Friday, 21 December 2012

Gold: Weekly chart.

Gold is now testing the 100 weeks MA for support. If this should break, we could see the 200 weeks MA tested for support. This is currently rising and approximates US$1,378.46 an ounce. That is some way to drop.

The MACD is declining after completing a bearish crossover in positive territory. Crossing into negative territory could send price lower. It would have to form a higher low to see price recovering. Having said this, the longer term uptrend, at this point in time, is very much intact.

I would look out for a basing process before buying more.

Gold and silver do well when there is a lot of fear in the air. With the governments of major economies dovish with signs of more monetary easing, equities have gained favour. Risk is on again.

Monday, 3 December 2012

Silver: Weekly chart.

A good friend reminded me that since I am looking to hold silver long term with a crisis mentality, I should be looking at the weekly chart. Indeed!

200w MA is rising relentlessly and is at US$25.55 an ounce. The 50w MA is at US$31.09 an ounce. We are seeing higher lows and higher highs on the MACD, a pure price momentum oscillator. Long term momentum is positive and strengthening.

There is a chance that supports could be tested which would probably see strong buying interest.

Friday, 23 November 2012

Gold and silver: Still important assets to own.

It has been a while since I wrote anything about gold or silver. However, this does not mean that my views on the precious metals have changed. I just don't have anything new to say.

I still believe that everyone should own some gold and silver. People could trade these and try to make some money in the process but I would argue that buying some physical gold and silver is important as they are real assets to own in an environment where fiat currencies are being abused by central banks.

Inflation or deflation? Central banks around the world would rather have the former. Some have even argued that the USA is trying to inflate its way out of its economic malaise. Its currency's value would probably drop in the process. The EU and Japan are doing the same. China might also do it to maintain a semblance of growth.

Whatever we do, leaving our money in bank accounts is the worse thing we can do. Our savings earn almost nothing in interest and although the nominal value might remain the same, our saving's real value is being shaved off over time due to higher inflation.

I am not saying anything new, of course, and this blog post is a reminder to readers and myself that even as we invest in income producing assets, gold and silver remain relevant tools to protect our wealth from possibly higher inflation in the years to come.

Given a choice, would I buy gold or silver now? Silver. I feel that silver's price has a lot more room to appreciate. Some readers might remember a piece I wrote many moons ago on gold and silver ratios. Gold is now trading at about US$1,733 an ounce while silver is at about US$33.30 an ounce. This means that 1 ounce of gold is equivalent to about 52 ounces of silver.

In January 1980, 1 ounce of gold could only buy 14.9 ounces of silver. Could we see that again? We could. Why not? Even if gold's price should stay stagnant at today's level (which is rather unlikely), silver could be worth as much as US$116.30 an ounce using this ratio. If gold should hit US$5,000 an ounce which many experts think it would over time, silver would be US$335.57 an ounce using this ratio.

Of course, I am just throwing up hypothetical situations and playing with numbers but these are possibilities when central banks around the world are just printing money to try and escape recessionary pressures. This is happening even as the world's stock of silver is finite and being depleted.

Immediate support for silver is at US$31.00 an ounce or so and a test of support could see buying interest returning. Immediate resistance is where it is now and if it should be overcome, we could see a retest of the double top at US$35+ an ounce. The MACD is just entering positive territory and the return of positive momentum could trigger a breakout.

Related posts:
1. Gold or silver?
2. Real value of gold.
3. Silver: Some views from Sean Rakhimov.

Saturday, 2 June 2012

Jim Rogers: I Won't Sell Gold Despite Losses.

Gold prices could plunge should the European debt crisis intensify, such as messy Greek or Spanish default and withdrawal from the eurozone.

Such a scenario would send gold on fresh declines as investors run to the metal's traditional hedge, the U.S. dollar, but bargain hunters will snap the metal right back up.

Translation: Gold is headed up either way, especially if weak economies prompt central bank to continue stimulating their economies.

"If Spain suddenly goes bankrupt out of the blue, everything is going to collapse ... to $1,300 or $1,200 if it goes that low, and I hope I am smart enough to buy a lot more," Rogers says.

Read more: Jim Rogers: I Won't Sell Gold Despite Losses

Sunday, 4 March 2012

Silver: Some views from Sean Rakhimov.

1.  Gold and silver are the only markets driven by fear, and fear usually does not emanate from the metals, but from other areas. A lot of the other assets are driven by greed.

2.  Silver does display a high degree of volatility and I believe its fundamentals are far superior to those of gold due both to its industrial usage as well as price. Silver is far cheaper than gold and a lot of investment has been switching over to silver. For instance, Sprott says it sells equal amounts of silver (in dollar terms) to gold, which means in today's numbers, silver is selling 50 times more in ounces than gold.

3.  I do think that the gold:silver ratio will get below 20, probably closer to 10:1. It's over 50:1 right now; so, that should be a good guideline.

4.  Generally speaking, though, with silver, we are probably somewhere midway through the cycle and have another 10 years to go. Investors should constantly revisit their reasons for being in this space and what exactly they are looking to get from it. I think there's nothing to worry about in the volatile price action. Silver is about the most volatile asset that you can be in. Other than that, I think it is up and up from here.

Read complete article: here.

For quite a while now, I have not really talked about gold, preferring to look at silver because I think the upside for silver is far superior to that of gold over the longer term. I also blogged about the gold:silver ratio before.

Accumulating more silver if its price should test supports would be a good idea.

Related posts:
1. Gold or silver?
2. Buy more silver on weakness.

Saturday, 25 February 2012

Silver: Trading above the 200d MA.

Silver is at US$ 35.43 an ounce. Will it go higher?

The RSI has just tipped into overbought territory but this does not mean silver's price cannot go higher. It simply means that silver is beginning to be overbought. In very bullish conditions, silver could stay overbought.

I would pay more attention to the MACD which dipped but is once again rising as the 200d MA at US$ 34.92 was overcome by a long white candle. A bullish crossover is observed. Whether higher prices are on the horizon would depend on whether a higher high or a lower high is formed on the MACD. 

If we should see a lower high on the MACD when a higher high in price has already been formed, we could be seeing the onset of a negative divergence which would be a precursor of a possible price correction.

Related post:
Silver: Broke resistance provided by the 50d MA.

Tuesday, 21 February 2012

Luring bullion refiners to Singapore.

Gold is essentially a very old form of money and like many people, I have always thought that having a consumption tax on investment grade gold is incorrect.

With the government exempting investment grade gold and other precious metals from GST come October 2012, buying physical gold as a hedge against systemic failure in the world of fiat currencies will become less burdensome.

Singapore's investment gold demand nearly tripled to 3.5 tonnes last year, according to consultancy firm Thomson Reuters GFMS.
Refiners have been put off by Singapore's taxes, opting instead to mould and sell gold bars in Hong Kong, which does not impose duties on bullion, and Japan, where the consumption tax on gold is 5 per cent.

Industry sources, however, said at least one major refiner has shown interest in opening a factory in Singapore around the talk of the tax change.

More gold traders are expected to set up offices here and store more bullion, following JP Morgan Chase & Co which opened a precious metals vault in 2010.

"I think this is really going to change the landscape in Singapore. A lot of companies will find the incentive to start operations in Singapore," a gold dealer said.

"This news is going to draw attention to Singapore as a safe place to park funds. Asset managers will also be very excited.

"The trend in the last three years is that people are moving to physical hard assets from paper," the dealer added.

Singapore imports gold bars from Australia, Switzerland, Hong Kong and Japan, which are then sold to buyers in South-east Asia and India, the world's largest gold consumer.

Source: TODAY online, 21 Feb

Friday, 17 February 2012

Investment grade gold exempted from GST.

As part of Singapore's Budget for 2012 announced by finance minister Tharman Shanmugaratnam, "Singapore is set to capitalise on the strong demand in Asia for gold as an asset. The government is exempting investment-grade gold and other precious metals traded as financial assets, from the goods and services tax (GST). This is already being done in a number of other countries such as Australia, the UK and Switzerland."

About time.

Monday, 23 January 2012

Silver: Broke resistance provided by the 50dMA.

It is the first day of the Chinese New Year. This is the Year of the Dragon and silver roared with life as it broke the resistance provided by the declining 50dMA, forming a long white candle.

The next resistance level is provided by the 100dMA at US$33.17 an ounce. With the MACD on the verge of crossing into positive territory after forming a higher low as silver tested US$26.00 an ounce thereabouts late last year, the positive divergence could see silver's price pushing higher in time.

If the 100dMA should be overcome successfully, the next resistance is provided by the 200dMA and that is currently at US$35.93 an ounce.

Given the relative volatility of silver's price, look to the weekly chart for guidance as a longer term chart shows stronger supports.

The 100wMA is the crucial support to watch. In the last decline, this support was broken briefly and likely to have weakened. Despite the strength of silver's upmove in price, it is still in danger of forming a lower high which could see price retreating once more. Whether the 100wMA would then hold as support would be the question on everyone's mind.

If the 100wMA should break, the next long term support is provided by the 200wMA and that is at US$21.65 and that is some way to fall. However, expect very strong support at the 200wMA if it should be tested.