James Turk & John Embry

The experts are still very bullish on the precious metals longer term. (Years, David Morgan has mentioned 2016)  The fundamental reasons for holding and investing in the PM's are still solid.  The cartel cannot suppress the price forever.

David Morgan Interview

Gold Double Bottom

Gold has declined back to the lows that were produced in late December 2011 and had a reversal day which shot it up $34 for a close of ~$1575.

Previous posts mentioned that a potential uptick would occur due to the oversold RSI and Slow Stochastics readings.  Both are now heading in the upwards direction (Blue Squares), but will the trend continue?  Especially going into the summer months...?

Circled in Pink are the low points over the last 6 months which many would call a double bottom.  Is the 1530 area the bottom for Gold in 2012?  It's anyone's guess at this point.  It may be a good area to add to a position for those waiting to get into the market.  (And for those that do not believe that this bull market is over).

I'm expecting the trading range to continue until late August, early September.  The seasonals at that time may kick Gold back to the highs that were produced last year.

Gold and Silver stocks are trading at yearly lows, P/E ratios are low for many of the senior and mid tier producers.  When most people want to sell, the Wall Street sharks will gladly take your shares and anyone else that wants to cough them up.  Ride out this storm and if your want to get out, wait for the next oversold / Parabolic move in the HUI, GDX, GDXJ.  (This may be a while)

Gold - Bottom soon?

Gold is still in a sell off downtrend which may be bottoming out soon ?  Sometimes a stock will over shoot to the upside and to the downside before a reversal. Gold may produce a double bottom near the $1550 level which was near the end of December 2011. (Indicated with the light blue line)

If there is a breach through the $1550 area, Gold may do a 100% retracement back to the low point before last summers rally which would be near the $1475 area.

The 50 dma crossed over the 200 dma a few weeks ago indicated with the red arrow.  RSI and Slow Stochastics are oversold, so a rebound to the upside may be realized within a week?  That is unless the sell off continues and the Slow Stochastics become embedded to the downside.

This may be a good time for shorts to cover their positions? Going into June and July, more consolidation and volatility is probable.

Bottom fishing Gold

Sell in May and go away until Labor Day, is there any truth to this?  Specifically with the Gold market?  Maybe...

Mid term, Gold is in a down trend with lower highs since the top back in August 2011.  It may retrace back to the low in December if the trend continues. No one really knows where the bottom will be for this short term bearish Gold market.  

Should it break the December low, the next significant support low is back in July 2011 just under 1500. That will be a 100% retracement from the major summer rally last year.

RSI and Slow Stochastics are in the oversold area which typically rebounds within a few days.  If the slow stochastic embeds, Gold will be heading lower.  Many see this a a buying opportunity and will be accumulating.

This consolidation period will most likely last for the next few months.  The seasonal demand for Gold in August / September may be the catalyst for the next uptrend. ?

Gold, Silver, HUI/Gold Ratio

3 year Gold chart, the consolidation continues.  Gold is still trading under the 200 day moving average and is in a slight downtrend.  A mid term wedge pattern is formed which typically ends with a break up or down, we should see some movement one way or another within a few months...?  Possibly post summer...?

3 year Silver chart - A clear downtrend is seen with Silver as well as a mid to long term wedge pattern. It is trading below the 200 day moving average and the RSI and Slow Stochastics are near the oversold level. Similar to Gold, the price will typically break either up or down through the wedge trend lines. The question is, which way is it going to break?

If the cartel want's to cover their shorts, expect the price to break down.  They can load up on ZSL, purchase puts on SLV and short the futures contracts and make a lot of fiat. Maybe the CME will raise margin a few times to slam the price back to the low 20'ies?  Easy money when you know when the margin increases will be announced and in effect.

If Silver should get slammed, the cartel as well as others (Soro's, Carlos Slim, Goldman, etc...) will probably go long to make a few more fiat bucks. A few hundred million is pocket change for them, but they will take the profit...

Gold/HUI Ratio  (HUI Index divided into Gold)  Gold and Silver stocks are trading at lows that haven't been seen in a few years.  Why purchase Gold or Silver shares when the S&P500 is up 8.87% YTD?  (For reference, the GDX is down 14% YTD)

The long term PM charts are still in a bull market, so those with physical bullion can just go about their business without worry. The PM savings account should not be viewed in fiat currency, but in how many ounces you actually own.

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