That's the question everyone seems to be asking right now. After an impressive and relentless upside trend since the dominant low in July, both gold and silver have continued to make higher highs and higher low (the classical definition of a rising trend). But with gold stocks looking shaky, many traders are starting to wonder if the top if already in for the actual gold and silver markets. My answer may seem evasive but it's really the only answer one can honestly give: the trend is up until proven otherwise.

Let's start by examining the daily chart for spot gold (above). You'll note that gold has continued to trend higher while its dominant short/intermediate-term moving averages (30/60/90-day) are also in a pronounced uptrend. This much is bullish since it shows rising trend, momentum, and cycles. Now it's true that price has accelerated and pulled away from these underlying moving averages in recent weeks, and also true that the 30-day MA is starting to pull away from the 60/90-day MAs. This *sometimes* signals an impending top, but in a momentum market even this signal is often ignored as new highs are made. Based on my analysis the only warning of an actual (short-term) top we'll have is if gold (and this is true for spot gold as well as for gold futures) closes underneath the $405 level. Why $405? Here's why:

Note that in the above gold futures chart a massive parabolic bowl -- largely responsible for the upside move since the July low -- is still intact since it hasn't been broken yet. This upcurve has been shepherding prices higher and higher since summer. Well now gold's price line is about to come into contact with the "rim" of the bowl. This rim intersects at $405 in the chart above. In the spot gold chart $405 is where the sub-dominant short-term moving average intersects (not shown). Whenever price closes below this moving average it typically confirms a short-term sell signal. Thus, I attach significance to the $405 level.

What would happen if $405 were penetrated on a closing basis then? I expect the second parabolic dome in the above futures chart would take control of the market and gold would then probe its next important pivot at $400 and then the one at $385-$390.

As you may recall, gold looked just as toppy around this time a year ago in December 2002 and yet it continued to make higher highs until the end of January 2003. One of W.D. Gann's important observations is that market's have "anniversary dates" which should be watched, since they often result in important turning points. In the gold market the important anniversary date is actually the beginning of February 2004.

Turning our attention to the silver market, one can't help but be impressed with silver's continuing strength. Even though silver itself may look a bit toppy, like gold, it's still above its dominant short-term uptrend lines. It's also still within the confines of its parabolic bowl pattern (see below), which has been the guiding influence of its rise since October (when its latest uptrend was established). I believe the important pivotal point for silver is the $5.60 level, which if broken would serve as a warning that further correction could be expected.