Gold Market Update
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In the update last weekend we were looking for a correction back across the trend channel shown on the 1-year chart below, probably to the $910 area. In the week that has followed gold has churned beneath the resistance at its inner uptrend channel return line, remaining substantially overbought. In the meantime the dollar has fallen further to hit our downside target, in the process becoming critically oversold, thus setting the stage for a snapback rally.
With the dollar looking set to rally and silver much more severely overbought than gold and vulnerable to a sharp selloff, gold still looks vulnerable to a reaction, and it is now thought that there is some chance of it breaking down from the uptrend channel shown. However if this happens it is considered unlikely that it will drop much - instead it would probably track sideways for a while consolidating before the long-term uptrend reasserts itself.
The longer-term outlook remains bullish.
Silver Market Update
Clive Maund
The update last weekend warned of the danger of a severe reaction as silver had become critically overbought. An interesting week has followed with “trench warfare” setting in between the late arrivals at the party and those selling with massive profits. The result was that silver edged higher, churning, and marking out a potential short to medium-term top area. Meanwhile, the dollar continued to drop to even lower levels during the week, hitting our downside target on Friday, and in the process becoming critically oversold, thus setting the stage for a snapback rally.
Silver remains critically overbought and whilst we must acknowledge that it COULD make further progress, downside risk at this juncture is viewed as wholly unacceptable, especially in view of the now high chance of a dollar rally. Those traders who have not already done so should take profits without delay. It is important to keep in mind that silver has a tendency to drop twice as fast as it goes up - and you have seen how fast it has gone up in recent weeks. This is a good point at which traders with the appropriate level of experience may wish to consider shorting it for rapid and substantial gains.
The longer-term outlook for silver remains very bullish with our first target at $30.
Clive Maund, Diploma Technical Analysis
Copiapo, Chile, 9 March 2008
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Clive P. Maund’s interest in markets started when, as an aimless youth searching for direction in his mid-20’s, he inherited some money. Unfortunately it was not enough to live a utopian lifestyle as a playboy or retire very young. Therefore on the advice of his brother, he bought a load of British Petroleum stock, which promptly went up 20% in the space of a few weeks. Clive sold them at the top…which really fired his imagination. The prospect of being able to buy securities and sell them later at a higher price, and make money for doing little or no work was most attractive – and so the quest began, especially as he had been further stoked up by watching from the sidelines with a mixture of fascination and envy as fortunes were made in the roaring gold and silver bull market of the late 70’s.
Clive furthered his education in Technical Analysis or charting by ordering various good books from the US and by applying what he learned at work on an everyday basis. He also obtained the UK Society of Technical Analysts’ Diploma.
The years following 2005 saw the boom phase of the Gold and Silver bull market, until they peaked in late 2011. While there is ongoing debate about whether that was the final high, it is not believed to be because of the continuing global debasement of fiat currency. The bear market since 2011 is viewed as being very similar to the 2-year reaction in the mid-70’s, which was preceded by a powerful advance and was followed by a gigantic parabolic price ramp. Moreover, Precious Metals should come back into their own when the various asset bubbles elsewhere burst, which looks set to happen anytime soon.
Visit Clive at his website: CliveMaund.com
