What gold, silver & precious metals are signaling

In the coming weeks we should see the broad stock market top out, and gold miners -- along with precious metals -- bottom.

By Minyanville.com Jun 7, 2013 4:36PM

Commodity Exchange report © Fotog, Tetra Images, CorbisIt has been a very long couple of years for the precious metals bugs. The price of gold, silver and their related mining stocks have bucked the broad market uptrend and have been sinking to the bottom in terms of performance.

Earlier this week I discussed the broad stock market and the fact that it looks as though its uptrend will be coming to an end sooner than later. The good news is  precious metals have the exact flip side of that outlook. They appear to be bottoming as they churn at support zones.


While metals and miners remain in a downtrend, it's important to recognize and prepare for a reversal in the coming weeks or months. Let’s take a look at the charts (with my analysis overlaid on each) for a visual explanation of where price is currently trading.

Weekly Price of Gold Futures
Gold has been under heavy selling pressure this year and it still may not be over. The technical patterns on the chart show continued weakness down to $1,300 USD per ounce, which would cleanse the market of remaining long positions before price rockets towards $1,600+ per ounce.


There is a second major support zone drawn on the chart which is a worst case scenario. But this would likely only happen if US equities start another major leg higher and rally through the summer.

Weekly Price of Silver Futures
Silver is a little different than gold in terms of where it stands from a technical analysis point of view. The recent 10% dip in price, which is shown on the chart as a long, lower candlestick wick, took place on very light volume. In my opinion, this shows the majority of weak positions have been shaken out of silver. Gold has not done this yet, and it typically happens before a bottom is put in.

While I figure gold will make one more minor new low, silver, I feel, will drift sideways-to-lower until gold works the bugs out of the chart.

Silver Mining Stock ETF – Weekly Chart
Silver miners are oversold; they are trading at both horizontal support and its down support trendline. Volume remains light, meaning traders and investors are not that interested -- and it should just be a matter of time (weeks/months) before they build a basing pattern and start to rally.

Gold Mining Stock ETF – Weekly Chart
Gold mining stocks continue to be sold by investors with volume rising and price falling. Fear remains, but that may not last much longer.

Gold Junior Mining Stock ETF – Weekly Chart
Gold junior miners are in the same boat with the big guys. Overall, gold and gold miners are still being sold while silver and silver stocks are firming up.

Conclusion
In the coming weeks we should see the broad stock market top out and gold miners -- along with precious metals -- bottom. There are some decent gains to be had in this sector for the second half of the year, but it will remain very dicey at best.

If selling in the broad market becomes intense and triggers a full-blown bear market, money will be pulled out of most investments, as cash is king. Gold is likely to hold up the best in terms of percentage points, but mining stocks will get sucked down along with all other stocks for a period of time. This scenario is not likely to be an issue for a few months yet, but it’s something to keep in mind.


More from Minyanville

Tags: GOLD
13Comments
Jun 7, 2013 5:20PM
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We know that the Mints are working overtime to meet the demand for Physical Gold and Silver, yet we continue to see Gold prices fall. Seems that's because of the manipulation of Paper Gold.
Jun 7, 2013 8:43PM
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I believe to what ever extent through "paper" gold and by other means gold silver are being manipulated by the Central Banks
Jun 8, 2013 8:36AM
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The best bet ,buy it when it's down.Thats what I do.I would really like it to go down to A $1000 an ounce.I just don't see that happening.People load up when it's down.
Jun 11, 2013 6:12AM
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There's been a lot of debate, since April's crash in gold prices, about how the gold price is really set. Some say nefariously, others say the price of gold is set fairly on the major exchanges. Whatever your view, you should look at this report on COMEX and how these traders are buying gold bullion there... or should I say paper gold.


Jun 9, 2013 1:08PM
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i DON'T DISAGREE WITH INFLATION BEING MUCH HIGHER THEN (found it) how it is calculated;

And because of that my feeling is Gold should be in the 1550-1600 range at least..

 

By a manipulation of figures; (And I will leave that within America for the time being).

The Government (s) come out with calculations that are misleading to the populace and investors around the World...

It would be very beneficial to us, because of pro-rated Soc.Sec...And to put a figure of +4-5% on the boards sounds reasonable.(SS is only figured on the 3rd. Qtr.).

But, by not using "volitile food and energy prices" in the equations; We are caught in a connundrum.

I believe by using trailing 9 month periods-averaged, we would see a better picture of those costs included....And see a truer picture of "actual inflation."

And along with adjustments to a mininum or living wages....We seem to be screwed..?

And the lower classes are screwed the worst.

Jun 9, 2013 9:57AM
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Gold's Run is Over.....The Gold Bulls Are Still In Denial.
Jun 8, 2013 11:17AM
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Ma&Pa have been loading up on Gold for sometime...

Seem's Gold coins, could not keep up with demand, if you want to count that.

In several Countries.

Jun 8, 2013 11:12AM
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There are some applications of control from Central Banks in the World..

Depending on who is buying and/or selling PMs....Mostly Gold.

 

But I would sooner believe demand in certain Stock Markets such as the U.S. for one.....?

Is pulling a lot of investments out of Gold/Silver, looking for better gains elsewhere...

The PMs investment has stagnated now for almost 2 years.While our Markets have trended upward.

I think that's where your culprit lies..And inflation has been kept at a low level by the CBs.

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