Gold & Precious Metals

Monthly Charts Clarify Prognosis for Gold & Silver

Posted by Jordan Roy Byrne - Daily Gold

on Wednesday, 21 November 2012 15:10

We’ve been surprised at the recent action in the precious metals complex. During the recent correction the shares were showing quite a bit more strength than the metals. Then the shares took a dive below support yet the metals maintained their recent lows! How do we interpret this wild volatility in the relationship between the shares and the metals? Quite often we look at daily and weekly charts. Now is the time to take a look at the monthly charts which can help us get a better read on the larger trends at hand.

The monthly chart of Gold shows the yellow metal in a very healthy consolidation between $1550 and $1800. Gold’s current retreat from $1800 has lasted two months. Back in 2009, Gold brokeout to a new all-time high in the seventh month of its consolidation. Presently, Gold’s bollinger band width is at a multi-year low and its three-month volume average is at a two year low. Also, the RSI has bottomed and made a higher low. Even if Gold touched $1600, it would remain in healthy position for a breakout in 2013.

nov20edgold

Gold’s companion Silver is currently trading in a tighter consolidation with $35 as resistance and $27 as support. Note that Silver has tested and held above $27 six times in the last fifteen months. Silver also held above the rising 40-month moving average which supported the market in 2009 and 2010. The RSI has also made a higher low and volume has trended down during the past seven months.  

nov20edsilver

Meanwhile, the gold stocks (HUI) look weaker than the metals. Momentum hasn’t confirmed its bottom as the market is in a clear range from 400 (support) and 525 (resistance). Note the current 11% decline in the HUI for the month while Gold and Silver are still in positive territory. Nevertheless, if and when the HUI prints a monthly close above 525, this chart would like quite bullish and general sentiment would certainly pick up.   

nov20edhui

The evidence argues that the bottoms remain well intact and the metals are consolidating before the next breakout which entails Gold breaking $1800 and Silver $35. However, these breakouts are by no means imminent. Since we are dealing with monthly charts that means potentially three or four more months of consolidation. Furthermore, sentiment data such as the COT structure and public opinion polls need some improvement before the market could sustain a breakout. Thus, more consolidation could be the order of the day for the metals.

Continued consolidation in the metals also helps explain recent weakness in the HUI, which is simply testing the lower half of its own consolidation. The shares see the weakness in the overall market and perhaps sense that an immediate breakout in the metals is unlikely Furthermore, while central banks have put themselves in position to act they haven’t actually done anything yet. When the market senses their action it will likely mark a final low within this consolidation.

The good news is the metals remain in fine shape and so to do most of the mining equities we follow. If we are indeed correct that the metals and shares will remain range bound then your task is simple. Prepare yourself for further consolidation by having your buy list ready and then be ready to act when the time comes. A wise friend once told me that in a bull market the goal is to accumulate positions at the lowest prices possible. With mining equities trading well off their highs, now is the time to do your research and find the companies that will lead the next leg higher and outperform the gold stock sector. If you’d be interested in professional guidance in uncovering the producers and explorers poised for big gains then we invite you to learn more about our service.

Good Luck!

Jordan Roy-Byrne, CMT

Jordan@TheDailyGold.com

The Stunning Dow / Gold Ratio

Posted by Chart of the Day

on Wednesday, 21 November 2012 11:22

For some perspective on the long-term performance of the stock market, today’s chart presents the Dow priced in another global currency — gold (i.e. the Dow / gold ratio). For example, it currently takes less than a mere 7.5 ounces of gold to ‘buy the Dow’ which is considerably less than the 44.8 ounces it took back in 1999. Priced in gold, the Dow has been in a massive 12-year bear market. The current downtrend channel is the third of this bear market. While this latest channel is the least steep of the three, the Dow priced in gold has just failed to punch through resistance for the fourth time.

20121121

Quote of the Day
“Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium.” – Murray N. Rothbard

Events of the Day
November 22, 2012 – Thanksgiving Day

Stocks of the Day
Find out which stocks investors are focused on with the most active stocks today.
Which stocks are making big money? Find out with the biggest stock gainers today.
What are the largest companies? Find out with the largest companies by market cap.
Which stocks are the biggest dividend payers? Find out with the highest dividend paying stocks.

<a href=”http://www.chartoftheday.com/”>Chart of the Day</a>

Notes:
Where’s the Dow headed? The answer may surprise you. Find out right now with the exclusive & Barron’s recommended charts of Chart of the Day Plus.

 

Five Ways to Turn the Fiscal Cliff Into an Outstanding Investment Opportunity

Posted by Keith Fitz-Gerald - Chief Investment Strategist Money Morning

on Tuesday, 20 November 2012 16:16

Many investors believe that a fiscal cliff “dive” is inevitable. 

Even with the prospect of a deal lifting the markets yesterday, I can’t say I disagree. 

The blame game has already started and it’s highly unlikely that we’ll see anything other than more foolishness out of Washington. And so far all they have done is kick the can down the road to date.

So what can you do about it? Believe it or not, crises like these can be an ideal time to buy stocks. And gold. And oil. And certain kinds of bonds. And more. 

The death of financial markets is almost always highly overrated.

Adding insult to injury, fiscal cliff or not, trying to time the markets is an exceptionally bad idea – 85% of all buy/sell decisions are incorrect, according to Barron’s. Further, Dalbar data shows that the return of an average investor trying to time the market is a pathetic 1.9% per year versus the S&P 500 return of 8.4% over the same time period. 

Over 20 years, that’s the financial equivalent of taking a 342% hit in lost performance.

With that in mind, here’s a five-point plan for turning the fiscal cliff into an outstanding opportunity.

1) Get ready to go bargain hunting

fiscal-cliffWith Europe entering another recession and some parts of the world flirting with a protracted slowdown that’s going to be more like a managed depression, things couldn’t be more uncertain.

While I don’t personally like this reality any more than you do, from an investment perspective I’m very happy to pick through the oversold stocks and go bargain hunting.

Why?

Because history’s rearview mirrors show that fear, panic, crisis and stress are all classic signs associated with opportunity — and profits.

This is particularly true for choices related to energy, resources and certain kinds of technology – all of which the world needs, as opposed to wants, and all of which are backed by billions of dollars flowing their way whether we go over the fiscal cliff or not.

2) Stress test yourself

Never mind the big banks or Wall Street’s hooligans, take a good hard look in the mirror. 

Many investors are completely unprepared for the psychological impact of our nation going over the edge. And you don’t want to be one of them.

….read the rest of 2, 3, 4 & 5 HERE

I continue to be amazed at the prices of gold companies today. It really looks as if we had a major blowout last week with investors throwing out the baby with the bathwater. Gold is in excess of $1700 and silver in excess of $32 and resource investors are digging through dumpsters looking for rusty razor blades with which to slice their wrists. Are they nuts?

I got a call on Friday telling me about yet another absurdly priced gold stock, that of Moneta Porcupine (ME-T) with a market cap of about $37 million, a 43-101 resource of 4.29 million ounces, a PEA released two weeks ago showing a net present value of $748 million with a gold price of $1,350. If you use what is probably a more realistic figure for gold at $1,700, the NPV jumps to a blistering $1.5 billion. Why do I have this sneaking feeling that a market cap that is only 5% of NPV isn’t going to last long.

…..read more HERE

Increasingly bullish prospects of gold stocks

by Steve Saville

Despite the recent weakness we are becoming increasingly bullish about the prospects for gold stocks. Actually, it’s partly due to the recent weakness that we are becoming increasingly bullish, because the extension of the downward correction makes it more likely that the overall advance from the May low will last well into next year.

We had thought that the most likely alternative to the overall advance extending well into next year was an intermediate-term peak late this year. But with the corrective action that began in September having continued until the third week of November there is now almost no chance of an intermediate-term peak by year-end. The correction has been long enough and large enough to lay the foundation for a rally lasting at least a few months.

….read more HERE

5 Minute Forecast

Posted by Agora Financial

on Tuesday, 20 November 2012 12:08

Unions, Gold, and a “Devastating” Event

  • No more Twinkies? Busting a myth from the demise of Hostess (in its current incarnation)
  • Loading up, paring back: peering into Soros’ and Paulson’s gold and gold-stock holdings
  • The looming event that could “devastate” millions of income investors
  • A breakthrough in Alzheimer’s detection steals headlines… while a breakthrough in Alzheimer’s prevention could make you wealthy
  • The mother of all metal thefts… a swanky salvage sale… a blueprint for secession… and more!

00:00  “Hostess is a poster child for severely handicapped companies,” says Byron King, “tied into an outdated business model, making & selling stuff that’s way past the sell-by date, in a world of brutal competition.

We turn to Mr. King this morning for insight into headline news… because in addition to the better-known pursuits on his CV — oilfield geologist, Navy pilot, military historian — he’s also been a bankruptcy lawyer.

The company, now in liquidation, “has been a dead man walking for a long time…. and now, we can all watch as management gets its last hurrah by calling the union bluff, and scuttling the ships.”

111912 fmf4

Not that management was any prize, Byron adds — “mail-order MBAs,” was the kindest he could be — caving to union demands for years and giving itself a 300% raise after filing for bankruptcy in 2011.

z0130 George Soros keeps rebuilding his position in GLD, the biggest gold ETF.

Readers with long memories will recall Soros Fund Management dumped nearly all of its 4.67 million shares of GLD in the first quarter of 2011. When gold was still under $1,400, we might add.

Ever since, Soros has been slowly accumulating — doubling his exposure during the second quarter and growing it by half in the third, according to his latest 13-F filing at the SEC. His GLD holdings now total 1.3 million shares.

Soros more than doubled his holdings in GDX, the major gold miner ETF, to 2.32 million shares.

John Paulson, the other mega-star fund manager with big gold bets, made no moves with GLD. But he did reduce his position in Gold Fields (GFI) and AngloGold Ashanti (AU) — two firms with heavy exposure to South Africa’s labor strife. (Byron King saw the trouble coming two years ago and recommended selling both for handsome gains. Good call: Both stocks have since retreated considerably.)

 

….read all the other entries posted in the 5 Minute Forecast from  z0020 right thru z0455 HERE

 

 

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