Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Analysis - Consolidation in Gold and Silver

Commodities / Gold & Silver Dec 09, 2007 - 12:37 AM GMT

By: Joe_Nicholson

Commodities “This update has been writing for weeks that it would be relative weakness in Europe that would cause exchange rates to tip in the other direction. With the Fed closer to the end of its accommodations than the stubborn hold outs in London and at the ECB, holders of those currencies have wisely begun to suspect the ride up, for now at least, is ending. In all likelihood, the Fed will probably look to keep the cut light and favor further open market activities including a possible change in the discount rate while Treasury and other government entities come to the aid of the ailing housing market that's the real source of the problem. In the meantime, it's possible gold and silver will continue to face headwinds and lose their panic premium as investors put money back to work in financials and other stocks.” ~ Precious Points: Fairweather Friends, November 25, 2007


Members at TTC will know I've been following a fourth wave triangle consolidation pattern in gold that, as the daily chart below reveals, is still valid. Taking out the 50-day moving average, currently about $784 in the futures, would be a warning sign and indicate a deeper correction to the $759-775 area.

Silver also held up well this week, as conversation shifted from whether the Fed will cut 25 bps or 50. Remember this update never flinched from its rate cut expectations and suggested last week that a cut in the discount rate was more likely than a steep cut in the overnight target, a view that became consensus this week. The chart below continues to unfold in a consolidation though, with the 200-day sma looking like strong support, an intermediate bullish outlook in silver is looking increasingly favorable even as a selloff to $13.50 continues to appear likely.

The problem, of course, is the rally in the dollar, particularly against the euro and the British pound. Just as this update suggested, it was not strong domestic economic news that triggered the turn, but weakness abroad. Of course, the BoE cutting its benchmark rate only increases the amount of paper currency in circulation and does not make an ounce of gold any less valuable. But, because of the hot money hedging in gold, the current consolidation is unavoidable and may deepen as described above.

The ultimate deciding factor could be the extent to which the U.S. economy weakens from here and when the financial crisis dissipates. In this, the Fed and other governmental authorities have the advantage in that they calculate the figure that would determine whether or not a ‘recession' had officially begun. The “r” word having become a terrible political liability in an election year, and with an administration making enormous expenditures on war and defense, expect every political exigency to avoid admission of a recession at least in the next twelve months

The president's rate-freezing plan being case in point and a tactic that reinforces the outlook that the Fed will err on the side of caution on Tuesday, likely with a 25 bps cut and a further reduction of the discount rate. The impetus for explosive new rallies in metals over the short term, Tuesday's rate cut notwithstanding, seems to be lacking unless crisis returns to the financial markets. This is certainly not entirely unlikely between now and next summer, so at least until then one new high in precious metals is likely.

Of course, as many of you know, one sure way to put aside the stresses of tracking the metals markets day to day is putting aside some of the physical metal as a long term investment. Now, whether you already own metals or are now just looking to get involved, there's a new piece of silver bullion on the market, a custom round designed in partnership between Trading the Charts and the Northwest Territorial Mint .

The design pictured above is available directly from the Mint on impressive five-ounce .999 fine silver round in minimum lots of 50, but, they've also provided rounds to serve as prizes for TTC's annual “Pick the Tick” contest. If you're not currently a member, click here to participate for free in this unique opportunity to win a beautiful piece of silver bullion with no obligations. Also, if you're thinking about increasing your allocation to physical metals, or considering commissioning a custom piece of your own, visit the mint's online store for a treasure of other valuable metal collectibles and bullion.

by Joe Nicholson (oroborean)

www.tradingthecharts.com

This update is provided as general information and is not an investment recommendation. TTC accepts no liability whatsoever for any losses resulting from action taken based on the contents of its charts,, commentaries, or price data. Securities and commodities markets involve inherent risk and not all positions are suitable for each individual.  Check with your licensed financial advisor or broker prior to taking any action.

Joe Nicholson Archive

© 2005-2022 http://www.MarketOracle.co.uk - 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