Monday, January 31, 2011

Gold Jan 31, 2011

Daily chart of Gold going back to early December 2010. Gold has been in a downtrend since the start of the 2011 year which is fairly typical after the run up it had since August/September.

Gold is currently trading under the short term, mid term AND longer term 100 day moving average which is bearish.
The 15dma crossed over the 50dma on 1/20.  The 15dma is close to crossing over the 100 dma (Bearish)
Stochastics are in the lower oversold area with the K line above 20 and rising. (Neutral)
MACD Histogram is starting to head back towards the 0 mid line. (Bullish)
Gold is trading just above the fibonacci retracement level of 61.8.
Today was an inside trading day, it may consolidate near this level before breaking either to the upside or downside. Fundamentally, nothing has changed, only that someone can now purchase Gold for $100 below last years high.
Short term- Bearish
Mid term- Neutral
Long term - Bullish

Sunday, January 30, 2011

Gold Production

Here is an interesting video on how Gold is mined in Africa, refined, used, coveted and reclaimed. Follow the process from rock to a 99.99 pure Gold bar.

Thursday, January 27, 2011

Jan 27th

Nothing fundamentally has changed for Gold, it is in a downtrend and many people that own Gold just tune out and not pay too much attention to the market.  Gold closed down 31 to 1315 and is currently down a little more in afterhour another 3 to 1312.  The market has a way of shaking people out of their positions at times like these, especially when some bought in last August near these prices. This is where TRADING is a handy tool.

I wrote an entry a few weeks ago on a possible investment allocation in the PM markets. A longterm physical Gold/Silver position in Coins and Bars, long/medium term position in miners, and a percentage for swing trading miners.

It is my guess that many institutions and hedge funds are short Gold and Silver and have made quite a bit of money.  They still have long positions in this multiyear bull market and they know it is most likely going to head higher this year and beyond. They also know that nothing continues to go up, up and away. What investment does?  You can't name one.  So based on that, they will short the market when the technical indicators advise to do so and book nice profits.

The market will eventually turn around, most likely in February as mentioned before.  Next support areas are 1313, 1300 which is the fibonacci 50% retracement level and at the 200 day moving average of 1280.

Tuesday, January 25, 2011

Gold correction January 2011

Daily chart of Gold going back to the breakout in August, 2010.  Fibonacci retracement drawn from the beginning of the breakout to the high in December 2010.

Daily chart of Gold going back to October 2010. Gold has been in a trading range between the lower 1300's to just above the 1400 level, about $100.
Gold is currently trading under the short term, mid term AND longer term 100 day moving average which is bearish.
Stochastics are in the lower oversold area with the K and D line under 20. (2nd day under 20, a third day may mean prices may head down to the low 1300, maybe lower).
It is trading along the bottom of the lower bollinger band and is at the support level of 1331, the November break low. The fibonacci retracement level of 61.8 is also at this area and should provide some support.
If it should pierce the 1331 level, the next support area is the October 2010 break low of 1313, then onto the even number of 1300 which is the 50% retracement level on based on the fibonacci that is drawn.

If your trading, you are probably already out of any long Gold tracking ETF's. the pro's that are short Gold may start covering their positions in the low 1300's.  Many people will be watching this level and investor interest should be high and should provide support. 1250 is not out of the question.

Silver is still more volitile and can drop to the sub 26 level before support.  Buying opportunity for those that have been waiting.  February should be a much better month for the precious metals.

Monday, January 24, 2011

Peter Schiff on China and the US Dollar

The invisible tax is creeping up on us, INFLATION.  You already know that gas and food costs are rising, Peter just reiterates this in this interview.  As for Gold, it may see a bottom somewhere near the $1300 level.  February should be a better month for the precious metals. This presents a buying opportunity as a year from now, this may look like a typical downtrend just like Feb last year.

Sunday, January 23, 2011

January 2011 Gold pullback

Daily chart of Gold going back to October 2010. You can see Gold has been in a trading range between the lower 1300's and the 1400 level, about $100.
Gold is currently trading under the short term, mid term AND longer term 100 day moving average which is a bearish sign.
Stochastics are in the lower overbought area with the K line under 20.
It is trading along the bottom of the lower bollinger band and is approaching the November break low of 1331, the next support level.
If it should pierce the 1331 level, we may see the October 2010 break low of 1313, then onto the even number of 1300.

Is this something to worry about? If you have physical Gold and have been a long term investor, NO.  Nothing fundamentally has changed, the governments around the world are still 'printing' money and the economic situation worldwide is still unstable. Gold is still the place to be.

Now if your invested in mining stocks, that is another story. When Gold/Silver does correct, the miners will typically go down much more depending upon the company. Explorers and Juniors will tend to break to the downside much more than mid tier and senior miners that are cash flow positive and have earning. That is the bottom line. I suggest as well as many others that people do NOT go on margin to purchase any stocks, especially in Gold and Silver mining because of this volatility.

One of the best ways to invest in a long term bull market is to dollar cost average into it. Every month on a certain day, purchase X amount of dollars into the investment without regards to the price. It can be 5 Silver Eagles, 1 or 5 ounce bars, Gold, Palladium, etc........ It depends upon your financial situation. Some can purchase a few coins of Silver, some may be able to purchase 10 Gold Eagles...   Some may want to purchase 10 shares of a physical backed ETF each month.  Sprott Asset Management is still acquiring the Silver it needs for their newly formed ETF, PSLV.

Wednesday, January 19, 2011

Bubble Risk of Gold ETF's

Interesting view of from a director of 'ETF Research'

No major changes with Gold or Silver, they are still in a trading range.  Some have said that the professionals have placed 'Puts' on Gold and have shorted it down only to buy it back long.  You can make money when Gold trends both up and down.  Most of us do not have the time for this type of trading as we do not have access to a trading screen during the working / trading day.

Sunday, January 16, 2011

Jan 16 Gold & Silver

Gold has been in another pullback since the start of the year and closed at 1359.  This decline should be short lived and is a buying opportunity for those waiting to get into the market or to add to their positions. (Physical coins, bars or mining stocks)

The question is, how low will it go?  Based on previous lows, the next support levels are:
Lower Bollinger band:  1353
100 day moving average: 1344
Nov 17 low: 1331
Oct 5th low: 1313
200 day moving average:  1272 (not shown on chart)

Keep an eye on the market next week as Gold may see a bottom for the short term. One of the hardest things to do is to time the market and buy at the bottom or sell at the top. (For swing traders/futures/options). Professional traders are most likely accumulating positions on the way down and on the way back up looking to sell during the next break high above the Dec 7th 1432 an ounce.

 Here is a weekly chart of Silver going back to late 2008.  There is a fibonacci drawn from the low in 2008 to a peak in May of 2009.  The 261.8 level is right around the $30 level and is a major resistance area. (Based on the fibonacci low and high, Silver went right through the 161.8 level)  Silver had a great 2010 year up over 80%, so a correction is due. The 30 level will eventually be a support area rather than a resistance level. At that time, Silver Eagles will be >35 each at that time...

As with Gold, this is another buying opportunity for those that believe that Silver is headed higher. Keep an eye on it this coming week for a potential near term bottom.

Thursday, January 13, 2011

Jan 13th Gold

Still in a trading range and below the short term moving average. Not too much happening, but I expect a run to the upside by spring followed by the typical summer pullback and trading range.  Nothing to do if your long physical, just sit back and accumulate on the pullbacks. 

Swing traders can definitely see a pattern here with a triple top and potentially a 4th coming up soon.

Silver has had a ceiling at the $30 level which should be support by spring and possibly a base for the summer.  I just purchased more Silver Eagle coins tonight from Bullion Direct at $31.  Not a bad price as other sites were selling them for $33+.  Accumulate while you can at these prices as next year you may look back and ask yourself why you did not buy...

Mark Cutifani, CEO of Anglogold Ashanti

Monday, January 10, 2011

Robert Griffiths on CNBC, 'Not owning gold is a form of instanity'


Gold had a small upside day today after 5 straight down days in a row.  Expect the trading range to continue until it breaks the $1400 area and uses it for support, not resistance. The last high was made on Dec 7th and once this is taken out, a move to the $1500 area should be the next consolidation zone.

Sunday, January 9, 2011

Gold Jan 7th

Gold is still in the trading range between 1315 in early Oct to the high of 1432 in early December. Gold has had a good run during the fall and is in a typical consolidation period before the next move, for the bulls, a move to the upside.
How low can this pullback go? 
The last break low was 1361 which was pierced, but closed a little higher at 1368. The lower bollinger band is just under this level.
The next support is at the 100 day moving average at 1337.
The next low is at 1331 which was in November.
The October low was at 1315 which is only $110 under the all time high.  Gold can move +50 in one day, so it can recover very quickly. With countries like China, India and Russia purchasing as much Gold as they can get, I will assume that this correction will not last long. We may see a bottom this coming week and a possible rise near the end of the week if not sooner.  If it does break lower, a potential buying opportunity for those on the sideline will be presented in both physical and mining shares.

Thursday, January 6, 2011

Gold Jan 6th

Gold has pulled back from the last high of $1424 to $1371.5, just above the last major break low of $1361.  If $1361 is breached (Bollinger band bottom and the last break low support), the next support level will be the 100 day moving average which is at $1335. This area may be a buying opportunity for those waiting for a correction.  The $1315 area is the lower support line on this chart which is a possibility should the price continue the downwards trend of lower lows and lower highs. 

January is typically a positive month for Gold based on seasonal data over the past 20 years.  It started off the month at $1413 an ounce and has traded down since. You can see the chart above is cyclical and the next break up after this consolidation period may be the move to the $1500 level.

Tuesday, January 4, 2011

Gold and Silver Pullback

Gold was down about 2.78%,  Silver was down about 5.2%. It did not take out any major lows or interrupt the upwards trend.

I did notice a time trend with Silver. The lines that you see are Fibonacci time zones and they have indicated a drop after the 18th day. I'm not sure if it is a coincidence, but something to watch for the swing traders.

Here is a Silver Seasonals chart from  Both January and February have been positive months for Silver between 2000 and 2009.  Time will tell if we see the same positive pattern for 2011.

We may have a limited time under $30 an ounce for Silver.  Once the $30 level becomes support instead of resistance, those Silver Eagles selling at 28-29 now looks like a total bargain...

Monday, January 3, 2011

Precious Metals investing allocation

For those that are new to precious metals investing, you should first determine how much of your investment portfolio will be allocated to this sector.  You will also need to determine which type of metal that you will be investing in. For most people, it is Gold first, then Silver.

In an inflationary economy, most commodities will rise, some more than others. Take a look at other commodities over the past 5 months like Sugar, Corn, Cotton, Oil they are all up just like the metals.  But investing in precious metals is a form of money unlike investing in or trading other 'soft' commodities. Other metals that are rising with Gold and Silver are Platinum, Palladium, Copper and the 'rare earth' metals like Lithium.

One may want to allocate 40% of their portfolio into precious metals after studying the history of Gold and Silver and understanding what the governments around the world are doing to their fiat currency.

For quite a few people, they will allocate that 40% into physical Gold bars and coins which is and has been a safe and great investment over the past decade.  Some may want to allocate 50% physical Gold and 50% physical Silver or some percentage into both of those metals.

My current investment allocation is physical Silver, core Silver and Gold mining stocks and cash that I swing trade ETF's and miners.

If one were to choose an investment allocation like this, they can determine how much of their portfolio they want to allocate into each category. If you want to be conservative, one could place 3/4 of their portfolio into physical Gold and Silver. With the remaining 1/4, they can purchase solid Gold and Silver mining shares. When you have an allocation like this, you do not need to watch the market that much. One could get away with a check once a week with no major worries on how the financial markets are doing.

Some people like myself have the time to monitor the markets on a daily basis, so I have a certain percentage of my PM investment for 'Swing trading' ETF's and various miners. It is time consuming, so it is only for those that have the time to study miners and can apply technical analysis on an entry point and a exit point.

If you do not have the time to study the markets, it is easier to purchase physical Gold and Silver bars and coins. With the new tax laws on reporting $600 transactions, you may want to keep your purchases to 1 ounce Silver coins and bars up to 5 ounces. For Gold, one can purchase increments of the Gold Eagle coins and bars of various weights.  The US Mint produces Gold Eagles in 1/10 ounce, 1/4 ounce, 1/2 ounce and 1 ounce pieces.  When you purchase Gold in smaller quantities, you can sell small pieces of your portfolio without liquidating everything.

On a last note, Bullion Direct states that they are required by the IRS to report transactions over $10,000.

Selling gold and getting ripped off

People that are unaware of the true value of their gold are getting ripped off by various Gold buyers.  We are a long way from the top for Gold and Silver.

Sunday, January 2, 2011

Gold Dec 31st

The last trading day for 2010 brought a $18 gain to the upside, what a way to close out the year.  You can see a similar pattern over the past 3 months where Gold has been in a trading range with peaks and valleys.  The peaks have been reaching new highs and we may see a new one if this rally should continue into the early 2011 year.

The MACD Histogram broke to the positive side and the momentum is heading higher. Gold may test the $1432 high during the last rally in early December.

Both Gold and Silver stocks are performing well and should continue with the rising prices.

Saturday, January 1, 2011

Happy New Year

Happy and prosperous New Years to all!