Silver (and gold) poised for a correction

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swissaustrian

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Silver has had an impressive rally during the last 4 weeks. It needs a rest.
It's very overbought (chart as of yesterday, today we added another 1%):

11kw3nt.png


We're now in the 32.5-33 resistance area which could take some time to be taken out.

Lease rates have been falling quite a lot lately which is an indicator of growing physical supply:
29eohmt.gif


Speculative paper postioning (futures/options) has picked up quite a bit as well. These people sell very quickly once a correction starts.

The EUR has rallied quite a bit, too, from 1.20 to 1.26. It's also up for a correction, usually dragging USD-prices of pms down, too.

All in all this points to a high likelyhood of a correction in the near future.
We'll see how much the correction costs us.

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All of the above applies to gold, too. The signs (overbought, falling lease rates, speculative positioning, EUR-strength) aren't nearly as dramatic as in silver, though.

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Buyer beware. :noevil:
 
Looking at the last few weeks, I would agree with SA. I am not so fancy with the charts, but I wouldn't be suprised to see silver drop back to $31.50 and gold down to $1650.

$.02
 
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Silver to drop to 32.50? It's only just reached that today. Up roughly .40 to about 32.65-ish as I write.
 
As I stated a few days ago on another thread, PMs have gone too far too fast after breaking out of the downtrend. Typical markets tend to correct back to the downtrend line shortly after an upside breakout. That means we COULD see 1600 gold again or maybe even 1500, for the LAST time in our lives. And it is feasible to see 26 silver one more time. Will it happen? Only time will tell.

At the outside, the worst (best if you are a buyer) scenario is a 40% pullback from recent highs. I personally do not see any way that can happen at all, just that it is the worst case scenario.

Buy on the dips, and when they stop, HANG ON FOR THE RIDE OF YOUR LIVES.
 
Mmerlin,
I would love to be a buyer at anything under 37 - 38, but the cutbacks we have been making, and sacrificial givebacks we have done in the name of saving the firm have put a serious dent in the Ancona budget and lifestyle. I intend to sit on the stack and watch from the sidelines until things get a little more stable, or until my firm pulls her shit together, whichever comes first. We actually have quite the nest egg, but Mother Bear will not permit any more stacking until shit changes for the better as regards my work.

All of that said, if we drop all the way back to 25 - 26, Mother Bear can complain all she wants, 'cause I'm stacking more!
 
Ancona, as stated on some other thread, I would love to be a buyer, too. However, also because of business, I will be taking a pass regardless of how low it gets, unless something unexpected happens.
 
Do not sell physical. Take profits and be really to add back.
 
Where's the salivating emoticon?

The wife is back to work after 3 months maternity leave so we'll have some disposable income again. If silver and gold prices drop back to July prices, I'll try to double my position to ~3% of portfolio.
 
32.31 as I check this morning (my time). Not too bad so far.
 
benjamen said:
Unemployment numbers just came out. I am not sure why a drop in the unemployment would cause such a jump? Perhaps more information is forthcoming?
Click to expand...

Much higher likelyhood of QE beeing announced next week on thursday :snidely:

Btw: You made a typo, it's a drop in employment not UNemployment :noevil:
 
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swissaustrian said:
Much higher likelyhood of QE beeing announced next week on thursday :snidely:

Btw: You made a typo, it's a drop in employment not UNemployment :noevil:
Click to expand...

http://finance.yahoo.com/news/payro...RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

UNemployment dropped from 8.3% to 8.1% through mostly funny numbers.

Non-farm employment went up by 96,000.

The scary number is the 63.5% labor force participation number, which is a much better indicator in my opinion. This is the lowest number in over 30 years!
 
benjamen said:
http://finance.yahoo.com/news/payro...RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

UNemployment dropped from 8.3% to 8.1% through mostly funny numbers.

Non-farm employment went up by 96,000.

The scary number is the 63.5% labor force participation number, which is a much better indicator in my opinion. This is the lowest number in over 30 years!
Click to expand...
:agree:

Labor force participation is the hidden variable in the equation. If this numer had stayed stable since 2008, the unemployment rate would be much higher.
They don't count those who have just stopped looking for work as "unemployed". :flail:
 
swissaustrian said:
:agree:

Labor force participation is the hidden variable in the equation. If this numer had stayed stable since 2008, the unemployment rate would be much higher.
They don't count those who have just stopped looking for work as "unemployed". :flail:
Click to expand...

I like this guy's work on unemployment:
http://www.shadowstats.com/alternate_data/unemployment-charts

Essentially, he calculates unemployment the way it was originally calculated before it started to be "improved" in the 1990s. Using the unmodified version, he calculates our current unemployment to be 22-23%!
:flail:
 
I saw the unemployment numbers on ZH and they didnt seem to be such a big deal.
Weve had far worse in the past and pm's went down or were neutral.
Hence my question .........

I suppose the question might be why didnt pm's get pushed down more, if the job numbers were likely to effect thinking on QE ?
 
That was a short-lived 'correction'. It will be very interesting to see how the day plays out and the closing price for the week.
 
this just in -

My Dear Extended Family,

If you have eyes to see, coordinated central bank monetary and fiscal stimulation
action is taking place.

Yesterday was "Draughi Day." Today the Chinese officially released massive fiscal
stimulus on top of the already monetary stimulus. Watch for the US Fed to chime
in.

QE to infinity MOPEd as sterilized is falling into place. Please review my post
from last weekend to you on the illusion of monetary sterilization.

Gold is going to and through $3500. The approach some long term gold bulls took
toward gold, initiating a temporary short directly after Labor Day, is now in the
process of backfiring badly.

Regards,
Jim Sinclair
Click to expand...
 
I don't know who he is referring to, but he is saying that folks who shorted gold after Monday got caught in a squeeze or otherwise are losing on their bets/trades as gold rises.
 
On another silver/gold site I made a guess and said something to the effect of silver may just get to 25 by the end of the week. At the time, I got shot down pretty hard, and rightfully so, but at this point it is looking pretty damn good. We're up a buck today and closing in on 34.

Although I believe we're going up way too fast, and are possibly getting set up for a massive drive-by, it sure is noce for now.
 
Benjamen,
Perhaps if no QE is anounced, folks who flee the stock market will flee in to gold and silver. These are indeed strange times we are living in and I have seen a lot of ocunterintuitive stuff recently. It would not surprise me one bit if the market crashed while the dollar strengthened along with soaring silver and gold. The metals have done a few disconnects in the last few years, so nothing would surprise me next week.
 
RSI (momentum) for silver is at 86 as of Friday's close. The last time we were that high was in late April of 2011, just before the massive $15 / 30% crash happened. The RSI high was at 90 back then. I'm reiterating what I said in the op: A correction is overdue. Anything over 70 is considered "overbought".
 
swissaustrian said:
RSI (momentum) for silver is at 86 as of Friday's close. The last time we were that high was in late April of 2011, just before the massive $15 / 30% crash happened. The RSI high was at 90 back then. I'm reiterating what I said in the op: A correction is overdue. Anything over 70 is considered "overbought".
Click to expand...

swissaustrian,
Where can I find current RSI for PMs, sectors, stocks, etc.?

I googled and found this: http://www.forexpros.com/currencies/xag-usd-technical

Would be interested in learning more about technical analysis.
 
superhero said:
swissaustrian,
Where can I find current RSI for PMs, sectors, stocks, etc.?

I googled and found this: http://www.forexpros.com/currencies/xag-usd-technical

Would be interested in learning more about technical analysis.
Click to expand...

www.Stockcharts.com gives you lots of technical tools for stocks, indices, bonds, commodities etc. Most of the charts aren't real time, though. They only get updated data once a day (after the US closing bell).

http://www.netdania.com/Products/li.../real-time-forex-charts/FinanceChart.aspx?m=c offers a lot of real time charts with sufficient technical tools.
 
@ Swissaustrian - Was that the correction you were expecting yesterday? If so, it was very short lived.
 
If no QE is announced (from any of the ECB, fed, PBOC) then PM's will tank for a little while. Right now, the flight to safety is into bonds mostly.

One interesting trick to see how much fear goes into gold is to look at the NAV/price ratio on PHYS - which just dropped.

Most trading platforms will give you indicators like RSI - and tons of others. Some of them even calculate them right (but far from all!). I like to watch the oscillators and OBV, which sadly, almost no one calculates right. I might write some code to work off my level II feed and get it right for me at least.
 
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