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What Happens To Gold And Silver Next? Look Out Below?

 
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Pillar of the Community

United States
3787 Posts
 Posted 02/15/2013  9:04 pm Show Profile   Bookmark this topic Add yup7676 to your friends list Get a Link to this Message
What happens next to gold and silver. What follows are some quick musings and thoughts as I leave my desk for the long weekend-

Let me first state this- I am not interested in taking a stance whether I am in the pro PM camp or anti-PM camp. I am a trend trader and as such, I am looking for the moves of importance, either up or down. I am not knocking PMs nor am I cheer leading PMs. I come to you and write this as a trader and your fellow coin collector.

In the interests of full disclosure, let me say that I have no trading position in any PM at this moment. I do have a long term holding in GLD that I have held since the funds inception. Again, I am not selling PMs, I am not buying PMs in the futures markets, ETFs or options. I say this because I want everyone to understand I have NO bias at all. I am going to describe what I am seeing.

I adhere to the school that the market is ALWAYS right and opinions are always WRONG. The price action and markets will in the end decide where all asset prices end up at and I respect that.

Finally, let me state that I do not make predictions in prices as a trader, and especially with PMs. Its a fools game, and again, what I look for is the trend, the PATH OF LEAST RESISTANCE. (all caps for emphasis)

Now that we have that out of the way, here's what I have after a week of watching the markets and PMs- I am going to break this down as simple and possible and avoid all sorts of gibberish and technical signals etc etc etc.

1- We have resolved a trading range in silver that has broken with volume to the downside.

2- We have resolved a trading range in gold that also broke to the downside, along with volume to prove it.

3- when a price point chops, goes sideways, its usually a sign of market indecision. hence, the back and forth and maintaining a narrow range of prices. Once this range is broken, its direction gives us clues and probabilities of the next step and often signals the start or continuation of a trend in price. In this case, again, we broke both to the downside, it was resolved.

4- Silver and gold are going down as evidenced by the price, which is going in the path of least resistance, which is down.

5- to make it super easy to understand, take GLD and SLV. pull up a chart on yahoo finance or google. in both of these, you can see with each pull back, the retractment in price has been cut down each and every single time. That brings me back to point 6

6- As the prices fall and with rapid speed, don't be surprised to see prices come back and bounce back up. However, do not allow that to give you the sense that its stopped going down, this is normal and in many times, the price falls, bounces and comes up well short of where it initially dropped.

7- Where does gold and silver drop come to an end? The market will eventually decide that. Keep in mind tho, these sort of events are not instant and immediate. IT WILL TAKE TIME for the final event to show where price ends at. Patience will be needed.

8- As silver and gold fall, they will fall into areas of support from previous times where buyers have bought the PMs. However, these prices should not be taken as gospel and could give way to lower prices. Also, be aware that as silver and gold fall, the prices and supply above them,,, will become resistance,,, therefore support becomes resistance in terms of price.

9- one of KEY important areas for both gold and silver will be how it reacts at the 52 low. Should we hit yearly lows, it is HIGHLY probably that there could be a rapid decline lower.

10- price does have memory. Again I repeat this because within all this uptrend that gold and silver have had, there will be an area where the market participants will feel that silver and gold are fairly price for the current environment. This area will be accompanied by strong buy volume and repeated buying.

11- Finally- some have said... "well silver is going to the teens", others say "no, it will stop in the 20s". However there is yet another option. Silver and gold could decline and then turn into a period of time where it doesn't nothing at all,,, just chops around and bounces. this could happen as well... where neither the buyers nor sellers are ready to take decisive action.

So there you have it. For those buying silver and gold in coin form, you know the drill... dont buy all at once.

Well thats it, thanks for reading and I hope it helps you get an idea of whats happening in the markets as of now :D
Bedrock of the Community
Australia
15610 Posts
 Posted 02/15/2013  11:16 pm  Show Profile   Bookmark this reply Add sel_69l to your friends list Get a Link to this Reply
I think that lower PM prices and trending down is a sign that the World economy is recovering somewhat.
I interpret it as PM's are seen as a less of a need to provide a hedge against inflation.
That has to be a good thing.
I think everyone would like to have a more secure tenure on their job, than they currently do.
Valued Member
United States
380 Posts
 Posted 02/15/2013  11:38 pm  Show Profile   Bookmark this reply Add Arcticsparky to your friends list Get a Link to this Reply
It's a great time to buy, before the reality of how bad the Economy is burns through.
Pillar of the Community
Japan
666 Posts
 Posted 02/16/2013  12:08 am  Show Profile   Bookmark this reply Add bekiz to your friends list Get a Link to this Reply
Pillar of the Community
United States
3787 Posts
 Posted 02/20/2013  10:24 am  Show Profile   Bookmark this reply Add yup7676 to your friends list Get a Link to this Reply
And there we continue lower breaking the range in price. I would think we get another day of selling before we run into support and or chop/sideways before the next move is resolved.

This is why buying the dip going forward is going to be a very expensive and frustrating proposition, even for those with deep pockets. prices are going much lower than what is being expected.

more later
Valued Member
United States
200 Posts
 Posted 02/20/2013  5:53 pm  Show Profile   Bookmark this reply Add lincsus to your friends list Get a Link to this Reply
Gold pricing is going down but I don't think its going down much. Most of the gold consumption is in India and China in that order. I am talking about the actual physical gold and not ETFs or some fancy virtual products. Demand in these countries is not going down. And we have no new sources of gold coming up anywhere. Even if gold price correct to a tad lower level, long term scenario for gold is still positive. Not as an investment but as a hedge against global economic and political uncertainties.
Pillar of the Community
United States
3787 Posts
 Posted 02/20/2013  7:03 pm  Show Profile   Bookmark this reply Add yup7676 to your friends list Get a Link to this Reply
I agree and Lincus puts it very well.

GOld and silver are indeed correcting, they are in a strong downtrend. There is a place for silver and gold but not at these prices.

As I have said over and over, everyone should have some gold and silver,,, but don't buy all at once and do not be buying every single dip. Gold and silver are not crashing.

As I stated in my original posting, its entirely possible that gold and silver do slide into support and bounce for a bit. However, a bounce in price Even for a couple of weeks, months would NOT signal that prices are done going down.
Bedrock of the Community
Australia
15610 Posts
 Posted 02/21/2013  12:37 am  Show Profile   Bookmark this reply Add sel_69l to your friends list Get a Link to this Reply
With such low interest rates, and inflation higher than interest rates shares at long last have become more attractive and house prices seem top have bottomed out and are slowly trending up.

That means that the building industry in particualar, and industry in general is becoming more confident and can raise capital again.
Those factors mean that with slowly increasing confidence in the econonmy, there is less need to hedge against economic uncertainties.

Although the recovery of the economy is hestiant, it finally seems to showing more vitality, and that is without the need to start World War Three!
At the cost of $12 trillion, WW3 does not have to start, unlike the period 1918 to 1939.

With recovery, PM's are less attractive.
Pillar of the Community
United States
3787 Posts
 Posted 02/21/2013  12:58 am  Show Profile   Bookmark this reply Add yup7676 to your friends list Get a Link to this Reply
@Sel, I tip my hat to you! Glad to see someone stating it why PMs are moving lower.

thank you Sir
Pillar of the Community
Japan
666 Posts
 Posted 02/21/2013  01:12 am  Show Profile   Bookmark this reply Add bekiz to your friends list Get a Link to this Reply
what about ppl who are gonna buy those homes?
any good employment news?
Bedrock of the Community
Australia
15610 Posts
 Posted 02/21/2013  03:35 am  Show Profile   Bookmark this reply Add sel_69l to your friends list Get a Link to this Reply
I notice that there is a litle less hoarding of gold in India (principally), and China (to a lesser extent).
I could not have predicted this (or I would have) but flying backwards, that's what some economic commentators are now saying.
As usual, their demand for gold is quite variable and will trend up again. Like most commentators, I have no idea when.
Pillar of the Community
Japan
666 Posts
 Posted 02/21/2013  04:07 am  Show Profile   Bookmark this reply Add bekiz to your friends list Get a Link to this Reply
The last number for China import from Hong Kong is for December: "114.372 kilograms, also a record high.."

Sel, when saying "less" from what number/month are you counting?

http://english.caijing.com.cn/2013-...2495258.html

Bedrock of the Community
United States
12250 Posts
 Posted 02/21/2013  04:52 am  Show Profile   Bookmark this reply Add basebal21 to your friends list Get a Link to this Reply
Bedrock of the Community
Australia
15610 Posts
 Posted 02/21/2013  06:15 am  Show Profile   Bookmark this reply Add sel_69l to your friends list Get a Link to this Reply
My comment on Indian / Chinese gold hoarding is based on very recent observations noted in media, not long term ones.
It may well be that the longer term trend will continue, but one of the reasons for the current small dip in the gold price can be reasoned back to the ?short term? cooling off of hoarding trends.

Of the longer term, I have no idea.
Pillar of the Community
United States
3787 Posts
 Posted 02/21/2013  09:53 am  Show Profile   Bookmark this reply Add yup7676 to your friends list Get a Link to this Reply
I have no doubt there will be BIG dip buying in gold and silver. BUT,, now is NOT the time.

Thats all I have been saying, to hold off for now,,,, let it come in because it is.

And I have been saying this not because I am for lower prices, I just dont want my friends on this board to use their cash at these stages if they can get it much lower. I dont see how one can be faulted for using their expertise to help others...
Pillar of the Community
United States
3787 Posts
 Posted 03/04/2013  12:55 am  Show Profile   Bookmark this reply Add yup7676 to your friends list Get a Link to this Reply
WELL...

just an update to this-

we had our bounce and retracement. As it stands now, Gold is very close to make yearly lows. Should this break, I would expect a flood of selling on another leg lower, much lower than what we have had and would signal the downtrend is rather strong.

That brings us to silver. Same story here, and so long as gold dries up here, expect it to get sold off as well and make yearly lows.

both gold and silver look very heavy price wise, to the downside.

The only reprieve that I see holding up gold and silver for now is the nonsense noise hitting the airwaves in regards to the budge cuts, Europe etc.... which is again nonsense and noise. All these things will get resolved, one by one.

SO, I am expecting a couple of scenarios price wise. One being we come into areas of price support, whereupon the market goes sideways and chops around, or we simply slice past them to the downside.

the upside to this? 1- you can/could sell short silver and gold and make money as they crash lower, price wise.

2- There will be the general public who is going to give in and throw in the towel on the PMs. Hopefully everyone here has cash still to add to their positions.

Those who have been buying all these dips, unfortunately, are going to get punished by the market as they will see their recent purchases go lower from where they bought.

So that leaves us with Palladium and Platinum. The leader of the bunch, Palladium, has stalled out here for now. I would think the recent price action is more of the market stepping back with such uncertainty abounding at the present. It does appear palladium is trying to hold certain levels, nevertheless it has been slipping. I wouldn't take my eyes off this metal however.

Platinum on the other hand looks sick. It has given up over a month and half of its grind up. It appears to be making a slow grind lower as well before it hits support levels. Again, watch to see if these levels hold.

Pal and Plat however, should continue to do better longer term. Its just that right now, at this point, the market is facing many headwinds, mostly sentiment. Furthermore, many commods are technically very weak and this is weighing down these two metals. Therefore right now I remain on the sides in regards to pal.

Going forward, I am looking to get short gold and silver, while still being long gold.

GOld and silver have had great runs. But cycles come and go. I dont think, personally, that this is it for them nor do I feel you just chuck them. However, thats only my opinion and the market will have the final say in due time. For now, the trend is down and until that changes I need to respect that as a trader.

Edited by yup7676
03/04/2013 01:02 am
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