by Bill Downey     Price Analysis of Gold and Silver
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Technical Analysis Trading Gold, Trading Silver/ analysis By Bill Downey providing key turning points & charts for investors and speculators in Precious Metals Trading, and Precious Metals Markets

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Bill Downey, of Gold Trends.net, LLC, is an Independent Investment Analyst with over twenty years of study. YOU SHOULD NOT TAKE ANY MATERIAL posted on this WEBSITE AS RECOMMENDATIONS TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED. Do your own due diligence. No one knows tomorrow's price or circumstance. The author intends to portray his thoughts and ideas on the subject which may s be used as a tool for the reader. GoldTrends does not accept responsibility for being incorrect in its speculations on market trend or key turning points that it may discuss since they are at best a calculated analysis based on historical price observations.

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  • 05 Sep 2012 12:07 AM | Customer Service (Administrator)
    GOLD - RECAP
    CME NEWS

    The gold market extended last Friday's huge intra-day rebound during Tuesday's session, with an early rally taking prices to a fresh 5-month high (but holding below 1705) However, a negative shift with outside markets weighed on prices by mid-session and took December gold to the 1691 support area before a close at 1698.
    Rising expectations for fresh easing measures from the US, China, and the Euro zone were widely seen as the main source of support for the gold market during today's session. In addition, news that a South African miners’ strike is starting to spread from platinum mines over to gold miners has the potential from creating near-term supply disruptions.

    Gold Hourly Chart
    Prices remained inside the narrow range established since the rally testing both the first support and resistance lines. The trend remains up and any push above this resistance area marked PIVOT should lead to the next resistance line. Upside targets for the week favors the 1725-1735 area once price is above the area listed as pivot.

    Support is the 1688-1692 area and then the 1673-1683 zone. Any move above the pivot line at 1704-1706 favors higher.

    In summary, the trend is up. There were six tests of that RED LINE today at 1700 and each time we stayed below 1704. The sideways action during consolidation is usually a sign bullish factor but I’ll still feel better once we move and close above the pivot.

    Gold


    Silver – Medium Term – Neutral

    Moving Average resistance 30.39-30.76

    Silver exceeded both the moving averages and the downtrend line on Friday’s big reversal. The Blue channel line on the chart travels all the way to 2001 and all the highs in silver have been at that line. The only time it was ever exceeded was the final move in 2011. Odds favor that the blue line is going to be the next major target for silver at the 36 dollar area. The blue moving average still needs to get above the red for the bullish reading on medium term, but the odds are on the upside. If gold can close above 1704 it should provide a cycle inversion that would have silver move higher into mid month. If not, silver will pull back into mid month first before making its next move higher. Either way, the upside is favored. It’s just a matter of the timing. Support is the 30.50 – 30.76 and as long as we’re above that, the trend remains up.

    Silver
  • 14 Aug 2012 1:54 AM | Bill Downey (Administrator)

    Gold price Now needs to confirm medium term trend

    The medium term has reached the decision point as price and the moving averages have arrived at the green channel line. In order to neutralize the down “TREND”  that gold has been in this year, price must overcome the blue 34 week average at 1641 and the Red 13 average at 1660.  This would put gold back inside the green channel and once the blue average can move back above the red, would confirm that the “TREND” on a medium term basis is up. This is the key area for the medium term and for gold to overcome. And don’t think the control boyz don’t know it.  This is the key level gold must overcome for the medium term.

    This is the key point here for AUGUST.  A price failure here and a close back below 1580 would suggest lower prices into the end of August. Short term Price cycles are due to turn this week and the potential to turn down to months end has risen significantly.

    14XGLDWKLYAug

    Gold weekly price chart


    Silver

    For the 3rd consecutive week silver has been able to close above the key long term trend line that it has been in battle with for what seems forever. We have now completed a full 13 weeks at this channel and it’s not the type of pattern we see often at bottoms. 

    . But short term cycle peaks are due this week so it might still take some time to work away from this long term trend line.  On a medium term basis, the moving averages at 31-32 is still the key price point for silver to get above to neutralize the medium term downtrend and provide confirmation to the forecast we have for the correction in metals to be over. More importantly will be the ability for silver to make this long term trend line a support point going forward.  In summary, the medium term is trying to make a turn here, but as we’ve seen the short term patterns are still choppy and overlapping. With short term cycles due to peak and usher in a pullback, we may have some more work to do in this area and silver might be getting ready for a pullback.

    11XSLVWKLAUG

    Silver Weekly Price Chart





  • 25 Jul 2012 2:19 PM | Bill Downey (Administrator)

    I am going to say something for the first time. I have been waiting for a year to say it.  You have probably heard this 100 times before and by some as much as 20 times. 

    But I will say it for the first time.

    THE GOLD CORRECTION IS OVER

    It ended yesterday

    The next stop is 1625-1630 for this week.  There's a lot more coming.
     
    Confirmation of the end of the correction will come  when GOLD only   pulls back for a few days at the beginning of August and not two weeks.

    Then it will move up another two weeks into the 15th-22nd of the month. If it pulls back to labor day from there expect much higher prices after that.

    Yesterday was no ordinary day

    It was 48 hours shy of being a FIBONACCI 233 days from the TOP at 1922 in gold.

    And the top at 1922 was exactly 40 YEARS TO THE WEEK (think of 40 years in the desert)hat Nixon closed the gold window.

    THESE last 233 DAYS HAVE BEEN THE DAYS OF TESTING

    In the next phase, the gnashing of teeth, the public is going to arrive looking to buy physical.

    When God created the universe, He created perfect order not chaos. We see only chaos not because it is, but becaue we have not perceived reality as it truely is.

    You will also be glad to know that the GOLD STOCK CORRECTION IS FINALLY OVER look for a 25% move higher in a short amount of time.

    XGLDMONJul2012CorrectionEnds
    Gold and the 21st Century Bull Market

     
  • 24 Jul 2012 4:42 PM | Bill Downey (Administrator)

    Medium Term Gold – Bearish Trend still -- Moving averages at 1648-1668

    the medium term trend is still bearish.  We’re using the gold ETF (GLD) to highlight this lower channel. Price is supporting in between this and the green channel over the last 9 weeks.

    The dual channel chart has price caught in between two channels (Green channel above and white Channel below) and there’s not much room on the downside before it gives way to another channel.  The best clue if that is to develop would be for gold to CLOSE below the 1520 low of this correction ON A WEEKLY (Friday) basis. As we can see today’s low is getting very close to that channel line that runs near the 1530-1547 area.

    Until gold enters one of the two channels either higher or lower, gold remains in a neutral sideways market.  The medium term trend is still down, and if it breaks lower into the white channel then the correction will still be in play. However, if gold can stage a rally from this point back inside the green channel lines and conquer the moving averages, then the potential for a move higher into the latter portion of the year will gain credibility.  Anything lower than today in price will raise concern over the short term trend.


    24GLDWklyJul

    Gold using (ETF) GLD Weekly Price chart with long term channel lines


    Silver Medium Term
    Trend – Bearish (30.61-31.54)


    the medium term in silver remains in bearish mode.  Price has been at the current channel line fighting to regain upside momentum since mid May.  While it has not broken below the lows of 2011 and 2012 at 26,  it has been a battle to remain above it.  As we enter Tuesday, there is still no resolve, but prices have been holding up enough that we can’t count out the upside taking hold. We have been under the impression that an important low was made in June, but the longer silver hangs around this channel the greater the chance of moving lower will come into play. 
    It takes a weekly close above 27.70 and then 28.60 to favor some type of bottom have been confirmed. 

    23XSLVWKLYJul


    Silver Weekly Price Chart with long term channel lines


    US Stocks
    Intermediate term –  Trend Bullish at 132.10 – goes neutral  at 134.70
    Moving averages – 134.91– 135.38


    We’ve been discussing the choppy and overlap pattern warns that the upside is not the main trend and today’s drop is part of that process. Once again the rescue squad came in and salvaged the day but the trend remains precarious and ready to turn down. 

    The trend is up as price is above the moving averages, but the pattern is choppy and overlapping and that warns that the upside is not the main trend.  Support is the moving averages and the upper horizontal line.  As we said yesterday, the cycle boyz favor one more spurt to August before a meaningful correction but we feel it could be at any time near this area.  Today may have been a taste of what is to come. For now, the trend is on the verge of turning down and the pattern of chop, while it allows for another push up, is dangerous in our assessment and is favored lower.

    24SPY4HJul

    S&P 500 Index Using (ETF) SPY price chart





  • 17 Jul 2012 1:34 AM | Bill Downey (Administrator)

    The chart below shows the short term cycles we follow.  We have two ideal dates every month where we expect a turn in short term trend. The last date was July 3rd (plus or minus 72 hours) and the high for July so far was right on the ideal date of July 3rd.  Not all the dates are on the exact day, but most are within the time window. All dates in the future have already been established.

    This week has another cycle turn due up. The window is open for the turn until Friday.  Once the window closes, the trend should be set into the first week of August.  The cycles also tell us whether the medium term trend is bullish or in a correction.  Whenever the red cycles are making the lows, the medium term is in a correction.  When the Blue cycles start making the lows again, the bullish uptrend is favored to resume.  The seasonal turn for metals is arriving.  What we need to see now is for price to move above the upper channel line and close above 1625 - 1630 in order to favor a move higher into the end of July.  At some point in time, price is going to fail to either move lower on a blue cycle and keep going higher to the next red cycle.  When that happens, the trend will invert back to bullish.  Look at the very beginning of the chart.  Note the red cycle and how price kept going higher to the blue cycle and then price made its high.  This is a cycle inversion and since that time the trend has been down.  The next cycle inversion that develops will set the price to make its HIGH at the red and its low at the blue.  At that point in time, the trend favors the correction in gold will be over and price will finally begin to move higher again.

    Gold Cycles and turn points


    Silver Weekly Chart
    Silver – Medium Term – Bearish
    Moving Average resistance 30.87-31.92


    the medium term chart remains in bearish mode. It takes a close above the channel line and above 28.60 for starters just to neutralize the short term down trend. 

     A close below 25.50 would look real bearish on the chart and would activate the lower trend line at 22.50 as the next support area on a weekly basis. With short term cycles due to bottom this week, there is still the potential that 26 will hold,  but Ben is testifying on Tuesday and Wednesday.

    In summary, price remains below the channel line but still didn’t hold above 27 today.

    It has now been 10 weeks that price has been hovering at the channel line. While lows can and do develop in July, the month of August is also an important turn point for the seasonal. If we can get back above the channel line on a Friday closing basis and close above 28.50 then the downside activity will at least be neutralized on the short term.  For now, we still need to keep patient just a bit longer.  Price needs to get back above the channel lines.  Until then, we have to allow for more downside.  The chart is beginning to improve, no doubt. We need a close above 27.70  to at least get some traction. It takes a close above the channel lines to neutralize the downtrend and then a close above the moving averages to confirm the correction is over on a medium term basis in silver. There are two places for a low in 2012. They are the 26-28 area where price is at right now and the 20-22 area where the next long term trend line is at. Once complete we favor the upside to return.  We have not ONCE called the low to be in place yet this year.  Most other analysts have called it about 10 times only to be wrong.  When the cycles turn over as we described on the first chart, we'll be ready to call the low in both metals.


    Silver weekly price chart with moving averages and long term trend lines of support and resistance




  • 11 Jul 2012 8:03 PM | Bill Downey (Administrator)

    I've attached a chart -----  of gold.  Its the ETF GLD --- and it only trades in New York -- where the majority of the volume still exists. 

    I've come to the conclusion long ago that Price is much more reliable than empirical opinion. 

    I've maintained from the get-go last August (and pretty much alone then and perhaps now) that this liquidity crisis would have the same effect as what we saw in 2008. For the most part, with a 50% dive in silver and a 23% correction in gold, my own opinion is that it has for the most part played out.

    The channel line that we've been holding now for almost 8 weeks is 6 years old and it's an important one. We've already lost the green momentum channel line and now its up to this chart.  What I want to draw your attention to is how far down the next long term channel line is on this chart.  I have no intention of changing anyone's mind about gold or silver --- and quite frankly, I'm long term bullish on gold.  I'm speaking in potential's and not absolute's. 

    12GLDWklyJul

    Gold using ETF (GLD) weekly price chart with long term channel lines of support and resistance

    My only intent with this note is to let you know that the situation as I see on the chart ---- and it is the same opinion as I gave last September,  is that the potential --- not the absolute --- but the potential IS GROWING THAT GOLD  ---- and probably everything else on earth ----- is growing DANGEROUSLY close to an "EVENT"

    I don't know the future ---- and channel lines can and do get broken --- AT MAJOR LOWS --- and get reversed - -- and I've seen it happen at major lows during the month of August in the past.  If we were to break down hard below this channel line ----- and then reverse back above it within 1 to 2  weeks of the event, it will most likely be the end of the correction.  If it breaks -----------------------and does not reverse and we close below 140-142 in GLD -------- the potential for gold to have a 1972 style correction before the big one will be in play.

    Bottom line --- this channel line better hold or at least hold a FLUSH out --- and have it reverse up.  If it does, it will most likely be the bottom.  IF it doesn't --- then the liquidity crunch will come full circle.  We’ll expand on it on the monthly report we’re working on.



  • 09 Jul 2012 3:38 PM | Bill Downey (Administrator)

    Popular TV show – Pawn Stars –shows Silver being sold and checked -- as seller comes in with 3000 ounces of spot silver.  Educational value.

    http://www.youtube.com/watch?v=Eidl_DWLqdw

    Medium Term Gold – Bearish (Moving average trend 1655-1671)

    The spot gold chart is increasingly getting dangerous and ominous looking and there’s no way around that.  We can say that things always look the bleakest at the point of a turn and that certainly has some credibility with the seasonal aspects coming into play in July/August. As you can see by the chart, the green arrows are the summer seasonal turn points. Last year, gold spent about 8 weeks in a consolidation before it exploded higher but the other yearly lows are usually spike down and then reverse price points.

    GOLWKLYSPOTJul9
     
    Gold weekly Spot price chart with key channel lines and moving averages

    While it is possible that we are nearing or a bottom, there is absolutely NO EVIDENCE on the chart that the uptrend has resumed as of this writing because we have not seen a spike or a reversal out of a trade range like 2011 that makes a HIGHER HIGH and price is below all the key moving averages of shorter duration. The 2011 reversal only took two weeks to make a higher high from the low. In retrospect, that reversal only lasted until August and was the final high in gold and we’ve been in a correction ever since.

    Then other momentum players will take notice once a higher high is made. Also of note is the fact that once again, gold was turned down from the channel line for the 5th time in seven weeks.

     With the 20 week moving average below the 34 week (indicating a downtrend) what is now even more concerning is that the 89 week moving average is getting very close to giving way.

    Another point to watch is that there has not been a WEEKLY CLOSE below 1555 this year.  We’ve gotten probes to 1530 but no weekly close below 1555.  Should we close below 1555 on a Friday, it will increase the odds that gold has one more leg down to complete before the correction is over.  In summary, we need a spike down and reversal or a reversal that makes higher highs. With the 34 week average at 1664, and the upper downtrend line from 2011 near 1700, it will take weekly closes above those points to signal a real turn.  This week’s low at 1576 was right at the 89 day average.  Watch that area in the coming week.  If it gives way and we close below 1555-1561, the potential for lower prices into the 17th of the month will be in play. It will take a minimum of a daily close above 1630 to favor higher prices into mid month.  For now, the gold market has NOT given enough evidence that the upside has resumed.

    Seasonal factor's are due to come into play and a low for gold during the summer is always a high probability.  a close back above 1630 would be the first step in turning the trend and so would the 34 week average at 1660.


  • 04 Jul 2012 9:29 PM | Bill Downey (Administrator)

    Short Term – Short Term Cycle
    the cycle inversion we’ve been watching for and our signal that the GOLD correction is finally over requires the LOWS to be made on the blue cycle and the highs on the RED cycle.  The inversion that we saw in June had the highs on the RED cycle and we’ve been waiting to see the lows on the blue.  Technically the low came in one DAY early BEFORE the short term cycle window opened.  The ideal day for a cycle turn was July 3rd (plus or minus 72 hours).  With only one day to spare, gold made its low. That is certainly acceptable within the realm of standard deviation.  The problem that was presented was really the SIZE of the move as I’ll explain in the next chart.  For now, when we look at this chart, we’ve favored that the turn was early and went with it so far.  However, the market always decides what it is going to be.  Whenever there are MAJOR changes to a market direction, it always does its best to throw as many people off as it can. As we’ve seen, how many times have we heard analysts proclaim a low in this market only to be incorrect and this latest turn has also been called the low.

    In order for the correction to be over in our work, the market MUST rally to the next RED CYCLE and peak and turn down around and near July 17th.  This is the one indicator that has kept us from saying the CORRECTION is over.  So far, it has saved us each time from making a wrong call as we have yet to put in PRINT – the correction is over.  If the cycle played out then we will rally to the 17th and pullback.  We must keep in mind, that the low was a day before the cycle window opened, and as we look at the next chart, it will show you the struggle I have at the moment with the options.  
    4GOLCYC1dJul


    GOld Cycles

    The cycle inversion Snafu

    Going into last Thursday, everything was in play for a cycle inversion where the BLUE cycle would become the point where the short term lows would be made.  The bailout announcement during the wee hours of Thursday on June 29th produced another 50 dollar rally in gold and that is an event that has happened numerous times over the past year, and has never led to a new bull market leg. In fact, as we entered that Thursday, gold was less than 30 dollars from its low.  The situation that developed this week with the market providing an 80 dollar rally from the lows is one where the EXACT high so far of 1625 is right on the EXACT ideal day for a trend change (July 3rd – plus or minus 72 hours) and it is an issue that must be addressed.

    With this move of 80 dollars in just 4 trading days to the EXACT ideal day for a high has now opened the potential that the chart below is still in play.  It’s very frustrating that this event has opened up this potential but there is nothing we can do about it.  What is has done is it has opened the potential that the blue cycle will once again MARK the high of this short term trend, and that gold and silver are about to drop into the week of the 17th.  Of more importance is the fact that if this is indeed what is happening, then it means that the CORRECTION in gold and silver is most likely not complete yet.  And with the HIGH happening right on the ideal peak day of July 3rd, the potential for the market to reverse and move lower into the 17th cannot be eliminated and could very well still take place. 

     

    5GOLCYCINVJul

    Gold Cycles

    WHAT NEXT ?

    So where does this leave us in what to expect ?  Well, first off,  if we close above 1625, it will favor higher prices towards 1646-1660 and that would keep the upside going.  Thus that is the KEY PRICE point we need to watch and was described on the first chart tonight.

    The 2nd thing is that the cycle window closes on July 6th and any high after that would favor that the cycle inversion has happened and odds favor we’ll move higher.  Those two points are the most important clues to watch for.  Anything less and we still have the potential to turn lower from the peak we saw on July 3rd. 

    There are many things that do point to a key low that took place and we’re sure that you’ve read all the bullish commentary about it from the COT reports to the seasonal aspects and to the global situation.  We don’t doubt any of those factors and we pretty much agree with them.  What these things don’t provide is the “TIMING” for the change back to a bullish up leg.  If they did, then all the calls for the “low is in” over the past six months would have been correct.  The market and price is what decides when the low will be in place. Not you, not me, not Robert Prechtor, not Antal Fekete, and not even Martin Armstrong. This doesn’t mean that these people are not brilliant and have no credibility. Indeed, it is the opposite.   But as you must know by now, calling the absolute low or exact change in time is impossible to ascertain to a very high degree.  Many just keep calling it until it happens, and somehow they are heroes.  That won’t be the case if they do the same when the HIGH does occur and they keep calling the low as the bear market unfolds.  For those who were around in 1980, you know what I’m talking about.  There are windows and price points in time where it is MORE likely to occur than other places, but there is never an absolute place.  The world is too complex for that and if it were possible, the Greeks would have cornered the olive oil market 2000 years ago.

    Once the market resumes the uptrend, and leaves this choppy sideways pattern, then the trading will become much easier and the long term accumulation will bring great rewards.  There are way too many fundamentals in place that favors much higher prices for gold and most likely silver. Thus we’re very confident that the rally is not over by any means.  Until the time it resumes, the trading will remain hard, and the points of accumulation must be followed for when the market does turn.  Thus we must always remember that PRICE is the ultimate determination of trend and if that is the case, we have no choice but to follow it, do what it dictates, and wait for it to make its move.  It is the only way we can survive.  We cannot will it or change it and if we fight it, we will lose in the long run.

    Getting back to this week – there are important INTEREST RATE DECISIONS that are coming forth on Thursday from Europe.  A lot of players have speculated that the ECB is going to lower rates and that has in part inspired this rally to some extent. If they do not, (and even if they do), the market can still peak this week and turn down into July 17th.   Regardless of what anyone tells you, no one knows tomorrow’s price for certain or what the market will do.  That is why the majority of traders who fail do so because they are always trying to pick the high or low and guess what the market is going to do without the “trend” on their side. 

    Thus, regardless of what happens a gold close above 1625 is required to keep the uptrend going and the potential that the cycle inversion is in play.  Otherwise,  the market has the potential to turn back down into the 17th of the month and extend this correction of time further. 





  • 21 Jun 2012 6:37 PM | Bill Downey (Administrator)


    In our last update we discussed that the upside potential in this market would come down to whether we could close above 1633.  Over the past seven days, the market tested the 1630-1635 area on seven different occasions but the market was unable to to close above that key level. 

    But there is a major development going on.

    The chart below shows the cycle we follow at gold trends for the short term.  When ever the blue cycles are making highs, gold is in a bear market.  But when the cycle high price is becomes when the red cycle appears it HIGHLY FAVORS that the big correction we have been seeing in gold is about to complete.  While most of the famous analysts have called the low a dozen or so times, we have yet to call the "low" is in.  Now what we need to see between now and July 15th in order to confirm that the bear market is coming to an end is for price to continue going lower into the first week of July and form a short term bottom and then to rally to mid-month and then lower to the end of July. In other words, if the highs start happening on the RED cycles and the lows on the BLUE cycles the odds that the major correction in this market is drawing to an end will have very high odds.  I've been watching these cycles for 35 years and this is the only indicator that I know of that shows when major market trend changes occur. 

    Gold Cyles price chart
  • 11 Jun 2012 2:46 PM | Bill Downey (Administrator)

    Last week’s run up to the 1633-1640 area was the first step in turning the trend back up and now it’s going to be important for gold to support near the 1550-1560 area this coming week in order for the trend to not turn back down.  The 1565 area will also be important on a daily closing basis as that is where the 89 week moving average resides. In summary, the potential for an intermediate term low remains in place but we’d like to see a close above 1633 in order to add to upside potential.

    9GOLWKLySpJun

    Gold weekly price chart with moving averages and key support points


    Dollar
    Long Term Trend – Neutral
    Moving averages (78.40-79.15)
    the US Dollar is completing its 13th month since price lows were established. Thus we are either at a major peak in the US dollar, and a reversal is about to develop or it will be moving up longer than most analysts have in their horizon at the moment. Here too we have readings which are dubious at best.  The 34 month and 34 week averages are basically at the same price point --- the 78-79 area. On the medium term the reading is bullish, and on the long term neutral.

    The US Dollar has made a new yearly high, and has closed on a weekly basis above 82.50.  This Thursday’s close will be important also as it’s a monthly close. The short, intermediate and medium term trends remain up, and the long term is neutral.  Last week’s pullback was a retest of the breakout line.  A weekly close below the trend line would open the potential for further drops back to the 79 area and the close at the lows of the week on this last bar on the chart is the FIRST sign we’ve seen for a potential dollar high and therefore increases the potential that gold has the opportunity for further price gains.  The Spain bailout announced over the weekend will also add to potentially lower US dollar if price can close out the coming week below 82.

    9DOLWKwkyJun.gif
    Dollar Weekly price chart with key channel lines and support and resistance


    Gold Stocks
    Long Term – Neutral

    The Medium term trend in gold stocks is still down but as we reported the low at 372 was one of the potential low points to consider this year and evidence continues to build that the price point was a major area of support.  We continue to favor an important intermediate term low is in place and the best odds for a low being in place or the year.

    The longer medium term trend is the same status as last week --- seems to have formed a bottom from which a pullback should not be as low as the lows witnessed 3 weeks ago at 372.  And as reported last week---- the trends are still down, but we still hold out that an important intermediate term low has the best odds so far this year of being in place. Last week’s listed resistance at 458-470 came in at 464. In summary, while it’s not impossible to pullback a bit more, odds continue to favor that an important price low is still in play and barring a major crash of the entire stock market, the worse is over for the gold stocks.


    9HUIWKLJun

    HUI Gold Stocks weekly price chart with support and resistance channels

     
    Silver – Medium Term – Bearish  (But at important trend line support)
    Moving Average resistance 31.63-32.74

    The medium term chart remains in bearish mode from a trend perspective, but silver has now spent 4 weeks at this long term trend line as it tries to forge a bottom.  From a seasonal and price standpoint, silver should be nearing the end of the long correction that has taken place over the last 13 months.  The 2nd half of the year is usually the strongest portion for silver and certainly a lot will depend on the global economy because the demand for silver makes up such a huge component. 

    But the most important factor will be from investment demand and while the physical market has been weak, it looks like it is starting to turn.  The information below comes from reader Jim G in France, and was a forward from David Morgan at the silver investor.

     Our physical demand last month was more than double the normal. It has continued into this month with even greater strength. We have seen an interesting trend the last two weeks. A lot of people are trading gold for SILVER! These are not small trades either. The trades are ranging from 10 ounces of gold all the way up to 300 ounces of gold for silver.

    The physical demand has been strong for both metals and rising. We are also seeing an increase in BIG money coming into the market (5,000+ ounces of silver or more and 100-500 ounces of gold per order).

    Silver’s weekly price chart

    The failure to close above the 28.55-28.85 area on a Friday basis was the one let down for the price chart last week.  With 13 months down and 13 weeks down from the spring top does argue for a potential turn point in silver prices. We got the close above the daily resistance of 28.85 during last week, and the projection of a move to test the 30 dollar area in last week’s update did get as high as 29.86 in spot before prices turned lower to end the week.  In summary, the medium term trend of silver still has not turned up and we still can’t rule out a final move down to 22 if the global recession continues to expand and if the global liquidity crisis goes into high gear with the situation going on in Europe.

    Price has been supporting for four weeks at this trend line.  There’s still work to do and the medium term trend remains down, but this area continues to be a place where a low point for the year can come into play.  A rally up to the dotted trend line towards 31 is gaining potential. 

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    Silver weekly price chart with support and resistance channel lines









Technical Analysis :: Gold & Silver

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