SilverGoldMarketNews   Home | Buying Silver/Gold | Archives | Mining | Contact

News, Information, Commentary and Resource Links for Investors in the Current Great Silver/Gold Bull Market

 
 

Site Navigation
 Home
 Buying Silver

 Archives
 Mining
 Contact

 Disclaimer
 Privacy

Recommended
Archives
 Ted Butler
 Jason Hommel
 Douglas Kanarowski
 Clive Maund
 David Morgan
 Jim Otis
 Charles Savoie

Continuous Charts
 Gold
 Silver
 Gold/Silver
 Silver/Gold
 $USD Index
 Dow Industrials

Futures Charts
 COMEX Silver Daily
 COMEX Silver Weekly
 COMEX Silver Monthly
 CBOT Silver Daily
 CBOT Silver Weekly
 CBOT Silver Monthly

 COMEX Gold Daily
 COMEX Gold Weekly
 COMEX Gold Monthly
 CBOT Gold Daily
 CBOT Gold Weekly

 CBOT Gold Monthly

Resource Links
 CoinInfo.com
 Commitments of Traders
 CMI Gold & Silver
 Forex Traders
 Forex Trading
 GATA
 Gold Silver Worlds
 Harvey Organ's Report
 Honest Money Report
 Kwaves
 Kitco
 Kitco Casey

 Kitco Silver
 Metal Prices
 Money Metals Exchange
 Money Changer
 Moon Phase Calendar
 Resource Investor
 Silver Futures News
 SilverCoins.com
 Silver Bear Cafe
 Silver Institute
 Silver Prices 1344-1998
 Silver Strategies
 TheSilverExchange
 To Buy and Sell Silver
 Trading Charts

 Turd Fergeson's Metal Report

 

   
 

 

   
 

 

 

 

 

   
   
 

Does “Higher Gold” Need a New Story?

By Przemyslaw Radomski, CFA

We have been writing about a bullish outlook for gold, silver and precious metals mining stocks for quite some time now, even though the seemingly bad situation in these markets. This opinion is based on a sound rationale (excellent fundamental situation for precious metals and extremely negative investors’ sentiment often seen at important turnarounds, among others) but we understand that it is still hard to be bullish, looking at the charts that have been full of moves down for the last couple of weeks. We have received an interesting question from one of our subscribers that shows one misconception (in our opinion) about what is needed for a rally in the yellow metal that we would like to comment on:

Q: Hello, "The fundamentals, such as open-ended QE, have been factored into prices. So ‘higher gold’ needs a new story. Investors are no longer excited about the QE story. If there is no other bullish story (how can a story be more bullish than open-ended QE?), the price of gold price will likely go lower." Could you please comment on this? Thanks! Regards.

A: Yes.

The fundamentals, such as open-ended QE, have been factored into prices.

Yes, we can agree with that. The information has been around for a while, people are aware of that.

So, ‘higher gold’ needs a new story.

Here we disagree. If a story as bullish as open-ended QE doesn't make gold go higher, then what story could? Maybe it's not a new story that is necessary?

Investors are no longer excited about the QE story

Exactly. Investors are no longer excited (!) and that's the whole point. Open-ended QE and other fundamental factors are positive. All that is missing is this "excitement." This is another way of saying that the situation looks good but people just don't want to buy because they are afraid of losing money. Is the fear really rational? If we agree that the fundamentals are positive, then it's not rational - it's purely emotional and caused by extensive consolidation.

If there is no other bullish story (how can a story be more bullish than open-ended QE?), the price of gold will likely go lower.

When the sentiment becomes extreme enough (extremely negative that is), we will see a turnaround even without an additional story. The fundamentals are already great. Now, a great story (Cyprus-led bank run?) could trigger the rally faster, but it's not required for the gold market to move higher in our view.

What is exactly gold doing now? Let’s take a look (charts courtesy by http://stockcharts.com.)

Gold’s rally is finally visible here, and the RSI levels (based on weekly closing prices) reflect this as well. This indicator is back above the horizontal red line after staying below it for several weeks. This same action was seen back in 2008 and was quickly followed by a significant rally in gold prices. Back then, after the final bottom formed, gold moved to its previous high shortly.

Last week we wrote about a small breakout in gold viewed from the euro perspective – let’s have a look at this chart to see how the situation progressed.

We saw a break above the declining resistance line early last week. The breakout has been confirmed in terms of range and time. Prices moved high enough to be visible in the long-term perspective and stayed above this line for three consecutive trading days. The situation here is very bullish.

Let us now move on to the chart that shows us the yellow metal’s performance from the general non-USD perspective (the average of gold priced in major currencies), as a similar situation to the above chart seems to have developed there. In short, the following chart represents and average of gold price from the previous chart and other non-USD ones.

 

Here we see what amounts to a small breakout so far. Prices are close to but slightly above the declining resistance line and have been there for three consecutive trading days. However, since this is a long-term chart, we prefer to see at least one weekly close above this line to say that the breakout is confirmed. In any case, the outlook has improved this week from a non-USD perspective. Actually, gold closed last week right at this line, but moved above it on Monday as gold didn’t do much from the USD perspective, but the USD Index rallied.

Summing up, gold recently broke above important resistance lines so when viewed from the euro perspective or when non-USD averages are taken into account, an already bullish situation has improved even further. Overall, the outlook remains bullish for gold and – as we’ve mentioned at the beginning of this essay – we don’t think that any breaking-news story is really needed to spark off the long-awaited rally in the yellow metal as the situation is already extreme. It could, however, cause the rally to start sooner.

To make sure that you are notified once the new features are implemented, and get immediate access to our free thoughts on the market, including information not available publicly, we urge you to sign up for our gold investment newsletter (free). Sign up today and you'll also get free, 7-day access to the Premium Sections on our website, including valuable tools and charts dedicated to serious Precious Metals Investors and Traders along with our 14 best gold investment practices. It's free and you may unsubscribe at any time.

Thank you for reading. Have a great and profitable week!

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Gold & Silver Investment & Trading Website - SunshineProfits.com

* * * * *

About Sunshine Profits

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Site Design and Maintenance Services by: Sundancer Graphics, Inc



© 2015 Sundancer Graphics, Inc.