Gold and Silver update … new highs this year

OEW has had the Gold market in a long term uptrend since 2001. And, we ‘re not expecting the bull market top until the year 2014. This coincides with the 13 year commodity bull market Secular cycle. We have been posting on this blog, from time to time, on both Gold and Silver. You can find these reports be using the “categories” search function and choosing “selected charts”.

Currently the precious metals are entering a very interesting situation. After the last report Gold bottomed about one week later within the expected bottoming range. We labeled that low Major wave 4 of the current Primary V phase of the bull market. After that low Gold rallied about $270 to $1793. This ended Intermediate wave i of Major wave 5. For the past two months Gold has been correcting in an Intermediate wave ii downtrend. It has been a bit tricky determining the actual low since the correction has been quite complex. Nevertheless, the low has occurred, or will likely occur on the next pullback. Silver has the same exact count as Gold. And, should also end its downtrend shortly.

Notice how both Gold and Silver ended their respective Major wave 4 lows, in late December, at the normal oversold MACD condition for each metal. Also observe how Gold has remained nearly entirely above the MACD neutral line since 2001. With the exception of the 2008 mass liquidation, this is typical bull market activity.

The interesting situation, we noted earlier, is quite simple from an OEW perspective. Situations like this are rare but do arise from time to time in various markets. Since Gold and Silver are, and have been, in bull markets. The quantitative feature of OEW requires both of these metals to make new all time highs before this year ends. It’s that simple!

With Gold currently trading at $1660, a new high is only about 16% higher from current levels. Nothing out of the ordinary here. One good uptrend can accomplish that. For Silver, however, a new all time high will require a couple of really good uptrends. With Silver currently trading at $31.54, a new high would require a nearly 58% advance from current levels. Since there are only about 8 months left in the year this would be quite a move. And, we are expecting it.

We conclude by suggesting there is a high probability both Gold and Silver will make new all time highs before 2012 ends. Best to your trading/investing!

If you would like to follow the metals with us you can review the charts on page 7 using the following link: http://stockcharts.com/public/1269446/tenpp

About tony caldaro

Investor
This entry was posted in selected charts and tagged , , , , , . Bookmark the permalink.

40 Responses to Gold and Silver update … new highs this year

  1. piazzi says:

    Tony,

    with silver at a hypothetical 56, SLW may do a hypothetical triple and still be below a hypothetical book value calculated purely hypothetically based on hypothetical figures by the hypothetical me

    all that said, hypothetically, of course, I have some personal (probably unfounded) suspicions and doubts about the management and published figures of SLW — not enough to totally dissuade me but a little to make doubt anything above a double (which would be a hefty discount to book with silver at 56) at this point

    • tony caldaro says:

      thank you Sir, That’s quite a hypo’d analysis! =)Personally I feel the same way about most publicly traded companies these days.Cook the books, do stock buybacks with stockholders profits, then issue stock options to their favorite employees.It’s no longer a market of stocks … it’s an index traded stock market.

      cheers!

  2. rc1269 says:

    Lee, do you have any thoughts on this YPF Argentina expropriation? really interesting situation. curious to see how Repsol / Spain responds, if at all

    • Lee says:

      Hey R C
      I just saw this and to be honest I don’t know .
      But when the word ” Nationalism” is used I always get nervous . Sounds like the EU has Spain’s back…. and debt .

  3. CB says:

    margin requirements on silver (& copper) have been lowered as of today’s close, fwiw….

  4. piazzi says:

    Tony, such a move in Silver can lit a fire under miners. It is very unlikely for such a silver move to not create a frenzy. am a lot more conservative, but I am a patient accumulator and not really a fast and furious trader

    • tony caldaro says:

      Piazzi, You probably had the best Silver trade in the past few years with SLW.Should Silver go to new highs this year, where do you think that stock will be?

      • piazzi says:

        It’s very hard to say if it will catch the same frenzy or not

        The first ride started for me based on valuation (ounces sold a at price X and obtained at price Y) x a conservative multiple of 10-15 (way to low for a PM stock but I used that in 2008) would say that SLW had huge potential at that time

        I will have to crunch numbers, I will do that and get back to you

        I am very interested in juniors this time around, if our projections for a last Hurrah run into 2014 or so pans out, especially if we are correct about the bull market in private assets, and politicos printing themselves into tighter corners every day, then, yah, I am interested in juniors as a basket

      • tony caldaro says:

        Thanks Piazzi, Look foward to your response.

  5. herringjd1 says:

    Your generosity is very much appreciated. I started buying PM’s when gold hit $1250 and I would like to thank both you and Patrick.

  6. Hi Tony,

    As always, thank you so much for sharing knowledge and insight. Is the WLEI a propriety figure used by your group, or is it a number released by a third party on a weekly basis?

    Thank You,

    breakout

  7. CB says:

    Hi Tony, thanks for the PM update Tony, Patrick and all of your team as always!
    It got me thinking about what you’ve brought up earlier about ST interest rates. If we consider the basic relationship between bond yields & gold price, then it is an inverse one as higher rates represent alternative return lost if gold is held instead of bonds. We see that in the last few years – rates down, gold up. When we look at the recent Dec-March rate spike, which you’ve pointed out in ur “under the radar” article, ST yields started looking very bullish, and actually still are with that crossover of 50SMA/200SMA intact …(?). But at the same time gold prices have been going up as well. The question is: was this just a false rate move which is now being unwound or are we simply working off the OB condition and ST rates are solidly on the rise? And did the ST rates move as a result of some genuine improvement in econ. data, or was it just an anticipatory move on the part of ST speculators expecting the Fed’s next round of QE. If I remember correctly, you mentioned a while ago that the Fed was perhaps expecting to see the “normal” effect of easing without actually giving it to the market. So, what is really happening now?…was the Fed just trying to see how much run they would get in the risk-on assets without actually doing the easing, and has the market come to the quick realization that it’s been just a bluff. Just how much bluffing can the Fed do :)) and does it really pay off for them in the long-run? I would appreciate your thoughts Tony when you have a few minutes. Thank you.

    • tony caldaro says:

      Hi CB, Covered this just recently in our forum.The FED’s mandate is full employment and low inflation.Since the bogus gov’t figures suggest inflation is under control, the FED is targeting employment.Vice chair Yellen made that perfectly clear in her recent speech. She even mentioned keeping FED funds down until late 2015. Clearly the economy has been improving: recent WLEI is in the expansion mode.What happens when you keep short term rates low for too long during an economic expansion?Yes, inflation rises and real rates of return plummet.Currently the PCE is near 4%. The 10 YR is near 2%. Real returns are a negative 2%.If the PCE rises to just 6%, the 1YR will likely rise to 2% as traders dump them, and we’ll get an inverted yield curve because of FED policy.Gold rises, Stocks peak, and the FED finds itself behind the curve again. Inflation during a deflationary Secular cycle? Happened in the 1940′s.

      • CB says:

        thanks Tony! Great points to consider and thanks for the important reminder to always think in real terms…gold is real, so it’s right wherever it goes….and yellen..oh, she’s just every gold bug’s best friend…mmmm, thanks Janet ;))

      • vorfahrt says:

        Tony,
        Why would you hold 10YR at 2% or 1 YR at 0% with PCE at 4% or in the 2-2-6 combo you illustrated for next year or so? This is plain irrational too my independend of what the FED does. Besides, it is no fun to be a FED in a deflationary cycle – you lose both ways. Thanks, Joe

      • tony caldaro says:

        Joe, That’s exactly where we are now.

      • piazzi says:

        investing decision criteria made simple courtesy of Maestro TC :-)

        and what assets are good to accumulate when real rates are negative?

        playing the market does not have to be difficult and does not have to involve reading millions of blogs and listening to millions of gurus

    • piazzi says:

      The answer to “Why would you hold 10YR at 2% or 1 YR at 0%” is: It Depends

      It depends on who you are and what you want to do

      How else can you park 100 billions of some cash, or 100′s of billions, if you are moving capital

      How else can you gain political leverage over a certain government if you are also a government

      How else can you extend support to a government if you are also a government

      I can go on, but the point is, it depends on who you are. The mistake with many a bond bears off the so-and-so-blog-or-guru has been that they have been thinking small scale and small stage

      There, IMHO, is a shift out of national debt on a global stage but these things take time to play out to the point of being readily apparent

  8. Pingback: Gold and Silver update … new highs this year | the ELLIOTT WAVE … | Algesr

  9. Pingback: Gold and Silver update … new highs this year | the ELLIOTT WAVE … | My Gold Fix

  10. Lee says:

    Who needs coffee with a forecast like this ?
    1523.90 – 1792.70 has a wee throw over at the .618 @ 1626 ish + – (I dont have my charts up so forgive me) by $13 bucks and then Igor gave it the business. SI …oh boy
    Thanks Igor !
    Thanks Tony and let’s be careful today on this Orthodox Easter
    The skies are angry still.

  11. cloudblu says:

    Thanks Tony for the update. Do you expect similar moves for the PM miners as well? They’ve performed very poorly relative to the metals themselves. Sentiment wise they could be in worse shape than at the depths of 2008.

    • chrys50 says:

      I think gold miners are ready to move higher after a long period of consolidation (from late 2010).
      http://www.screencast.com/t/jQWa2cTg

    • tony caldaro says:

      Hi Kristal, In the 1930′s americans could not own physical gold, so they bought only miners.In the 1970′s americans could own physical gold, so they bought the miners and gold.Now americans can not only own gold, but gold etf’s too. Miners have become the least preferred choice.Think they will follow the general market.

Comments are closed.