Thursday, March 22, 2012

PM's in Trading Range

Not too much happening in the PM market these days... quite boring as they have been in a fairly large trading range and currently heading towards the lower end of the range.  The day traders and swing traders are making a little bit of money, but there are no solid trends up or down.

Here is a weekly chart of the World Gold Index.  I've highlighted 2 area's in the past of new highs that were produced followed by steep declines.

A new high was produced in 5/2006 and it did not reach the same price until 9/2007, 1 year and 4 months later.
Another new high was produced in 3/2008 followed by the financial crises / sell off and that price level was not reached again until 9/2009, 1 year and 6 months later.

A new high was produced in 9/2011 and Gold has seen a sell off. Based on the 2 examples above, Gold may be in a trading range for over a year.  If that is the case, Gold will not reach the $1920 until Sept 2012 or latter in the year...?  Possibly next year if it takes 1 year and 6 months. (March 2013)

The weekly World Silver Index is an ugly chart IMO. I've drawn major upper and lower trend lines that cut off the overbought and oversold areas.  Silver is currently under the lower trend line which is in the oversold area based on the chart.

Silver has also been in very long consolidation trading ranges.  The parabolic peaks are spaced about 2 years apart, but missed 2010.  Could it spike up again before 2 years? Possible, but probably not likely.  (I'm going out on a limb here).  I personally believe that it should be trading much higher as the Gold Silver Ratio should be around ~20/1 or so...

I'm content with just sitting tight and accumulating either shares or Silver Eagles when possible.  This is in general a long term 'investment' aside from those that swing trade the ETF's and equities.  I have the next major target level of $77 (fibonacci) after it pierces $50. 

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