Watch Gold & Silver Steps

August 23, 2014

gold and silver bull market steps

Gold is under downward pressure again…Is this a cause for concern?

So far, the answer is no…

If gold now stays above $1195, which is a very strong long-term support level, this will become the springboard for higher prices in the next major upmove.

GOLD: What to be watching

In the meantime, it’s best to follow gold’s steps.

We started the steps in 2001 when the last bull market was getting started. It was the gloomiest time for gold, and the mood is pretty gloomy today as well.

So the steps will provide a good guideline…

We’ll start with gold, and Chart 1 shows us gold’s stepping stones.

Gold is currently trying to rise back above $1300, its 65-week moving average. If it does, it’ll show firmness.

Once gold closes above step 1, the August 2013 high near $1420, it will pass the first key hurdle.  It’ll then have accomplished a complete bottom area.

Step 2 on Chart 1 will then be the next hurdle to overcome.  This $1536 level was the key bottom area after gold peaked in 2011. 

This level was clearly violated last year when gold fell into a deeper bear market.  Up to that point, the bear market was moderate.

So once this level is surpassed, gold will have recovered from the vicious part of the decline, and it’d be another bullish factor for gold’s rise.

From there, the $1800 level will be the next hurdle, which was gold’s second gold peak area in 2012.

The record high area near $1905 will be the final obstacle.  Once a new record high is reached, gold will be poised for a super take off rise.

SILVER’S STEPS

Like gold, we’re also following the steps for silver.  Chart 2 shows silver resisting at its 65-week moving average. But as long as silver stays above its key support lows at $18.70, it’ll be fine.

Once silver rises above its February highs at $22, it will cross the first hurdle (Step 1).  The August 2013 highs will then be the second step to surpass at $24.70. 

So this is what we’re watching and we recommend you do too.

Interestingly, gold has risen essentially the same as the S&P500 this year.  The perception is that the stock market has been the place to be.  It’s been soaring and clearly worth investing in.  But the perception is also that gold has been a bad investment.

In reality, using the highs in gold and the S&P500 in July and August, the gains this year have been 9.32% for gold and 8.73% on the S&P500. An impressive reality.

In the meantime, gold shares are turning bullish and all signs show they’re leading the way up for gold and silver.

This means you’ll want to keep the metals you have and/or buy new positions at these low levels.

Printed by courtesy of the Aden Forecast: https://adenforecast.com

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Mary Anne & Pamela Aden are well known analysts and editors of The Aden Forecast, a market newsletter named 2010 Letter of the Year by MarketWatch, which provides specific forecasts and recommendations on gold, stocks, interest rates and the other major markets. For more information, go to www.adenforecast.com

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