Louise Yamada - 3 Fantastic Gold, Silver & Mining Share Charts
Gold Spot price (GOLDS-1,395.15, see Figure
19) retreated only toward 1,287 before establishing a rally that was
eventually able to penetrate the declining 50-day MA as well as the
short-term downtrend from the May rally to establish a higher low and
the push through 1,345, which set in place the first higher high since
September 2012, establishing the first uptrend.
Technical analysis
historically cannot identify “V” bottoms since the evidence of
accumulation is not present, and there is always the risk of another
low. The decline to 1,200 fulfilled the 50% retracement of the 2005
advance of 353%, and came close to the corresponding 2005 uptrend just
below 1,200.
Price has now achieved / penetrated 1,400 briefly, our potential first target, at an initial price resistance.
The weekly momentum (see
arrow) turned positive, and could support a further rally. The monthly,
more structural, reading remains negative.
The 1,400 level represented
the first major resistance, but price could push further toward the
declining 200-day MA near 1,500. The 38.2% Fibonacci retracement of the
decline comes in at 1,463; a full 50% Fibonacci retracement would
suggest 1,550 as a possibility, were 1,463 achieved, carrying price back
to the major April breakdown level (see horizontal line). The
longer-term downtrend intersects at 1,600.
Seasonality suggests the
potential for a rally into fall for Gold. But technically, a more
extensive consolidation phase would be expected before the metal might
rally sustainably. Therefore we might anticipate a period of backing
and filling over a period of months once the rally has run its course. A
current pullback could test the new uptrend at 1,340; next support
1,275.
Please reference last
month’s piece for a more structural discussion on Gold. Additionally,
anecdotal evidence (from James Turk) contends that central banks dumped
1,300 tons of gold in a manipulated attempt to take gold price down and
prevent an alternative to the growing fiat currencies; further that
Shanghai data suggest that China is buying all the monthly production of
Gold. We may never know the truth on this.
Looking at the gold stocks
through an ETF (see Figure 20), the GDX simply looks like a kickback
rally into resistance, in need of much more repair after the tremendous
decline from 65 to nearly 20. “The bigger the drop, the longer the need
for repair.” Time is needed for that repair.
Silver Spot price
(SILV-23.52, see Figure 21) joined Gold in a rally following a 63%
decline. Silver has managed to rally close to the breakdown level of
26-27 turning the weekly momentum positive (see arrow), but both price
and the declining 200-day MA resistance may halt the progress at least
over the short term. The monthly momentum remains negative.
KWN Note: Until further technical evidence suggests otherwise, Yamada believes the gold market remains bearish: “... technical arguments thus far suggest Gold is simply experiencing a bear market rally.” The same situation exists technically in the silver market according to Yamada: “A
trading range between 20 and 25 could develop as a period of repair for
Silver in what currently represents a bear market rally.”