NFTRH Interim Update 2.20.13, Au & Ag

Gold and silver downside momentum is either building into a capitulation and a bottom or the technical damage is going to be obvious.  A drop below 1525 puts gold in a cyclical bear.

Gold Daily

Volume is increasing as the metals approach the important support zone we have long-watched by both daily and weekly charts.  A lower low to last spring and summer would represent significant technical damage for those who make their bones in managing gold’s price.  Of course, staunch gold bulls probably welcome a big decline as they may see it as the last chance to buy monetary insurance on the cheap.

Silver Daily

Silver has been declining harder than gold recently and this would normally be a negative indicator (rising gold-silver ratio) for the overall markets.  Some commodities (agriculturals all along and Cu/Industrial metals yesterday) and global markets have gotten dinged, but so far the US Robo-Market continues apace.  We’ll see how much longer that would last if things go impulsive down on the precious metals (with silver leading the downside) and commodities continue to degrade.

Short of an all-controlling cabal of evil policy makers with everything firmly under control, the indication may be that the inflationary policy is not enough to push back the natural forces of deflation this time.  While this could manifest in a significant stock market correction (or bear) at some point, the market continues to act as if Goldilocks is here to stay.  She isn’t.

Most members of the “gold community” are scared right now and a similar reading by RSI to that of last May, along with a big volume crash into support noted for each metal above could finish this decline, at least on an interim basis.  But this is not a bottom call, especially on the miners. The phrase ‘falling knives’ is in play and all due caution and respect for that is warranted.  But I am here to illustrate the range of possibilities, not just the popular ones. Right now it is popular to be bearish the precious metals.

These events show why it is important to remain intact when the market is going against you. Feeling like a capitalist beats feeling like a righteous but frightened victim every time.

HUI 375 now appears to be the last ditch marker before the low 300’s come into play.  If Huey were to somehow hold the 375 area (preferably with a hard drop below and upside reversal), then we would have a positive indicator on a bottom.  In this scenario, volume would need to be huge, indicating a final pukage by the holders and purchasing by the predators.

But again, until proven otherwise, a dark cloud is over head and it is raining sharp kitchen utensils.