Gold and silver look like they have bottomed – again. Perhaps this time it will be a real bottom instead of another fake-out like December 2013 and June 2014. Crude oil has crashed by about 30% in the last five months. The charts show what could be an important bottom. One would think that increasing conflicts in Iraq and the Ukraine would support oil prices. The S&P 500 Index has powered higher for 5 years with only minor corrections. The “Greenspan/Bernanke/Yellen Put” has levitated the market to a very high level. It looks like a danger zone to me.
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In his weekly market review, Frank Holmes of the USFunds.com summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,200.29 up $11.54 per ounce (0.97%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, rose 4.24%. The U.S. Trade-Weighted Dollar Index gained 0.87% for the week.
This infographic summarizes the upcoming Gold Referendum in Switzerland: Why is it important, what is at stake, why it could be a game changer and trend change. It also puts the Swiss gold reserves into perspective and compares, in relative terms, how Switzerland has much more gold per capita than any other country. However, it used to be an even bigger holder of the yellow metal. In 2000, the SNB held 2,500 tonnes of gold and it has also been the biggest national seller since.
There is clearly an upswing present since early November, but defining this upswing is a challenge so a broad in the Raff Regression Channel. It does a pretty good job of defining direction and accounting for volatility, which we are seeing now. The lower trend line ends around 112 and I will mark support here. The long-term trend for gold is still down and GLD has a big resistance zone in the 115-116.50 area.
Taking all this together, it is clear that the Eastern gold demand is largely offsetting the Western disinterest. The real effects of this evolution will become clear once the interest from the West will heat up.
Are Russia and Europe buying more gold? Will the Swiss vote ‘yes’ in its gold referendum? Is there a chance for QE4? Peter Schiff is on Kitco News to comment on some of the most recent headlines surrounding the gold market and also to share his thoughts on the U.S. economy. The Euro Pacific CEO says the U.S. recovery isn’t real and adds that the dollar is only strong because all other currencies are weak.
Claudio Grass, managing director at Global Gold Switzerland, provided some comments on the TV debate. He first noted that the authorities are increasingly showing a need to use the government owned TV stations to push the message that the gold backing would be a big mistake. He feels that authorities are becoming increasingly nervous.
I can peg JPMorgan’s formerly manipulative short position in COMEX silver as now being no more than 8000 contracts and quite probably even lower. Never, since acquiring the massive short position of Bear Stearns in 2008, has JPMorgan’s silver short position been lower. Considering how much physical metal I believe JPM has accumulated (SLV, Silver Eagles, etc.), JPMorgan has never been better positioned for a real upside move in silver.
For the week commencing November 17th, there are some key central bank announcements, coming from the U.S., Japan and the European Union. Below is a more detailed calendar of economic data in key markets, but, more importantly, formal central bank announcements. They are not necessarily driving gold and silver prices, but could cause price volatility. As evidenced by the calendar, the second half of the week could be very volatile.
The chart of foreign central bank gold holdings at the Fed over the past fifteen years shows little activity except for 2007 and 2008, when just under 410 tonnes was withdrawn – big sellers during that period included Switzerland (250 tonnes) and France (227 tonnes). It would seem that the remaining central banks holding around 6,000 tonnes are generally happy with the Fed’s free custodial storage service.
In his weekly market review, Frank Holmes of the USFunds.com summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,189.01 up $11.03 per ounce (0.94%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, rose 2.94%. The U.S. Trade-Weighted Dollar Index fell 0.13% for the week.
What dominates the GLD chart is a bearish reverse flag formation. However, rather than executing with a breakdown below the flag, it broke out above the flag. When you see a bullish outcome to a bearish technical pattern it is a sign of positive momentum. This is confirmed by the Price Momentum Oscillator (PMO) which bottomed. A PMO bottom in oversold territory is generally a good set up.
“The only thing a silver miner must be careful about in adopting an approach of openly petitioning the regulators to address the goings on in COMEX dealings is to stick to the facts and don’t say anything wrong. Unfortunately, there are an incredible amount of misstatements of fact regarding the COMEX’s role in setting silver prices that a miner repeating them will reduce any petition to a fool’s errand. I would assist any miner desiring to petition the regulators.”
The GLD surged almost 3% on Friday, plunged over 2% on Monday and advanced 1.43% on Tuesday. There may be some support in the 110 area and the ETF is still quite oversold, but the bigger trend is down and this is the dominant force. I will leave first resistance in the 115 area