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Posts Tagged ‘silver new 52 week highs’

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Investors Rush Into Gold and Silver as U.S. Treasuries Show Signs Of Weakness

In Market Analysis on September 20, 2010 at 5:47 pm

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Since the emergence of the European Debt crisis in April 2010, treasuries have been in a strong uptrend as investors have been seeking protection from risky assets.April to August 2010 was a deflationary period, similar to the fourth quarter of 2008 when treasuries soared higher before the massive government stimulus.  Stocks have been in a five month correction.  Now, in September 2010, long term treasuries are suffering a correction and break of long term trend support.

Long term treasuries are unable to find support at the 50 day moving average.  I highlighted a few weeks ago that treasuries appear to be making a top as the Chinese cut back on U.S. debt. The massive efforts from Washington to prevent a double dip appear to be putting a respite in the decline in equity markets.  It also appears that  The Fed will continue to easy monetarily during this crisis as they meet tomorrow and is expected to accommodate further.  The Fed has already stated that they will keep interest rates low well into 2011.  This is very bullish for silver and gold.

Efforts to deflate the currency have succeeded and now the dollar is challenging new lows and breaking through support.  Treasuries have corrected considerably along with the dollar.  Although the policy makers in Washington have revived the equity markets, the long term effect on the dollar and long term debt will be detrimental.  The markets are at resistance now and are very overbought.  I would consider being careful on this rally as a deteriorating currency and high unemployment will put pressure on the consumer.

The precious metals long term uptrend is in fact the best place to be during this ongoing debt crisis.  Now there is a massive flow to silver and gold.  I would not go chasing it now with the masses.  There will always be corrections and sales on gold and silver in a bull market as I highlighted to my readers four weeks ago right before the rally. Silver is especially overextended and could have a  healthy pullback.  There will be sales in the future as profit taking is imminent as it is overextended over its 50 and 200 day moving averages.  Subscribe to my free newsletter for trading signals and strategies at http://goldstocktrades.com.

It appears that the strategies from the central bank are now reflating the economy as gold, silver and base metals have reached new highs, while the dollar and U.S. treasuries are correcting considerably.   I believe the trend of sovereign debt defaults will continue and central banks raising their positions in precious metals.  This is the beginning of a major rush into gold and silver

We are currently seeing a huge transfer of capital into gold, silver and mining stocks.    I believe the best way to invest in emerging markets is to buy gold, silver and base metals that these countries are now importing rather than exporting.  I also see the possibility of the equity market, dollar and treasuries decoupling from silver and gold as they have made extremely upside breakouts since our bullish call on precious metals at the end of July. It has made an explosive move and is extended way above support and moving averages so a pullback is inevitable.  I am a long term silver bull but at this point would wait for a healthy pullback and secondary buypoints will be alerted to my readers first at http://goldstocktrades.com.

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Banking Reform Pushing Financials Lower and Silver Higher

In Market Analysis on June 25, 2010 at 2:41 pm

Major mining indexes appear to be approaching a major breakout point fueled by the sweeping overhaul and takeover of banks.  Banks have been under pressure from a continuing recession, high unemployment, a weak housing market and now more government oversight and audits. This does not help a recovery process for housing or financials.  These are two industries where I need to see strength to believe in a real economic recovery.

Financial are under a lot of pressure.  In the past 6 months, the financials have had 7 major weekly distributions verse 1 major accumulation which leads me to believe that this bearish crossover could lead to a major financial decline.  Notice how the financials when it broke into new 52 week highs it was on low volume which means it didn’t have the momentum to really hold those highs.  This is also evidenced by the declining momentum indicators.  The financials had 5 major weekly sell off in the 8 weeks of April and May.  The bearish crossover pattern plus the failure of the financials to hold the 200 day leads me to be long term bearish.

On the other hand Silver, Gold and Miners all appear to be reaching new breakout points.

Silver is very close to a 3 year breakout and I would not be surprised if over the next couple of weeks silver makes a move into new 36 month highs. If this move breaks $19 on silver, which is a major resistance level my target would move to $30 an ounce.  Silver has shown increasing demand as it has found support at the rising trendline support and is at the verge of a major breakout.

The connection between the financials and silver is showing that more investors are moving away from investment vehicles which are exposed to debt, government regulation and weak economic growth.  Investors want their assets in real money which is silver and gold.  Keep an eye on $19 silver and a breakdown of XLF past $14.

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Fear of Deflation, A Weak Economy and Bad Global Debts

In Stock Movers on June 20, 2010 at 3:30 pm

Copper is an extremely useful indicator which shows the strength of the global economy and whether the economy is growing or decreasing. At the moment Copper is flashing a “red alert!” A very bearish crossover pattern means that copper could go lower for many months.

This pattern is taking place with a broken trend, weakening rsi and momentum. All these signals together makes the chance of a fakeout, bear trap or whipsaw less probable. Next target is $250 which is the 50% retracement.

The bearish copper pattern is taking place at the same time as an extremely bullish cup and handle breakout on gold. Many investors are finding gold and silver a better place to be right now rather than equities or commodities that are more susceptible to a weak economy.

I especially like silver here and have recommended UXG U.S. Gold which has made a huge discovery in Mexico. UXG is one of the leading stocks in the market right now up a 108% in the last 6 months. Although it is extended and I do believe there will be a pullback I am still extremely bullish on this company. In the next couple of weeks more news will be coming out summarizing the massive amount of work UXG is doing in Mexico.

Silver is going to follow gold and breakout into new highs and when that breakout is done a huge move could follow according to my point and figure charting. As you can tell by this chart that as the global economy is in danger people are buying silver. This is a sign of deflation, when the general public hoard silver and gold rather than being exposed to debt.

Silver is making a long term ascending triangle which is a bullish pattern and hasn’t violated any trend lines or moving averages. I predict silver on this next breakout could catch up with gold.

In a real economic crisis silver is a much more practical item as an alternative currency as it is much cheaper. A middle class person could easily cash in some dollars to by a roll of silver dollars verse buying gold coins.

The market is also predicting that interest rates are going to stay low as central banks fight deflation and hoarding of precious metals. This is illustrated by the move in utilities to reverse the bearish crossover signal. This signal is usually bearish unless there is a significant reversal close to the crossover.

Utilities is a sector which is extremely sensitive to higher interest rates. When this sector rallies it usually predicts low interest rates. The fear of bad debt globally and deflation is causing a rush to gold and silver and an easing from central banks.