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It was another
strong week for US markets that is set to power many
stocks higher soon. I’ve rarely seen so many great setups for swing
trading in the leading stocks and we are and will be taking advantage of that
in the week ahead.
In
stark contrast to the rampant bullishness that is so pervasive in markets and
stocks today the precious metals are kind of here in no man’s land for
the most part for now with a negative skew in the short term.
While
it’s not that much fun it happens and it’s only a sale in
reality. Buying large dips has done nothing but increase wealth for over a
decade now and there really is no sign of it stopping.
As
Mark Twain says, “History rhymes”
This
could not be more true for this secular precious
metals bull market. We get failed breakout after failed breakout and then
large corrections which end up being huge, fantastic buying opportunities in
a short amount of time.
That
time is very near and I’m covering gold and silver daily during this
correction for subscribers so they can take advantage of this sale.
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Metals review
Gold fell 3.04%
this past week and slightly violated this odd slanting head and shoulders
pattern. We could easily fall to $1,625 here at the minimum and quite
possibly much further.
The
good news is that the larger picture has a bullish reverse head and shoulder
with it’s neckline
at the $1,775 region for now. Preferably I’d not like to see gold fall
much further as it could annul the larger, much more bullish reverse head and
shoulders pattern. Time will tell.
Even
more good news is that lows and strong support at the $1,650 level held quite
well for the week which is important on the weekly chart.
Volume
was heavy on The Wednesday’s low in both the GLD ETF and the futures.
For now I’d have to say the bias is bearish in terms of looking at
volume.
Either
way if you’re considering buying or adding to a physical gold position
it’s a great deal at the moment that will be richly rewarded in the
years to come.
Many
of the gold stocks are in the same boat and are selling at huge unreasonable
discounts. These have always represented great times to buy, not sell.
Silver
fell a hefty 4.35% this past week and violated its head and shoulders
neckline before recovering to close the week very near it’s
neckline and the 100 and 50 day moving averages.
Technically
we should move down to test the $29 area and this could well happen as it
seems we’re building a little bear flag pattern here which would be a
lower low and point to lower prices soon.
Volume
was heavy on moves lower and weak on the moves back to resistance levels
which says more downside is likely. Traders are
nervous about going long in this very volatile and unpredictable market while
at the same time I know for a fact that physical silver is flying off the
shelves.
Unfortunately
the silver price is dictated by traders in the futures market for now but one
day this will decouple and your silver coins will be worth at least twice as
much a paper ounce of the metal.
Platinum
was pretty flat for the week having fallen only 0.09%. The head and shoulders
pattern I talked about seems as if it’s not going to play out and now
we have a small slanting reverse head and shoulders pattern which is pointing
to higher prices.
The
lack of heavy volume to push platinum lower in the futures market is good
while we saw the same in the PPLT ETF except for Thursday which was a quite
high volume day as the ETF was accumulated.
Platinum
looks set to move higher any day now.
Palladium
rose 0.18% this past week and looks set to move higher and test the $725
level soon. Palladium remains the best looking precious metal in my view.
Volume
in the futures and the PALL ETF is on the lower side which is great as this
little flat base has formed and is now ready to move the price higher.
Fundamental Review
Late
in the week the IMF approved $36.7 billion bailout for Greece.
This ends the apparent uncertainty over whether the country will default or
not. I never really thought there was an option in the end.
Bailout
was really the only option as a true default would have bankrupted the major
banks of the world but we all know how connected they are and how in control
they are of many governmental branches.
A
major move came out of Japan this week when
they announced Chinese approval of purchases of $10.3 billion of Chinese
government debt (treasuries). The world is moving away from traditional US
Dollar and Euro investments in a bid to diversify and in this case strengthen
ties regionally.
Even
after new Indonesian laws were passed limiting foreign company ownership of a mine to 49%
some of the world’s largest companies are still investing and
reinvesting in the country. The fact remain it’s still a pretty safe
and lucrative place to own a mine and the weather is usually great as well.
Not to mention it’s locale on the coveted ring of fire where the
world’s largest mine have been discovered.
Much
of South-East Asia is beautiful and very rich in minerals and with the recent
opening or loosening of government policy in Myanmar we’re going to
begin seeing more and more companies try to explore the area.
For
now a major Philippine company is going to give it a go.
Personally I think companies located in the region will have a much easier
time being the first movers since they have similar customs and just
understand what it’s like over there. I’ve had the pleasure to
live in South-East Asia and travel extensively and I feel I have a decent
grasp on the situation and area but still, nothing compared to having grown
up there.
While
smiles may show on the outside, especially in touristy areas, but often a
deep distrust of foreigners lies hidden below and even more-so when it comes
to extracting the countries riches.
If
you’ve never been blessed enough to have graced that part of the world
I highly recommend it. You can read all you want but you won’t really
know until you go. I find that with most places though, but that region holds
a special place in my heart.
Speaking
of Asia, my old launching off point, Taiwan, Asia’s hidden jewel, made a “bonanza” from their gold purchases
in 2008. Unfortunately they aren’t going to buy more. The
central bank governor there even went so far as saying it’s a risky
asset, but they aren’t selling any gold either.
While
gold was certainly cheaper in 2008 after a huge crash in everything under the
sun it’s become quite cheap here now again and will prove to have made
you a bonanza in 3 or 4 years if you are new to buying physical gold.
A
company subscribers and I own is now going
to issue dividends in physical gold and silver coins.
We should begin to slowly see more and more of this and this type of strategy
will attract many more investors, especially as the company is very solid to
begin with. It’s about time we saw this type of strategy implemented.
The
precious metals assets from the bankruptcy of MF Global are being sold to another large commodities player.
It doesn’t sound like it was an auction as it should have been and also
shouldn’t those assets go directly to the customers who actually own
the positions?
I
can’t say I’m intimately familiar with what is going on but there
is certainly something that smells fishy about the whole situation which is
already one of the biggest messes and cases of blatant corruption and
stealing I’ve ever seen. And to top it all off there hasn’t been
any charges yet, nor any signs of a true investigation taking place.
This
weeks humour comes out of
Venezuela. The country has nationalized mines and basically booted companies
out of the country after all the hard work had been done and often large
amounts of infrastructure as well.
It’s happening again but this time the
company is backed by Russia to a large degree which is odd since they have
such good relations.
I
guess Venezuela having just repatriated most of their gold now wants to mine
all their national gold and keep it all for themselves
as well. I can’t say I blame them but they are being pretty underhanded
going about it.
Have
a Happy St. Paddy’s day and a hangover free weekend and an even better
week to come, it’s almost spring!
Warren Bevan
www.preciousmetalstockreview.com
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