Wednesday, October 06, 2010

Dollar, Silver and Gold Charts

Before looking at the charts below keep in mind the following: No country in the history of the world has ever been successful in printing their way to prosperity, and the outcome will be no different for the US in this most recent attempt to do so.

Bottom line: Though short term corrections are called for in the charts below, the dollar will most certainly continue to fall while precious metals rise over the mid/long term.

Daily Dollar Chart - oversold (look at the Full STO and MACD) - a short-term bounce is due.

Weekly Dollar Chart - oversold (look at the Full STO and MACD) Again, a short-term technical bounce is overdue, but we're definitely headed lower for the mid to long term.. Note that 75-74 will be key support levels on the downhill slide followed by MASSIVE SUPPORT at 72-71 (If we fall below 71, the USD will be in completely uncharted territory - and at the LOWEST LEVELS EVER - all being relative of course because it's a global race to the bottom now)

Daily Silver Chart - Severely overbought (look at the Full STO and MACD) - a short-term pullback is certainly due. Note that historically when silver pulls back, it usually does so all the way back to its 50 or 200 Day Moving Average (DMA) - will we see the same upon the next pullback (~ $19 an oz)?

Weekly Silver Chart - Further confirmation of an overbought condition (look at the Full STO and MACD) - correction is due. Note silver's recent parabolic rise above it's 50 week Moving Average; also note that historical pullbacks show silver usually falls back to its 50 week MA (~$19 oz) - will this time be any different?

Daily Gold Chart - overbought (look at the Full STO and MACD)- a short-term correction is due. The nearly parabolic rise above the 50DMA is unsustainable, baring a looming currency collapse - but I don't think we're there yet

Weekly Gold Chart - further confirmation of an overbought condition(look at the Full STO and MACD)- a short-term pullback is due.


The currency and PM markets are leaning forward quickly - trying to factor in Helicopter Ben's looming QE2 monetary carpet bombing campaign - but they can't continue on like this in perpetuity and they will eventually undergo a short term reversal (always do).

Question of the day:

Should you enter here with a PM purchase?

Personally, I wouldn't, I'd wait for a nice pullback to the 50DMA, but that may take some time and patience, because as John Maynard Keynes stated: "the market can stay irrational longer than you and I can stay solvent" (Not saying I'm a proponent of his economic philosophy - merely that it's a wise comment)




Anonymous said...

A pull back is definitly the norm but something tells me this time is different and I think silver will pass twenty five before a pull back takes place. I wouldn't be surprised if it went to thirty.

Anonymous said...

This could easily be the beginning of the "black swan" event for the dollar. The problem with technical analysis is that it does not take into account the epic events like the collapse of the dollar as the world currency. I am actually hopeful that it is happening now so the we can end the irrationality of the world depending on the fiat currency administered through the (BIS) Band of International Settlement.

I don't believe Gold and especially Silver are gaining in value against the dollar, they are coiling up to replace the dollar.

It has been irrational to believe the the private banking central banking system of the world could be allowed to control the printing of fiat currency and that somehow it would have a happy ending.

The sooner that turkey gets basted the sooner we can get back to a real currency and rebuild the world economy on a sound footing.


Anonymous said...

"Personally, I'd wait for a nice pullback to the 50DMA, but that may take some time and patience"

Are you sure this isn't the (long predicted) time when Gold goes into backwardation?

Looking at the daily kitco charts I haven't seen those --- oh to familiar downward spikes--- of Gold suppression this last month.
And the world events in general seem to be building up to ... something. A phase change perhaps.
Can't you just feel the tension.

Seriousy Randy, what if Gold isn't available at all in a month and here you were counseling folks to hold off.

Anonymous said...

Randy - go to your local gold dealer and ask if you can purchase more than one or two ounces (i.e. 10 or more ounces). The last dealer I visited (yesterday) has silver, but gold is being hoarded and isn't actually available in quantity. What does that say about reality? Plus, the Treasury now tracks all PM purchases in cash totaling $3K per year.

We already live in strange times. It only gets stranger.

PS - you and I live in the same city.

Randy said...

Slight pullback today ($15 on gold and 3% on silver) relieving some of the overbought pressure.

Yes we could be in for a "Black swan event" or a "currency collapse", and there is a slight possibility gold won't be available for purchase in a month, but I honestly don't think we're there yet...

Bottom line: it's very easy to let your gut make a decision for you (especially when an exciting run like this takes place), but if the decision goes against better common sense and defies numerous instances of past history, chances are the gut decision will be wrong...

With this said, if someone is dollar-cost averaging PM purchases every month and it's time to buy a coin or two, don't let this run-up sway your decision, however, I don't personally think it's the best time to make a substantial "Core-holding" purchase...

Thanks for the comments



Randy said...

Anon - I don't purchase locally (too expensive)

I use these guys and it looks as if their supply of gold and silver is still quite solid:



Randy said...

Gartman Expects Correction to Follow `Euphoria' on Gold:

Gartman: Too much excitement right now - would not be surprised by a $100 fall from here