Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Bitcoin, Crypto Market Black Swans from Google to Obsolescence - 1st Aug 21
Gold Stocks Autumn Rally - 1st Aug 21
Earn Upto 6% Interest Rate on USD Cash Deposits with Binance Crypto Exchange USDC amd BUSD - 1st Aug 21
Vuze XR VR 3D Camera Takes Near 2 Minutes to Turn On, Buggy Firmware - 1st Aug 21
Sun EXPLODES! Goes SuperNova! Will Any planets Survive? Jupiter? Pluto? - 1st Aug 21
USDT is 9-11 for Central Banks the Bitcoin Black Swan - Tether Un-Stable Coin Ponzi Schemes! - 30th Jul 21
Behavior of Inflation and US Treasury Bond Yields Seems… Contradictory - 30th Jul 21
Gold and Silver Precious Metals Technical Analysis - 30th Jul 21
The Inadvertent Debt/Inflation Trap – Is It Time for the Stock Market To Face The Music? - 30th Jul 21
Fed Stocks Nothingburger, Dollar Lower, Focus on GDP, PCE - 30th Jul 21
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Big Moves Ahead!

Commodities / Gold and Silver 2010 Apr 23, 2010 - 10:12 AM GMT

By: Peter_Degraaf

Commodities

Best Financial Markets Analysis ArticleWhen plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it."….. FREDERIC BASTIAT (From his important book ‘The Law).


COMMODITY ONLINE in a recent online poll of a sample size of 21,600 respondents selected from across the globe, found that 93% or 20,100 of the total sample size had indicated that there would be a fall in the gold price due to the recent upbeat mood in the global equity markets, while only 1,400 respondents contradicted the stand, and 105 did not comment on either side. This showed that most of the respondents believed that there would be a fall in gold prices in the near future due to a recovery in global equity markets.

This is good news! Contrarians love it when 93% of traders take a position that they can trade against!

Meanwhile Elliott Wave (EW) enthusiasts continue to stubbornly insist that the gold price is headed lower.  The people who follow these advisors are losing out on the greatest gold bull market in history.  After all if you don’t buy gold or silver while it is cheap, when will you buy? 

EW practitioners are like people who drive down the highway with both eyes glued to the rear view mirror, oblivious to what lies ahead.

EW analysis works best when viewed in retrospect.  The reason for this is very simple.  Let’s assume that in ‘never-neverland’ corn was selling at 4.00 a bushel.  The EW analysts, after drawing in their 1 – 5 patterns next predicted a drop in price to 3.00 a bushel.  They expected this drop to move down in three stages marked A, B and C.

Meanwhile there was a drought in all of the corn-growing areas of never-neverland. 

Price was beginning to rise.  The EW analysts kept warning:  “The price of corn is headed lower because Time is more important than price; when time is up price will reverse.”  Ignoring the weather reports they looked only at the lines on the chart.

To apply EW analysis to the price of gold simply by drawing anticipatory lines on a drawing board is to ignore the billions upon billions of Dollars, Euros, Pounds, Yen, Rupees and Renminbis that are daily being printed and released into the world’s money pool.  

Fundamentals combined with technicals are an ideal combination.  For optimum results they are not to be separated.  A number of bullish factors are listed at the bottom of this article.

Featured is a chart that combines the gold price (dotted line), with the US dollar.  Since the end of January, the US dollar has lost its influence over gold.  This indicates fundamental strength in gold.  As recently as December 2009, a rise in the US dollar caused gold to drop sharply.  The fact that gold is ready to move on its bullish fundamentals renders negative comparative analysis (such as the rising US dollar) obsolete.

Featured is a chart that compares the silver price (dotted line) to the US dollar.  As with gold, so has silver been rising in tandem with the dollar for the past several months.  This is a very bullish signal for the precious metals.  

 Silver bullion sales are going through the roof.  First quarter 2010 sales of US Eagles and Canadian Maple Leaf coins at the respective mints are at all-time high levels.  During the first quarter the US mint used 9 million ounces of silver in the production of Eagles.  At this rate the Mint will take 36 million ounces of silver off the table this year. 

Featured is the monthly chart for the US dollar.  The current rally in the dollar is a counter-trend move that is expected to run into resistance at the green arrow.  The moving averages are in negative alignment and both are falling (purple oval).

Featured is the index that compares ‘stuff to fluff’ (gold to bonds).  If you’ll check my October articles in the archives, you’ll see that I pointed out to you the importance of the upside breakout at the green arrow to the price of gold (bottom of this chart is the gold price).  At the same time I pointed out the bullish aspect of this trend as the 50DMA was and is, in positive alignment to the 200DMA (blue oval).

Today I stress the importance of the resolution of the current ‘inverted head and shoulders’ pattern (green ovals).  The anticipated breakout at the blue arrow at the top will be matched by a breakout for gold at 1200 (bottom chart).   The buildup to this coming breakout is underway right now!

The rising trend in this index points to a movement away from ‘fluff into stuff’.  This trend will pick up steam once it rises above the 10.00 level.

Once the breakout is underway, the people who have allowed the EW analysts to cloud their thinking will climb aboard and keep the rally going.

Featured is the index that compares gold stocks (GDX) to gold (GLD).  For the past 2.5 months the stocks have outperformed bullion.  This is a bullish development for both.  The green arrow points to the fact that the 50DMA is beginning to rise again thus confirming the rising trend.  Since the index bottom in February each new bottom has been higher – another bullish sign.  The coming breakout at the blue arrow will start a mad rush into gold and gold stocks.  At each of the turning points near the rising support line my subscribers were informed that the Gold Direction Indicator was turning bullish.  It helps them to know when to buy and when to sell.  At the moment the GDI reads a bullish 59%. 

A powerful source of energy for gold and silver is the ‘real interest rate’.

At the moment US T-bills are yielding 1.5%.  The rate of price inflation according to Mr. John Williams at Shadowstats.com is about 5.5%.  This means inflation is eating away 4% of a dollar that is invested in a T-bill for a year.  That is ‘negative real interest’, and gold historically thrives under those conditions.

 The Producer Price Index for March shows producer prices jumped 0.7% with food rising at the largest rate in decades, 2.4%.  It was the 6th consecutive rise in a row and this spells PRICE INFLATION.

Chart courtesy Shadowstats.com.  The blue line is the price index maintained by Mr. Williams who employs methods used by the government prior to 1992.  These methods were subsequently changed to show a lower rate of increase.

Other bullish factors for gold and silver include the accelerated increase in national debt of which Greece is just the tip of the iceberg.  Next in line will be Spain, Portugal, Ireland and Iceland.  There will no doubt be others.  In the USA a number of states are technically bankrupt and will be looking for the Federal Government to come to the rescue (read more money printing).  These include California, New York, Illinois among others.

Finally there is the realization among investors that their paper gold certificates (including futures and options) have about 1 ounce of gold backing 100 ounce commitments.  This game of ‘musical chairs’ will have a bad ending, except for those of us who demand ‘stuff’ instead of ‘fluff’.

Happy trading!

By Peter Degraaf

Peter Degraaf is an on-line stock trader with over 50 years of investing experience. He issues a weekend report on the markets for his many subscribers. For a sample issue send him an E-mail at itiswell@cogeco.net , or visit his website at www.pdegraaf.com where you will find many long-term charts, as well as an interesting collection of Worthwhile Quotes that make for fascinating reading.

© 2010 Copyright Peter Degraaf - All Rights Reserved

DISCLAIMER: Please do your own due diligence. I am NOT responsible for your trading decisions.

Peter Degraaf Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in