Are Gold And Silver Ready To Rumble?

My Comments: I’ve never been much of a gold bug. I recognize it’s value as a trading opportunity and the need for a large portfolio to include what are thought of as non-traditional investments. But since it tends to increase in value during times of high inflation and general woe and gloom, and being a person whose natural inclination is optimism, it tends to disappear from my personal radar.

Plus there are some in the blathering media who seem to glorify the act of owning gold, as though having some was a path to rightousness.

A recent conversation with someone caused me to see this as it crossed my desk and I thought you should be aware there is a strong sentiment that you can make serious money with gold over the next couple of years.

James P. Montes, Equity Management Academy / Mar. 2, 2014

At first glance, silver appears to be moving in step with gold. Gold’s up 11% year to date and up over 7% month to date, while silver’s up 10% for the year and gaining 11% for the month.

“The silver market is showing quiet strength and major support has been defined in the $19 to $20 levels for May Silver.” Commented Karl Schott, a silver specialist with the Equity Management Academy. The fundamentals have not changed and in fact have gotten stronger.

“Silver is finding its own support independent of gold due to strong buying from China and India and an increase in industrial production of electronics,” including smart phones, said Eric Sprott, CEO Sprott Asset Management in a recent phone interview.

Now let’s deal with some reality in the real physical gold market in 2013. As we discussed in 2013, the supply/demand data suggests to us that physical demand was overwhelmingly greater than mine supply.

Here is a chart showing the World Gold Supply

It is obvious to us that precious metals markets were manipulated in 2013. It is also obvious that demand far exceeded annual mine supply. Now let’s analyze what should happen, going forward, with these revelations. If gold prices are back on their long-term trend, ex-manipulation, a linear progression of the gold chart from 2000 to 2014 would suggest a price of $2,100 now (62% higher than the current $1,300 level) and $2,400 by year-end (Figure 2).

Trend showing price of goldThe gold and silver markets have met and fulfilled all expectations for an upswing into the late February time frame as documented and published on Seeking Alpha.

The silver market needed a rally above 20.97 to turn The VC Price Momentum Indicator up and complete the expected initial target zone level of 22.10 documented in last weeks’ report and culminate this initial advance. “The gold and silver markets have given a very powerful confirmation of the 1 to 3 month outlook for an initial bottom confirmed late December into late February. Major resistance shows up in the 1336 to 1347 area for the April futures contract. The silver major resistance shows up in the 22.10 to 22.37 levels basis the March contract.”

Echoing my comments, “The market will provide us with another opportunity to get long again for those that missed the initial breakout. A close below 1322 would confirm a correction into the 1311 to 1297 areas is possible where it would offer traders/investors with another ideal buying opportunity to get long. Buy corrections and add to your long-term positions in silver as we approach the 21.44 to 21.02 levels. A close below 21.71 would confirm a possible test to the mid to low 21 area for March silver futures.”

Our Live trading room subscribers exited all long positions short – term to intermediate above 22.10 for May silver. They were well informed and prepared days ahead of silver moving towards these expected levels of resistance and realized some very substantial profits. The weekly high was 22.18.

( If all of this interests you, then here is the link to the original article where you can get the full monty about both SILVER and GOLD.– TK )