Gold still in trading range

Sell in May and go away, come back after Labor Day?  Gold is still in a trading range and looks like it will be that way until some catalyst sparks an uptrend,,, or downtrend...?

Since August of 2011, Gold has traded between $1550 and $1930.  It is under both 50 and 200 day moving averages with the 50 crossing under the 200 last week. (Not bullish)

The RSI and Slow Stocastics looks like they may rebound to the upside for a trend back up.  Gold may just trade sideways until the 'seasonals' kick in which is typically the month of September. The seasonal pattern does not always come into play as last year, Gold and Silver went down for the month of September.

Short and mid term bearish, long term bullish.

As far as the Gold and Silver stocks, they should be pretty close to a bottom unless the PM's sell off for some reason. Their PE ratios are about as low as they have been for years. In a few years, we may look back at the miners in 2012 and see that they were a buy.

Gold = Trading range

Gold has been in a trading range which is closing in on one year.  Based on past price history, this is not unusual as a 1.5 year consolidation period has been seen over the past decade bull market.
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1 year daily chart of the World Gold Index

Gold is trading under the 200 day moving average which is bearish. The 100 day ma crossed over the 200 day ma on 4/5/12 which is also bearish for Gold.  This can also be seen as an accumulation point for those that believe that higher prices may be coming in the mid to long term.  Over the past decade, Gold has not spent much time below the 200 day ma, we'll soon find out about the current market as May and summer is a few months away.

Here is a podcast interview from GoldSilver.com with Simon Black. He still sees the long term bull market in Gold heading higher and talks about the bubble that has been growing, debt and the debasement of fiat currencies. Also diversifying portfolios outside of the United States.

http://youtu.be/HnnTFfAOO4Y

Silver rally or continued downtrend?

Below is a daily chart of Silver over the last 3 years.  Since the high that was produced in the early part of 2011, Silver can be seen in a technical downtrend indicated by the blue trendlines.

A technician can say that it is producing mid to long term lower highs and lower lows, the definition of a technical down trend.  Silver is also trading below the 50 and 200 day moving average which is bearish.

On the positive side (for the bulls out there), even though the chart may be seen in a downtrend, the RSI is on a uptrend. Technician's call this a divergence and may lead to higher prices sometime in the future...? 

See the question marks under the green upward arrow...   Why the question marks?  Although this divergence is seen as a potential upwards bias in the future, price manipulation can swing prices and investor psychology away from this market faster than dropping a hot potato. 

Why would anyone invest in the Silver market when you know that the CME can raise margin requirements any time they please and drop the price by 10%+ in a day? (While they go short and make a killing along with those at the CFTC).   It's safer to trade AAPL or Amazon, etc...

The cartel will eventually want to make some $$$ going long at some time as they cannot control the LONG TERM trend which is up.  As long as worldwide countries race to debase, Silver will be a great investment for long term holders.

Gold and Silver stocks heading lower?

As if they aren't low enough, Gold and Silver stocks are at a multi year low based on the ETF GDX.  The GDX is similar to the HUI and XAU as it contains large to mid cap Gold and Silver stocks.

Here is a one year chart of the returns for GLD (representing Gold) and the GDX:

Gold has a 15% return and the GDX has a -21% return.

Here is a 5 year chart of the returns for GLD and GDX:

Gold has a 136% return and GDX has 11% return.  Why hasn't the Gold and Silver stocks kept up with the bullion?  Some say that the ETF's are to blame as they do not carry the high risk that the miners have.  Some may believe that Gold has hit a top and will only go down from here, so why invest in a Gold miner?

Physical metals are taxed as a collectible and at a higher rate (28%) than selling a stock / bullion ETF. Excerpt taken from Groco.com

Calculating Capital Gains Tax on the Sale of a Collectible

Uncle Sam takes a tax bite out of almost every asset sold and collectibles are no exception. Indeed, collectibles are currently subject to one of the highest rates of federal taxation on investment property. Capital gain from the sale of a collectible is taxed at 28 percent.

Here is the GDX divided into Gold bullion over the past 3 years:

You can easily see that the Gold / Silver stocks have significantly under-performed the physical bullion.  Some may say that it's best to only purchase physical bullion and that any paper asset is asking for trouble. As Rick Rule has mentioned in past seminars (Like the SF Hard Assets that I went to last November), you want to buy items when they are on sale, not at retail price.  

One way to approach the miners is accumulating a position in the GDX to spread out risk.  It is hard to pick the exact bottom or top, so dollar cost averaging into the ETF would be a good way to go if one believes that the miners will rally at some point in the future.

Gold Silver Ratio mid April

Like Gold and Silver, the ratio is also in a large trading range which does not look like it is gong to make a significant move one way or another.  That is until a catalyst of some kind moves one of the metals while the other is stagnant.

The ratio is above the 50 and 200 day moving average - Bullish
Even though it has been in a trading range since last October, it is on an ascent - Bullish
It is overbought on the Slow Stochastics indicator - Bullish if it should embed, otherwise, Bearish.

Looks like some heavy resistance near the 58 level which was a low point in September 2010. (Green line)

There is not too much exciting here, the ratio may continue this trading range until fall and the 'seasonals' come into play.  (If they do this year).

Silver Manipulation.....?

There can't be any manipulation in the Silver or Gold market, the U.S. has the CTFC to regulate the futures markets.  (And what a fine job they are doing!) The U.S. also has the SEC to monitor the financial markets, Martha Stewart knows what will happen when a little insider trading happens...

Here is a video of some nice people from the banking sector and quite a bit of data regarding the price of Silver over the last few years...

SMX to launch gold, silver contracts based on Indian prices

Another Gold and Silver Exchange?  Looks like Singapore want's to start 'playing' the Gold / Silver trading game. I haven't heard very much about the Pan Asia Gold Exchange lately, but I haven't done any research on it either. Having 'independent' exchanges around the world may not be beneficial to the cartel's stranglehold on the short term prices.  I'm sure they would not want Singapore to start this exchange which may start other countries to do the same.

Singapore Mercantile Exchange (SMX), which is backed by Financial Technologies (India), today said it will launch gold and silver contracts based on Indian prices for the global market next month.

SMX E-Gold would offer a convenient trading unit of one kilogram to be traded based on gold future prices in India but quoted in US dollars, SMX said, adding it would be launched on May 8.

SMX E-Silver would trade in 30-kg lot based on silver future prices in India but quoted in US dollars, said SMX.

Both contracts would be cash settled against the benchmark Gold and Silver futures contracts in the East, it said.

"Both contracts are similar to those traded on Multi Commodity Exchange of India (MCX), the sister exchange of SMX," said SMX, chief executive officer, V Hariharan.

"We are introducing the same contracts from our sister exchange in India to the global market in US dollars," he said.

He said SMX would consider launching MCX's other successful contracts for the global market as part of its expansion plans.

Participants in the SMX E-Gold and SMX E-Silver would be able to use and benefit from pricing in the most liquid Gold and Silver futures contracts in Asia, said SMX.

The participants would be able to hedge their exposure based on one of the most liquid precious metals futures and physical market and link hedging to other similar contracts in the world.

Meanwhile, SMX has launched a campaign to expand its trading members, and increase the membership options.

It has started offering transferable, non-transferable and associate trade membership, replacing its existing single category of trade membership.

Jignesh Shah, Vice-Chairman, SMX said, "The new membership offerings will spur entrepreneurship and are aimed at attracting the new generation physical and OTC commodity traders to the futures market to hedge their risks."

Eric Sprott Interview on Martin Ellis

Both Gold and Silver and still floundering in their 'large' trading ranges and may continue for some time until some type of catalyst occurs.  (Like the bullion banks want to make fiat going long before they short the crap out of them again).  In the mean time, here is an interview from Eric Sprott.   Just stay long and don't let the PM bear market and consolidation affect your investing psychology. 

Bernanke parody

Bernanke parody on money printing...  It's semi-funny in a way...

Silver and Gold Stocks

Not much interest in both Silver and Gold stocks lately as the HUI index is near the lows around the summer of 2010. The following is a 3 year chart of the HUI index.  It is under the 50 and 200 day moving average which is not a good sign for the index. The RSI and Slow Stochastics are oversold, so a bounce may come sometime within the next few weeks.  Can it go lower???  One word:  Yes

Those that believe that Gold is in a potential bubble and the 1900+ peak last year was the top will not purchase any PM share long and may even go short which has been the trade to make money over the past few months.  Even if money managers wanted to invest in the PM sector, they can always purchase the ETF's and reduce risk.

Here is a chart of the Gold / HUI Index ratio over the past 3 years.  The current price of the HUI index divided by Gold.  It is currently taking 3.7 of the HUI Index to equal one ounce of Gold which is at a high over the past 3+ years.

Most of the miners have been selling Gold / Silver at higher prices than last year and the year before, so their PE ratios have dropped.  Some pay a dividend, so they are getting attractive to those that wish to speculate in this sector.

Investors in this sector may need to wait out over the summer months and into the fall before a potential rally is seen.... ?   Some large institutions may want the prices to go lower so they can pick up some bargains. (They want your shares)

Gold trading range,,,,for ?

As mentioned in previous posts, Gold is in a huge trading range and one that may be around for a little while.

It could be in this pattern for a year and a half based on trading ranges in the past. (As noted in a post a few weeks ago).

Only those that swing trade the ups and downs are making any money in the PM markets.  Most are unable to do this because there are people that actually work for a living and do not sit in front of their computers M-F to monitor and trade the markets.

We just trade one currency for another, one may eventually become close to worthless and the other will not only retain purchasing power, but increase purchasing power. One is in a long term bull market and the other is in a long term bear market.

With today's volatile markets, it's just best to turn off the 'kitco' page and focus on family or your hobby.

S. Carolina bill to use Gold and Silver in the future?

Are more states going to use Gold and Silver as money?  (It already is.....but)

At the end, the reporter mentions that Ben Bernanke has stated "going back to the Gold standard would not work because the US doesn't have enough Gold to cover it's debts".   What does this tell you?  In 2013, the US is going to hit the debt ceiling again and those morons in government are going to increase it and spend more.  Do the greedy bankers want more fiat to speculate in the financial markets?  Since congress is bought off by the Wall Street bankers, they can do just about anything they want.

Does an increase in money supply mean that Gold and Silver will go up?  Yes in the long term, no in the mid to short term.  They can raise the debt ceiling, produce more digital fiat and the price for the PM's CAN go DOWN......   It's a farce, but what can you say when JPM, Goldman, HSBC and the banking elite control the price mid and short term...???