Tuesday, July 19, 2011

Gold $1600, Silver $40, where to now?

I thought I would share some thoughts from several technical analysts I have a great deal of respect for.

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Firstly the Midas Touch Gold and Silver report from Florian Grummes:
Gold is on the way to my new price target of US$3,500. Given the current constellation, I think it is even conceivable that gold could double by spring 2012 already.

In the next few weeks until mid of august I expect gold to move towards around US$1,650. Here a brief pullback could calm things down before gold will shoot higher to around US$2,000 by year´s end.

In the short term gold might need some days to digest the big move during the last two weeks. I do not expect any more significant pullback below US$1,575. On the contrary, we are probably in the early stages of the largest upward move in gold in this bull market.
Charts and extensive commentary, as well as subscription details (free) are at the following link -> Midas Touch: Gold and Silver Analysis


Unfortunately Florian was sending these out by email PDF for sometime, so past commentary & charts don't go back that far, but I have been subscribed and following his work for over 18 months now.

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Gary Savage from Smart Money Tracker is a cycles analyst and recently timed entry back into Gold (after the correction to sub $1500) almost perfectly.

This from Gary in the comments section of the blog on July 5th:
The move back above $1500 was powerful and gave back nothing.

Since it is late in the intermediate cycle we have to consider that the bottom may very well be in.

Let me say this. If you are going to wait hoping on further declines be prepared to chase the move just in case gold doesn't give us a lower entry.

I started to build a position in the model portfolio today. I do still have some dry powder just in case there is another dip down.
Based on the patterns we are seeing Gary has indicated that a price target of $1800 may be possible over the next several months (based on the percentage gains we've seen in other runaway moves).


The Smart Money Tracker is a great blog to follow, although Gary has flip-flopped a couple of times with the medium term outlook (e.g. 3-6 months) in the recent choppy action he has still consistently been able to catch some great entry points for his subscribers. There is a free blog and if you want his further commentary it is around US$200pa for subscription (I'm now subscribed after following his free blog for almost 2 years).

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The Prince is an analyst from Macro Business and has been posting some great charts and commentary about Gold. This from a post today:
If you consider that history is repeating, than the target is more likely in the $2700 to $3500 range (using 500 as the nominal point for 2011, and 900 as the “terminal” point in 2012-13):
Gold in USD compared to other bubbles (note this is not semi-log)

Of course, what we are talking about here is the broad assumption that gold will inexorably continue its bull market, flittering from one economic and monetary crisis to the next, with no end game in sight.

Is this time different? Or will The Bernank pull a Volcker and raise rates above their negative real terms, or will the ECB try to contain inflation (or will it be contained by a great swithe of debt destruction?) There are known unknowns that traders and investors face going into the 10th year of this bull market – take care. Link to complete post.

You can follow The Prince's commentary on Gold, the markets and specific stock profiles on this page.

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We've just witnessed the longest Gold rally in 31 years (since 1980). Silver has also performed well slicing through resistance at $39.50 and has managed to hold on for now.

Consolidation or a temporary pullback from these levels would keep the rally looking healthier and setup nicely for a further push into the end of the year, perhaps to around $1700-2000 as suggested by the analysts above.

I have been quite bearish on equities (including precious metal stocks) for a few months now and have avoided some pretty serious draw downs in stocks that I owned. Over the last 2 weeks I have added to some positions so that I am now sitting around 1/3 cash, 1/3 resource & metal stocks and 1/3 physical. I am still cautious about the potential for a deflationary period in which the stocks could be hit hard, but my position has not changed from 6 months ago when I suggested that we could be on the cusp of the 3rd phase of the bull market where we really see what Gold can do!

BB.

For a free gram of Gold signup and trade metals on BullionVault.com (CLICK ME).

9 comments:

  1. SO BB, what do you think of Gary's "broken silver parabola" theory? Are we looking at a significant silver correction in the not too distant future before the final blow-off phase and if so, how low do you think it can potentially go?

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  2. Hey Mike, I think it very much depends on decisions and developments that are yet to occur... for example the Fed could pull QE3 out faster than anticipated and blow my expectations out of the water (to the upside), but at this point I think a new high for Silver this year is unlikely. Downside target: I think mid to high $20's is definitely possible in any deflationary crisis (sovereign implosion emanating in Europe for example), maybe even as low as $22. That said the Silver market seems to be quite tight and the falling registered inventory at the Comex is definitely a bullish development.

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  3. Just gathering opinions atm, as I wonder whether it might be worth selling some of my silver while it is at high prices, holding the cash, waiting for a correction and then jumping into the silver miners.
    Sold some of my miners recently so it's a bit disconcerting watching them wander off into the distance but otoh I feel like buying them now would be panicking in.
    It would be really nice if someone could guarantee the correction then I would know what to do. :) What's your rough strategy for the rest of the year?

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  4. my understanding is that the pure lack of stock in silver is what is currently holding up prices. it appears it will only be a case of institutional sells that will cause a price correction.

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  5. Mike, I would call myself neutral based on my capital position as described in the post (that said keep in mind my portfolio is much more aggressive that any sensible financial adviser would recommend given the non diversified nature of it).

    I agree jumping into the equities after the run they've had the last couple of weeks could be a mistake. I am waiting on results of debt ceiling increase and Greece before I make any short term changes... if it looks like they might be able to avert crisis for another 6-12 months I may look at slightly increasing my position in PM equities. Until then I am sitting tight.

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  6. no 10oz bullion bar at perth mint at least 1 month till new stock.

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  7. Thanks for the update. Interesting that the Perth Mint is still struggling to supply retail bars to the market...

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  8. My gut feeling today says silver will shortly make a trace-back to around $32, then within 6 months we'll hit $80+.

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  9. Could do LS. I think we have a multi week correction in the price of metals coming up as per my latest posts. I think Silver could even correct to below $30.

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