Gold and Silver Trading Alert: Gold Slides Again as Expected

By: Przemyslaw Radomski | Thu, Sep 10, 2015
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Gold Trading Alert originally published on September 10th, 2015 7:49 AM:

Briefly: In our opinion, short (full) speculative positions in gold, silver and mining stocks are justified from the risk/reward point of view.

Gold, silver and mining stocks declined once again yesterday, but this was not surprising to those who followed our analysis. We moved to the short side many days ago and the profits have just increased. Will they increase even more?

Quite likely. The gold chart features a good reason for it (charts courtesy of http://stockcharts.com).

$GOLD Gold - Spot Price (EOD) CME
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To a large extent, our previous comments on the above chart remain up-to-date:

We just saw another daily close below the neck line of the bearish head-and-shoulders pattern, which makes the breakdown more confirmed. Based on our experience, it usually takes 3 trading days for a given move to be completely confirmed, so the situation will become even more bearish if gold closes below the neck line also today (which seems quite likely).

Gold indeed closed below the neck level of the head-and-shoulders pattern and that's a very bearish sign as it means that the breakdown was confirmed. A move below $1,080 has just become much more likely and so has the chance of increasing our profits on the current short position.

$GOLD:UDN Gold(EOD)/PS DB US$ Bearish CME/NYSE

From the non-USD perspective, we see that gold is at its previous lows. It's not at the 2013 / 2014 lows but its certainly at the 2015 ones. The medium-term trend remains down and it seems very likely that gold will move even lower in the coming weeks.

$SILVER Silver - Spot Price (EOD) CME
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We recently commented on silver's performance from the short-term perspective and in today's alert we would like to focus on the long-term one. Silver's recent move higher is almost invisible on the above chart and that tells us something about this move's importance. Silver is below its 2010 low and it's already after a rebound that followed the first attempt to move below it.

Consequently, it's much more likely that silver will manage to move below the 2010 low at this attempt. If it doesn't, it's not likely to rally significantly anyway, as the declining red dashed resistance line is relatively close. The outlook remains bearish.

$HUI Gold Bugs Index - NYSE Arca INDX
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We'll change the perspective also in the case of mining stocks. The decline in gold stocks proceeds in tune with what we saw in 2008 and we have just seen an important signal that miners will move considerably lower in the coming weeks. The Stochastic indicator based on the weekly closing prices flashed a sell signal and these signals are not to be ignored - they've been quite reliable in the previous several years.

Summing up, the precious metals sector declined as expected, but it seems that the real decline is only beginning and that our profits from the short position will be much higher before the decline is over. We just saw 2 additional reasons for metals and miners to move lower: the verification of the breakdown in gold and a sell signal from the Stochastic indicator, and both of them have quite strong bearish implications. Even if we see a small corrective rally shortly, it will likely not change the main medium-term trend, which remains down.

To summarize:

Trading capital (our opinion): Short position (full) position in gold, silver and mining stocks is justified from the risk/reward perspective. Specific stop-loss orders and initial target prices are available to our subscribers.

Long-term capital (our opinion): No positions

Insurance capital (our opinion): Full position

You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.

Thank you.

 


 

Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Gold & Silver Investment & Trading Website - SunshineProfits.com

Przemyslaw Radomski

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same.

His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem that may never be solved, PR has changed the world of trading and investing by enabling individuals to get easy access to the level of analysis that was once available only to institutions.

High quality and profitability of analytical tools available at www.SunshineProfits.com are results of time, thorough research and testing on PR's own capital.

PR believes that the greatest potential is currently in the precious metals sector. For that reason it is his main point of interest to help you make the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for professional excellence and ethics for the ultimate benefit of society.

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Disclaimer: All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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