Technical observations of RossClark@shaw.ca
Posted Jun 29, 2011
Gold and Silver – More Range Bound Activity
It is now eight weeks since the precious metals topped and gold is producing its third Springboard alert (oversold in a rising trend). The May 17th and June 13th alerts produced rallies of $70 and $43. Additionally, both gold and silver have simultaneous RSI(14) readings below 40, an occurrence we like to see once prices have been in a consolidation of five weeks or more following an RSI reading of 85 in the Silver/Gold ratio. Once this oversold reading is behind us the metals should be capable of more sustained rallies. The first day in silver with a higher high can be used to identify the upside reversal.
Gold is close to its 50 & 55 day Bollinger Band supports ($1470 & $1490) and silver is approaching its 7% moving average band (currently $31.60).
These are the type of oversold and support characteristics seen at important lows following the tops in 2008, 2006, 2004, 1995 and 1987.
Although the metals have made new lows for the month of June, the majority of the mining stocks are holding above the June 17th bottoms. This is inverse to the price action seen going into the April highs when there were bearish divergences in the miners.
Seasonally, prices should be expected to base out in late June through July.
The next important highs in silver should test the upper 7% moving average band this summer.
Click on the image for larger chart:
Silver/Gold Ratio, Gold and Silver
2008, 2006, 2004 and 1987
Click on image for larger chart
Don Vialoux of EquityClock.com
Gold Futures Continuous Contract Seasonality
Date range: January 1, 1990 to December 31, 2009
Analysis has revealed that with a buy date of September 13 and a sell date of May 23, investors have benefited from a total return of 183.61% over the last 10 years. This scenario has shown positive results in 9 of those periods.
How to Invest: Go HERE where Don Vialoux lists instruments that mirror the movement of Gold Futures
AGNICO-EAGLE MINES LTD. (TSE:AEM) SEASONAL CHART
The best return over the maximum number of positive periods reveals a buy date of July 27 and a sell date of March 18, producing a total return over the same 10-year range of 1059.65% with positive results in 10 of those periods.