Friday, May 18, 2012

Good chance Gold and Silver have bottomed

There is a good chance the bottom is in for Gold and Silver or we are very close to it (I could be wrong, so make sure you come to your own conclusions and don't blame me for your trading/investment mistakes).

They say when you pick bottoms all you get is smelly fingers, but I'll take my chances on this occasion. Unfortunately I haven't had much of an opportunity to add to my own positions in this dip as used a majority of my ammunition in the correction 5 months ago when we saw similar prices, but this has been a great opportunity for others who believe the bull market in Gold and Silver is ongoing with a peak yet to come.

Here are a few charts and brief notes on why I think the bottom is probably in.

We saw an indecision candle on May 16th and this was on strong volume which suggested capitulation as the price was allowed to fall almost to the lows we saw in late December 2011:

Click Chart to Enlarge

There was good reason for capitulation as Gold had broken the uptrend line which formed after the GFC lows for Gold in late 2008:

Click Chart to Enlarge

Note that the dip during the GFC saw a similar trend break, but was followed by a new trend which was an even steeper incline than the last.

It is my expectation that the current correction will be followed by a similar new trend with a steeper incline and will possibly be the new trend that eventually takes us to the parabolic blow off top that I'm expecting will end the bull market within the next couple of years.

There have been 3 clear trends of pitch during over the past 11 years and I believe we will soon see the 4th defined:

Click Chart to Enlarge
In Australian Dollars the chart has been suggesting a good buying opportunity with Gold dropping down into what I consider my "buy zone":

Click Chart to Enlarge
Sentiment in Gold and Silver has been pushed down to bearish lows (contrarian signal that suggests a good time to be buying):

Click Chart to Enlarge
Click Chart to Enlarge
And USD sentiment has been pushed to bullish extremes:

Click Chart to Enlarge
Further to all the above there are other aspects pointing to a bottom which I don't have time to detail, but the Commitment of Traders report for Comex futures has seen the Commercials offload a large number of shorts over the past few weeks and the report for this week is likely to show similar. Also there are a large number of Gold bears coming out of their den with downside targets, often a sign we are at or nearing a bottom.


Of course these are risky times we're in with Greece potentially on the verge of a political storm which could see them default on their debt obligations if the bailout money is withdrawn. Regardless of this though, the environment is one that Gold should be thriving in with negative real rates, western banks are ready to intervene again (IMO we will see QE3 within the next couple of months which might drive the start of the new trend in Gold), non-western banks are buying Gold, the geopolitical situation is still shaky and there is risk the Iran situation pushes Oil and Gold higher... nothings changed, so stop rocking back and forth and shaking in the corner because the value of your Gold has dropped. Get back on the horse.


[CLICK HERE] To subscribe to blog updates via email (free)

BB.


 Buy bullion online - quickly, safely and at low prices

9 comments:

  1. I guess I had some hand (or finger?) in stimulating this post? Thanks for your thoughts on it

    ReplyDelete
    Replies
    1. Yes your post was a bit of a prod to give some thoughts on recent price action :)

      As you pointed out, "buying the dip" has been a successful method to ride out the bull market so far, I think buying this dip even if it does go lower short term will provide a fruitful result.

      Delete
  2. My goodness, still trying to buy as bullion is dropping. Good luck with your limited trading experience.

    ReplyDelete
  3. we are not traders we are investors mate. i know BB personlly and he knows his stuff

    ReplyDelete
  4. Replies
    1. Your laugh is pre-emptive troll as the bottom that night was $1526 and we are still trading above it.

      Delete
  5. I have not been pre-emptive.
    The only gold price that matters to you and other AU residents is the price in AUD.
    The gold price in AUD is now below the price it was when you called bottom. Fail.
    The whole scenario you postulated in this and subsequent posts has turned out wrong. Just as wrong as your spruik of BSR who's directors for 5 years now have been regularly extracting dosh from gullible goldbugs like yourself and having a whale of a good life on the proceeds.

    ReplyDelete
    Replies
    1. Nice. I can use this troll dribble as a contra indicator and go and get some more ounces...

      Delete
    2. lol pretty obvious OP is US price centric, but believe what you like I guess.

      Delete