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I’m going
to unlock this “Nightly Report” for everybody, because I wanted
to clarify some things for people who are calling me crazy for saying that
the silver “Bubble” might have burst.
Two days ago, I wrote an article called “Did The Silver Bubble Burst?“.
I got many emails from people saying that this is nonsense, and that I should
look at fundamentals instead of Technical charts.
While that is partly true (trust me, I DO know that the fundamentals for both
Gold and Silver have never been brighter), I think that one should not ignore
the technicals either.
I also wrote that Silver has a good chance of rising back towards $38 (based
on the Silver vs Nasdaq
Comparison) in the short term.
So even though we MIGHT have seen the top in Silver back in April 2011 (we
have warned our readers back then that this was a
possibility), it doesn’t mean that we are BEARISH on commodities. In
fact, I am actually quite BULLISH on Gold and Silver right now, which I will
explain later on in this post. If we get to $38, it remains to be seen what
will happen next. It could be that silver just keeps on rising, and ignores
the “Nasdaq Similarities”. If that
happens, I will change my view, rather than being stubborn. If I would have
held on to “Fundamentals” when Silver reached $49, I would have
burned my hands. Fortunately I didn’t, and I saved myself as well as my
subscribers a lot of money.
I am not a BULL nor a BEAR in ANY asset class, but I would
rather say that I’m a REALIST.
I hope this
helps to clarify.
*************
We now have a
BUY signal on the RSI for Gold. Price has also broken above a key resistance
level, and has made a higher high.
However, we still don’t have a BUY signal on the MACD (yet), and Price
is now close to the upper Bollinger Band, which often acts as resistance.
 
Chart courtesy
stockcharts.com
We also have a BUY
signal on Silver, as the RSI broke above the red resistance line and above
50.
We will soon get a BUY or SELL signal on the MACD, which will decide whether
Silver will rise or fall.
Chart courtesy
stockcharts.com
As expected,
the higher high in the Gold:Silver
ratio was not confirmed by the RSI and MACD, resulting in Negative
Divergence, meaning the ratio should soon start to drop. This means Silver
should soon outperform Gold. Given the BUY signal on both Gold and Silver, I
expect both to rally over the next couple of weeks.
Chart courtesy
stockcharts.com
What Gold and
Silver will do, greatly depends on the movement of the US Dollar
The dollar has set a higher high, which was not confirmed by the RSI and
MACD, resulting in Negative Divergence.
Price is also in a rising wedge, which often ends badly.
Chart courtesy
stockcharts.com
Sentiment in
the US Dollar is also sky-high, adding more weight to my SHORT TERM negative
view on the USD and the positive SHORT TERM view on Precious Metals.
Chart courtesy
Sentimentrader.com
The Euro is the
heavy weight in the USD index, so the recent dollar strength can be mainly
attributed to the Euro Weakness.
We can see that Sentiment in the Euro now reaches historic lows. This
doesn’t mean that the Euro will rise immediately, but the downside
potential seems to be rather limited, based on sentiment (not price-wise).
Chart courtesy
Sentimentrader.com
However,
sentiment in the GBP and the Swiss Franc are also very negative now, meaning
the dollar could be in the process of setting a top against ALL currencies
now.
Chart courtesy
Sentimentrader.com
Back in August we warned of the “Swiss Franc
Bubble”, which was based on Technical indicators as well as
sentiment charts:
Chart courtesy
stockcharts.com
That was the
EXACT top, as the Swiss Central bank intervened shortly after, and we profited
nicely of this opportunity by shorting the Swiss Franc at that time. $XSF
(the Swiss Franc Index) is now back at 104 (coming
from 140′ish)…
That combined with the UBER BEARISH Sentiment, gives me reason to believe
that the Swiss Franc may be close to finding a bottom.
Last but not
least, the Bullish % index of Gold Miners is still very depressed. This
indicator shows the percentage of mining stocks in the $HUI index that are
yielding a BUY signal on their point and figure charts.
Chart courtesy
stockcharts.com
Conclusion: IF
the Dollar is about to set a short term TOP, this will probably lead to a
nice rally of both Gold and Silver, and most likely also in Mining Stocks.
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