1. Gold & Silver Update
As expected Gold managed to rally and exploded $50 higher within just five
trading days since my last update. But with the same velocity all gains have
been vaporized with two large down days. Another short-term top has been clearly
established. Although this top at $1,232 has confirmed a series of higher highs
it is now believed to be just another bear market trap due to the extremely
weak price action. Overall the bears are still in control.
Any move below $1,170 should start a sharp sell off and might trigger the
long expected final capitulation towards $1,035. If the bulls instead can defend
the $1,180 level again, the sideways movement simply will continue and could
lead to a bullish base building.
Meanwhile the Chinese simply hoarding more and more Gold.....
2. The Midas Touch Gold Model
Although Gold managed to rally more than $50 my model never really turned
bullish. But in mid of march at the last important low it did. Today the model
changed into the Sell/Bearish Mode. We have new sell signals on the Gold
USD-Daily chart, Gold in Indian Rupee, Gold in Chinese Yuan as well as
on the GDX Daily Chart. Seasonality remains on a sell signal until end
of June. The heavy liquidation in the SPDR Gold Trust is giving a new
sell signal too.Only one new positive signal since my last update is the buy
signal for the Gold/Silver Ratio on a weekly basis.
The latest CoT-Report for Gold is neutral while for Silver the CoT-Numbers
have been terrible as the professionals are holding the highest short position
since October 2010!
My model is pointing towards lower prices again.....
3. Gold Daily Chart
The breakout above $1,210 followed by a push up to $1,232 has been a bull-trap
so far. But it is too early to assume that Gold is going to crash down towards
$1,140 immediately.
The whole movement last week has been the first meeting with the falling 200MA
($1,222) since early February. That itself is a positive development. A failure
at the first meeting with this important moving average is typical. The following
reversion towards the 50MA ($1,189) is also typical. As long as Gold is consolidating
in between these two moving averages the bullish case can not be neglected
and the chance for a larger recovery remains.
So if Gold can hold the current level around $1,187 in the next couple of
days and then move above $1,200 another attack of the 200MA would be in the
cards. Above the 200MA the recovery since mid of march could extend towards
$1,240 and higher as Gold would have been building a base in between these
two moving averages for the next rise. But of course today's price action is
not very encouraging for the bulls. On top especially the extremely negative
CoT-Data for Silver are supporting the bearish case. Also seasonality remains
weak in the coming weeks and the Gold-miners are breaking down from a bearish
wedge.
Overall this 4-year old bear market is not over yet - at least we are missing
the clear confirmation for its end. This grinding sideways action certainly
is not looking like a hungry new bull. If you don't need to be active in this
market I suggest you'd be better staying at the sidelines and avoid any short-term
trading. This trend-less period can only cost you money and nerves.... As an
investors I suggest you wait for another chance to accumulate physical Gold
below $1,150 until you hold 10-20% of your net-worth in physical Gold and Silver
as an insurance.
4. Long-term personal view/believes
The return of the precious metals secular bull market is moving step by step
closer and should lead to the final parabolic phase (could start in summer
2015 or 2016 and last for 2-5 years or even longer). Before this can start
Gold will need a final sell off down to $1,050-$980. My long-term price target
for the DowJones/Gold-Ratio remains around 1:1. and 10:1 for the Gold/Silver-Ratio.
A possible long-term price target for Gold remains around US$5,000 to US$8,900
per ounce within the next 5-8 years.
Fundamentally, as soon as the current bear market is over, Gold should start
the final 3rd phase of this long-term secular bull market. 1st stage saw the
miners closing their hedge books, the 2nd stage continuously presented us news
about institutions and central banks buying or repatriating gold. The coming
3rd and finally parabolic stage will end in the distribution to small inexperienced
new traders & investors who will be subject to blind greed and frenzied
panic.
