Saturday , 21 October 2017


Is Gold Ready To Bounce? Not Likely! Here’s Why

Gold and silver have been all over the map in 2014. To figure out what’s next for the metals this article assessesgold-silver their deep and long term status as speculative assets and the relationship between the two metals and determines what must happen to reverse their continuing decline. Read on!

The above are edited excerpts from an article* by Chad Karnes (etfguide.com) as also posted** on SeekingAlpha.com both under the title Is Gold Ready To Bounce?

The following article is presented by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!)www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and the FREE Market Intelligence Report newsletter (register here; sample here) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.

Through February, they were both up over 10% and outperforming stocks [but] since then they have given back…[much, if not all] of their gains….[with gold] up 4% for the year, while silver has declined 2%, underperforming its counterpart by 6% YTD.

Sentiment and Technicals Suggest a Coming Bounce

…As was stated in our 6/4/2014 Technical Forecast, “Gold is also now oversold, the first time that has happened on the precious metal and its ETF since the June 2013 $1200 (GLD $115) price low panic”. The following day gold and silver were up 1% as their next bounce likely kicked off. Should we expect this bounce to hold?

The Long Term Gold/Silver Relationship

…It is pretty much understood that silver is the more volatile of the metals, the one traders turn to for more speculative interests…[but] to really accept that…we turn to a chart comparing its historical relationship with gold.

The chart below shows [that]:

  • when gold is outperforming silver…(when the ratio is rising/flat), the metals markets are typically flat or in decline or, at a minimum, susceptible to a pullback (as was the case in the 2007 precious metals rally which ultimately gave back all those gains in 2008).
  • when silver is outperforming gold the metals markets are undergoing rallies…

 

(click to enlarge)

The Short Term Gold/Silver Relationship

The next chart displays this relationship over the short term.

  • Since the 2011 precious… top, gold has continued to outperform silver with a few short term opportunities to get long the metals before the next leg of their decline.
  • The short term metals rally in mid-2013 occurred as the gold:silver ratio broke down from its trend channel shown in red on the middle of the chart (after almost a year silver finally started to outperform gold in 2013 as the gold:silver ratio fell). A similar occurrence happened during the early 2014 metals rally (…as the ratio also turned down as sentiment reached extremes) [but] these were just short term opportunities.

(click to enlarge)

The Future for Gold and Silver

So far in 2014 silver has underperformed gold by 6%… [causing] the longer term gold to silver ratio to continue higher and warning us of a continued decline in the metals’ markets.

  • Until silver can start outperforming gold on a weekly and monthly basis (the first chart’s ratio turns down), investors should not expect any longer term precious metals rally to take hold.
  • In the meantime investors should expect only short term long opportunities available to the gold bugs (GDXJ), like the one we are expecting now as this ratio breaks down from its short term trend…

Stay connected!

Conclusion

Gold Bugs likely will remain disappointed until the gold to silver ratio turns decidedly down and silver can finally start to outperform gold, helping us recognize a precious metals rally that has legs.

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://www.etfguide.com/is-gold-ready-to-bounce/ (© 2014 ETFguide, LLC) The ETF Profit Strategy Newsletter and supporting publications provide investors actionable trading and investing opportunities utilizing technical, sentiment, and fundamental analysis sprinkled in with some common sense.)

**http://seekingalpha.com/article/2261883-is-gold-ready-to-bounce?ifp=0 (© 2014 Seeking Alpha )

Related Articles:

1. Tips from TIPS on Prospects for Growth, Outlook for Inflation & Future for Gold

TIPS are telling us that the market is quite pessimistic about the prospects for real growth, but not concerned at all about the outlook for inflation. Read More »

2. Which Is More Volatile In A Down-trending Market – Gold or Equities?

With the gold price in dollars breaking decisively the 200 day moving average but with volatility across a broad range of asset classes close to, or at, historic lows…this article looks at what patterns occur in equity and gold prices during both up and down trends and how to adjust your portfolio accordingly. Read More »

3. Gold Going DOWN to $1200/$1220 in June Then UP to Retest $1520 – Here’s Why

With gold’s current setup, we’ve finally reached a significant cycle pivot…and I believe that we are likely to be treated to a very surprising turn of events. Directly ahead, I believe, is a major turn and rally for gold. Read More »

4. Noonan: How Long Will These Low Prices In Gold & Silver Continue?

How long these low prices in gold and silver will continue is the ever pressing question on the minds of the gold and silver community and topic of so many articles written by the experts. While many have striven to provide an answer, and 2013 failed to match the “predictions” as to the “When?” issue, the best answer is: For as long as it takes. Here’s why. Read More »

5. Gold Dropping to $900 & Silver to $15 By End of June Before Going Parabolic!

Back in early May, 2013, I correctly forecast the lows in gold & silver which occurred 2 months later. Today, my new analyses of gold & silver indicates they both will show further weakness during the 2nd quarter of 2014 before both jumping dramatically in price before the end of 2014. Below are the specific details of my forecasts (with charts) to help you reap substantial financial rewards should you wish to avail yourself of my insightful analyses. Read More »

6. Gold Should Bounce Sharply Higher – Here Are 10 Reasons Why

Is it time to throw in the towel? Is the bull market in precious metals really over? I don’t think so because my analyses suggest that nearly all of the fundamental factors that have been driving the gold price higher in the past decade have only strengthened in the past two years. Now that the correction has most likely run its course, I expect gold to bounce sharply higher. Here are 10 reasons why. Read More »

7. Noonan: U.S. Debt & the Expected Movement in the Price of Gold & Silver

This article is a brief overview of how the U.S. government has come to be usurped by a banking cartel that controls government, media, corporations, etc. all because of their control over the money supply in the Western world and, understandably, why they are desperate to keep their Ponzi scheme from unraveling and being jettisoned in favor of gold and silver and concludes with a look at what the charts have to say about the future movement in both gold and silver. Read More »

8. Silver Likely to Rally Even Farther & Faster Than Gold In Coming Months – Here’s Why

It is a reasonable bet that gold, about 40% below its 2011 high and facing large demand and dwindling supply, will rally in price over the next few years. Silver prices will follow gold prices but rally farther and faster from their currently low and oversold condition. Read More »

9. Present Gold Price Is No Surprise & It Likely Will Decline Even Further – Here’s Why

Much has been written over the years about gold going up dramatically in price to $5,000, $10,000 and even higher yet here we sit at $1,250 or so. Surprised? You shouldn’t be. Below are articles outlining why the decline is underway and what to expect as a bottom price. Read More »

 

One comment

  1. The future value of both Gold and Silver will be in response to both market trends and events that affect the value of global currencies; that said, I believe that these “events” will actually be the triggers that cause PM’s to regain and surpass previous highs.

    We are in for a wild ride and that is why I urge all those responsible for investment portfolios to consider adding physical PM’s to your portfolio’s so that they equal a percentage of it’s total value.