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

I bought over 14 ounces of gold last summer when the price was around $1100-$1115. I'm obviously happy with my gold position at this point.

Where do you guys see gold and silver headed between now and year's end? I've heard that the economy may struggle this summer because of the presidential election? If that's the case, I would assume precious metals might be in for a nice upswing.

Peaked at $18 today... came back down to $17.50... I don't think that's much in the way of a correction in price especially if you look at last weeks closing prices...

As it stands day after day silver prices are climbing....all good signs! (if you're already in silver..)

If you ask me I still think there's some room to go up... If a GSR value of 55 is average current gold price of 1,291 would equate to a price in silver just around $23..

Another $5 spike in the price of silver would be nice for me right now as I'm holding and not buying as much anymore...

some quick charts-


Gold




First lets go back a bit in time. Let us pick up to 2/11 where gold hit a 52 high of 1263.90. The low of that day was 1196.30 and we used that roughly as our lower end of the range. Please note the price action between the aqua lines and below and above it as well.

Do you see that range? Do you, looking between the aqua lines how gold chopped around, pulled back, sometimes pushed outside of the upper end of the range, a few occasions made a few 52 highs in between? Remember how I talk about when we have a range where there is sideways chop and bounce? Thats exactly what we are seeing in the above chart.

Why is this important? This illustrates what I mean when I talk about a rubber band being stretched. This range or base, which ever direction it resolves to go, usually confirms and shows us which way price wants to move. We have a saying "the longer the base, the more we blast off into space". In this case, we had roughly a good 2 months plus of a base. This base or range from 2/11 was confirmed to the upside, continuing the uptrend on friday of last week. Confirmation of the uptrend was the fresh yearly 52 highs that were made.

This range also shows why its important when you are buying assets, such as at yearly highs, to buy them in a proper order. When we buy 52 highs we want to buy properly. We do NOT want to buy EVERY SINGLE 52 high or just because it a 52 high. That would not be the right way to buy. Just because an asset hits a 52 high, doesn't mean you run out and buy it. Its not that simple. You must follow the proper order as the 52 highs are being hit.

so, if you have been doing this properly and starting to add to a line, you should have been buying at:

1- 1263.90 on 2/11

2- 1263.91 on 3/4

3- 1280.71 on 3/11

4- 1287.81 on 4/29

Those would be proper entry points, in their proper order. We do not want to buy the 52 high just because it a 52 high. Why? When the pull back happens, it could/can slice below that entry point and can add to your emotional quandary if you bought right. We also want to start to see each line or position we add, that we see each addition show a profit. After all, our goal in this game is to extract maximum profit from the market and pad the trend as we hop on at its start.

IF you have missed these points of entry, there is still time to buy again but you would want to allow time to go by, let a base build up again or let a pull back and then a hit of the 52 high to give you a comfortable entry point.

Going forward, we now want to see if this same pattern continues. Does a range show up again or are we off to the race? Will we see gold stop consolidating by time and have pull backs that are deeper in price? We have to wait and watch and see.

Nonetheless, gold is in a firm uptrend. its going higher. It could pull back and STILL be in an uptrend. All of the price action thus far is telling us the buyers remain in control, the dips in price are shallow and bought up and until this changes, we have no reason to think this move is false. The yearly highs (52 highs) are enough to confirm the uptrend. IF that is lost on one, then it is probably a safe bet to say you wont ever grasp what is going on.


Silver




Silver is exactly the same thing as gold. A big range or base develops. Within that range, silver fell out of it, a few times popped above 16 and was even lagging gold for a bit and then *poof* on 4/12 that range got resolution by breaking 16.17 and just getting a massive amount of straight up buying. Once again tho, that rubber band was being stretched and it would have an explosive move when it was resolved. As we have seen, it was resolved to the upside and it resulted in 11 up days in a row for silver. This is why we like seeing a range/base made, it confirms and makes that move explosive and without a DOUBT shows the way.

In this case we didnt have any 52 highs but instead a range to buy from. They were

1- buy 16 on 3/17

2- buy 16.18 on 4/12

Additionally, you could have bought the 52 high or added there, which would be 17.78 Now here is where it gets tricky in a sense. We want to buy those 52 highs, we want those assets hitting early highs.

If you bought the 52 high of 17.78, you will without a doubt see a pull back simply because the buyers dont have much energy for now to push it past that, notice how many days in a row silver was up. I mean it was a big huge amount of unmitigated buying that occurred.

HOWEVER, one is buying the first 52 high, which is 17.78 and that is a proper point. Silver has not come all this way, all the work of the buyers, just to come here and roll over. 52 highs are there for a reason, just as 52 lows. In this case, the 52 highs will result in more 52 highs, even if silver experiences a pull back, which you should WELCOME with open arms and EMBRACE it. To get higher prices we WANT to see pull backs.

Going forward, we want to see how silver and gold react at these levels. Do they continue this pattern of building bases or does it turn into a pattern of pull backs with new yearly highs? wait and watch.

@yup
Thank you for the charts and the detailed explanation of what is going on and what to look for. I now know more what to look for and not to do as I did and jump the gun to buy. So, to put what you have explained in perspective to the ABX stock I bought, the newest range it looks to me was from 4-11 through 4-27, a short run so not to expect a very high increase, or at least a short lived one. BUT a new base price was established at $16.76, right? I can expect a correction down, but should still be above the new floor? I should have waited another day or two until I saw a correction as buyers rested, then once it started back up, bought. One thing though is that it's been on a pretty much slow constant climb until 4-11. Hopefully it will be on another slow climb :-) But, I will welcome small corrections as you say, as they should be the prelude to another run. Thank you for sharing your knowledge and experience.

@MontanaCMR

It could or perhaps the momentum allows for a quick pull back and then runs back again at 52 highs. just have to wait and see.

As far as dip buying, what would be best is to let things ride for a bit, let profits build. Let them give you a nice cushion for when the real pull backs happen.

I personally do not buy dips, its not my edge. I prefer to buy on the way up, have an established sizing and then let things run. If they run in the direction I am positioned for and I see enough time for pull backs and times of nothing happening, and it starts rising, then I add but again I add with a smaller size then even my last entry.

The farther we get away from the initial move the more risk of a change in character and tone in whatever given asset we are putting money into. Eventually all patterns shift and change, as an example, an asset could still be in an uptrend but after a period of mild pull backs, shallow dips, it could start up with violent erratic moves. This is a change in character on the part of buyers. Usually this happens at the end of the run of the trend or when the stock/commodity/currency, etc, is running out of buyers. These exact same patterns of behavior manifest themselves on the way down also when one sells short.

But for now, I say, if you can, resist the urge to add. If you do add, do it in smaller increments then your last purchase. Its also about time frame. I know some fellow traders will be looking to buy after a few days and sell. Others with a longer time frame might be looking to nibble in the up trend. What is your time frame? Some funds, when they are buying, after they have a big position, let it run and later add. Other funds step in and start a new position after never being once in the stock. so again, know your time frame, even if you are an investor.

I thought I unlocked them, I wonder what I did then lol give me a bit.

@yup
My terminology needs improvement as well :-) Pull back. So, looking at the trend I would say buy ABX at $18, SILJ at $12, and PAAS at $14? Would this be right for the next place to look for and jump in?

I just bough the Livermore book. Too bad I didn't read it last year, when I first got in the market....believe me, I could write a book on stupid mistakes, greed, incredible lucky hits, and not sleeping at night worrying about the opening bell.
You know, I have bullion in my vaults, like most of us do. I don't really think twice about it, pricewise, because I KNOW I am a LONG ways off until sale day.
To be able to sit through the volatility of a stock price through this period took some practice, patience, and, yes, a lot of mistakes first, and losses trying to time things, or, getting greedy.
I do have my "scalping" stocks...very few are bullion related.
Investing, like most things in life, is simple, but not easy, due to my emotions which can cause financial pain if let loose. I'm learning to just be fearless and confident. Make a buy, and stick with it. NO remorse(unless your talking RLYP!)