GOLD AND SILVER REVIEW
MARKET SUMMARY
*Silver Bullet*
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Gold finished on Friday near $565, up about $7. Silver closed near $10.18, up about $0.48. Gold retreated slightly this week but managed to record another bullish candlestick in the weekly chart. The big store this week was in the silver market. Silver treaded water all week and then spiked higher on Thursday by almost 50 cents up to $10.25, the first move above 10 dollars and into double digits in over 22 years, as seen in the chart below:
Last weeks report suggested: "...silver showed surprising strength this week. The chart below shows a very bullish weekly candlestick for the metal. Silver appears capable of making another assault upon the recent market peak." Silver did climb to high levels and sliced through the powerful psychological $10 level as though it wasn't there at all. Speculation concerning the proposed silver ETF continued to encourage bullish traders about the precious metal. James Moore, an analyst at TheBullionDesk.com commented: "Conditions are set to remain volatile in silver for some time to come as traders await the SEC's decision on Barclay's ETF application... a positive outcome and subsequent launch is likely to generate plenty of upside with $12.50 remaining my price target."
Gold lagged silver on a percentage basis but manage to close near record highs, up near $7 for the week. Last weeks report noted: "The (gold) market ended the week on a very bullish note, from a technical perspective higher prices next week are expected.) In the gold chart below, prices did indeed drift higher but were unable to break-out above the previous peaks high point:
The XAU, gold stock index consolidated to close near the break even point for the third consecutive week. In the weekly chart below, gold stocks posted another slightly bullish candlestick. The long lower wick is a very powerful technical indication of higher prices to follow next week. Note that it does not guarantee a higher close, only that higher prices are likely at some point:
All three of the major stock indices have been consolidating for nearly 3 months. The Dow Jones remained above support at the 11000 level after testing it this week. It recorded a bullish weekly candlestick. However, the Nasdaq and the S&P attempted to close above resistance but were unable. For the Dow break-out to remain valid, we would like to see break-outs in the Nasdaq and the S&P next week.
INTERVIEWS:
*Julian Philips & Gary Kaltbaum*
On the Saturday March 4th program at radio.goldseek.com, Julian Philips shared his views on the dollar, gold and silver. We also chatted with Gary Kaltbaum, from Fox News about precious metals, stocks and his market views. Here are a few highlights from the show:
*Julian thinks that gold could run to $600-$700 per ounce on the next big swing higher and that silver looks even stronger. Please note that the interview took place before Thursday this week, which illustrates the timeliness of his silver call.
He noted that when gold is doing very well, as it is right now, there are few safe places to invest outside of the precious metals realm. He said that in the 1970's the gold appreciation was due to its role as the ultimate currency. It remains the currency of refuge today and that is the prime reason for its current appreciation. He points out that gold has always been and will always remain sound money.
Julian agrees with me that the Goldman Sachs price target of $100 per barrel oil and $150-$200 per barrel by various market analysts remain viable targets in the years ahead and will be the result of dollar depreciation, not merely higher demand for oil.
Julian thinks that the TIPS ETF (ticker symbol: TIP) could be a smart addition to a domestic portfolio. The tips ETF tracks the TIPS government bonds which mimic the CPI figure. In other words they compensate for inflation - as inflation climbs, the TIPS interest rate increases. The TIPS ETF earns approximately 4% currently. He thinks that as long as it is honored by the government it will provide a good way for investors to protect themselves from the inflation ahead without being fully invested in precious metals and energy related assets. He agrees that protective sell stops must be used by all investors to limit risk and reduce the likelihood of emotion based investing.
Our second guest, Gary Kaltbaum is convinced that gold moved too far too fast. He pointed out that when a market moves up in nearly a straight line, it tends to need to consolidate. He sees that gold could pull back to the $500 level before resuming its advance. However, Gary thinks that this bull market in precious metals will mirror the 1982-2000 stock market. Thus it will be a very long term trend that will unfold over the decade ahead. Gary likes Gold mutual funds for new investors that are risk averse and are concerned about volatile stocks.
Gary also shared his thoughts on the stock market. He noted that oil stocks are showing weakness and may be topping except for a select few. He is not happy with the divergences between the DOW, S&P and the NASDAQ. His work indicates that it might be bearish that although the Dow broke to new high levels the other markets did not follow, because there are only thirty stocks in the Dow. He is concerned about the stock markets in general because there has not been a ten percent correction in the markets in almost four years.
Guru Predictions
*The Golden Guru Award*
There were far fewer Gold Guru's willing to share their forecasts for precious metal this week, however, two did stand out:
Ned W. Schmidt, of: THE VALUE VIEW GOLD REPORT, reiterated his price target for gold: "Dollar denominated investors, both of them, should be using all buying opportunities to add to their Gold positions. As shown in the last two charts on US$Gold and CN$Gold, those opportunities present themselves on a regular basis. US$1,300 Gold and CN$2,000 Gold are both no longer fantasies about which Gold Bugs write. They are real possibilities."
Dr. Clive Roffey noted: "The gold market has been drifting for the past few weeks as it consolidates its recent gains. After a brief flirt with the $535 support the gold price has rebounded back above the recent $555 resistance. Its Friday night push in the US above this $555 resistance has triggered the start of another bull trend and signals the end of the recent correction. This gold market has been in limbo for the past couple of weeks but the news of attacks on oil installations has provided a new set of fundamental data to determine the next main trend move. Irrespective of the short term vacillations my longer term target of $620 remains intact."
Swiss America CEO and author Craig R. Smith shared his gold price forecast: "Gold is on a trajectory to reach $600 an ounce or more this year based on market fundamentals and current geopolitical conditions. Even when the big funds and banks sell off gold on profit taking, the gap is quickly filled with strong demand from the growing global base of smaller investors. Gold anywhere under $600 is a bargain. Commodities trump stocks as long-term bet," Mr. Smith told WND's Joseph Farah in a recent interview available free on CD.
Bottom Line
The Gold Guru Award of The Week Award, goes to Ned W. Schmidt for his intrepid $1,300 gold price projection. When we take the average of our intermediate-term pundit estimates for gold we find a single price target of, $840 an increase of $2 from last weeks consensus of $838.
($1,300 + $620 + $600) / 2 = $840
Thanks for reading.
Chris Waltzek
cwaltzek@comcast.net
Please visit my blog and web site for free daily market articles, audio broadcasts and analysis.
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