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

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.

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.

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.

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.

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.

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.