Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

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

© 2005-2019 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