HUI Gold Bugs Index potential breakout

With Gold trading near $1835 and ounce and Silver at $41.75, the Gold and Silver miners are starting to get some attention.  Speculators on Wall Street may be taking positions in the Senior, Mid tier and Junior miners looking to acquire a nice profit in the 4th quarter of 2011.

Here is the Amex HUI Gold Bugs Index going back to September 2009.  It broke out above the trading highs that were produced in late 2009 and early 2010 in September 2010.  Since then, the HUI has been in a another trading range between the fibonacci 100% level and the 161.8 level.

There is a triple bottom which is almost a mirror image of the triple top that was produced a year earlier. A perfect example of a previous high that is now support. The HUI also touched the top fibonacci range (161.8) 4 times which has been providing heavy resistance.

With PM prices on the rise, quarterly earnings for all quality miners should meet or surpass expectations. Look for the HUI Index to break above the 609 high that was produced in early April this year.  With September around the corner, I'm expecting a breakout with the quality Gold and Silver miners. It has been quite a waiting game and as the saying goes, 'all good things to those who wait'.

Gold - continuing the trend

Not really too much to say about the price action of Gold over the last ~2 months.

Gold is trading above the 3 moving averages, short 15day, medium 50day and long 100day.  With September around the corner, Gold should continue to appreciate.  Out of any month in the calendar year, September has the highest percentage return over the last 30 years. 
Professional traders know the seasonals for the Gold market and will be accumulating positions. Hedge funds will also jump in and push the price higher,,,,,,,,,,,,,,,,,,,,,,,,,,,,,until the RSI is overbought and a short selloff occurs.  But they will be back in again once it bottoms out.

3 month daily chart of Silver

  
Silver is generally drifting higher and is above the 15dma. The 50dma is close to a crossover of the 100dma which should present a bullish setup going into September.  Support should soon be at $40 an ounce and with the seasonal trend up next month, Silver should see a run toward the $50 level before the end of the year.

Gold and Silver miners should start producing new yearly highs as both Gold and Silver appreciates going into the 4th quarter.  Keep your eye on the HUI index breaking out and over the 609 level.

Gold breaks $1900, miners ready to break out

Daily chart of the Dec Gold futures, $1917.9 was reached at 3pm Pacific Std time....  yeah for all of us longs!  (We'll see what the Comex does in the near future)    Gold has gone up from $1800 to $1900 in 4 DAYS, I think this is a first.

Here is a 2 year daily chart of the HUI, the AMEX Gold BUG's Index:

The high for the HUI over the last 2 years is 609 and it closed today at 605.  If you have solid juniors and mid tier Gold and Silver companies, keep your eye on them as hedge funds and institutions may be buying up shares which should finally drive the price higher.  The shorts will eventually get squeezed and will buy back at a major loss....   High Frequency trading algorithms should also increase the volume with the miners.   Once the HUI breaks 609 and trades above that level for a week or two, the miners should be off to the races.

Venezuelan President Hugo Chavez - Send our Gold back

From the Nasdaq.com site:

The week's biggest precious metals-related story probably came from the news that demagogic Venezuelan president Hugo Chavez decided to repatriate the vast majority of the nation's gold holdings from vaults in England, including 99 tons from the Bank of England itself. In total, Venezuela will return 211 tons of gold to its shores, with most of the metal traveling by ship.

Chavez cited concerns about foreign powers seizing the country's gold reserves, possibly as retaliation for the government's nationalization of certain key industries or as part of some more concerted campaign. Libya, for instance, has had some of its overseas reserves frozen as NATO conducts a bombing campaign and assists the rebels fighting Colonel Muammar Gadhafi.

Many 'goldbugs' may see Chavez's move as validating - the more hardcore gold buyers are fixated on physical possession and delivery, citing the benefits of the metal as a security in times of civil unrest, chaos, anarchy and hyperinflation. More conventional gold traders are content to take their profits on electronic shares or claims on some centrally-stored repository of gold. 

This is going to be interesting to hear the follow up stories on this one.  You have probably heard of 'fractional banking' where it is legal for US Banks to lend out more money than they actually have.  Well, some have suggested that some Central Banks have done the same with the precious metals that they are holding in their vaults.  Keep your eye on this one.

Also, there is a FOMC meeting next week on Friday.  Last year's gave birth to QE2.......we'll see what this year will bring.  For speculation, the bankers want more bail out money right?  (Who doesn't want more money to invest?  Or steel?).   The large institutions can bring down the financial markets even more this coming week to show the fed that the economy is still weak which validates the need for QE3 or whatever BS they will be calling it.  Bottom line is that they will be increasing the money supply even more, inflation will go up and the lower / middle class will pay the 'tax'....  

I personally have close to ZERO savings as I have put most of my capital in either Silver, PM ETF's or mining shares.

Gold / Silver up before Sept?

Gold is still holding onto the massive gain over the last few weeks / months.  It has run up from a low of $1478 on July 1st to the recent high of $1814 last week.

Trading above the 100 day moving average since last January. Very bullish chart formation with the short term moving average above the 50 and the 50 above the 100.

Silver is edging it's way up and taking a back seat to the Gold run up over the past few weeks.  (Silver lead Gold from Feb to April).  Silver is trading above the $40 level and is also above the 15 dma which is bullish for the metal.  With the seasonal trend up for the precious metals in September, the $40 level can be a solid support level now.  $30 Silver may be a thing of the past.......  Everyone had their chance to pick up Silver in the low $30 range over the last few months.

Look for the Gold Silver ratio to drop toward the end of the year.

Silver Wheaton CEO podcast

Geoff Candy from Mineweb interview's Silver Wheaton's CEO Randy Smallwood. Investors in the Silver space will learn Silver Wheaton's business model, the amount of Silver they acquire over a year, costs, plans for expansion and his 12-18 month price target for Silver.  (I'll give you that one, $50.  I think that is conservative but it's prudent to be so when your reputation is on the line).

Silver Wheaton CEO Randy Smallwood Interview

Disclosure: As of this posting, I am currently long shares of Silver Wheaton.

Silver - trend channel is up

Silver has been in a slight upwards channel since the May selloff.  The upper and lower channel lines can be seen before the breakout / runup in late March and into April.

Look for a possible breakout above the upper channel trendline during the 4th quarter of this year. (September - December)  Silver ETF 'long' swing trades and 'Calls' should be profitable during this 'Seasonal' period.

To start the upwards trend, Silver needs to start trading above the short term moving average.  Then look for the 50 dma to cross over (above) the 100 dma.  When this happens, a lot of traders will most likely get into the market looking to ride the trend up for a few weeks/months.

Silver still $30 range...

Gold hits a new high, but Silver is down over $1...  Gold is leading Silver at this time as it is seen as a 'flight to safety' and 'real' money.  If problems are seen with the economy going forward, industry will not manufacture as much products that include Silver so demand will be diminished.  So investors sell off the metal and switch to the one that is rising...

Daily chart of Silver from Kitco

Silver spiked down to $37 just before 4pm and bounced right back up.  If you wanted to purchase a equity or commodity and had some influence on the price, wouldn't you want it to sell off first then purchase at a cheaper price?  (That's for the big players)

I continue to dollar cost average into Silver while it is still in the $30 range.  (Bought some again today) It is a definite possibility that you will not see Silver in the $30 range after this coming fall season and into 2012. 

As some guru's have suggested, some may want to transfer most of your savings account fiat currency into hard assets, just keeping enough in your checking account for weekly and monthly expenses.  The dollar going forward will continue to be devalued and inflation will continue to eat away at your purchasing power.  Those that keep dollars in a savings account will slowly loose to inflation over time.

James Turk interviews Eric Sprott on Silver

S&P Downgrade from AAA to AA+

Looks like the market is in for another round of selling on Monday and into this week as S&P downgraded the US Credit rating from AAA to AA+ on Saturday.  Of all times to do it huh?  On a Saturday over the weekend.....   It should be no problem for those in a 401k that have moved their position out of the mutual funds and into cash or another fixed income fund.

As of Sunday evening at 8pm PST, Silver is up and is trading at $40.17 (after last weeks sell off),   Gold is at $1696.xx, just shy of $1700.

I am diversifing the remaining cash that I have into Silver...only keeping enough in my checking to pay bills...

 

2011 should be the last year you will see Silver in the $30 range. (Untill the blowoff crash after the parabolic stage....this will most likely be in a few years) 

Gold Silver Ratio

Gold = $1664
Silver = $38.33

Gold Silver Ratio = 43.43

Daily chart of the Gold Silver Ratio from late February, 2011.  You can clearly see a trading range since the Silver selloff / comex margin increases in early May.  The trading range depicted with the blue lines.  Where might a good entry point for Silver buyers be?  It will most likely be at the upper range with Silver dropping and Gold rising or flat.

The Gold Silver ratio will eventually start dropping and break below 40 again.  When?  It's anyone's guess....but the end of this year is a definite possibility.   If Gold reaches $1700 and the Gold/Silver ratio drops to 35 by year end, Silver would then be at $48.57 an ounce.  The spot price is currently at $38.33 which looks 'cheap' compared to where the price may go by the end of the year. (~26% increase from here if the price were to go to $48 by year end.  How much are people getting with a CD or their Savings account?)

Gold is currently leading the precious metals as it is seen as money.  Silver is lagging and anytime you hear that the economy has problems, Silver will most likely be taking a hit.  Why?  Because it is viewed as an industrial metal and if the economy is bad, industry is bad and there will be less Silver consumed into products...... blah blah blah...... That is how it's viewed, so we have to live with the volatility that is inherent with Silver. 

I purchased Silver today and will continue to accumulate going forward. I'm looking for it to drop lower so I can get more at a lower price, especially before the 4th quarter of this year as I am anticipating the seasonal run up with both Silver and Gold.  I am also looking for solid producing Gold/Silver miners to rally in late Aug/Sept.

New high for Gold...(again)

Looks like more and more people are waking up to the financial mess that essentially the whole 'fiat' would is in. Can't fix debt with more debt and those who know that will prosper with both Gold and Silver.  Those that play the hard assets markets right should be able to pay off most of their debt and be free and clear on their primary home and other real estate investments.  Cars, credit cards, boats should all be able to be paid off with the dollars that you accumulated with this massive bull run in Gold/Silver.

A colorful daily chart of Gold from early February, 2011.  $1675.9 is the new high produced! (More inflation is on the way...)

Gold is currently riding near the upper Bollinger band and may trade sideways for a bit before taking off towards the $1700 area.  The moving averages are in a bullish formation, short term over the mid term and the mid term over the long term. (Not all seen on this chart)

 Daily chart of Silver from early February 2011.  The breakout over the last few weeks continues and the upwards trend towards $50 should be met within the 2011 year.  This time, it should break through and may make a run towards $60 by year end. 

I'm holding American Silver Eagles and do not plan to sell until the Gold/Silver ratio is under 20.  I will most likely start selling in percentages of my physical portfolio.  The Gold/Silver ratio may go down to 10/1, no one really knows.  The last time the Gold/Silver ratio was under 20 (in 1980), it did not stay there for too long.

Swing trading Gold/Silver ETF's and solid miners should be profitable going forward and into the end of the year. 

August Gold new high... Monthly chart (No text, blogger issues)

Eric Sprott interview from Jim Puplava

Jim Puplava interviews Eric Sprott. He talks about the physical Silver supply, the May 1st manipulation/crash and Silver's potential future.  Continue to Jim Puplava's website afterwards as he has many good interviews from leading economists and professional hard asset investors.

Eric Sprott Interview