|
It was another wild week as silver
roared and gold held its own as well. The US markets were even wilder as
they bucked and jumped after news of a US receiving a forecast downgraded
from a prominent ratings agency.
I don’t see this forecast revision
as anything but words as we all know the US’s actual credit rating
should have been downgraded already. The good news is markets are
shrugging this negative news off and look poised to run
higher. Unfortunately the metric they are measured in, the US dollar,
remains under severe pressure.
The good news is that gold and silver
also remain very strong, actually, incredibly strong. I’ve been
extremely bullish both gold and silver for nearly a decade now and still am,
but I’ve been expecting some kind of correction over the short-term
which just hasn’t come.
In silver I thought $40 would pose some
problem. Now we are ready to attack $50. There has to be a
correction at that level, doesn’t there?
Last year when silver broke the $18.50
shackles it became a different animal altogether and has gone straight up,
for all intents and purposes.
Back in the last bull market in the late
1970’s gold rose 24 fold. So far gold has only risen 6 fold in
this bull market. Both gold and silver have a long way to go.
If you’re new to this space it’s hard to buy right now after the
moves we’ve been having, but who’s to say they will stop?
I always like to buy on weakness but in
all honesty we just haven’t seen much lately. Perhaps you just
have to step in and buy regardless. After all the bull market will come
back and save you if prices do drop. That’s the beauty of bull
markets. Even if you don’t time your buy points perfectly, it will
roar back and go higher eventually.
Gold only rose 1.22% for the week but we
did see it surpass and more importantly close the week above $1,500.
It’s going to continue higher now until it
doesn’t. Generally round numbers pose resistance and $1,500 is a
major round number.
We should see some stalling out here but
then again the gold market is so small that it’s not hard to move it
around. If there are another few large investors or funds buying gold
here then there should be no stopping.
As for the GLD ETF the volume has been
strong and steady tapering off near the end of the week. There is no
sign of a top yet, but that can change in a day.
Silver rose 8.40% this past week making
two weeks in a row of gains above 8%. While this may seem excessive, one
of our swing trading positions rose over 8% two days in a row this past
week. We took our large profits at that point and subsequently the stock
fell over 10% a couple days later. There has yet to be a blow off top
like that in silver.
Chances are good that we will continue
this move to the $50 area now. I’d expect some profit taking and
a correction at $50, but I did at $40 as well and that little bump in the
road is hardly what I would call a correction.
Looking over at the SLV ETF the volume
was extremely heavy for the week with volume hitting almost 90 million shares
traded on both Wednesday and Thursday. This is the type of volume we see at
tops. Investors piled in before the long weekend which is hard to
fathom. I would have though selling would be the case.
Be very careful trading silver here, but
as I said above, if you buy some physical silver here don’t worry about
it. Even if we correct back to $40 the pain won’t last
long. The bull market will come back to save you.
Remember, the 1980 high adjusted to
inflation is about $140. We have much further to go.
A neat piece came out stating that
Russian’s central bank increased their gold holdings by 280 tonnes over the past two years. They are said to
continue buying at least 100 tonnes of gold a year
for the foreseeable future. The Russians are employing a much similar
strategy to China by buying up domestic supply rather than exporting it, or
importing the metals. This in a sense leaves no paper trail, and helps
not drive the prices too high too quickly.
They are not the only ones buying gold.
More and more central banks, large funds and you, the individual investor,
are coming into the gold and silver markets.
I know I say it nearly every week, but it’s been true. We are far
from a top. Just buy it!
Sprott put out an
excellent piece which analysis silver much the same way as I do. By using
simple supply and demand, as that’s all that really matters in my
opinion. They also talk about gold and silvers role as currencies as the
worlds paper, or fiat currencies, drop in value. Gold and silver ARE
money, the paper we use each day is only a currency and not a store of
wealth.
I’m going to cut it short this
week. Please note there will be no weekend letter next weekend as
I’ll be down in the Big Apple attending a trading seminar.
Please enjoy your long weekend and happy
Easter!
Until next week take care and thank you
for reading.
Warren Bevan
www.preciousmetalstockreview.com
If you found this information useful, or informative please pass it on
to your friends or family. You can subscribe by visiting www.preciousmetalstockreview.com
and adding your email to the newsletter signup found on the left of every
page.
Free Service
The free weekly newsletter “Precious Metal
Stock Review” does not purport to be a financial recommendation
service, nor do we profess to be a professional advisement service. Any
action taken as a result of reading “Precious Metal Stock Review”
is solely the responsibility of the reader. We recommend seeking
professional financial advice and performing your own due diligence before
acting on any information received through “Precious Metal Stock
Review”.
|
