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Gold & Silverís Bull
Correction & Oilís Stuck in a Barrel
by Chris Vermeulen
Gold and silver have had one hell of
a run in the recent days. Both looked like they were topping weeks ago but
recent bad news hit the wires making investors buy gold like the stock market is
about to go under. Gold bullion inflows are the highest it has been in 6 months!
The massive gold inflows can be seen
Gold is about to shoot through the
roof as everyone around the world piles in as a safe haven for their money.
We are getting the same inflows
which we had when gold topped out 6 months ago, indicating investors are
loading up on gold cause it looks so bullish, but really they are the last of
the buyers before this 3 months rally ($300 gain per ounce) is ready for a
cool down phase.
The charts below you can see that
gold stocks have not been out performing gold for two months. Generally this is
a bearish sign for gold. While gold could continue higher, I think a correction
is possible any day which will allow for some profit taking and both the price
of gold and gold stocks to recharge before another leg higher.
Gold Stocks/Spot Gold Price
This chart should be increasing in
value while gold rises but it has not for almost two months. Does the smart
money know something we donít?
Gold Bugs Index Ė Daily Chart
The gold bugs index shows us how
gold stocks are performing as a basket. As you can see in the chart below they
have been more or less moving sideways while gold climbs. The momentum MACD has
gone flat and stochastics is making a lower high. Again this is just a different
look at how gold stocks are performing.
Spot Gold Ė GLD Daily Trading Chart
Gold trading has been choppier than
ever in the recent months making it difficult to get in with minimal risk. When
the market is this volatile itís important to only put a portion of your money
to work as stocks and commodities can change direction very quickly and take a
large chunk of your funds. Keeping bets small or staying out of the market until
volatility settles is the best way to deal with this. There are great
opportunities each week to make money so donít get to stressed out trying to
pick a bottom.
Gold has been moving higher and with
the recent negative news it has pushed higher once again. As you can see in the
chart gold is now trading at the top of its trading channel with the stochastics
indicator at the top if its range as well. With the price of gold about 12%
above its support trend line it is obvious that it looks ready for a correction
before a new leg higher.
Silver SLV Ė Daily Trading Chart
Silver has been on a tear for the
past month and today it gapped higher and kept moving again. This price movement
looks like a parabolic spike in the making and when it reverses I expect a sharp
snap back which silver is known for doing. Again we must wait for correction
before putting money to work in silver.
Crude Oil Commodity Chart
Crude oil continues to be under
pressure and has not been able to break above the 40 period moving average.
Although oil is trying to hold its ground and has been doing a good job for the
past 2 months, I still think it has more room to the down side. Both the MACD is
looking like itís about to roll over and stochastics has made a hook and lower
high. If we get a setup in an oil fund I will be looking to short oil soon.
Gold, Silver, & Crude Oil Commodity
In short all three commodities look
ready to move lower as the short term underlying technicalís are bearish. I
would like to note that gold generally is a leading indicator for other
commodities which you can see going back to the 1970ís. And with any luck we
will see rising price across the board in the next few months.
For those of you looking to go long
gold, silver or oil, I think waiting for some type of pullback is needed. The
keys to successful trading are knowledge, discipline, and patience. If you have
the knowledge of how the market works, the best way to achieve discipline and
patience is to do your home work and stick with your action plan. Donít carry a
losing position if it goes beyond your exit point. Exit and find a fresh trade
with lots of opportunity.
If you would like to receive my free
weekly trading reports please visit my website.
Vermeulen is Founder of the popular trading site
There he shares his highly successful, low-risk trading method. For 6 years
Chris has been a leader in teaching others to skillfully trade in gold, oil, and
silver in both bull and bear markets. Subscribers to his service depend on
Chris' uniquely consistent investment opportunities that carry exceptionally low
risk and high return. Reach Chris at: Chris [at] theGoldAndOilGuy [dot] com
This article is
intended solely for information purposes. The opinions are those of the author
only. Please conduct further research and consult your financial advisor before
making any investment/trading decision. No responsibility can be accepted for
losses that may result as a consequence of trading on the basis of this