Safehaven | Precious Metals Analysis for Gold and Silver

July 08, 2009

Precious Metals Analysis for Gold and Silver
by Chris Vermeulen

The broad market including commodities is under some serious selling pressure as traders and investors panic to exit positions. Today small caps stocks and commodities took the majority of the beating. Although the market looks bearish at this point, I do think there is a very good chance of a bounce Thursday and Friday, but I figure we will see selling into the close on Friday as traders stay in cash over the weekend.

This week's price action for all our funds provides us with new technical analysis on the charts. Support levels were broken and we are now in free fall mode for these four commodities. I do like the way the charts are setting up. The bigger and quicker the drop in price the better the odds that the next setup will follow through for a profitable trade.

Gold Precious Metal - GLD ETF Fund

Gold confirmed the breakdown with a 1.5% drop today. We continue to wait for prices to stabilize and provide an opportunity to enter long. We are 5-10 days from any possible setup.

Silver Precious Metal - SLV ETF Fund

Silver has had a nice sharp pullback from the May high which we expected. We continue to wait for more price action to unfold to generate a low risk buy signal.

Technical Sector Timing of Precious Metals

So far this week the market has caused some serious damage to the technical's. Overall the market looks over sold and I am expecting a positive day tomorrow. The price action today looked very much like panic selling and that is generally when we see stocks and commodities rebound for a couple days.

The S&P500 penetrated a critical support level intraday but closed higher. One more down day in the market and we will most likely see program selling step in which will force stocks lower for another couple days triggering even more panic selling.

We continue to let the market unfold analyzing the technical's on a daily basis. Waiting for a low risk trade can be a slow process but this down time allows us to learn and fine tune our technical analysis skills even more.

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Chris Vermeulen
TheGoldAndOilGuy.com

Chris Vermeulen is Founder of the popular trading site TheGoldAndOilGuy.com. There he shares his highly successful, low-risk trading method. For 6 years Chris has been a leader in teaching others to skillfully trade in gold, oil, and silver in both bull and bear markets. Subscribers to his service depend on Chris' uniquely consistent investment opportunities that carry exceptionally low risk and high return. Reach Chris at: Chris@theGoildAndOilGuy.com

This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.