Gold and Silver – 1 Jun

Gold made another high and closed well off of it for the day. Price is being capped by the Bollinger band with no real chart resistance between the current price and the all time high at 1575. Support is coming from the prior resistance level at 1526. Also, the 18 day moving average is climbing fro 1511 and should bolster that 1526 level in the coming few day. RSI is a moderate 62 with room to run before entering over-bought territory. Stochastic is embedded (3 days above 80) and is indicative of increasing upside momentum. As long as stochastic remains embedded, all pullbacks are buying opportunities. I think the horrible economic news is propelling gold higher as money and as a safe haven. QE(n) is back in the news and as far as MSM is concerned, back on the table. Readers of my blog understand that QE to infinity has always been the intention of the Fed.

PHYS, the real 100% allocated gold bullion fund, closed slightly lower on the day after making a higher high on the chart. The up trend is intact as long as support at 13.20 holds. Resistance is coming in at 13.50. RSI is a moderate 58 and stochastic has entered over-bought territory. This is on its own is not much of an indication, look for an embedded stochastic to signal building momentum. As with gold, there is no real resistance left above 13.51 other than the Bollinger band. The premium to NAV for this fund is 2.38% and is a bargain.

Silver had a rough day and closed down while painting an ugly red candle. I do not like the looks of this chart and sold my position in silver to lock in a modest couple percent gain. My problem is that RSI is being reversed at the 50 level where you would expect it to in a bear market. MACD is starting to hook over as well as stochastic. The Bollinger bands have contracted and is forecasting a future rise in volatility. So the picture is not particularly encouraging. The fundamentals are aligned with silver, but that has never been a sound argument on its own to be long. There is too much market manipulation in silver to blindly hold it. I think the spin on silver is that economic numbers are so horrible that future economic contraction is almost certainly in the cards, therefore silver as an industrial application is going to suffer. That only leaves the specs to maintain a lofty bid. The specs can be flushed by JP Morgan at any time they desire. I expect silver will have to base build some more and will eventually move higher as gold moves. I expect gold will outperform in the near term.

Resistance is still the 39.50 area with support near 36. 33.50 still looks like strong support and a likely bottom unless the stock market implodes. That is a very real possibility.

PSLV, the real 100% allocated silver bullion fund, has filled the second gap while painting an ugly red candle. I bought this last week on the the close of the 24th at 16.89. I sold yesterday when things started to get ugly and price was 17.30. I believe the first gp is going to fill and support around 16.20 is going to be tested. Strong support at 14.87 should hold on any pullback unless the stock market implodes, then all bets are off. Silver is not and will not be considered as a safe haven like gold will be. I expect gold will go much higher on an imploding stock market that leads to more QE.

This entry was posted in Gold, Matrix Sentry TA, PHYS, PSLV, Silver. Bookmark the permalink.

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