Gold and Silver Precious Metals Analysis
Commodities / Gold & Silver 2009 Sep 13, 2009 - 09:23 AM GMT
Precious Metals - A few weeks ago I mentioned that palladium was breaking out to new highs for the year, and that its move was a good sign for the other metals, which would likely follow its lead. Platinum jumped in line this week and made a new high for the year. The weekly charts show platinum and palladium well off their all-time highs, while gold is knocking on the door to set new all-time highs.
The U.S. dollar continues to fall. It appears that the Fed has sacrificed the dollar in order to inject massive liquidity into the markets, resulting in rising stock and commodity prices, including gold and silver. Asset inflation is attempting to replace the financial deflation that occurred in the mortgage and related markets. This is similar to robbing Peter to pay Paul; and will end accordingly.
Both metals are making new yearly highs, which bodes well for the other metals.
Gold
Gold had a good week, adding $11.80 (+1.19%) to close at 1006.20. Its all-time high is about 3% above at $1033. The weekly chart shows the inverse head & shoulders formation still intact. Price is bumping into overhead resistance, represented by the neckline (white slanted line).
For the formation to be confirmed, price needs to break above the neckline on expanding volume, turning resistance into support. A strong breakout has the potential to reach $1300.00. Expanding volume is crucial.
It is possible that gold does not break through on the first attempt. A lot depends on the dollar. If the dollar continues to weaken, it will put a wind to gold’s back. If the dollar rises, it could dampen gold’s advance.
Silver had another good week, adding .54 cents to close at $16.77, for a weekly gain of +3.33%. The daily chart shows silver breaking above its June high.
On a short term basis, silver is overbought, but as we have seen with the stock market – overbought is a sign of strength until prices reverse; and assets can stay overbought for longer periods of time than first thought possible.
The weekly chart shows that silver has a long way to go to get back near its all-time high. So far this year, however, silver has been outperforming gold as the second chart indicates.
Next up is the same chart as above, but extending back to the beginning of the bull market. It paints a somewhat different picture, with gold performing the best.
Gold has protected purchasing power through both inflation and deflation, while silver and platinum took pretty good hits during the deflationary collapse.
This may be due to the fact the silver and platinum are industrial metals, while gold is more of a monetary metal or currency. In the next leg of the bull market I believe that silver will kick in as a currency – poor man’s gold if you will.
The above excerpt is a small sampling from the latest full-length market wrap report, available only at the Honest Money Gold & Silver Report website. All major markets are covered with the emphasis on the precious metals. A free trial subscription is available by submitting a request to: dvg6@comcast.net.
Good luck. Good trading. Good health, and that’s a wrap.
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Douglas V. Gnazzo
Honest Money Gold & Silver Report
About the author: Douglas V. Gnazzo writes for numerous websites and his work appears both here and abroad. Mr. Gnazzo is a listed scholar for the Foundation for the Advancement of Monetary Education (FAME).
Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.
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