Gold price breaking out, silver price outperforming, 21 August 2012

It’s the second day in a row that both the gold price and the silver price in US dollar are surging. They are breaking some of their technical resistance lines, although volume is not very high (typical for the last two weeks of August). The gold price in US dollar is up with 1%, the silver price in US dollar is up with some 2.3%. Spot prices in other currencies were not up today with a similar percentage, probably because prices are already near their all-time highs in most currencies while  dollar gold is some 15% below its nominal high.

The interesting fact is that both gold and silver prices are approaching their 200 day moving averages and left behind the 20 and 50 day moving average. From a technical point of view, that’s an important evolution. Of course this breakout should be confirmed the coming days and weeks. It’s clear from the chart below that prices were mostly below the 200 day moving average in 2012. Another striking fact: the 20 day and 50 day moving averages are starting to slope upwards. Chart courtesy: StockCharts.com. More long term gold and silver price charts are to be found on this page, especially if you want to put today’s prices into perspective.

 It has been a long time since the price of silver has outperformed the increase of gold. We saw this positive price action during the past two days. If this trend holds the coming days, it confirms the positive outlook.

There is a growing amount of experts that are convinced that the bottom in gold and silver is in. Jean Hathaway for example stated yesterday on King World News: “I continue to believe that gold is at the end of its year long correction, and nobody gets it. From my point of view the setup couldn’t be any better than that. There is absolutely no volume in the mining shares, and yet gold already made a low in December of last year. Gold has held that low and the gold shares made their low in the middle of May.”

Furthermore, Chris Martenson explained in one of his latest interviews why the gold price could easily move towards $ 2,500. He didn’t specify a timeframe for this move in price. The fundamental and economic conditions couldn’t be better for gold and silver. He also points to a gigantic flag in the gold price, as visible on the chart below (Mr Martenson notes though that chart analysis is only a guide and not necessarily a predictor of price).

If the multi-month correction in the gold and silver prices are over, than this is the ideal moment to add to your gold or silver investments. We’ve created a guide with only trusted services to buy physical gold and silver or to get top class advice in the form of investment newsletters. Do not hesitate to make use of it.

 

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Comments (6)

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  1. Sugarsail1 says:

    Interesting to go back and read how totally wrong some of these analysts were, you can learn a lot from their mistakes. Take the Pennant formation, for example, it is presumed by investopedia and most chart analysts that the trend leading into pennant is the same direction as the trend going out which is the basis of this article’s claim that gold would break out to the upside after the pennant was complete….the exact opposite happened a few months later when gold tanked. Now in late 2014 we have another Pennant formation with gold price completing…could it break upwards after the last year and a half correction? Who knows?