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Precious Metals Charts Point to Higher Prices.

November 22nd, 2011 · Chris Vermeulen · 11 Comments

Over the recent couple months the precious metals charts have made some sizable moves. Most investors and traders were caught off guard by the sharp avalanche type selloff and lost a lot of hard earned capital in just a few trading sessions. Gold dropped over 20% and silver a whopping 40%.

The crazy thing about all this is that these types of moves in precious metals can be avoided and even taken advantage of in certain situations. There is no reason for anyone to continue holding on to those positions after they pullback 6% of more because of the type of price and volume action both gold and silver had been displaying in the past few sessions.

I warned investors on Aug 31st that precious metals were about to top any day and that protective stops should be tightened or taking profits was also a smart move. It was only 2 trading sessions later that precious metals topped and went into a free fall. You can get my detailed analysis if you read my report Dollar’s On the Verge of a Relief Rally Look Out!”.

A couple weeks later once precious metals has found support and the uneducated investor’s were licking their wounds wondering what the heck just happened to their trading accounts… I put out another report but this time with a bullish outlook. Silver was currently trading at $29.96 and I had a $35-$36 price target over the next two months. Gold was trading down at $1611 and I saw it heading back up to $1750-$1775 area before finding resistance and pulling back. Both these forecasts were reached over the next two months. You can quickly review the report called “Precious Metals Charts Point to higher Prices” for more info.

With all that said, what exactly are the charts saying right now?

Current Precious Metals Charts Summary:

The past 6 weeks we have been watching both gold and silver struggle to hold up but they have managed to grind their way to my price targets. After reaching those targets a couple weeks ago sellers have stepped back into the precious metals market and put pressure these metals.

Last week gold and silver started to pullback in a big way with rising volume. This could just be the start of something much larger which I will cover in just a moment.

The wild card for precious metals and for every stock and commodity for that matter is Europe. Every other day there seems to be headline news moving the market and most of takes place in overnight trading for those of us living in North America. It’s this wild card which is keeping me from getting aggressive in the market right now.

Let’s take a look at the charts…

Silver Precious Metals Chart:
Silver is currently in a down trend and may be starting another leg down this week. Long term I am bullish but for the next couple months I am remain neutral to bearish for silver until it forms a base to start a new uptrend from.

Precious Metals Charts


Gold Precious Metals Chart:

Currently I am neutral/bearish on gold. If it can trade sideways for a few weeks then I will become bullish.



Precious Metals Charts Conclusion:

In short, I feel there is a good chance the US dollar will continue higher and if that happens we should see strong selling in North American equities, commodities and likely on the precious metals charts.

Financial markets around the world are at a tipping point meaning something really big is about to take place. The question is which way will investment move. The only thing we can do is trade with the current trends, price patterns and volume.

At this time I still see a higher dollar and that means lower stocks and commodities. This could change at the drop of a hat depending on the news that comes out of Europe so the key to trading right now is to remain cash rich and taking only small positions in the market.

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11 responses so far ↓

  • 1 Ross T // Nov 23, 2011 at 8:50 pm

    Currently investors are flooding into $US to flee the European haircuts, so you right – most likely a big gold/silver boost after Christmas. Unless something stunning happens in Europe to bring investors back.

  • 2 Greg Atkinson // Nov 24, 2011 at 9:23 am

    Ross I wonder if Gold & Silver are the best places to be. Gold already looks pricey to me and has done so for a year or more. As I have mentioned a few times if Government’s need to get debt under control won’t they start selling off some of their gold at some point and if that happens I would imagine gold prices would tumble.

  • 3 Biker // Nov 24, 2011 at 10:45 am

    Another view on PMs:

  • 4 Lachlan // Nov 24, 2011 at 12:37 pm

    Just iron out the humps and dips in Au prices BP…and the price always goes straight up. Same for shares and property….in the modern economic paradigm anyhow. Its true though that many people would be sickened by the volatility but then are they saying property and shares are immune?

    And to be fare I do think silver will hit 21/22 region shortly… but gold will not sell off in any serious manner….probably staying in its consolidation range above 1550 or so before more upside.

    One thing to consider also is that when silver sells off the inventory largely disappears from the shelves which could be explained by the presence of a large paper predator capping the market. At such a time we should see a flood of product on sale.

    As for bonds??? are they serious??? get real, get physical assets 🙂

  • 5 Lachlan // Nov 24, 2011 at 8:14 pm

    Everything will go to the moon sooner than later since the ECB or the Fed will have to QE.
    I was going to buy Telstra shares (for the yields Shoes pointed out) until I saw that Greek one year bonds were better…at 308% 😉

  • 6 Stillgotshoeson // Nov 24, 2011 at 9:08 pm

    I have been expecting QEIII from the US and some QE happening in Europe already.. Oct/Nov was my guesstimate. Seems we must wait a bit longer. Lachlan.

    I have similiar figures for precious metals to you.. I am thinking circa $25 Silver and $1350 Gold

    Still looking to see new lows on the DOW and ASX. Maybe 1 last hoorah rally on some money printing news.

    Plenty of beaten down stocks on my watchlist, some have even reached or even dropped below what I had pencilled in buy targets, still holding off.. Cash is king at the moment, Have an order in for more of my Bolivian based Aussie Gold miner.. Has dropped to my price a few times but I amstill a little way down on the pecking order, order open till 8th December..
    A beaten down A-REIT is at appealing levels, refinance issues in 2012 keep me cautious.. If it dips more than 10% I may get a few.

    Still have my USD I purchased earlier in the year for my trip that was postponed due to the business ventures.. Bought a few more on October 28th 🙂 Pencilled in for May/June/July 2012 now.

    Businees 1 is going well, have upped sales from 35Kg of Coffee a week to 50Kg.. Had a walk in offer to buy us out.. considering selling my half. Business 2, growing but still not so good.. waiting on school holidays to see if changes and upgrades were worthwhile..

    General position for me is to hold current shares and look to accumulate on next dip.

    Physical Silver is my preferred bullion and Gold Miners my preferred stocks. I expect Silver to outperform Gold, there are just so many more Gold Miners around and the miners really have not had the great rise that gold bullion has so I think they have catch up coming.

  • 7 Lachlan // Nov 24, 2011 at 9:58 pm

    Coffee eh Shoes…i had wondered what you chose to do there. Interesting. Wouldn’t suit me..I’d drink it all 🙂

    Actually I was talking US gold as maybe you might be too. The AUD gold I am very bullish and have taken an etf position at 158.5 to speculate on a the next move I believe to be through 2000. I am watching closely the aud/usd which has been turning bearish last few days after breaking down through 1.02 to parity support area. Still it may bounce here or around 94/95. Other than that I think the asx200 looks ok but would have a neutral trading stance anyhow. Everything is range bound I guess but at least the metals are sold down here despite possibility of one last capitulation. Silver will be the weaker but that is fine and I have physical gold and silver. Silver will go up bigger later imo. I guess the whole show would be sold down before any qe was likely to start…guessing the predators will be shaking out and loading up for this next spurt. If we go to a lower low as you say that will be a solid shake out. I will only add on the dip. Inflation will continue after.
    BTW I am interested in Telstra shares due to the yields… and price seems steady. I’m not sure how they add up…need to learn to value these things ya know.. to compliment price technical evaluation.
    As a physical asset, pm’s aside, I like to stack my mining reveg seeds (build inventory while crops are heavy) and the future looks decent… if you’re a believer in the boom. Sure looks booming from where I am. QLD is being turned upside down. Lot of farms caught up in the middle though.

  • 8 Lachlan // Nov 24, 2011 at 10:01 pm

    my bearish targets (not calls) for aud usd are around 88 and 80 but just watching for now

  • 9 Ross T // Nov 24, 2011 at 10:02 pm

    So many governments continue to spend beyond their tax raisings, Even the Goose will be going for more borrowings shortly, so all the central banks have the same problem – going to the market for more when they know their economies do not have the growth (with the possible exception of China and the RISC) to support the bond rate “guaranteed” or go and print.
    Iceland took their medicine, and a couple of euro govts have been shaken already, but there is much more to come. More serious forays into gold, silver and commodities by investors sick of being ripped off will be needed to sort them out once and for all. The longer investors accept the status quo the longer the recession.

  • 10 Lachlan // Nov 25, 2011 at 11:03 am

    Just purchased another 1kg block Ag of my favourites for accumulating. Like the Perth mint 20 X 1oz coin tubes too.

    Its cheap enough and if the capitulation comes I probably wont be around for the ten minutes it takes to buy before the inventory is wiped out.
    Chinese saving model is my mo 😉

  • 11 Greg Atkinson // Nov 27, 2011 at 4:38 pm

    Ross the core of the problem in my view is the obsession governments, economists & policy makers have with GDP. I think we need to focus more on GNP, productivity, debt and a few other measures and forget about GDP.

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