Gold And Silver's Price Swings

Above is a daily chart of gold and silver along with some basic swing and trendline analysis. As you can see both metals are making lower lows and lower highs which can mean only one thing, the current short-term trend is down.

For those of you who are bullish I would recommend waiting for the pattern of lower lows and lower highs to be broken. A move above the April 27th high would negate the downtrend and tilt the odds in favor of the bulls but until that happens the bears remain in control of these two metals.

Profit Objective Reached In Gold

Today Gold was up sharply and reached my objective of 87 to 88. I exited 3/4 of my long position at 87 and held just a very small piece just in case we get some more follow through tomorrow. This turned out to be a very good trade and I know many of you got long gold with me...What a great way to start off the year...if only all of our trades would work this well.... (sigh)

Silver Testing Resistance

For those of you who are following the metals I would keep an eye on the above chart... Above is a chart of silver and as you can see silver is testing its trendline which has been touched several times over the past few months.

In my opinion in order for gold to continue moving higher, silver needs to breakout above this trendline. Until we see that happen, gold will have a tough time maintaining it's current rally.

Silver and Gold

Above is a daily chart of Gold and Silver. As you can see, gold is now testing its high from last year. I've been looking for gold to test this level for many months but I wasn't able to catch this last leg up in gold because I was involved in a few other projects outside of trading.

In the lower pane is a chart of silver. Notice how silver is making a series of lower highs and lower lows. In my opinion in order for gold to sustain this rally and breakout, silver needs to break its downtrend and begin to make higher highs.

It will be interesting to see if gold will pull silver up or will silver drag gold back down like it did during the months of April, May and June. Gold is also benefiting from a lower dollar.

I don't see any low risk trades in gold or silver right now so I will stand aside and wait for the next opportunity in the metals to present itself.

Gold and Silver

Looks like I exited my long gold position just in time. I've been bullish on this metal and it has rallied nicely but something just didn't feel right yesterday and the day before.

If you look at the above chart of GDX(gold stocks) you'll notice the bearish engulfment that formed at the year high. That alone made me nervous about being long and when you combine that with the rally the dollar had yesterday, it was clear to me that I should take profits and sell my gold position yesterday which I did on the open.

Another thing that bothered me about being long was that silver didn't rally much. When the metals rally and I am long, I feel much more comfortable when silver is leading the way up which is not what we saw over the previous few weeks.

Long-term I am still looking to buy gold but for now I will just wait for the next buying opportunity to present itself.

SIlver And Gold Get Pounded

Today both silver and gold sold off rather sharply on heavy volume. I was long SLV and GLD and got stopped out today at a loss. On the open my sell stop in SLV got hit at 126 and shortly after that I got stopped out of GLD...I lost on both of these trades.

If there is one thing that can be learned from this trade, it is the importance of using stops. Ever since I put these trades on I've been posting charts which showed where my protective stops were placed. I got stopped out of SLV right on the open for a 5 dollar loss from my entry price. If I didn't have a stop placed or if I waited until the close, I would have lost twice as much. I could have lost 10 dollars on this trade but because I had my stops placed well in advance, I took a loss of 5 dollars which I can live with.

I think today is a great example of why stops must be used and actually placed in the market. Don't ever use mental stops unless you are playing with mental money!

Silver Getting Ready To Rally?

I'm profitable on my long silver position again as both gold and silver were up today.

You'll notice in the above chart that silver is showing relative strength compared to gold. Gold took out last month's low while silver is putting in what appears to be a higher low. I take that as a sign of strength and a sign that maybe a rally will take place in the very near future.

I'm going to sit tight with my long SLV position even though there are many people who are negative on the metals. We'll see what happens.

The Dollar And Silver

I've been long silver with a nice profit until today. The Dollar had a sudden 2 day rally which caused commodities such as oil, copper, gold and silver to collapse.

My Silver position is now showing a small loss and my protective stop is below 127.00.

Why Silver And Not Gold?

As you know I've been long silver as of Tuesday and you can read about the reasons why I am bullish by clicking here.

Since Tuesday silver has rallied sharply and I am still holding onto my long position.

I've received a few emails asking why I seem to be more bullish on silver than on gold. Well first of all let me say that I think both gold and silver will rally but I think silver will be the metal that rallies the most.

If you look at the above chart you will see a 4 year weekly chart of the silver/gold ratio. A rising ratio line means silver is outperforming gold while a falling ratio line means silver is under performing gold.

In the lower pane is the stochastic oscillator. Every time this oscillator has moved below the buy line and turned up, silver has outperformed gold. This indicator has been 100% correct over the last 4 years on it's buy signals which I think is amazing.

Right now the stochastic oscillator has crossed upwards confirming yet another buy signal. So as you can see, the above chart is the reason why I am more bullish on silver than on gold. I'm looking for this ratio to make new highs. I hope this clears things up..We'll see in the weeks to come if this analysis is indeed correct.

Silver Update

On Tuesday I bought silver based on my comments that silver appears to making a bottom.

Since then SLV(silver) has had a nice move up of about 3% in the past 2 days.

My upside objective for this trade if it continues to move higher will be a test of the year high which is at 146.00 made in February.

The red line you see in the above chart is a ratio line of SLV(silver) vs GLD(gold). Notice the sharp move up in the ratio line which means silver is becoming stronger than gold.

Silver Up, Gold Down

Just the other day I wrote about how silver should become stronger than gold and today was a great example of that. Gold was down $3.70 today while silver was up 5.50.

You can see the ratio line is moving higher as money moves into Silver. I think both metals will trend higher, but silver is the one I really have high hopes for. We'll see what happens.

Silver Stocks I've Been Bullish On

A few weeks back I posted some comments about why I thought silver and silver stocks would rally. Two stocks I really liked were PAAS and SSRI which you can see in the above chart. Both stocks have moved up nicely since I first wrote about them. You can read my original post by clicking here.

Silver Better Than Gold?

Another one of my readers wanted to know which gold stocks I like at the moment. I was going to save this post for later in the week but being that my reader took the time out to ask me what I like, I figured I'd take the time out and post about it now.

The bottom chart is a chart of the XAU (gold/silver index). Above that we have two silver stocks, SSRI and PAAS. Notice that the XAU index has made new lows for the year while SSRI and PAAS have not. These two silver stocks are showing relative strength.

Last week silver also showed some strength by breaking out above the prior week's high while gold hasn't done so yet. So it appears to me that silver and the two silver stocks I just mentioned are showing some strength not only to the market as a whole but to gold itself.

There are a few other metal stocks that are showing some relative strength such as AEM, AU, FCX and even a few steel stocks. I haven't bought anything yet but SSRI and PAAS are at the top of my list as potential longs. I like both gold and silver, but silver is the one that is showing a bit more strength as of now. Keep an eye on it!

Gold and Gold Stocks

One of my readers asked me about gold stocks so I figured I'd post the above chart with a few comments.

Don't let the numbers in the above chart scare you. This is not Elliot Wave analysis but rather me simply numbering the swings to make it easier for you to follow my thinking.

The correlation between gold and gold stocks is obviously a very strong one as you can see by matching the points on both charts. Points 1 through 6 are almost identical in duration and magnitude until we get to point 7. At point 7 gold makes a new high but the XAU index does not. At point 8 gold makes a higher low while the XAU index makes a lower low. Why would gold stocks suddenly appear to be losing ground when compared to gold from point 7 to 8? Well you have to realize that even though gold is a major catalyst for gold stocks, gold stocks are still stocks and are influenced by movement in the stock market as well. Point 7 is where the S&P made it's top and began it's sharp drop and that is why gold stocks are now losing ground compared to gold the commodity.

My view is that this sets up a potential buying opportunity in gold stocks because these stocks got dragged down by the market not by gold. I think gold stocks are undervalued when compared to gold so I'll be watching them closely in the days to come.

Next week I want to see how gold behaves if the yen begins another leg up. If gold can keep its head above water in the face of a rising yen, I'll be buying GLD next week and possibly gold stocks once I see them showing signs of strength.

Gold And Silver

I'm so tempted to buy Gold and Silver next week but my fear of a rising yen is holding me back from taking action. I think if the Yen has another leg up, money will move out of the metals causing them to go lower. I don't feel like getting caught.

What I like about the above chart is that the long term trend is up which we can all see by looking at the very large swings on a weekly chart (not shown). As long as the swings are making higher highs and higher lows, the long term trend is up. The reason I'm tempted to buy the metals next week is because now the short term trend appears to be moving higher. Silver just put in a higher low and is making a higher high, gold looks like it is about to do the same. So now we have the daily trend possibly turning up while the weekly trend is still up. Maybe I'll buy some metals next week...I'll see how they hold up if the yen rallies. Decisions... Decisions.. Decisions...

Gold and Silver

Yesterday I commented that I'd like to start accumulating Gold at support providing I see a consolidation take place over the next 3 weeks. As of now, it appears money is leaving both the silver and gold market in a big way. Gold was down over 21 dollars and silver was down 69 cents today.

Above are the ETFs for gold and silver. Notice the weekly bearish engulfments that developed this week. I'm not about to short these markets, but I'm going to remain on the sidelines for a few weeks with the hopes that gold will build a base or consolidate so I can get long. It just seems like money is leaving every market right now except for bonds and oil.

Metals Surge

Yesterday I was hoping we would get another day of selling so I could add to my long gold position but instead the metals exploded higher. Gold was up over 21 dollars for the April contract and Silver was up 39 cents. This is the largest daily gain for both markets in quite sometime.

Above we have a daily chart of the ETFs for Gold and Silver. Both of these ETFs posted their highest close in eight months. I'm still looking for GLD to test the highs from last may which comes in at 72. All my trailing stops were raised today to the lowest low in the last 15 days.

PAAS Breaks Out

The one silver stock I mentioned in one of my posts the other day was PAAS. Today the stock broke out to an eight month high. It would be nice if there was more volume behind this up move but I am going to hold onto this for awhile. The next resistance area is the March high which isn't too far away. I'm looking for the stock to break that high. As always, we'll see what happens.

Silver Seasonal

One of the tools I like to use in my trading is seasonality. I think seasonality is misunderstood by many traders. The way I like to use seasonals is to COMBINE it with other tools to improve timing and accuracy.

Long before the internet became popular, I was receiving my seasonal charts in the mail from a company called Moore Research Center,Inc.
In my opinion they have the best seasonal charts and do the best research on seasonal tendencies. I highly recommend their work. The above chart is courtesy of Moore Research Center,Inc.

The above chart is the 15 year seasonal tendency for silver. As you can see in the yellow highlighted area, Silver tends to rally during the month of January going into February. This appears to be a good time to be bullish on silver and even gold

Now just because there is a seasonal tendency to rally doesn't mean you just buy and hope the seasonal strength repeats this year. I like to combine it with other tools to help improve the accuracy. If you scroll down below you will see my other reason for being bullish on silver now.

SLV (Silver) Showing Signs Of Strength

Today the strongest ETF was SLV(Silver) up almost 4%. Most of the commodity ETF's were up nicely today.

Above we have a 6 month daily chart of SLV (Silver iShares). Silver is clearly in an uptrend if you look at the large swings. SLV just recently tested the 200 day moving average and has now broken above the trendline which tells me that maybe this pullback is over. MACD is also about to give a buy singal. There is also a seasonal tendency for Silver to rally this time of year. I'm looking to get long Silver next week. I bought some feeler shares in the afternoon today.