After a week of nuclear meltdowns, carry trade unwinds and Security Council meetings, let’s hope the upcoming week will be a little less dramatic. IF it is, the metals are poised to have strong price action and look to finally take out stubborn resistance at 1430 and 36.
Let’s take a look first at the CRB Index. Remember that this is an index of a basket of commodities. It looks like this:
|Energy||Crude Oil, Heating Oil,
|Grains||Wheat, Corn, Soybeans||17.6%|
|Meats||Live Cattle, Lean Hogs||11.8%|
|Softs||Coffee, Cocoa, Sugar
|Gold, Silver, Platinum||17.6%|
OK, here’s a weekly chart. Note the similarities, so far, to the dip last November.
Here’s the same CRB, only from a daily perspective:
OK, if we assume that the long-term trend has not been disturbed and remains in place (which I do), then we are at a moment when it becomes a rather compelling buying opportunity. For perspective, the dip on the weekly chart of the CRB came last fall on 11/19/10. Check out some of the action since: Gold was 1355 and is today 1419. Silver was 27.30 and today is 35.27. How about the 3 Cs…corn, copper and crude? Corn on 11/19 was 5.46. Today its 6.90. Copper was 383.95 and today its 436.10. Lastly, crude was 83.43 and today its 101.62.
Now, of course, I could be wrong. The world could be ending and all may be lost BUT, as you know, I’m a big believer in the primary trend and the fundos so I expect that this dip in the CRB to be a buying opportunity just as was the dip last fall.
How does this relate directly to the PMs? Well, first, here’s gold. For all the wailing and grinding of teeth, for all the top-calling chartreaders and for all the heartless shills like Gartman, please describe for me how and why this chart looks like it has topped. Really? Really. Really? I don’t think so.
Even more compelling is this daily chart of silver. Note the pretty lines I’ve drawn on here. (As an aside, I’ve received a few emails inquiring what “chart service” I use. These are Lind-Waldock charts. The lines are generated by a fancy new program designed in a joint project by Westcott rulers and Sharpie.)
Alright, now look closely at this because this is pretty cool. Note the primary trend #1. Then, notice that the correction to Turd’s Bottom took us below the primary trend…which is fine, happens all the time. Now note the recovery trend #2 (huh-huh, Turd said #2). Do you see how silver, IF it continues to follow #2, will soon cross back over the primary trendline #1 and be back in trend? Note, too, that that convergence will happen right at the EE-constructed resistance zone of 36-36.40. I think that the primary trend is too powerful to be contained and Blythe, the EE or whoever is trying to keep silver below $36 is about to be overwhelmed. Its going to be a very interesting week.
Lastly, here’s some light reading for your weekend. First, Big Red in Virginia sent me this link and its a good read:
On the earlier thread, I was asked to explain some hedging strategies. No time for that now, unfortunately, but this article may help. Its a little technical but its a god place to start.
And I thought this was interesting , as well.
I may have more tomorrow so check in again then. Enjoy the mandatory, two-day cooling off period and get ready for next week. TF
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