Buckle in, stay the course and be sure to remain situationally aware. Now is not the time to look away. Continue to remain patient, diligent, yet patient. February will be a very exciting and consequential month for gold and silver.
So says Turd Ferguson (tfmetalsreport.com) in edited excerpts from his original article* entitled Bear Down.
[The following is presented by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and may have 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.]
Ferguson goes on to say in further edited excerpts:
Gold: Weekly Chart – 2 Year Horizon
The chart below stretches back two years, past the point where QE∞ was announced and the massive, coordinated price smash scheme was initiated…Note that gold has once again reached a rather significant inflection point on the chart. On five, separate occasions over the past sixteen months, gold has reached toward this trendline and each time has failed to break through. Also note, however, that price has seemingly found a solid floor which has held for over seven months. Something has to give. Soon.
Gold: Weekly – 5 Year Horizon
Note that I’ve drawn the same primary trendline in red. I’ve also added a basic measure of price momentum called the RSI (Relative Strength Index). You can plainly see that we are approaching a very important crossroads. Either gold breaks through the trendline and The Bottom is confirmed OR $1180 will fail and price will very likely fall toward the next clear line of support near $1050.
I’ve added the RSI to this chart because it may very well be the key indicator of what will happen. Note the downward trend of the RSI from the August 2011 price highs. If price can rally AND this weekly RSI moves up and through the 50 level, The Bottom should be readily identifiable to all but the most ardent of bears.
Silver: Weekly Chart – 2 Year Horizon
Silver is, not surprisingly, in almost the exact same position….Note that silver appears to be failing again, right at the trendline.
Silver: Weekly Chart – 5 Year Horizon
We again get a picture that is similar to gold. Like gold, if silver fails here and breaks down and through the June lows, I’d hold off on buying for a while as the next area of clear support doesn’t appear on the chart until price reached down toward $14.50. Also like gold, silver holding the $18-19 area AND breaking the RSI downtrend line at 50 would be a clear sign of The Bottom.
Working in gold’s favor is the appearance…again…of very tight global supply. The February Comex delivery period has begun and…just as in August, October and December…GOFO rates have moved negative again.
DATE 1-mo 2-mo 3-mo 6-mo 12-mo
29-Jan-14 0.04833 0.06167 0.06833 0.10833 0.17333
30-Jan-14 0.05000 0.06333 0.07667 0.10333 0.17167
31-Jan-14 0.04000 0.05167 0.06167 0.09333 0.16500
03-Feb-14 0.02800 0.03600 0.04600 0.08600 0.15400
04-Feb-14 -0.00400 0.02600 0.03600 0.08000 0.14600
This clear signal of tight physical bar supply has shown to be an equally-clear indicator of paper price support and, because gold is pressing against such a sharply downward sloping trendline, all it simply needs to do is consolidate sideways for a while in order to break the trend...and if gold breaks its downtrend and confirms The Bottom, can silver be far behind? Probably not.
I’ve often stated that, since it took nine months for gold to fall from $1800 to $1180 and silver to fall from $36 to $18, the process of finding and confirming The Bottom will also likely take nine months. Nine months from late June of 2013 takes us all the way to late March of 2014.
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Continue to remain patient, diligent (as we must closely watch the June lows), yet patient. I still firmly believe that the Cartel Bank-induced, contrived and counter-intuitive selling scheme has run its course and has reached the point where it is unproductive for the banks to allow paper price to go much lower.
February will be a very exciting and consequential month as Comex gold is delivered and the March silver and copper contracts move toward expiration…so buckle in, stay the course and be sure to remain situationally aware. Now is not the time to look away.
[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.]
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