I followed up with my prior post on levels I feel are important to watch for in both the gold and silver markets yesterday but on analyzing the charts again today, something else caught my attention that I completely overlooked in my last assessment. Perhaps because the danger of this happening was further off but it appears as though the 50 day moving average is turning lower. What concerns me is the dreaded “Death Cross” that occurs when the 50 day moving average converges and crosses to the downside of the 200 day moving average.

Let’s take a look at the chart for a clearer picture of this.

The larger red rectangle is the inverse head and shoulders that I am watching. The black square is the current head and shoulders that is still in play. But the blue circles indicate the death cross potential. The first one shows how close gold was to this cross back in late February but the second oval shows that the 50 day is turning down again and looks to be headed towards the 200 day moving average. Death crosses of this nature are good indicators of bearish forecasts and may negate the inverse head and shoulder pattern visible on the chart.

I still feel that the levels outlined in my prior posts should be respected but I will now add this indicator to my overall analysis.

You have two options here … I don’t want to pick sides. I believe I’ve laid out both cases in my prior posts. If you believe that gold is going up and will set new highs down the road then use weakness to buy more. Don’t complain about it. If you are holding profitable gold and are considering or have been considering letting some go, this is just one more indicator you should observe to aid you in that decision.

I spoke to a good friend of mine last night and told him that while I haven’t been buying physical silver, I do believe another flush is coming and I am currently saving my disposable cash for that exact moment because my LONG TERM outlook for silver hasn’t changed despite my short term bearishness.