to see prices break through them to remain bullish. The end of this week and early next week could be a turning point for gold and silver so we will watch carefully how prices move into that time frame. On the sidelines of gold and silver.
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