PHYS and PSLV Update – 16 Mar

 

Gold has found support and PHYS has bounced twice at the 12.40 level. This level corresponds to strong chart resistance that was breached and then became support. Price remains within the defined downtrend after reaching the top of the channel and then reversing lower late in the trading day. Resistance remains at 12.80. RSI is dead neutral and stochastic has flattened out and taken on a slightly positive slope. My sense is the knee jerk panic trade is subsiding to some extent and fundamentals are returning to the forefront. This is constructive to gold because the fundamentals of the global financial state have never been worse.

Silver did not fair quite as well as gold. The gain in silver has been dramatic and makes it more susceptible to profit taking as risk aversion. Also, it is viewed as an industrial metal as well as a monetary metal and is suffering to some extent from the fear of economic collapse. With that said, the retreat in silver is modest and speaks to the underlying strength of silver story. Support is holding between 15.10 and 15.20 and corresponds to a Fibonacci 38.2% retrace. If support fails there, stronger support rests at around 14.30. Resistance is around 16.25. RSI is neutral and stochastic is still headed lower. MACD has signaled bearish by virtue of a well defined cross and is heading lower. PHYS has underpinnings because the world has finally figured out that real silver is in real short supply, and paper silver is almost unlimited in supply. The flight to quality and real metal is not over by a long shot. I see support between 14.25 and 14.40 holding.

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