Saturday, 31 December 2011

Jim Rogers on silver and gold.

Jim Rogers sees long term trends and here is what he thinks about silver and gold:

"I think silver will be a great place for the next 10-20 years."

"It would not surprise me to see gold go to US$1200 – but if it goes that low I’d buy a lot more – gold has been up 11 years in a row it deserves a substantial correction."

Source: CNBC, 29 Dec 2011.

The story has not changed.

I am looking to buy more gold and silver on further price weakness.

Related post:
Silver: Searching for support.

Friday, 30 December 2011

Silver: Searching for support.

Silver formed a white hammer in the last session, closing at US$27.70. This is a single candle reversal signal which has to be confirmed. If valid, we could see price heading higher and testing resistance provided by the declining 50dMA once more. The 50dMA is currently at US$32.05.

The 50dMA has proven itself to be a strong resistance, pushing prices lower in November and early December when it was tested. It would take some extraordinary buying pressure to break through this wall to go higher. I expect traders to recognise this as well and many sellers would be waiting to sell if the 50dMA should be tested.

Looking at the MACD, it is in steady decline in negative territory. However, not reaching the depths it did in October is promising. We could see the formation of a positive divergence. A lower low in silver's price with higher low in the MACD would be a buy signal for me.

If I do buy some silver upon sighting a positive divergence, would I hold forever? Probably not. It would probably be for a trade and I would probably sell at resistance. Why?

Looking at the weekly chart, the MACD is still plunging. Momentum over the longer term is clearly negative with no reversal in sight. Although decreasing volume with continuing price weakness is encouraging for long holders, price could drift lower. I would like to see major support provided by the 200wMA tested before making my next move.

Tuesday, 6 December 2011

What are Jim and Marc saying about gold?

Investment gurus Jim Rogers and Marc Faber in recent interviews seem to agree on the dynamics in the gold market. Rogers says he’s not selling his gold and Faber says there is no bubble. But that doesn’t mean bullion is not still in a correction phase.

Dr Marc Faber, “when you buy gold, it’s an insurance against systematic failure and problems in the financial markets.”

Read full report: click here.

Thursday, 1 December 2011

Silver is testing resistance.

Silver has been forming higher lows. Could it form a higher high next?

Momentum oscillators have been exhibiting encouraging signs. We have a higher low in the RSI as well as the MACD. Indeed, the MACD looks like it is on the verge of a bullish crossover with the signal line. However, it remains in negative territory and we could be seeing just a rebound. The rising RSI is touching the 50% line which in this case could act as resistance.

Although forming a white candle in the previous session, price is still being resisted by the 50dMA. The 50dMA has, in the past, proven to be a formidable resistance which pushed the price down as it was tested repeatedly earlier in November.

With the MACD still in negative territory and the RSI coming up against the 50% line as resistance, the 50dMA could be hard to overcome once again. If, however, it should be overcome, expect resistance next at the 20dMA which is currently at US$ 33.30 an ounce.

Having said this, if the 50dMA could be overcome convincingly, resistance posed by the 20dMA should be less of a problem. We could eventually, then, see the 100dMA tested. That is at US$36.51 an ounce now.

Friday, 18 November 2011

Silver: Breaking the 20d MA support.

Silver has been hugging the 20dMA for support but the declining 50dMA has proven to be much stronger and has pushed it hard enough to break the support provided by the 20dMA, forming a long black candle.

At the same time, RSI has gone below 50 which often acts as support in a declining market. It has some way to go before it becomes oversold. The MACD is forming a bearish crossover with the signal line and we could see momentum turning negative again as the MACD continues to dip. Overall picture, bearish.

As an investor, in situations like this, I would put silver higher up on my watchlist. If price were to decline further and possibly forming a lower low, I want to see a higher low on the MACD. A positive divergence is what I would be looking out for. This would be a signal to go long and I would increase my long exposure accordingly.

If we believe that the longer term direction for silver is up, there is no need to panic and we should view strong selling in the market as possible opportunity to load up instead.

Wednesday, 26 October 2011

Silver has broken out of resistance.

I have not been saying much about silver in a few weeks because it was basing and there was nothing much to say. Silver touched a low of US$26 an ounce like I thought it would in Silver: Accumulate or wait and see?

Although it touched a low of US$26 an ounce, it also formed a long legged hammer, a bullish reversal signal which was confirmed as its price recovered. I said that the white metal was oversold and that a rebound was likely in Silver: Bouncing off the 100dMA.

Silver's price has been forming higher lows since my last blog post. In the last two sessions, it broke resistance provided by the 20dMA and this MA was successfully tested as a support in the last session. A resistance turned support. This is what long holders are looking for before adding to their positions. Indeed the rising MACD shows improving momentum although still in negative territory.

Further improvement in the price of silver is likely to meet resistance at US$37 an ounce or so. That is where we find the confluence between two declining MAs, the 50d and the 100d. Of course, price could turn south as well although the probability of an upside is somewhat better. Technical analysis is about probability, never certainty.

Tuesday, 27 September 2011

Silver: Bouncing off the 100wMA.

Silver is currently at US$31.28 an ounce. I hear some people saying that if silver should go under US$30.00, we should cut short our long positions. I don't like to sell when prices are forming new lows. I like to sell on rebounds.

Silver did touch a low of US$26.00 an ounce but a long legged hammer formed on the daily chart. This is a bullish reversal signal. Although the MACD is plunging into negative territory, the RSI is now in the oversold region, something that has not happened in a long time.

Momentum is negative but the drop has been fast and furious. Such an aggressive drop is often followed by an aggressive recovery. The RSI suggests that currently the white metal is oversold and a rebound is likely.

On the weekly chart, momentum is still positive and it is quite clear that price bounced off the 100wMA at about US$26.00 an ounce. We could probably expect some resistance at US$34.44 an ounce which is where we find the 50wMA.

Related post:
Silver: Accumulate or wait and see?

Saturday, 24 September 2011

Two videos and a quick TA on gold.

22 September 2011, REUTERS.
Did the gold rush go bust?

22 Sep 2011, REUTERS.
Gold selloff normal, bull run still on, says Henwood.

I still believe that precious metals will do well over the longer term. I looked at silver's weekly chart in an earlier blog post today and the longer term uptrend is intact.

Gold's technicals look stronger than silver's and its price is still trading above the 100dMA at US$1,634.58. The 200dMA is currently at US$ 1,522.65 and would be the support to watch if the 100dMA should give way completely.

Silver: Accumulate or wait and see?

At this moment, silver is trading at US$ 30.93 an ounce.

The 200dMA as a support has been compromised. The short term uptrend of the metal has been jeopardised.

Looking at the daily chart would sent jitters down the spine. Momentum has plunged into negative territory and one could only wonder if price is going to find a base soon.

Looking at the weekly chart, it is clear that the longer term trend is still up. It is also interesting to see that while negative divergences were quite clear in the daily chart, they are nowhere to be seen in the weekly chart. There is, therefore, no signal that silver's uptrend will have a major shift over a longer timeframe.

For anyone who believes that investing in silver is a hedge against the inherent flaws of fiat currencies and that much higher inflation is going to take place, any weakness in an uptrend is a buying opportunity.

Having said this, the flight to the perceived safety of cash especially the US$ amidst expectations of another recession and accompanying deflationary pressures will continue to see prices of commodities going down in the meantime. With people expecting prices to come down for all assets in a truly deflationary environment, gold and silver have not been spared.

It would certainly take some guts to continue buying more silver on further weakness in the near future. If the 200dMA is not recaptured as support, I will look to the 100wMA at US$26.21 as the next support and this is some way to fall.

Instead of buying at every drop in price, a wait and see approach might be prudent even for the very bullish.

Friday, 23 September 2011

Silver: Going through a rough patch.

On 20 September, I mentioned that silver's price could be in for a rough patch and that we could see the support provided by the 200dMA tested. This is at US$36 an ounce. This has come to pass.

I am adding to my long position in the precious metal.

Could silver's price continue to weaken? Technically, it looks like it could. However, understanding that technical analysis is all about probabilities and never certainties, I am increasing long exposure based on fundamentals.

I am not going into why we should be buying gold and silver instead of hoarding cash. I believe that the topic has been beaten to death and, yes, I believe we should have some gold and silver.

Related posts:
Silver: Momentum could be turning negative.
Buy more silver on weakness.

Tuesday, 20 September 2011

Silver: Momentum could be turning negative.

A lower high on the MACD was formed when silver broke US$44 an ounce in the second half of August. This gave a hint of impending price weakness which we are seeing now. With the MACD on the verge of dipping into negative territory, silver could be in for a rough patch.

When will I load up on silver again? If price should retest the 200dMA, I will most probably increase my long position in the precious metal. Currently, the rising 200dMA approximates US$36 an ounce.

Tuesday, 6 September 2011

Gold is not a bubble.

There are many types of things we can invest our money in and I do not pretend to know all of these things. Indeed, I would have an extremely hard time trying to understand all kinds of investment in this world.

I try to keep an open mind about things and, indeed, if I did not, I would not have invested in real estate, gold and silver or even in stocks for that matter. I listen to reason, using insights from people like Marc Faber and Jim Rogers as compasses. Together with my limited knowledge of economics, I make my own decisions.

Although some think that gold is a bubble, I do not think so. In fact, as recently as yesterday, I was chatting in LP's infamous cbox when this topic came up again.

Gold is still nowhere near its peak in terms of real value. Real value? Yes, I am talking about gold's price adjusted for inflation. There is still some way to go.

“I don’t think that gold is in a bubble,” Faber, publisher of the Gloom, Boom and Doom report, said in a phone interview yesterday from Chiang Mai, Thailand. “When you buy gold, it’s an insurance against systematic failure and problems in the financial markets.” Read full article here.

Buying on weakness in an uptrend is the way for me.

Saturday, 20 August 2011

Silver's long white candle.

It would seem like a no brainer that with all the recent troubles with sovereign debt in Europe and the USA that smart money would flow into precious metals. Gold and silver have done exceedingly well this week. See chart below:

Silver's price action formed a long white candle in the last session. This is an affirmation of the breaking of resistance five sessions before as the 20dMA was broken. Silver has been trading above the 20dMA for three sessions now.

The 20dMA is a likely resistance turned support. So, for anyone who would like to buy at support, the 20dMA at US$39.90 an ounce is the price to watch for now.

RSI is rising but is not overbought yet. The MACD has formed a higher low and has just completed a bullish crossover in positive territory. Momentum is positive and we could see silver's price going higher in the meantime.

I wonder if silver could test the high achieved in late April earlier this year once more. If it does, I would probably divest some of my investment in the metal.

To anyone who bought more silver based on technical analyses in my last couple of blog posts, congratulations!

Related post:
Closing above the 100dMA.

Sunday, 7 August 2011

Silver: Closing above the 100dMA.

Two weeks ago, I mentioned that I would not add to my long position in silver at the price level then. For the reasons why, please refer to the blog post here.

Silver closed above the rising 100dMA at US$38.33 an ounce, forming a black spinning top in the process. The longer term trend for silver is still up although it is experiencing some weakeness in momentum now. The MACD has completed a bearish crossover with the signal line but it is still in positive territory suggesting that silver is experiencing a correction and nothing more. See the chart below:

For the more adventurous, buying more at current levels is definitely better than buying two weeks ago. For the less adventurous who wish to buy closer to the 200dMA which is currently at US$33.66 an ounce, why not? It could happen. Good luck.

Saturday, 23 July 2011

Silver: Strong resistance.

The last five sessions saw silver's price forming five candlesticks which clustered in a narrow range in the region of US$40 an ounce. It seems to have come up against a formidable resistance. Tension is building up.

With the RSI having formed a higher low, momentum remains strong. The MACD is still rising in positive territory. However, things could change quickly if USA's government should raise the country's debt ceiling. So, I would not add to my long position at these levels.

Any pull back to supports could see stronger buying interest. Immediate support is provided by the rising 100dMA which is approximating US$38 an ounce. This is followed by the rising 50dMA which is approximating US$36 an ounce. These would be more ideal prices to add to long positions.

Where do we find resistance in case price rose higher? After all, the RSI has yet to move into overbought territory. For silver, it seems that there is resistance at every US$2 interval. So, the next resistance level is at US$42 an ounce followed by US$44, US$46, US$48 and US$50 an ounce.

I would accumulate if supports were to be tested. If price continues to rise without a test of the supports identified, I would ready myself for further divestment of my long position.

Saturday, 16 July 2011

Silver: Going higher?

Three sessions ago, silver broke out of resistance provided by the declining 50dMA. This was done convincingly, forming a long white candle in the process. The question is whether it could go higher or whether it would retreat?

Prices climb a wall of worries and I would not be surprised if the price of silver should retreat to test supports before moving higher. For now, the momentum oscillator shows strength. The RSI bounced off the 50% line which acted as support. The RSI, still rising, is now approaching the overbought region. The MACD has crossed into positive territory and is still rising. Momentum is positive.

These are signs that market bulls need to confidently add to their positions. They could buy in if price should pull back to support next. Immediate support is in the region of US$38 an ounce while stronger support is found at US$36 an ounce which is where we find the former resistance provided by the 50dMA.

Bears would be watching the region of US$40 an ounce closely. If price is unable to go higher than US$40 an ounce over a prolonged period, we could see another round of selling. Breaking US$40 an ounce would be great news for bulls.

Sunday, 10 July 2011

Silver: Stronger momentum.

The price of silver has strengthened somewhat, closing at US$36.54 an ounce in the last session. How it performs in the next session is crucial in determining its direction in the near future. How so?

US$36.54 is where we find the 50dMA which has turned down and is declining. This MA is likely to exert some downward pressure on price.

Momentum has strengthened as the RSI broke 50% which often acts as resistance or support. The MACD although still in negative territory has also turned up and is rising towards zero.

Failure to overcome resistance and in moving higher could see the 200dMA tested as support in time. This is currently at US$32.01 an ounce.

Saturday, 2 July 2011

Silver: Blog post in ASSI.

I am trying to adjust to a new routine in life and have been waking up two hours earlier everyday for a week now. Trouble is I am still having difficulty sleeping earlier at night and I am suffering from lack of sleep.

I have a new blog post on silver today but posted it in my other blog, ASSI, by mistake. So, go ahead and check ASSI for my latest thoughts on silver.

Saturday, 25 June 2011

Silver: Trying to find a base.

What's happening to silver's price at US$34.64 an ounce?

One reason why I have not been blogging much about silver is because there is nothing very much to say. My last blog post on silver still says very much what I would say today.

The big difference is that price is no longer above the 100dMA and has to look to the 200dMA for support. Also, in my last blog post, I said that the 50% line in the RSI has been established as a strong resistance and that price could have a harder time climbing higher. This has turned out to be true.

If we look at the price action, it has formed a series of lower highs and we want to be cautious if we are on the long side. It suggests a lack of conviction on the part of buyers. What about sellers? It would not be wrong to assume that sellers are waiting for the long term support provided by the 200dMA to break before they take action. This is currently at US$31.63 an ounce.

What's my strategy? Wait and see.

Some numbers:
50dMA: Flattened and downturning. US$38.46 an ounce.
100dMA: Rising. US$36.63 an ounce.
200dMA: Rising. US$31.36 an ounce.

Related post:
Silver: Wait and see.

Sunday, 12 June 2011

Silver: Wait and see.

Silver closed at US$36.20 an ounce. This is closer to the support provided by the 100dMA at US$35.83 an ounce than the resistance provided by the 50dMA at US$39.22 an ounce.

The weakening momentum observed in my last blog post is confirmed by the RSI which has been unable to overcome resistance provided by its 50% line.

The 50% line is now established as a many times tested resistance and likely to be quite strong, therefore. This, in turn, suggests that price could have a harder time climbing higher.

Although the MACD has averted a bearish crossover with the signal line in negative territory, its distance with the signal line seems to be narrowing. The negative momentum although mellowed is still very much in force.

Since my last blog post, my strategy has not changed and I would wait and see.

Related post:
Silver: Weakening momentum.

Saturday, 4 June 2011

Silver: Weakening momentum.

The price of silver seems to be consolidating as the initial rebound off recent lows loses momentum. This is quite obvious as the MACD formed a lower high in negative territory and seems ready to form a negative crossover with the signal line. The fact that the MFI has turned down at the 50% line reinforced the picture of weakening momentum.

In light of this development, I am keeping an eye on the 100dMA which is at US$35.44 an ounce now. In the event that this support is breached, we could well see the long term support provided by the 200dMA tested. If the 100dMA should hold up decisively, we could see the flatlined 50dMA tested as resistance next. This is at US$ 39.26 an ounce currently.

What am I doing? Nothing for now. I would like to buy more silver when the signs are more reassuring. Currently, the situation is somewhat dicey. For anyone who would buy at the 100dMA if it should be tested, he would be betting that the support would hold and if it should hold, not only could the 50dMA be tested as resistance, we might see it even broken as, potentially, we have a reverse head and shoulders pattern on hand. Notice that I said "bet" because that is what it is.

For me, I would like to see a positive divergence formed between price and the MACD, that is a lower low in price and a higher low in the MACD. This would give me greater confidence to add to my long position in silver although it would still be a "bet" but a bet with a greater probability of success. TA is, after all, about probability and not certainty. Good luck.

Wednesday, 25 May 2011

Silver is rebounding off support.

Today, a fellow local blogger bought some 3,000 ounces of silver at US$36.70 an ounce! Yes, he is a very rich guy and he thought he had missed the silver boat when it hit a high of almost US$50.00 an ounce in the recent past. This is his maiden purchase and I am impressed.

Well, is it a good time to be back in silver? Technically, silver was hugging the 100dMA for a few sessions and formed multiple dojis. The long white candle in the last session which formed above the 100dMA confirmed the reversal signals.

The MACD seems ready to form a bullish crossover in negative territory. Silver has rebounded smartly but as the MACD is in negative territory, it could just be a rebound and nothing more. We want to stay cautious and not throw in the kitchen sink as well if we initiate a long position here. Of course, initiating a long position now is much safer compared to just three or four weeks ago.

Silver is currently at US$37.24 an ounce. I would look to the 50dMA which is at US$38.98 currently as the immediate resistance. If price is unable to move above the 50dMA convincingly, be prepared for more downside. A test of the 200dMA for support would be ideal for long only investors to add to their positions.

Saturday, 21 May 2011

Silver: Selling pressure eased.

The selling pressure experienced by silver has eased. Candlesticks in the last three sessions closed above the 100dMA with those in the last two sessions forming long legged spinning tops. These could act as reversal signals but they need confirmation.

The technicals are benign and encouraging. The MACD is closing the distance with the signal line in negative territory. We could see a bullish crossover in the near future which could signal a rebound. If this were to pan out, watch the resistance provided by the 50dMA which is now at US$38.98. That prevented price from moving higher as it rebounded from the recent rapid decline. Market participants are likely to remember that and, so, the 50dMA would be a significant and immediate resistance level.

Am I buying more silver at the current levels? Well, we could see a rebound in price and it might be a good idea to add to my position just in case it happens. This would be for a quick trade which means selling if the 50dMA should be retested. However, I am more a longer term holder and I am not convinced that the 100dMA is a strong support now. Why?

See how the 100dMA has been broken in so many recent sessions? It could be a matter of time and this could take months but we could see the 200dMA finally called upon as support. The 200dMA is a long term support and if it does not break, generally, it would provide a more secure entry point.

This strategy is a sound one for me because I already own silver bought at a much lower price. I am in no hurry to add to my position unless I get a firmer sign that things have stabilised for the longer haul.

Sunday, 15 May 2011

Silver is breaking the 100dMA support again.

(Something is wrong with Blogger. This blog post appeared on 12 May 2011, not 15 May 2011.)
Silver is now trading at US$33.37 an ounce. This is below the 100dMA which is at US$ 34.43 an ounce. This is the second time in the last one week to see the 100dMA broken.

Will price close above the 100dMA again this time round? If price were to close below the 100dMA, we could see lower prices in the sessions ahead. Could we see a test of the 200dMA at US$28.67 an ounce?

The MACD has declined into negative territory. Momentum is clearly negative. However, if the 200dMA were to be tested and if it were to hold up, buying more at that level is probably a good idea. Compared to the low of late January 2011, it would still be a higher low and the longer term uptrend would still be intact.

UOB is selling silver at S$ 41.67 an ounce today.

Saturday, 14 May 2011

Silver closed above support.

Silver, in the last session, closed above the 20wMA.  A long legged black spinning top was formed. A spinning top suggests indecision and fierce fighting between the bulls and bears. It is also a reversal signal but it might be less convincing as it is not white in color which suggests that the bears had a slight advantage.  The lower wick also broke support just as it did last week but it touched a lower low this week. There is little doubt that the 20wMA has weakened. We could see the 50wMA tested eventually. That is currently at US$27.18 an ounce.

What about the daily chart? The good news is that the RSI has formed a higher low while price formed a lower low. This is a positive divergence. The downward momentum in price has eased and could lead to a reprieve. It does not mean that price would rebound immediately as positive divergences could fail too or take some time to come to fruition.

With the MACD still declining in negative territory, the momentum is clearly to the downside. Any long position taken at this point in time should be a smallish hedge. Being mentally prepared that price could see more downside is also a must although any downside is definitely more limited at this time compared to a fortnight ago.

Wednesday, 11 May 2011

Silver: Watch the 50dMA.

Some of you might have bought into silver as its price tested the support provided by the 100dMA which is currently at US$34.36 an ounce. With silver now at US$38.82 an ounce, that means a nice 13% gain in just three days.

The 50dMA which seems to be going flatter is at US$39.07 an ounce. Silver traded at close to US$39.50 an ounce just a few hours ago before pulling back. It seems to me that the resistance provided by the 50dMA could be quite strong. I would keep an eye on this. If price were to break out, the next resistance is provided by a 20dMA which has turned down and is currently at US$ 42.62 an ounce. Consider taking some profit.

If, however, silver's price failed to move higher and if price were to close below US$38.00 an ounce, we could see it declining further. A retest of the rising 100dMA is possible and it would, in the process, erase all paper gains for anyone brave and lucky enough to initiate a long position three sessions ago. A little less greed could be a good thing.

Saturday, 7 May 2011

Silver: A white candle at last.

Waking up this morning, after going through my toilet, I turned on my PC to look at silver's chart. The fight between bulls and bears in the last session was clearly a tug of war as a candlestick with a short white body and long upper and lower wicks was formed. The bulls were slightly stronger.

The RSI has turned up from the boundaries of the oversold region while the MACD continued its decline. It is too early for the bulls to pop the champagne for sure. Of course, we could see the next few sessions turning into a relief rally as, after all, prices do not usually go down in a straight line but down a river of hope. Dust takes time to settle too.

What is most significant with the price action in the last session is that price has closed above the 100dMA and that is psychologically important. If price should continue to consolidate above the 100dMA, then, it could form a base for further upside.

I have people asking me whether it is now the time to buy silver, I can only say that this is a better time to buy silver than it was a few sessions ago. The risk premium is now lower and it is no longer overbought, not by a long shot. Could price go lower? Yes, it could but the downside is more limited than it was before. Know your own tolerance for risk and act accordingly. Good luck.

Friday, 6 May 2011

Silver: An eye on supports.

Silver's price has weakened by more than 30% since hitting a high of almost US$50.00 an ounce. Is the free fall going to continue?

It is now trading at US$33.75 an ounce and this is below the support provided by the 100dMA at US$34.12 an ounce. If we could see it closing the current session above the 100dMA, good news for the bulls although it could turn out to be a temporary respite. However, closing lower than the 100dMA, we could see more downside in the next session. Wait and see.

The RSI is bordering on oversold and the MACD, fast approaching zero, shows strong momentum to the downside. In case the 100dMA support fails, what is next? Look at the weekly chart and we get some clues. The 50wMA is at US$26.83 an ounce. Wow! That is some fall from US$50.00 an ounce. Well, if it should happen, yes, it is.

The thing to note is that the 50wMA will move higher in the next week and the value could be somewhat higher, perhaps, closer to US$27.50 an ounce. It is also interesting to note that this price would still be a higher low compared to the low touched in January 2011.

The 50wMA is one which was tested successfully many times in 2010 and, expecting it to be a stronger support, I plan on adding more to my long position in the precious metal closer to that level.

UOB was selling silver at S$43.76 an ounce today.