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.