Nice little move lately for the two precious metals in our headline. Gold now has a few resistance points to get though to keep the faithful happy- the first being right around current levels at $1350. Following a breakout through that level we’ll see pressure at $1425, $1475 and $1550. The good news for gold bugs is that, not only do the precious metals often rise into October, but the charts support that move this time around. Momentum indicators RSI and Stochastics are hooking up favourably. I hold a position in a gold bullion ETF at this time.
Silver is showing some life too. It looks to have firmly broken out of its $20 lid – next nearby resistance comes in at $22 then $24.50 and finally $28. Momentum also looks favourable for silver at this time, although it is further ahead of gold. I do not hold a position in silver.
8 Comments
Keith,
I really value your work and follow it closely, can you give any estimates on where gold and silver will end up in October? Can recommend the best way to play this trade at this time? I’m accumulating some positions now in gdxj- for more torque in golds and slw for silver.
Thanks
John
Hi John as noted, we have to see 1350 broken – but if it is, then 1425, 1475 and 1550 are all potential targets by october. Difficult to suggest where it might end up at this point, but what I would do is sell at any of those targets as the latter part of October arrives. Again, though–we must see 1350 blown before those targets are reached. I note that seasonals are sometimes flat for gold in August, then usually strong in September so it may be 2-3 weeks before the next leg up starts.
Based on a bit of an inverse H&S with a price increase of about 15.8% from the head to the neckline, $gold should go to about $1600, with some resistance points to be aware of on the way. I hope, I hope.
1550 is my top bet–but close enough
I am long a small position in gold, so it would be good to see. Nice to see the 1350 level break–that is positive.
IS TLT BREAKING IMPORTANT SUPPORT?
TLT (20+YEAR T-BONDS ETF) WEEKLY CHART SHOWS A SUPPORT ZONE BETWEEN 105 AND 106, AND TLT HAS VIOLATED THAT ZONE IN A MOVE THAT IS BECOMING DECISIVE. ALSO THE PRICE MOMENTUM OSCILLATOR (PMO) HAS DROPPED BELOW THE BOTTOM OF THE FIVE-YEAR PMO RANGE. DO WE HAVE THE POSSIBILITY OF A LARGE HEAD AND SHOULDER FORMATION ON TLT AND CAN WE EXPECT AN EXTENDED BOUNCE?
TLT (bonds) and all interest sensitive stocks are oversold–likely due for a bounce–see my comment on ZUT above. Significant resistance at old support of $110 may be a target, but agreed that the longer picture is bearish.
Keith:
A bit off the topic of this blog but speaking of seasonal investing, utilities are supposed to do well at this time of year. Not so this year so do you still hold some of your higher dividend payers including ZUT. Thanks.
Yes, unfortunatly, I own 5% positon (which has shrunk to a 4% position!) in ZUT in my equity platform. I look at the chart and see a material breakdown in support, which worries me – but I also note that its quite oversold. I just had an extensive discussion with my fundamental analyst associate here at ValueTrend, and he notes the perception of higher rates affecting the outlook for their (the utility sector’s) profitability. As usual, the market has built more into the situation than is reality–most utility companies have long termed debt not due for many years. so, putting it all together, I expect to wait for an oversold bounce and will from there likely sell–take my licks and move on at some point.