Money Talk Daily

Archive for the ‘Gold & Silver Markets’ Category

While the last two days have been uninspiring, gold did start the week by bouncing off the support we had hoped for and turned in a nice performance through Wednesday. Thursday and Friday show indecision and a pause – almost as though gold is trying to figure out what to do next having broken through resistance at $1,725 and closing out the week just north of the 75-day moving average. Still, we’ll take it. We didn’t give up our gains, and we’re still on the right side of the moving averages. Let’s see what next week has in store for us.

Click to enlarge chart.

In a move that had to give gold longs some relief, gold decisively broke through resistance and the 50% Fibonacci level at about $1,725, went on to break through the 75-day moving average, and closed just above $1,750. Of course financial news out of Europe no doubt helped put a fire under gold’s move.

But the bigger point is there will no doubt be many such events as this economic tale of woe continues to unfold. Hence it seems almost reckless to consider gold as being in anything other than a long-term bull market. Yet for those who continue to hold a short to medium term view as well, the charting continues.

Click on chart for larger view.

Gold has yet to muster the strength to break out of this trade range. Yes, the past two days have show some gains, but the spinning top today tells us that traders are undecided. What to do next?

To sound like a broken record: (1) Nothing economically/financially has been fixed, and (2) Gold needs a decisive break and close above $1,725 to get the bull rolling again.

Click chart to enlarge.

Once again, gold bounced where we longs had hoped it would and moved up from there. Interestingly, it made a run to $1,725 which is our “break-out point” before retreating back to around $1,708. So it moved from one Fibonacci level to the next and finished up in the middle. To repeat, we need a decisive break and close above $1,725 to make us more confident that the short-term bull move is back on.

For the longer-term gold investor who sees gold as a hedge against the financial crises that have no practical solutions, these moves really don’t mean much. Nothing is fixed. Gold remains in a long-term bull market.

Click to enlarge chart.

Not a whole lot to be said on this trading day after Thanksgiving. Nor any real surprises. Gold remains technically week, yet continues to hold at the 38.2% Fibonacci level which is desirable from the perspective of gold longs.

Note that 150 day moving-average down around $1,650. That should be key support should the current level fail. Again, we need a solid close somewhere around $1,725 for the possibility for our rally to get going again.

Click on chart to enlarge.

Gold gave back a bit of yesterday’s gain yet still holds just above the 38.2% Fibonacci level. Again, we’re going to need to see gold decisively break above $1,720 to have some confidence that the bull run will resume. Have a Happy Thanksgiving tomorrow!

Click chart below to enlarge.

Looking back at yesterday’s post, gold did bounce today where we had hoped, and at this late hour is trading a few bucks north of $1,700. A nice relief. Of course, we’re not out of the woods yet, but today’s and this evening’s action is encouraging. Clearly there are some folks who see gold below $1,700 to be of great value.

That said, as the wannabe masters of the financial universe continue to show their impotence in dealing with global crises far beyond their abilities, who’s to say gold might be a great value at multiples of today’s price? There are no practical solutions for our nation’s economic ills, at least none that have a chance of being implemented. Stand by for more “fun.”

Click on chart to enlarge.

We’re still looking for a bottom in this period of weakness in gold. We did hold at bout $1,680 which is near another Fibonacci level. If this fails to hold, the next support on the way down should come in around $1,640 to $1,650. At some point we’ll pick up some buying as gold as lost none of its attributes that argue for a bull market.

After Thursday’s drubbing, the gold futures market decisively registered a signal of indecision – a spinning top with volume that wasn’t all bad. So we’re still hanging around the 50% Fib level – and sitting right above the 50-day moving average. Where do we go from here? You tell me. European turmoil continues unabated. The hedge funds stand ready to inject all kinds of volatility into the markets. And the war drums are beating in the Middle-East.

We are sitting on a bit of support right now. If this fails, we can expect some additional support to come in between $1,680 and $1,700. If we hope to get out of this consolation and regain a bullish trend, gold bulls are going to have to muster the strength to push gold above $1,800 decisively. I do believe that will happen. The snag is when.

There’s just not a lot good someone long gold futures can say about that big, ugly candlestick the market gave us today. Would have been nice to see support come in again at or just below $1,750 like it has recently, but that was not to be. But we do have to respect market action, and today’s calls into question where the next level of support will show up.

We’re at the 50% Fibonacci retracement level, and just above the 50-day moving average. Good enough. If that gives way, it’s down to around $1,680 to $1,700 where the next bout of support should appear.

Of course, none of the factors that have been driving gold higher has been fixed, so this author is not prepared to jump off the golden train. With the markets embroiled in great turmoil and uncertainty, with Europe in economic convulsions, and with the United States’ budget and economy in pitiful shape, volatility will continue to rule. Of course, the hedge funds will continue to chase prices around adding to that volatility.

Anyone who says making money in this market environment is easy is profoundly ill-informed.

Click on chart to enlarge.

With uncertainty and indecision continuing to plague the markets, gold staged a very mild sell-off today. Hence we’re still in this consolidating range, just hovering around the 61.8% Fibonacci line. While gold bulls would love to see it blast through resistance at $1,800, it may be that patience is going to be the required virtue. There have to be plenty of shorts who are open for business at $1,800, and dislodging them will take more than the longs have shown – so far.

With the shorter-term action driven so heavily by interpretations of the news and by various currency & debt crises, it’s easy for those longs who believe the fundamentals of gold and silver are in our favor to get discouraged or to doubt our convictions. At this point, it might be helpful to remember Jessie Livermore who said something like, “The man who can be right and sit tight is rare.”

Again, there’s just no a whole lot to be said about today’s action in the gold futures market. It’s pretty clear that some shorts are open for business at $1,800, so that’s the number for gold longs to beat – for now. This chart, in the very short term, is all about indecision.

Having jumped on this latest move by going long in late October, I’m not unhappy with the current price action. It is nice to have volatility settle down a bit, although I don’t expect that to be the rule going forward. At some point this brief – so far – consolidation pattern is hanging around that 61.8% Fibonacci line like it’s sort of a price magnet. None of this is going to last forever.

With governments around the world doing what they do best – obfuscate, endlessly debate, postpone crucial decisions, and print gobs of money – it’s hard not to be partial to the noble yellow metal which stands as a resource against monetary depredations.

No question about it. True believers who have been long gold shares have been a frustrated lot, suffering through what seems to be an eternity waiting for them to show their expected leverage to the metal itself. And it just hasn’t happened – yet. Almost makes one want to throw in the towel and try to find the hottest tech stock to buy, huh? Not so fast.

Well-managed, properly-financed miners have the potential to throw off a ton of cash as the increased profits from a rising gold price drop to the bottom line. One negative can be increased energy costs which can be significant for mining operations. Yet if crude doesn’t take off, the impact of rising energy costs will be muted. This is not a recommendation for any particular mining shares, as I’m more of a futures trader than a stock trader even though I am long some gold shares. But walking away from quality gold shares now with a vow never to return might not be in your best interest. Give it a think.

For a graphic view of the pain gold stock investors have been experiencing, take a look at this chart comparing the HUI to the price of gold. When the line is declining, gold shares are lagging the price of the metal. A picture worth a thousand words?

(Click on chart to enlarge.)

Gold bulls had a good week. For all you candlestick fans out there, Friday’s nice big bullish engulfing candle is a real encouragement to those long gold futures.

What’s going to be interesting to watch is what happens as gold hits $1,800 again. No doubt some of our friends the shorts have set up shop there and will be looking to cap the price at that level. Will the bulls have enough strength to punch through? If so, and if that happens soon, then this current bull move in gold has some real strength. Stay tuned!