Silver Market Update
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What a difference a few hours can make! After posting the article “The Great Silver Standoff”, additional research for a new Silver Market update revealed that on the arithmetic chart, silver has in recent days successfully tested the lower channel line of a fine parallel uptrend channel, and is now in position to break strongly higher, an event that can be expected to trigger another strong rally in gold.
The 6-month chart for silver shows the fine uptrend channel and how, with the lower channel line now approaching the price from beneath, it is about to force an upside breakout. While a breakdown from this channel is technically possible, and would of course be a sell signal, it is assigned a very low probability. WE THEREFORE COME DOWN OFF THE FENCE DECISIVELY AND EXPECT A MAJOR UPSIDE BREAKOUT BY SILVER VERY SOON.
Any sidelined funds from recent sales of precious metals stocks should be immediately redeployed in strong gold and silver stocks that are not ridiculously overbought. If you have recently sold stock take the opportunity to redeploy into those with the most potential.
Gold Market Update
Clive Maund
Gold is expected to break sharply higher soon, in sympathy with an important upside breakout by silver. A strong rally should follow that will probably take it to the $610 area. However, gold is already substantially overbought, being significantly more overbought than silver, although this is not expected to stop it - but once the move appears to be approaching completion, we will be noting the positions of the exits as the gap with its moving averages will then be huge.
The 6-month chart shows how gold has stalled out in recent days above its 10-day moving average awaiting the outcome of the silver standoff. A 10 and 20-day moving average have been added to this chart, in addition to the usual 50 and 200-day, in order to assist in gauging how overbought gold is on a short-term basis. It is clearly substantially overbought, as measured by various oscillators and the gap with its longer-term moving averages, but is nevertheless expected to advance considerably further, as a result of silver breaking higher coupled with its own intrinsic reasons for going up.
Any sidelined funds from recent sales of precious metals stocks should be immediately redeployed in strong gold and silver stocks that are not ridiculously overbought. If you have recently sold stock take the opportunity to redeploy into those with the most potential.
Clive Maund, Diploma Technical Analysis
Kaufbeuren, Germany, 25 January 2006
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Clive P. Maund’s interest in markets started when, as an aimless youth searching for direction in his mid-20’s, he inherited some money. Unfortunately it was not enough to live a utopian lifestyle as a playboy or retire very young. Therefore on the advice of his brother, he bought a load of British Petroleum stock, which promptly went up 20% in the space of a few weeks. Clive sold them at the top…which really fired his imagination. The prospect of being able to buy securities and sell them later at a higher price, and make money for doing little or no work was most attractive – and so the quest began, especially as he had been further stoked up by watching from the sidelines with a mixture of fascination and envy as fortunes were made in the roaring gold and silver bull market of the late 70’s.
Clive furthered his education in Technical Analysis or charting by ordering various good books from the US and by applying what he learned at work on an everyday basis. He also obtained the UK Society of Technical Analysts’ Diploma.
The years following 2005 saw the boom phase of the Gold and Silver bull market, until they peaked in late 2011. While there is ongoing debate about whether that was the final high, it is not believed to be because of the continuing global debasement of fiat currency. The bear market since 2011 is viewed as being very similar to the 2-year reaction in the mid-70’s, which was preceded by a powerful advance and was followed by a gigantic parabolic price ramp. Moreover, Precious Metals should come back into their own when the various asset bubbles elsewhere burst, which looks set to happen anytime soon.
Visit Clive at his website: CliveMaund.com
