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ChartWorks

The following report was published for our subscribers April 25, 2011. Technical observations of RossClark@shaw.ca


 

Gold - Another Goal Achieved
Silver - Into a Rare Position

Gold reached its minimum upside target of $1515 over night, based upon measurements from the March 15th low of the consolidation of November through April 4th. A correction should find support between the 20-day and 34-day exponential moving averages (currently $1469 and $1451). The optimum target for this leg of the bull market remains $1580, based upon the measurement from the January 28th low.

Gold

Silver prices have been advancing relative to gold since August in classic bull market fashion. In that time they are up 175% versus a gold move of 31%. The ratio has its most overextended monthly RSI(14) reading since January 1980. We expect to see the GSR find support at 30:1 and 26:1 (a silver/gold ratio of 3.3% and 3.9%).

Gold/Silver Ratio

Silver is into Upside Exhaustion mode in all three time frames; daily, weekly and monthly. There have been five previous occurrences since 1964. Any downside break of 10% from the high will indicate that the runaway phase is at an end and a violent initial decline back to the 34-day average is likely. A 50% retracement of the rally from the $18 low in August coupled with simultaneous daily RSI(14) readings below 50 in gold and silver is common at corrective lows within two months of the high.

The action is close enough to our optimum window for a high (April 27th through May 6th) to suggest that the frenzy is virtually complete.

Silver - Simultaneous Upside Exhaustions in daily, weekly and monthly charts

April 26, 2011
March 3, 2008
April 13-19th 2006
January 2nd to 18th 1980
September 4, 1979
February 8th to 26th 1974

 


The opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized.

Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or options or futures contracts. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk. Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications.

 

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