Monday, October 31, 2011

EU (European Union) Gold Silver

Short Ytube vid from Mike Maloney's 'Whygoldsilver' channel talking about the EU kicking the can down the road and how the public is not informed about the precious metals markets.

Saturday, October 29, 2011

Silver miner performance year to date

Below is a year to date daily chart of select Silver miners vs SLV which will represent Silver.  Overall returns can be viewed as the 'strength' of the company as viewed by investors.

It is interesting that not all Silver miners follow the price of Silver as seen above.  Year to date returns as of Oct 28 for SLV and select Silver miners are:

iShares Silver ETF SLV:   20.57%
Fisrt Majestic AG:  36.25%
Endeavour EXK:  26.58%
Global X Silver Miners SIL:  2.5%
Silver Standard SSRI:  -17.76%
Pan American PAAS:  -20.03%

The mid tier Silver miners First Majestic and Endeavour are positive for the year and have out performed the physical Silver year to date while the major Silver miners SSRI and PAAS have under performed. 

I've heard David Morgan state that he was rebalancing his portfolio at the start of this year and it may be something that PM investors may want to do each quarter or on a yearly basis.  He mentioned that he was focusing on mid tier comapanies for 2011 which has been good advice as seen with the companies listed above.

If you were to liquidate your portfolio of PM companies and reinvest the proceeds back into the PM industry, your allocation and the companies that you selected would probably be different than what you have now.  I plan on selling portions of certain miners before the end of 2011 and rebalancing for the 2012 year. 

Thursday, October 27, 2011

PM Breakout, Q4 rally...?

Silver and Gold are both on the move today with speculators accumulating positions. Bullion banks may be taking long positions?  With momentum in the PM markets, hedge funds will push them higher looking for quick profits.

A daily chart of the World Silver Index with a fibonacci retracement from the low in Aug 2010 to the 49 peak in April 2011.  Silver closed above the upper bollinger band and is heading up to the 61.8 fib level. It may have a pullback for a day or two but the next resistence point looks like the $37.50 area.

The mining stocks are rallying with the PM prices but many are still lagging based on year to date returns.  Expect a solid rally into the 4th quarter based on good earnings reports.

Tuesday, October 25, 2011

Speculators back in ?

Both Gold and Silver had a nice little bump up today.  (Potential breakout to the upside)  Looks like some of the speculators may be taking positions in anticipation for some price appreciation in November...? ? ?  Once the chart pattern reveals higher highs and higher lows, hedge funds will most likely be in on the ride up. Most of those on Wall Street can 'smell' money...

Ever wonder why the price of a stock or commodity runs up, consolidates, then runs up again and consolidates at certain prices?  Take a look at Pivot Points, you can Google them for how they are calculated and used.  Today's action with both Gold and Silver hit the top Pivot Point which provided resistance on the upside.

Gold futures 5 minute chart

Silver futures 5 minute chart

Sunday, October 23, 2011

The Great Silver Debate (Kitco)

Interesting debate on Silver price manipulation between GATA's Bill Murphy and CMP Jeffery Christian.

Thursday, October 20, 2011

Gold Trading range

Daily chart of the World Gold Index from February 2011.

A fibonacci retracement is drawn from the lows in Jan to the double peak in Aug / Sept.  Gold is in a trading range between the 61.8% and 50% fibonacci levels.   Gold is up ~13.7% year to date and can also be seen as consolidating after the huge run up between July and early Sept.
The turn of the month may bring a movement either up or down. (Being a PM bull, I'm leaning towards the upside).  Being bullish at this time is opposite to the chart formation as Gold is trading under the 20, 50 and 100 day moving averages.

Next week:  Oct. 27   Comex October gold futures last trading day

Sunday, October 16, 2011

Gold Silver Ratio - Entry points for Silver

Over the last 2 years, the Gold/Silver ratio has had a RSI reading over 70 two times indicated below circled in red. (With the 2nd time was a few weeks ago). The 'overbought' reading can be used as an entry point into the Silver market.

The late January 2010 RSI peak had a Gold/Silver ratio just above 70 which eventually dropped all the way down to the low 30's within 1 year and 3 months.  (A LOT of money was made by hedge funds and trend traders during this period).

The current ratio is at ~52 and many precious metals investors believe that the ratio will eventually end up close to 15/1. (The ratio that our founding fathers wrote in the coinage act of 1792)

With Gold currently at $1680, a 15/1 ratio would place Silver at $112.  One can purchase Silver at $32 an ounce today.  Do you like to purchase items when they are on sale?  How about money that you can get for a ~71% discount?

Sunday, October 9, 2011

Last quarter - Silver up or down?

Silver has had 4 major sell offs/crashes over the last 10 years which were in 2004, 2006, 2008 and this year, 2011.  For the 04, 06 and 08 sell offs, 2 years of the 3 had rallies into the 4th quarter. (04 and 06 which dipped in December).

A yearly chart of 2004 from Kitco:

A yearly chart of 2006 from Kitco:

A yearly chart of 2008 from Kitco:  (Financial Crises Crash year)

A yearly chart of 2011 from Kitco:  (Up to October 7th, 2011)

Will the Silver spot price follow the rally of 2004 and 2006?  Or will it follow the 2008 chart and dip yet again for a small rally in December?   Mark Twain has mentioned 'History doesn't always repeat itself, but often rhymes".    

With the debt issues in Europe, both Gold and Silver _should_ go up.  But when investors are loosing $$$ on other stocks, commodities, currencies, etc,,, they will sell their Gold and Silver to cover the losses.  This can lead to a temporary sell off with the metals, even if they should fundamentally go up.

With that said, I'm leaning towards the rally side for the 4th quarter, but it is really anyone's guess. Especially when you have bullion banks with hundreds of millions of dollars to move the futures markets. When they need to cover a short position, they can drop the market 25% + in a matter of a few days.

Gold is up 14.75% YTD
Silver is up 5.74% YTD

Sunday, October 2, 2011

Technical analysis in a manipulated market

Can you use it and does it work?  Yes, but it depends on your time-frame, risk tolerance and objective.  Here is a year to date daily chart of the World Silver Index.  A fibonacci retracement is drawn from the August 2010 low to the high of late April 2011.

The Silver market is a good place for traders as it has volitility and some safety as the metal will never go to zero.  For traders to make money, they need movement either up or down, so they can either go long or short on their trades, either daily or a swing trade. They just follow the momentum and make money on the short term trends.

For the mid and longer term holders that are not using stops or are holding physical, technical analysis may not be a good tool to use as market manipulators can bring down the market within a few days as seen in May and Sept of this year. Because Silver as seen as both monetary and industrial metal, some may say that the outlook for the economy is weak so there is less industrial demand, justification for the sell-offs.

For long term physical holders of the bullion, you really do not need to look at the price and charts of the metals on a daily basis.  Once a week on a Sunday should be fine as this bull market looks like it will continue for years to come. (Unlike the 1970's PM bull market which lasted for 10 years). If divided into 3 phases, we are still in the 2nd phase.  Between 2013 and 2015 should be exciting times for both Gold and Silver.

I am holding physical metals for the long term and do not care about the price swings up or down. I have another account that I purchase PM ETF's and Gold/Silver miners that I trade.  When you know that this market is heavily manipulated, It's best to take the money are run when you are profitable.  I have a few miners that I have held for more than 1 year and are in the long term capital gains category, but I mostly swing trade as you never know when the cartel will bring down the markets.

As far as the current Silver market, it dropped from the $40 level down to $26.15 in 3 trading sessions.  It has since found support around the 38.2 fibonacci level which is around $30. Many technicians believe that there is support at the moving averages which would have been the 100 day in pink or the 200 day in orange, but you can throw all of that out the window when the manipulators want to bring down the market.

My projection now is for Silver to base and rise back to the $40+ level by the end of the year.  Can the cartel bring down the price even further? Anything is possible, especially when you need to cover large short positions.