Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AMD Ryzen 4900x / 5900x and 4950x / 5950x Zen3 4th Gen IPC and Clock Speed and Core Specs - 14th Aug 20
Stock Market Gap Fills Suggests Market Momentum May Stall - 14th Aug 20
Silver May Be Overextended – But It’s STILL Cheap - 14th Aug 20
A Short Guide To Making Your First Stock Market Investment - 14th Aug 20
Is Tech Reality Affects our Dating Possibilities? - 14th Aug 20
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Bottoms and Moving Higher But on Low Volume

Commodities / Gold and Silver 2011 Feb 07, 2011 - 03:23 AM GMT

By: Merv_Burak


Best Financial Markets Analysis ArticleGold bottomed and looks to be moving higher BUT the volume is just not there to be encouraging.  The next week or so will tell us if it is going towards higher levels or if the downside will continue.

Time constraints and no chit chat this week, just the facts.


Well, the P&F advice to wait for the $1320 support to be broken, with a move to $1305, before going P&F bearish is working, so far.  The final support is still holding so we’ll keep our fingers crossed hoping that now we can go into higher ground.  With the turmoil in the Middle East I would have expected a more exuberant gold move but it does what it has to do to confuse most traders.

My normal indicators are still giving us a positive reading.  Gold bounced off its long term moving average line and remains above the line.  The moving average line itself is still in a positive trend.  The long term momentum remains in its positive zone although it has decline quite a bit from its high and remains just a hair below its negative sloping trigger line.  The volume indicator continues to drift sideways and is sitting right on top of its still slightly positive trigger line.  All in all the long term rating remains BULLISH.


Unfortunately the intermediate term is not as positive as was the long term.  Gold is still below its negative sloping moving average line.  The momentum indicator is, however, in its positive zone (just slightly) and above a positive trigger line.  The volume indicator is zigzagging above and below its trigger line ending the week just below the line with the line continuing in a negative direction.  Putting all this together we are neither bullish nor bearish but are at a – NEUTRAL rating for the intermediate term.  The short term moving average line is still some distance below the intermediate term line and not yet ready to confirm any upgrade in rating.


 One might be encouraged by the actions of gold to stage somewhat of a bottoming and rally event but I’m not yet fully convinced that the turn around is here.  The biggest worry is the lack of upside volume action.  Bull moves rarely last without the backing of increasing upside volume action.  As we see in the chart the recent volume is below is average volume from the past 15 days, which included a good portion of the downside trend.    But let’s look at the indicators and see if they might give us a more encouraging assessment.

Gold has moved above its short term moving average line and the line has just turned to the up side.  The momentum indicator is still just slightly in its negative zone but it has been moving upward and remains above its positive sloping trigger line.  As mentioned earlier the volume action leaves a lot to be desired.  From these indicators the short term rating is just barely in the BULLISH camp.  It could change very quickly.  The very short term moving average line has just crossed above the short term moving average for a confirmation of this bull.

Other signs of note are the breaking, to the up side, of the down trending channel and above a very short term resistance.  These are positive signs but I’d like to see some better upside action.  Still, the indicators are pointing, however minimally, to the up side.

As for an immediate direction of least resistance, I’ll go with the lateral.  Although we do seem to be in a short term up trend the Stochastic Oscillator appears to be in a turning mode and the Friday gold close was to the down side.  Maybe the down side is the more realistic but I’ll go with the lateral.


From a P&F stand point silver made a 6 unit drop but quickly recovered 5 of those units to the Friday close.  Although the drop did signal a bear trend the quick reversal may put that signal in jeopardy.  The actions this week will probably either confirm the bear or nullify the signal.

On the long term silver is still far away from any reversal.  It remains BULLISH.

On the intermediate term silver, although having showed signs of weakness, is back on track for now.  The price was in a downward trend for weeks and did move below its negative moving average line but the recent bounce has taken silver back above the line and the line has just turned to the up side.  Throughout this recent weakness the momentum indicator remained in its positive zone.  It had been moving lower and had been below its negative trigger line but is once more above the trigger and the trigger has turned back to the up side.  The volume indicator is still below its trigger line and the trigger remains pointing downward so we need a little more upside action here to get too bullish.  In the mean time the rating has now gone back to the BULLISH side.  This is not yet confirmed by the short term moving average line as it is still below the intermediate term line.

On the short term the only indicator that is still giving us a concern is the daily volume action.  We need more speculators jumping in.  In the mean time silver is moving higher above its positive short term moving average line.  The momentum indicator has moved into its positive zone and is moving higher above its positive trigger line.  From the indicators one can only rate the short term as BULLISH.  This rating is confirmed by the very short term moving average line moving above the short term line.



What we have here are two Indices charted from the previous bull market high to the present.  It is really a tale of two Indices.  One is the PHLX Gold/Silver Sector Index, the most popular North American major Gold Index and the other is the Merv’s Gold & Silver 160 Index.  What a difference in performance between the two.  The PHLX closed on Friday just 0.4% above its 2008 bull market weekly high close while the 160 closed on Friday 88% above its 2008 bull market weekly high close. 

During the bear market of 2008 both declined almost the same amount, PHLX down 67% while the 160 was down 71%.  On the other hand, during the bull market since the lows of 2008 the PHLX advanced 193% while the 160 Index advanced 523%, quite a difference.

What is the difference?  The PHLX is composed of about 17 of the largest and/or highest “quality” gold stocks while the 160 is composed of the top 100 gold stocks (by market value) traded on the North American exchanges plus 60 additional stocks, some of a more speculative variety.  Note that real penny stocks are not included here but are included in my Merv’s Penny Arcade Index.  The 160 Index really far better represents the overall gold and silver stock market.

There is another major difference in the two Indices, the method of calculating the Index value.  The PHLX is calculated using a weighting method that places greater emphasis on the larger stocks and lesser emphasis on the smaller stocks in the Index.  As an example, the top 4 stocks represent about 65% of the Index value.  The top 2 stocks alone represent 40% of the Index value.  By comparison the 160 Index is calculated based upon the average weekly performance of all stocks in the Index.  No stock has any greater value towards the Index than any other stock.  Each stock represents 0.625% of the Index value no matter the size or “quality” of the company.

I just bring this up so that when you read an analysis of the gold market which makes reference to one of the major North American Indices you should know that the Index represents basically the performance of only a very few of the largest stocks in the Index and may not represent what is happening to the overall gold and silver stock industry.

Some might say I should have used the ACRA Gold BUGS Index or the Market Vectors Gold Miners Index but they are not that much different from the PHLX to make a difference in the commentary comparison.

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