• 16 hours Russian Prestige And American Politics: The COVID Vaccine Race
  • 18 hours Is The Silver Rally Over Or Just Getting Started?
  • 2 days Alibaba-Backed Tesla Competitor Set To IPO In The U.S.
  • 2 days Emerging Economies Could Get Left Behind In Race For COVID Vaccine
  • 2 days Dead Malls Could Be Amazon’s Next Target
  • 3 days Unpacking Biden's Energy Plan
  • 3 days Russia Aims To Become World's Top Gold Producer
  • 3 days Global Tech Stocks On Edge Over Trump TikTok Ban
  • 4 days Cobalt Squeeze Threatens The Electric Vehicle Boom
  • 4 days COVID Has Sparked A Surge In Cybercrime
  • 5 days Precious Metals Bulls Still Have Plenty Of Room To Run
  • 5 days The U.S. Has The Tech To Go Green, But Will It Use It?
  • 6 days Massive Losses Force Russian Commodities Giant To Slash Dividends
  • 6 days Markets Up On Stimulus Hope
  • 7 days UK To Invest In Europe's First Geothermal Lithium Recovery Plant
  • 7 days TikTok Takes Center Stage In US-China Tech War
  • 8 days Are Semiconductor Stocks Overvalued?
  • 8 days Jobs Report Doesn’t Say Much Amid COVID Uncertainty
  • 9 days Crypto FOMO Heats Up As Bitcoin Climbs Above $11,000
  • 10 days Aluminum Is Bouncing Back In China
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

  1. Home
  2. Markets
  3. Other

Gold and Silver Prices Strengthen as the USD Weakens

Gold

We kick off with a quick look at the chart for gold and as we can see both the 50dma and the 200dma are moving up nicely in support of gold prices. The recent correction could have taken gold to have tea with the 200dma, however, strong buying came in and pushed the price through resistance in preparation for the next leg up. The technical indicators, the RSI and the STO, are on the high side suggesting that a breather could be on the cards, but don't count on it, indicators can remain distant from the 'norm' for extended periods of time.

By comparison the US Dollar is struggling to gain any sort of traction as two attempts by the USD to get above the 200dma since December have failed, along with the recent attempt to break out above the 50dma just recently. The RSI, MACD and the STO have struggled to rally and are now heading south which does not bode well for the USD in the short term. Maybe it will make a stronger stand at much levels say around the '72' level as there does not appear to be much in the way of support at the moment.

US Dollar Index

Friday was another super day for silver prices with a 3.66% jump to hit a new three decade high. The pull back was less severe than it could have been as shortages continue to dominate the news. The technical indicators are in the overbought zone with the RSI just above the '70' level sitting at 70.59, however it can stay there when its in the mood. On the negative side watch the yawning gap that is developing between the 200dma and silver prices. The chart suggests that we could now be in for a breather but don't count on a breather just yet as the physical market is struggling to meet demand.

Silver

In a piece found on Jesse's Cafe American relating to an original article carried by the Financial Times we have the following snippet regarding silver prices:

The short squeeze in silver is fairly remarkable and obvious to all but the most pig-headed or willfully misdirecting. Looking at the Comex warehouse, SUPPLY is consistently and smoothly decreasing even while PRICES are increasing sharply.

Silver does appear to have hit a bit of a 'high note' here perhaps, and has once again come far and fast. A consolidation or a pullback might not be unexpected, depending on what US equities might do. For now many things are riding on the dollar liquidity bubble, including those who are merely fleeing it and seeking safer stores of wealth, particularly in Asia. Silver is outperforming gold as demonstrated by the decreasing gold to silver price ratio, no doubt influenced by the fact that the central bankers have access to gold in their national treasuries, but few have any silver. Silver is in a short squeeze, and so volatility and upside surprises are to be expected.

All it needs now is for you to ensure that you are positioned in this market via a holding of the physical metal, the gold and silver producers or a few long dated call options.

Have a sparkling week and thank you for your attention.

 


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

 

Back to homepage

Leave a comment

Leave a comment