Shareswatch Australia

Australian stock market investing, ASX charts, analysis & market forecasts.

Shareswatch Australia header image 2

Are Gold & Silver on the Verge of Something Huge?

June 24th, 2012 · Chris Vermeulen · 12 Comments

Gold and silver have taken more of a back seat over the past 12 months because of their lack of performance after topping out in 2011. Since then prices have been trading sideways/lower with declining volume. The price action is actually very bullish from a technical standpoint. My chart analysis and forward looking forecasts show $3,000ish for gold and $90ish for silver in the next 18-24 months.

Now don’t get too excited yet as there is another point of view to ponder…

My non-technical outlook is more of a contrarian thought and worth thinking about as it may unfold and catch many gold bugs and investors off guard costing them a good chunk of their life savings. While I could write a detailed report with my thinking, analysis and possible outcomes I decided to keep it simple and to the point for you.

Bullish Case: Euro-land starts to crumble, stocks fall sharply sending money into gold and silver which are trading at these major support levels which in the past triggered multi month rallies.

Bearish Case: Greece, Spain and Italy worth through their issues over the next few months while metals bounce around or drift higher because of uncertainty. But once things have been sorted out and financial stability (of some sort) has been created and the END OF THE FINANCIAL COLLAPSE has been avoided money will no longer want to be in precious metals but rather move into risk-on.

Take a look at the gold and silver charts below for an idea of what may happen and where support levels are if we do see money start to rotate out of metals in the next 3-6 months.

Gold Forecast

Silver Forecast

Over the next few months things will slowly start to unfold and shed some light on what the next big move is likely going to happen to gold and silver.

The price movements we have seen for both gold and silver indicate were are just warming up for something really big to happen. It could be a massive parabolic rally to ridiculous new highs in 2012/2013 or it could be a huge  unwinding of the safe havens as countries sort out their issues and the big money starts moving out of metals and into currencies and stocks.

Only time will tell and that is why I analyze the market multiple times per week to stay on top of both long term and short term trends. So if you want to keep up with current trends and trades for gold, silver, oil, bonds and the stocks market checkout TGAOG at:

12 responses so far ↓

  • 1 Lachlan // Jun 25, 2012 at 2:14 pm

    I still think the Dollar index is ready for a run upwards as far as 88 even and its timely now for a flight to safety rally in gold and US bonds with a the Euro situation beginning to hit it’s straps. Golds stocks are very over sold too. If the timing is not right now it should be sometime shortly.

  • 2 Stillgotshoeson // Jun 25, 2012 at 3:35 pm

    Ordered me some more silver bullion, so yes I am bullish on silver.

  • 3 Greg Atkinson // Jun 25, 2012 at 5:37 pm

    I prefer silver to gold simply because there is a lot less silver sitting in vaults.

  • 4 Lachlan // Jun 25, 2012 at 8:46 pm

    I like silver because it is historically well below its nominal high made 30 odd years ago and there ain’t many things in that category. My prediction for silver at USD 50 odd was to fully retrace to 21/22 and I am still hoping that may come through. I could not buy this dip Shoes because I have to save more cash…so unlike me though. Like a bower bird on twelve steps 🙁

  • 5 BP // Jun 25, 2012 at 11:11 pm

    If we simply did the _opposite_ to what the experts advocate, we’d be well ahead, Lachlan. Lost count of the bad calls I’ve read on these sites… . At least you’re safe in cash.

    I like silver, but I don’t particularly like silver at fifty bucks, having seen it there before… and watched it plummet back to twelve… in the late seventies, thanks to the Hunt Bros fiasco.

    PMs are nice’n’shiny, but they sink very quickly. 😉

  • 6 Greg Atkinson // Jun 28, 2012 at 2:50 pm

    Another view to ponder: Is Gold on the Edge of a Violent Downturn? (CNBC)

  • 7 Lachlan // Jun 28, 2012 at 5:37 pm

    Silver at fifty was always going to be a major risk for the second time BP but I have never paid that much either.
    I will admit that both PMs could sell off from here Greg but then I have entertained thoughts here before of gold as low as 1300 (a full technical breakdown). At least 1450 is a fair bet. That would be a fake breakdown to shake out leverage before reversing and going higher. I think the MF Global event may have chased some paper long specs out of their game. Gold is long term going higher imo however.

  • 8 Greg Atkinson // Jun 28, 2012 at 6:38 pm

    Lachlan I still wonder if the debt-ridden EU nations will eventually start selling their gold as South Korea did when they ran into so much trouble all those years ago. At what point do some of these countries get serious about paying off their debts and start selling what they have sitting in vaults? If that were to happen, gold prices would certainly fall and maybe that’s why the gold is still sitting there?

  • 9 Lachlan // Jun 28, 2012 at 9:23 pm

    I think your point is correct Greg though key also is what can be done with the gold once it’s owner has been relieved of it. It may be leveraged into a greater amount of paper sales.
    There may be between 780Trillion and some unspecified number north of two quadrillion dollars worth of derivatives (affecting many different assets esp bonds) floating around the globe.
    Ours is a world built on promises only satisfied with ever more promises…whether in the form of our debt/debt based money, or derivatives or within alliances between market players. Such a fluid and elastic system could be stable for a long time but the fallout from its inevitable demise could be very harmful. This episode of monetary history wont go on forever and one can at least say that because nothing ever does. In contrast, things usually persist longer than most ever expect they will….which leaves us back where we started…completely confused 😉

  • 10 Greg Atkinson // Jun 29, 2012 at 7:49 am

    Lachlan I also read this in the Nikkei recently regarding China’s appetite for gold.

    “TOKYO (Nikkei)–Gold prices have been leveling off since hitting record highs of more than 1,900 dollars per troy ounce last September. However, in the months that followed, as the gold market started to cool down, China started quietly ramping up its imports of the precious metal. This curious development has stoked speculation over why the nation is buying gold, and who or what in China is responsible for this shift.”

    Interesting. How long will China keep up the buying spree & what will happen when they start to ease back on imports?

  • 11 Stillgotshoeson // Jun 29, 2012 at 6:57 pm

    Bought more SBM today on the news of the merge..

    Will add then to the $100k portfolio too, removing IMF.

    I will update it tomorrow.

  • 12 Lachlan // Jun 29, 2012 at 9:30 pm

    Yes China does buy a lot of gold on dips Greg and that was noticeable recently as well as for some years now. Physical demand from some sovereigns and banks picks up when prices are depressed. The peaks in gold prices are probably more to do with a mixture of short covering and paper specs on the long side.
    China’s foray into gold sets it up to be a key player in a new GRC complex imo. I would think the dollar will be dethroned soon after the time China finalises it’s purchases. See Chile just this week joining a list of others circumventing trade settlement in USDs… including Iran, Japan, Brazil, Russia and India .

Leave a Comment



This site is not intended to act as any form of financial or investment advice.  © 2008–2017 Shareswatch Australia — DisclaimerCutline by Chris Pearson


The information contained in this website is for general information purposes only. Whilst we endeavour to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk. Please seek professional advice before making any investments.