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Gold & Silver on the Verge of Something Huge!

Gold and silver have taken more of a back seat over the past 12 months because of their lack of performance after topping out in 2011. Since then prices have been trading sideways/lower with declining volume. The price action is actually very bullish from a technical standpoint. My chart analysis and forward looking forecasts show $3,000ish for gold and $90ish for silver in the next 18-24 months.

Now don’t get too excited yet as there is another point of view to ponder…

My non-technical outlook is more of a contrarian thought and worth thinking about as it may unfold and catch many gold bugs and investors off guard costing them a good chunk of their life savings. While I could write a detailed report with my thinking, analysis and possible outcomes I decided to keep it simple and to the point for you.

Bullish Case: Euro-land starts to crumble, stocks fall sharply sending money into gold and silver which are trading at these major support levels which in the past triggered multi month rallies.

Bearish Case: Greece, Spain and Italy worth through their issues over the next few months while metals bounce around or drift higher because of uncertainty. But once things have been sorted out and financial stability (of some sort) has been created and the END OF THE FINANCIAL COLLAPSE has been avoided money will no longer want to be in precious metals but rather move into risk-on.

Take a look at the gold and silver charts below for an idea of what may happen and where support levels are if we do see money start to rotate out of metals in the next 3-6 months.

Gold Forecast

Silver Forecast

Over the next few months things will slowly start to unfold and shed some light on what the next big move is likely going to happen to gold and silver.

The price movements we have seen for both gold and silver indicate were are just warming up for something really big to happen. It could be a massive parabolic rally to ridiculous new highs in 2012/2013 or it could be a huge  unwinding of the safe havens as countries sort out their issues and the big money starts moving out of metals and into currencies and stocks.

Only time will tell and that is why I analyze the market multiple times per week to stay on top of both long term and short term trends. So if you want to keep up with current trends and trades for gold, silver, oil, bonds and the stocks market checkout TGAOG at: http://www.thegoldandoilguy.com/free-preview.php

Chris Vermeulen

Gold ETF – The Gold ETF Experience

GLD Gold ETF – Taking advantage of the gold market using the GLD exchange traded fund to generate consistent profits in any market condition.

As I mentioned before, the past 5 months have been very frustrating for most traders as we are stuck in this sideways price action. I also noted that August to December is generally the stronger months for gold. Although gold has been under selling pressure during the last 4 weeks I think there is light at the end of the tunnel. It’s usually the darkest before dawn, but there are some hurtles for gold to over come before we are in the clear which I explain below.

Chart 1 – The Gold Mining Stocks Index
This is a 10 year chart with a cup and handle pattern complete with a breakout. As you can see in the chart below gold mining stocks have continued to collapse below their support level. This does not mean gold is going to follow but it is a red flag which needs to be noted for future long entry points. Gold mining stocks in general are seen as volatile and high risk types of investments so I understand why investors are unloading their positions to lock in profits.

Gold Mining Stocks Index

Gold Mining Stocks Index

Gold mining stocks are pushed below long term support level.

Chart 2 – Gold Stocks Index
This is an 8yr chart of the price action of gold stocks and you can see that they are currently testing long term support levels. If this monthly bar closes below this trend line then long term investors should be sitting in cash until we have a new opportunity to enter long or short. The HUI generally makes the move before the price of gold so I follow the HUI in all time frames.

Gold Stocks Index

Gold Stocks Index

The HUI is testing long term support.

Chart 3 – Performance Chart (Gold Stocks vs Price of Gold)
The past 2 years from 2006 to present gold stocks have slowly been underperforming the price of gold. This is generally not a good thing to see if we want higher prices for gold. But the good news is that gold stocks appear to be reaching levels at which new rallies have started.

Gold Stocks vs Gold Spot Price

Gold Stocks vs Gold Spot Price

Gold stocks under performing the price of gold but near support.

Chart 4 – Daily HUI Chart
I follow the HUI like a hawk as it fine tunes my entry and exit point for trading GLD, DGP and DZZ funds. Last month the HUI made a lower high and a lower low which is a red flag. While I don’t predict prices I am thinking these lower prices for gold stocks are just panic sellers over extending a sell off. I would really like to see an August rally kick into place.

HUI Gold Stocks Index

HUI Gold Stocks Index

The HUI makes a lower high and lower low on the daily chart.

Chart 5 – GLD Gold ETF Chart
While gold stocks have been selling down, gold has so far been able to hold some ground. As you can see in the chart below the last three months gold has made higher highs, and higher lows. Currently gold is testing Major Support at the 200 EMA.

GLD Gold ETF Trading

GLD Gold ETF Trading

Gold ETF GLD at long term support still holding its ground.

Conclusion:

My analysis of gold using the charts provided above shows that gold stocks and indexes are oversold and are at major support levels. Thus an August rally is not out of the picture and we could have some favorable setups in the near future. I would prefer higher prices, but in the end movement is movement and we can profit in either direction evenly.

GLD gold etf trading for me is the most accurate trading vehicle I have come across. I have been using my proven trading model which avoids the price gaps and keeps risk under 3% for each trade. GLD makes it simple to profit from the markets using a proven trading model for trading long and short term gold setups in all market conditions (bull, bear, and sideways).

My focus for short term trading is simple. Wait for a breakout which satisfies my trading model, enter the trade and then exit 50% of position on the first sign of weakness. Exit second half on a trend line break. My goal for GLD ETF is 2-5% and we are in trades for 2-10 days unless prices continue to run. I generally have 10-20 trades per year with gold.

Chris Vermeulen is Founder of the popular trading site TheGoldAndOilGuy.com. There he shares his highly successful, low-risk trading method. For 6 years 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.

Reach Chris at: www.TheGoldAndOilGuy.com