For those taking close interest today there was an interesting move in gold prices as the below chart shows. A ‘V’ shaped bounce of some $35.00 or so just before the close must have given a few gold bulls a real scare. Gold dropped briefly below $1720.00 so we can only imagine that someone has made a rather fortuitous purchase at this level. However, if this sudden drop had occurred a few minutes later then we would have had a dramatic closing price for today’s trading session in New York. Granted we would only need to wait 30 minutes or so before trading re-commenced when we assume that a more [...]
Stock exchange is a very volatile, emotion-driven place. Even though most of the time one can predict future moves in particular assets with decent effectiveness, every once in a while abrupt and unexpected market moves take place. And we have just seen such violent and heavy declines in precious metals mining stocks. Sadly, no one is able to foresee the future with 100% certainty and this is why diversification is such a crucial concept in investing. It would have certainly protected gold & silver investor’s profits or at least diminished their losses had they invested not only in mining stocks but also in metals themselves. Now, the following question arises – is [...]
It’s been another one of those odd ball trading sessions where gold prices managed to finish the day up $2.50 to close at $1727.40/oz, but the gold mining stocks, as evidenced by The AMEX Gold BUGS (Basket of Unhedged Gold Stocks) Index, known as the HUI, fell 21.55 points to 447.96 or a staggering 4.59%. If we look back two years to the start of 2011, gold was trading at around $1400.00/oz so we can clearly see an increase in its value. At the same time the HUI was trading at around 560 so we can clearly see that this sector has suffered a decrease in value. So those investors [...]
The precious metals complex had a great rebound at the end of the summer but is now in the midst of a correction. Recently we wrote that the correction was nearing an end. We believe that to be the case. A short-term bottom could occur sometime this week. However, the precious metals sector was unable to retain much of the very strong momentum it previously had. Thus, the metals and stocks will need some time to confirm support and generate positive momentum before they have a chance of breaking to new highs. That being said, we wanted to take a broader view and analyze the sector in its current context [...]
Based on the October 12th, 2012 Premium Update. Visit our archives for more gold & silver analysis. Despite a lukewarm, lackluster first half of the year, Gold has so far risen by 13 percent in 2012, nothing to sneeze at. The price of gold rose by about $215 in 2012, with most of the gains, $165 worth, having materialized in the last two months. This was after the U.S. Federal Reserve announced its plan to resume buying bonds to prop up the economy. The underlying bullish case for gold remains intact, given the prospect of indefinite loose monetary policy. Central banks have been supporting gold this year and it’s no [...]
The mining shares are seeing some very good inflows of speculative money. The result has been an advance for 8 out of the last 9 weeks. The chart shows the index blowing through resistance levels with relative ease with the next Fibonacci retracement level within striking distance. As the trend is higher, we would expect dips in price to be bought. Initial support for the index is down near the 50% retracement level that comes in near the 505 region. AT some point longs will decide to take some money off the table after a run of this nature but as to where and when this will occur, we will [...]
The HUI is closing in on a KEY technical resistance level on its weekly chart at the 50% Fibonacci Retracement level of its last year summer high and this years trough. That level is basically right at the high made in today’s session as it comes in beginning at the 504 level. If the HUI closes the week through this level on a good strong note, look for the index to move towards the 540 level. Note that all of the major moving averages, whether the shorter term 10 and 20 week or the 50 week moving average are either turning higher or flattening out and beginning to turn.
Gold and silver stocks are not only the most volatile sector but the highest beta sector. Therefore the percentage moves can be quite exaggerated relative to the market. Currently, the shares have emerged from a W bottoming pattern. They have gained substantially (in percentage terms) in just the past month. I wanted to consult history and in particular the rebounds following the bottoms in 2000, 2005 and 2008 to get a sense of the reasonable upside potential over the coming months. Judging from history, one should not be alarmed about the recent gains because these rebounds tend to run much longer and higher. Below we chart the HUI in weekly [...]
After weathering a long consolidation followed by a major correction, gold stocks remain deeply out of favor today. But this bearish sentiment is slowly yielding as gold powers higher in its usual autumn rally. Gold stocks are starting to show signs of life again. And after their strong advance since late July, they are now on the verge of a major upside breakout. Odds are this event will herald a major new upleg. Despite the gold-stock sector commanding some of the biggest gains of the past decade, gold stocks have become a four-letter word. The flagship gold-stock index, the HUI, essentially stalled out way back in late 2010. Then it [...]
The Mining Sector shares have shown some strong performance over the past three weeks having solidly rebounced from down near 390 moving up through several overhead resistance levels. A push through overhead resistance near 440 sets up a run towards a major resistance level centered near 460, which is the point that needs to be bested for a trending move to the upside to develop.
Gold has pushed to the very top of its recent trading range as it works within the confines of its consolidation pattern noted on the chart below. It either mounts a solid breakout this time around or it will fall back towards $1600 and slightly below once again. I have noted that for the last 5 weeks or so, the lows have been slowly creeping higher hinting at market strength. It simply needs a spark, something to ignite it and push it past the strong selling pressure emerging between $1620 – $1630. Today’s strength is predicated on news out of China showing its economy slowing also. Traders are expecting the [...]
All the fundamental factors that have made gold such a stellar investment for the last decade are still intact. Fiat money is still being produced on easy street around the world, which in turn fuels worries about the dwindling purchase power of the currencies; central banks are still accumulating gold; real interest rates are still negative so investors don’t give up any interest rate by investing in gold. However, there are several things that have been affecting gold negatively over the past few months, much to our dismay. One of them is the dollar’s strength against the euro and gold’s recent tendency to move inversely to the dollar and in [...]
he breech of the 400 level in the HUI has brought out some further stop-loss related selling as well as fresh shorting by hungry bears in the sector. GoldCorp’s news from yesterday is still impacting the miners in general. That being said, the underperformance of the mining shares against the price of Gold is dropping this important ratio down toward those levels which have been considered as “undervalued” once again. While it is small consolation to mining equity bulls to see the value of their holdings being diminished once again, it does appear that we are entering a region that should engender value based accumulation sooner rather than later. In one [...]
This weekend I had a conversation with a fund manager friend who I admire. He lives in the Asia-pac region and has tremendous knowledge of and insight into markets. I asked him what his advice would be. He told me it’s simple. My advice for the next three months is patience. My advice for the next three years is precious metals. People often feel the need to complicate things by over-trading and over-thinking the situation. In this piece, we want to keep it simple for Gold and Silver and the mining shares. The first chart is the chart we published back in May when suggesting that a major bottom could [...]
Gold stocks languish in a sentiment wasteland these days, left for dead by everyone but a small contrarian remnant. So naturally bears abound, their arguments dominated by the idea that gold miners’ costs are so high that they can’t make money anymore. Provocatively though, this notion is totally wrong. As gold-stock valuations reveal, gold miners are earning profits hand-over-fist at today’s gold levels. Valuations are the fundamental heart of stock investing, ultimately driving the vast majority of long-term performance. Investors buy stocks because they want a stake in companies’ future profits streams. The less they pay for each dollar of future profits, the better their ultimate returns. And the price [...]
Gold Settles Higher On May 23d – Finds Support From Drop In Dollar
With the present economic conditions in the US, there are various ways in which the fluctuations in the price of dollar will make the gold price rise and fall according to the rates. If you’re an investor, you should take into account the bigger picture so that you can take an informed and measured decision in the long run.
Gold & Silver Price Overreact to Fed Speech
The metals have been subject to the same type of trading behaviour. It became blatant once again today. In fact, it is the third time this week that we witness extreme speculation in the metals. Silver, for instance, saw its peak today at $23.20 and its lows at $22.15, a difference of almost 5% intraday. Note that the peak on the charts was during the speech of Mr. Bernanke. A bit later, prices came down triggered by one specific sentence in the speech.
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