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
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21
Why Tether USDT, Stable Scam Coins Could COLLAPSE the Crypto Markets - Black Swan 2021 - 6th Jun 21
Stock Market: 4 Tips for Investing in Gold - 6th Jun 21
Apple (AAPL) Summer Correction Stock Trend Analysis - 5th Jun 21
Stock Market Sentiment Speaks: I 'Believe' We Rally Into A June Swoon - 5th Jun 21
Stock Market Russell 2000 After Reaching A Trend Channel High Flags Out - 5th Jun 21
Money Is Cheap, Own Gold - 5th Jun 21
Bitcoin and Ravencoin Cryptos CRASH Bear Market Buying Levels Price Targets - 4th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Powerful Rebound In Gold and Silver Prices About To Begin?

Commodities / Gold and Silver 2011 Dec 31, 2011 - 05:01 AM GMT

By: Jeb_Handwerger

Commodities

Best Financial Markets Analysis ArticleRarely has such technical destruction been visited on stalwart sectors such as gold, silver and the mining stocks(GDX). The silver charts reveal technical damage not seen since the destruction of 1984. It can only be conjecture that can account for a once in a generation obliteration of a once hallowed sector. It must be remembered that both gold(GLD) and silver(SLV) had major moves earlier this year to the $1900 and $50, surpassing overhead resistance and reaching overbought territory. This may be the reason why the decline in precious metal is overextended and extremely oversold. We urged caution back in April for silver and in September for gold. Silver has characteristically corrected close to 50% from its highs, while gold has fallen less than 20%. Pullbacks are normal and restorative in a secular bull market in precious metals especially after explosive moves.


Unless such technical destruction is reflective of an upcoming geopolitical news development, we must look for more mundane causes. When the woods are ablaze, the fire obliterates the sequoias at the same time they incinerate the pines. The recent declines may be the result of a rush to the U.S. dollar (UUP) and treasuries (TLT).

Fukushima's can be explained rationally as a result of a millennial event consisting of fire, wind and flood. The chaos through which we are passing defies explanation. It is as if the inmates of the asylum have taken over Wall Street.

Unless there is an underlying exogenous catastrophe that lies ahead, what is being witnessed is a tale of sound and fury told by an idiot. We believe that the markets are reacting irrationally to rational fears of deflation compounded by a flight to cash in fear of risk. Gold Stock Trades has reiterated on many occasions that it is inadvisable to fight the Fed. On numerous occasions we said with one stroke of the pen the Central Bankers could reverse the entire market.

This year's surprise twist resulted in reversing a precious metals market that was on the verge of a runaway upward move. Deftly the dagger that accomplished the twist was thrust through the rising precious metals market and resulted in stiletto downward moves.

There was also a coordinated effort by the Japanese (FXY) and the Swiss (FXF) to boost the dollar and devalue their supposedly, safe haven yen and franc over the past few months and at the same time revive their own struggling economies. It may be that the Fed wanted to lower gold and silver prices and lift the dollar before instituting its next round of QE3 in the 2012 election year. This year may not have been the right time to weaken the U.S. dollar, especially as Europe struggles with its own debt crisis and China deals with its own weakening economy.

To avoid a domino contagion effect in Europe and to prevent nations from collapsing, actions were taken by the Fed to stall rising commodities, prevent a collapse in the U.S. dollar and keep a cheap Euro so peripheral nations have an easier time paying down debts. Best to save the PIIGS, through a cheap Euro and reserve QE3 for later.

The question arises: What will it take to cause a turnaround in what is the most severe correction in gold and silver in several years? Public sentiment and momentum indicators are hitting multi- year oversold levels indicative of a reversal. Heretofore, gold and silver have been safe havens, but not recently. Ergo it is hoped for that positive events in 2012 may serve to control the blaze. The U.S. dollar is reaching key resistance at 81, while gold, silver and the miners test support at oversold conditions indicative of a major rebound move. We could be setting up for the biggest move in precious metals and miners during this 10 year bull market run.

It should be mentioned that this entire decline is the possible result of an assault by market manipulators who have gone short on the traditional repositories of value, exactly at the end of the year thinly traded holiday period. The move to the downside is overextended and could indicate selling capitulation. There will be a turn around very soon. Shorts will cover. Gold and silver will rise again, benefiting the source of bullion, the gold (GDX) and silver (SIL)miners.

Further declines and tax loss selling may be in the offing, but are great bargain opportunities as gold, silver and the miners have reached record oversold levels. There is a rule that reactions to exogenous news items which create technical gaps down will be filled to the upside in a Newtonian equal and opposite move higher for gold, silver and the miners.

Stay tuned to my free newsletter for up to the minute developments in our chosen sectors of precious metals, uranium and critical/strategic metals.

By Jeb Handwerger

http://goldstocktrades.com

© 2011 Copyright Jeb Handwerger- 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 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

TBB
31 Dec 11, 17:41
Powerful Rebound About To Begin

My 2 cents is that we won't see a powerful rally until we get QE3. What this signifies is that we won't get this stimulus unless and until things start to unravel. This means that stocks and both gold and silver will trade in lock step. So if stocks puke sometime in early 2012 so will gold and silver. Once the FED has had enough and pulls out the QE3 bazooka then stocks, gold, silver and yes maybe even real estate will be off to the races. Any rebuttal is welcome! Around the world Happy 2012!!!


Post Comment

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