Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Price Worst Plunge Since February, Will it Do the Same Again?

Commodities / Gold and Silver 2010 Nov 14, 2010 - 11:39 AM GMT

By: Merv_Burak


Best Financial Markets Analysis ArticleOuch! That was some decline on Friday, the worst single day decline since early Feb.  The Feb decline ended the next day and gold took off for a $350 advance until this past week.  Will it do the same again? 


A day or two does not change the long term prognosis unless we have already had much negative action prior to the latest.  So, the long term point and figure chart remains as it was last week while the indicators have not changed their message, although they might have firmed up a bit.  Gold price remains comfortably above its positive sloping moving average line with no indication that it will plunge below the line very soon.  The volume indicator is also in new high ground above its positive long term trigger line.  It’s the momentum indicator that is changing, as one would expect. 

The momentum indicators are usually the first indicators to provide some hint of problems ahead, although one would not trade based upon the message of a momentum indicator alone.  The long term momentum indicator is in its positive zone but underperforming the price action.  It has given us a negative divergence warning versus the early Oct top and has now dropped back below its trigger line.  With a basic lateral drift over the past few weeks the momentum trigger line has turned horizontal and Friday’s indicator move below the trigger line has turned the line negative.  This is, so far, the only negative long term warning so not to panic yet.  Putting all of these indicators together the long term rating still remains BULLISH.


On the intermediate term things are about the same as for the long term, the only slight difference is that the momentum indicator is much closer to breaking below its Oct lows for a stronger warning signal.  For now, gold price remains above its positive moving average line.  The momentum indicator remains in its positive zone although it has dropped below its trigger line and the trigger has turned downward.  The momentum has also given us a negative divergence warning, similar to the long term indicator.  As for the volume indicator, it remains above its positive trigger line and still quite positive.  All in all, the intermediate term rating remains BULLISH.  The short term moving average line continues to confirm this rating by remaining above the intermediate term line.


This is where we really get our first serious warning if things are going to turn ugly.  The short term should be the first to turn negative and it has.  The price of gold has dropped below its short term moving average line and the line has turned downward at the same time.  The momentum indicator is still very, very slightly in its positive zone but moving lower fast and has moved below its negative trigger line.  The negative divergence mentioned in the previous sections can be seen here also.  With the daily volatility in the market it’s kind of difficult to

decipher the meaning of the daily volume action so I’ll leave that part out.  Overall, the short term rating has now turned to the BEARISH side.  Although the very short term moving average has turned downward it has not yet crossed below the short term average for confirmation of the bear. That might come with another day or two of downside price action.

As for the immediate direction of least resistance, that would now be to the down side.  The Stochastic Oscillator has now entered its negative zone and heading lower.  Gold has dropped below the very short term moving average line and the line has turned downward.  The strength seems to lie with the down side.


Silver continues to out perform gold except that this week it was out performing gold on the down side, not by much but still taking a bigger hit than gold.  Silver stocks, however, do not seem to know that silver took a hit this week.  Both the Qual-Silver and Spec-Silver Indices were up on the week, Spec-Silver by more than 3%.  The more speculative silver stocks continue to be where the action is (along with the Penny Arcade stocks). 

Comparing the two short term charts, gold and silver, there are many similarities but also some differences in their market action.  The silver action since the Oct lows was a lot more vigorous than the gold action but still the short term momentum indicator gave us a negative divergence similar to gold.  However, looking at the intermediate and long term momentum indicators (not shown) they are a lot stronger than gold’s momentum indicators.  Neither the intermediate nor

the long term silver indicators have given us a negative divergence, so for now it’s only a short term warning.  One should not take this as silver possibly moving counter to gold.  Silver is often considered as a younger brother to gold and when gold makes its move so would silver.  The only point here to consider is that although the two would end up moving in the same direction it is inevitable that one will move more emphatically than the other.  My guess is that despite the direction of the move silver will remain a better bet than gold, very short term considerations excepted.

As mentioned, the silver indicators are very similar to those of gold mentioned earlier.  The one basic difference is in the short term indicators.  Here the silver price has just crossed below its short term moving average line but the line slope is still to the up side.  This results in a slightly better rating giving silver a short term rating of – NEUTRAL (versus gold’s bear).  For the other time periods the ratings are still at a BULLISH level.


Shown last week was my Merv’s Spec-Silver Index of 25 speculative silver stocks.  The Index was in a gung-ho up trend.  This week, although not a good week for most Indices, this Index had another good week gaining 3.7% on the week while most other Indices (except the Penny Arcade Index) were either on the losing side or gaining mere fractions of a percent.  It remains a speculative trader’s market.

I have great faith in those speculators who are able to move markets.  As long as they continue to have faith in the speculative and gambling stocks and are moving that sector higher I see no problem with the majority of the full spectrum of precious metal stocks continuing to advance, short term problems or not.  It’s when the speculative and gambling variety of stocks start to decline because these speculators start to lose their faith in them that we have to really worry about the universe of precious metal stocks.  When faith is lost in the market it is first lost in the most speculative sectors before the better quality stocks.  I would recommend watching what is happening to my Merv’s Penny Arcade Index, Merv’s Spec-Silver Index and Merv’s Gamb-Gold Index.  These three Indices represent the speculative and gambling sectors of the precious metals stocks.

It should be noted that the FTSE Indices in the table are for trading up to Thursday’s close and do not include the effects of the Friday drubbing. 

Merv’s Precious Metals Indices Table

Well, that’s it for this week.  Comments are always welcome and should be addressed to

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Merv's Precious Metals Central

For DAILY Uranium stock commentary and WEEKLY Uranium market update check out my new Technically Uranium with Merv blog at .

During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician ( CMT ) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada 's Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE .

To find out more about Merv's various Gold Indices and component stocks, please visit . There you will find samples of the Indices and their component stocks plus other publications of interest to gold investors.

Before you invest, Always check your market timing with a Qualified Professional Market Technician

Merv Burak Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules