GLD hit support (neckline) yesterday and made a lower low to October’s low. A loss of this neckline would measure to 105 (+/-). GLD is on a bear signal.
[Editorial Comment]: Fed minutes shows there is still an emotional overhang on the gold ‘community’. Every time these great people in high places pretend to show any level of interest in scaling back on QE, the metal’s price implodes. Yet a tapering of QE would be largely symbolic and don’t forget, the other half of the inflationary operation is ZIRP, which the Fed continues to unwaveringly hold.
Is this the community, or is it heavy handed manipulation? Does it matter? Gold looks increasingly like it needs a final washout, as we have been noting lately.
SLV is on a bear signal and the October low is gone.
GDX is on a bear signal as volume kicked up yesterday (as it did in gold and silver).
SIL lost the neckline and is on a bear signal.
The silver-gold (SLV-GLD) ratio continues in breakdown mode by daily charts. Therefore the gold-silver ratio continues in break ‘up’ mode. This can bring pressure to precious metals, commodities and even stock markets.
Gold miners also look constructive vs. silver.
Precious Metals Bottom Line
Yesterday looked like a new phase of bearishness engaged. With that came the first positive feelings I have had in some time for the precious metals. Assuming that this morning’s pre-market strength is not a real reversal, we have downside targets ready in gold (all the way down to 1000), silver (mid-high teens) and HUI (168 +/-).
In other words, a waterfall to finish the correction and very possibly the bear market would be most welcome. I mean, how long does the ‘community’ want to endure a slow death by a thousand paper cuts?
With the valuations in the sector bordering on insane, what seems to be happening here is every bit the no-brainer opportunity that Q4 2008 was. With one notable exception; the macro fundamentals for gold and its miners have not yet engaged, whereas in ’08 they were on display for all (who would or could) to see.
So, assuming NFTRH goes bullish on gold and the miners on a sharp decline to or toward targets, there may be some element of a leap of faith that gold will resume its upturn vs. crude oil and broad commodities for example, and that gold vs. the S&P 500 will make a washout low near the SPY-GLD ratio’s blow off objective of 1.53-1.58.
Meanwhile, we will follow the events as closely as possible with the idea that finally, a solid opportunity is upcoming. If in the unexpected case that whatever is going on in ‘pre’ this morning appears to be anything real, we will note that ASAP as well. The first step would be to undo yesterday’s damage and the next objective would be the 50 day MA’s as usual. My preference is obviously for a washout conclusion; something we can really sink our teeth into.
DBC remains on a bear signal.
SPY continues to correct a bit off of over bought, over loved levels. Last update profit taking and/or hedging was recommended (as applicable). If we can add some decelerating speculation signals (like junk bond weakness, for example) to the gold-silver ratio’s strength, we may actually get a meaningful correction here. SPY is on a bull signal.
EZU is on a bull signal on its way to neutral territory. The 50 day averages are key here.
EEM is neutral to bearish and considering the big picture charts of MSEMF, not looking very inspiring.
FXI is on a bull signal and yet I sold my China/Asia fund as part of some initial profit taking on the broad stock market.