Seduced by silver at the tender age of 11, David Morgan started investing in the stock market while still a teenager. A precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems ahead and reasons for investing in precious metals.
Today on Jim Puplava’s Financial Sense Newshour metals update, David Morgan talks about the 16:1 gold to silver ratio fallacy and why we see silver margin requirements imposed.
Chris Vermeulen is Founder of the popular trading site GoldAndOilGuy.com. There he shares his highly successful, low-risk trading method. Since 2001 Chris has been a leader in teaching others to skillfully trade in gold, oil, and silver in both bull and bear markets. Subscribers to his service depend on Chris’ uniquely consistent investment opportunities that carry exceptionally low risk and high return.
Jim Puplava welcomes Chris Vermeulen today on the Financial Sense Newshour metals update. Chris indicates that silver is still consolidating, with the possibility of one more down draft.
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2011-05-23 09:08:592014-03-10 06:14:32Gold and Silver Still Consolidating
Commodities so far this week have not changed much. But I can point out a few things for us to watch Thursday and Friday.
Precious Metals – Gold GLD fund – Silver SLV Fund – PM Stocks GDX Fund
We could start to see a shift between the price relationship between gold and the broad market. I pointed this out last week mentioning that gold and silver are starting to hold up in value while stocks sell off on big days. For example, Wednesday’s sell-off in equities did not have much effect on precious metals. This is what we want to see. It means money is moving out of stocks and into gold and silver bullion as a safe haven.
These three charts of GLD, SLV and GDX show Wednesday’s price action as gold and silver moved higher while precious metal stocks sold down with the rest of the market. This is generally a bearish indicator for gold and silver but because I am starting to see this happen more often and traders are ready for the market to top any day, I am seeing this as a bullish indicator. If the market starts to slide I have a feeling investors will be dumping a lot more money into gold and silver.
Gold, Silver, Precious Metals Stocks
Energy – Oil USO Fund – Energy Stocks XLE Fund
We are seeing a similar pattern in the energy sector. Oil had a nice move higher today while energy stocks sold off. Stocks are starting to fall out of favor.
Energy Oil Stocks
Natural Gas – UNG Fund
Natural gas is still in a bear market and trading under a major resistance trend line. This commodity could go either way so I am going to wait for the odds to be more on my side before jumping on board with a long or a short trade.
Natural Gas UNG Fund
Mid-Week Gold, Silver, Oil and Nat Gas Conclusion:
The market is starting to look and feel top heavy with many indicators and price action patterns giving cross signals. While the market could continue to rocket higher with new money getting dumped in from average investors because of solid 3rd quarter earnings, we must be cautious by tightening our stops and take some profits off the table. Until we get a short term oversold market condition I am trading very conservatively.
Waiting for a good trade is crucial in trading. If you always want to trade and force positions when the market is choppy you end up with lower probability trades.
I hope everyone had a great weekend and is now ready for another week of trading. I have put together a few simple charts to show you what we could see with prices in the near term. While I do not predict future price movements (because it is impossible to always be correct), I do like to know what could happen and be ready to take action when something significant occurs.
The five charts below quickly summarize what I am seeing in the market currently.
Gold Stocks – HUI Monthly Chart
Gold stocks have been performing very well this year. As you can see from the chart stocks are getting squeezed into the apex, which generally creates explosive moves. We could be months away according to this chart so don’t get trigger happy just yet.
A breakout to the upside will most likely trigger a very large rally. But if prices break down then I expect to see gold stocks pull back to new yearly low.
Gold Bullion Market
GLD Gold ETF – Gold Bullion Prices – Daily Chart
Gold has been trying to move higher the past 4 weeks and is having a tough time. With any luck gold will bounce higher Tuesday or Wednesday starting a new rally higher. If prices do not hold, up I figure we will see a sharp price drop which could go all the way back down to the $800 level within a couple months. I am currently long gold and will continue to hold it until I see a technical breakdown on the chart.
Silver is in the same situation as gol. It’s pointing to higher prices but a breakdown will most likely trigger a sharp sell off. I currently own silver and will be looking to exit below the $14.00 level.
SLV Silver ETF Trading Signal Newsletter
UNG Natural Gas fund – Natural Gas Prices – Daily Chart
Nat Gas looks to be breaking down once again on rising volume. We could see another waterfall type drop this week.
UNG Fund Trading Signals
USO Crude Oil Fund – Crude Oil Prices – Daily Chart
Crude oil had a big pullback Friday which could make for a great short term intraday play on Monday. Sharp price drops like this will generally have bargain hunters (buyers) step in the following day to push the price higher. Also I pointed out that oil is trading at 4 different support levels. This could give prices an intraday pop or possibly start a new leg higher in the coming days.
I continue to wait for a low risk setup in oil, which is possible that we get a setup this week. Only time will tell but I will keep you posted.
USO Crude Oil Fund Trading Signals
Technical Traders Conclusion:
Gold stocks, gold bullion and silver are trading at support levels. The overall trend is up so there is more of a chance that we will see a bounce from here. But the market always throws in a curve ball so be prepared for locking in gains or cutting losses quickly if we see prices slide lower.
Natural Gas continues to have selling pressure and looks to be having a technical breakdown as of last Friday. This could be a nice play for those aggressive traders who want to take advantage of a 1-3 day breakdown in price.
Light Crude Oil is in a similar situation as gold and silver. Currently trading at support and could go either way, but the odds are in favor for a bounce.
I will update again on Wednesday night, if you would like to receive these quick technical trading reports to your inbox Free please visit my website: www.GoldAndOilGuy.com .
