Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Why You Shouldn’t Get Excited About Gold Price Mini-Rally - 26th Jan 21
The Truth About Personal Savings Everybody Should Know and Think About - 26th Jan 21
4 Economic Challenges for 2021 - 26th Jan 21
Scan Computers 2021 "Awaiting Picking" - 5950x RTX 3080 Custom PC Build Stock Status - 26th Jan 21
The End of the World History Stock Market Chart : Big Pattern = Big Move - 26th Jan 21
Stock Market Recent Sector Triggers Suggest Stocks May Enter Rally Phase - 26th Jan 21
3 Top-Performing Tech Stocks for 2021 - 26th Jan 21
5 Tips to Manage Your Debt - 26th Jan 21
Stock Market Intermediate Trend Intact - 25th Jan 21
Precious Metals Could Decline Before their Next Attempt to Rally - 25th Jan 21
Great Ways of Choosing Good CMMS Software for a Business - 25th Jan 21
The Dark Forces behind American Insurrectionists - 25th Jan 21
Economic Stimulus Doesn’t Always Stimulate – Pushing On A String - 25th Jan 21
Can Karcher K7 Pressure Washer Clean a Weed Infested Driveway? Extreme Power Test - 25th Jan 21
Lockdown Sea Shanty Craze - "Drunken Sailor" on the Pirate Falls Crazy Boat Ride - 25th Jan 21
Intel Empire Fights Back with Rocket and Alder Lake! - 24th Jan 21
4 Reasons for Coronavirus 2021 Hope - 24th Jan 21
Apple M1 Chip Another Nail in Intel's Coffin - Top AI Tech Stocks 2021 - 24th Jan 21
Stock Market: Why You Should Prepare for a Jump in Volatility - 24th Jan 21
What’s next for Bitcoin Price – $56k or $16k? - 24th Jan 21
How Does Credit Repair Work? - 24th Jan 21
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Will Gold and Silver Continue Their Run Up?

Commodities / Gold and Silver 2011 Oct 14, 2011 - 07:21 AM GMT

By: George_Maniere


Best Financial Markets Analysis ArticleI had at least six emails today asking if the run in gold and silver were over. The answer is most definitely – Maybe!!!! My regular readers know that I have been predicting silver at $50.00 an ounce by year’s end. I believe that the drivers of gold and silver remain intact. The fact is that there is a sense that gold and silver has moved too far – too fast and as a result, people are not inclined to chase the trade.

For the sake of this article I will use the ETF GLD to represent the move in gold and I will use the ETF SLV to represent the move in silver.

Let’s not forget that silver had its own parabolic move from January until the last week of April and the people who bought in the last week of April will not soon forgive or forget. To add to this Gold experienced a parabolic move of its own from July through September when it ran from $1200.00 an ounce to $1925.00. The average investors see the correlation between the two moves and are not inclined to chase either trade. The fact is that in September gold was extremely overbought and it needed a pullback to consolidate before the next leg up.

The media was squawking that gold was in a bubble but this is complete nonsense. When we speak of a bubble let’s look at gold in the context of other markets. An example of a bubble in gold would be a look at it from 1972 to when it rallied up until 1979. That was close to a 1000% rise. Gold, since 2001, when it traded for $250.00 an ounce ran up to $1925.00 which is a rise of about nine times. So we have a tangible item that represents a global currency for the last 5000 years that has on an inflation adjusted basis not even reached $2200.00.

While there are many things still favoring this secular gold move there is no doubt we are still in a very cyclical bear market now.

Please see the chart of gold below.

As you can see, when the chart is pulled out over just three years, every six months or so gold comes back to the trend line, consolidates and then continues its run up. This chart shows me exactly what I expect to see. What I expect to see is the spot price of gold at about $2500.00 by year’s end.

Silver, on the other hand, has just finished its second major correction this year. The second one that took place at the end of September was as parabolic as the one that took place in the 1st week of May. This second decline caused silver to lose nearly half its value. This decline has pushed the silver indicator to the second most oversold value in a decade.

Given the sharp selloff over the last few months it is not at all surprising to see silver in oversold territory. This begs the question – how oversold is it in relation to other corrections? According to the silver VIX, silver is at its most oversold reading in the past decade with 2008 the only exception. Talk about volatility as the silver VIX showed the most overbought condition in April, with silver exceeding 2004, 2006 and 2008 peaks, and then see the most oversold reading six months later. Given the deeply oversold condition silver finds itself in, is now a good time to take advantage of the recent price decline? The answer is yes and no.

Please take a look at the chart below.

A look at this chart will show that silver has begun to consolidate and move sideways through the middle of October. Stocks usually put in this pattern before they break out and I expect my prediction of $50.00 an ounce by year’s end to bear out.

Now that I’ve put that out there I must say that I could be wrong about silver. If silver’s breakout fails to continue the correction it has made in the last month, beginning next week we could see a down leg that could take us to the $20.00 level heading into November. What makes watching silver over the next week so incredibly important is that for the last year the market has seemed to use the S&P 500 as a proxy and all assets may get bid into yearend as it works off its oversold condition.

In conclusion, if the US dollar continues to advance after it cools off a bit, we are likely to see both gold and silver sell off or trade flat at best. Please see the chart below.

Right now the USD Index is above the 200 day moving average (DMA) as well as its 50 DMA which are converging near $76.00 and would represent strong support on a short term correction in the USD Index. For the all clear to be signaled by silver, we would likely need to see the USD Index break below $76.00. As long as the USD remains above the 200 DMA I think playing defense for precious metals is the proper strategy.

By George Maniere

In 2004, after retiring from a very successful building career, I became determined to learn all I could about the stock market. In 2009, I knew the market was seriously oversold and committed a serious amount of capital to the market. Needless to say things went quite nicely but I always remebered 2 important things. Hubris equals failure and the market can remain illogical longer than you can remain solvent. Please post all comments and questions. Please feel free to email me at I will respond.

© 2011 Copyright George Maniere - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - 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

6 Critical Money Making Rules