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

More Downside Ahead for Gold and Silver

Commodities / Gold and Silver 2014 Oct 31, 2014 - 12:31 PM GMT

By: Jordan_Roy_Byrne

Commodities

Last week we argued that the underperformance of the gold miners during Gold's rebound was a bad sign. Since then the miners have plunged to new lows while Gold appears to be at the doorstep of a major breakdown below $1180. It shouldn't be a surprise as it would simply be following the miners and Silver. The current bear market is getting very long in the tooth but it is not yet over. We see more losses ahead before a potential lifetime buying opportunity.


The HUI Gold Bugs Index is obviously very oversold but its not yet at strong support. It closed Thursday at 164 but should fall another 9% to support at 150. Currently the HUI is 26% below its 200-day exponential moving average and 19% below its 50-day moving average. The chart argues that those figures need to reach 40% and 27% before we deem the oversold condition extreme. If the HUI trades below 150 then it would mark an 11-year low. That is extreme!

HUI Gold Bugs Index Daily Chart

Nick Laird of ShareLynx provided me data from the Barron's Gold Mining Index (BGMI) which I uploaded to stockcharts.com. This index dates back to 1938 and allows for greater historical perspective. Data is updated weekly so I had to estimate the current price. The HUI, XAU and GDX are all down 10% or 11% on the week so I calculated a 10.5% loss on the week which is a price of 567. Lateral support, which dates back to the early 1990s as well as trendline support that dates back 50 years provide a strong confluence of support in the mid 400s. That is roughly 20% downside.

BGMI Weekly Chart

Another reason to expect more downside is Gold hasn't even broken $1180 yet, though it may have by the time you read this. The price action has been textbook bearish. Gold failed to rally up to trendline resistance in the summer and then it declined in nine of twelve weeks. It rebounded for two weeks but quickly reversed at the 10-week moving average which is sloping down sharply. Also, the net speculative position in Gold as of a week ago was 25% of open interest. There are a fair amount of longs left to capitulate. Gold's downside support targets are $1080, $1040 and $1000.

Spot Gold Weekly Chart

We've been warning for several weeks of the near-term downside potential in precious metals. It is being realized but that does not mean its over. The miners plunged to new lows in recent days yet they are likely to move lower before a major turn. Our work above suggests a minimum of 9% downside potential and as much as 20%. Meanwhile, Gold could fall another 15% to strong support at $1000. Opportunities are coming but they are not here yet. We want to see Gold and gold stocks decline further so that they become extremely oversold as they reach major support levels. That is the combination that could produce a lifetime buying opportunity in the weeks or months ahead.

If you'd be interested in professional guidance in this endeavor, then we invite you to learn more about our service.

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2014 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne 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