Been a little since I looked at Gold and Silver on my blog, about time I had another look.
Will start with gold, as usual I am focusing on long term charts here, each candle is 1 week and chart stretches back to 2010.
Since the all time high in 2011 (nominally at least) gold has faced a bear trend. A large bearish channel has formed which is shown in dashed lines. On that channel gold has recently failed to break up into top half of channel and price fallen again. For a great many traders who aren’t interested in fundamentals this is green light to short the shit out of gold for surely it will keep falling.
There is another way of looking at the chart though. I drew in pitchfork some time ago maked in bullish green trendlines, (and never published it on my blog until now as I didn’t want to give the kiss of death.) If this pitchfork continues to prove valid I expect a rally from here and another attempt at that dashed middle line of the bear channel, maybe successful this time.
Further evidence can be seen by the bullish divergence in momentum. Despite lower lows in price the momentum is fading. This would support idea that gold is ready to turn bullish.
In very similar fashion silver can also have a fork drawn in using almost the same points in time to form the pitchfork. At the moment silver appears to be finding support on a parallel line slightly up from the bottom of the pitchfork.
Also just like in gold the momentum appears to show a pronounced bullish divergence.
Like holding a balloon deeper underwater only makes it want to pop higher up to the surface I feel the same thing may happen to precious metals eventually. Unless another countries gold is stolen (like Ukraine and Libya, not to mention all the gold which has been leased then remelted and sent east) then the suppression cannot last indefinatley no matter how many paper games are played in the Comex.
Gold / Silver Ratio
To finish heres a look at the ratio between gold and silver. This particular chart is on a very long timescale going back to the early 1990’s, each candle is 1 month.
Here we can see that there seems to be a large channel forming the trading range. When the ratio is near the top that is when silver is very cheap compared to gold. At the moment the ratio is near the top of that channel with a ratio something like 1 ounce of gold is same as 74 ounce of silver!!! Considering natural scarcity of the metals in the earth the ratio should be a lot lower. I’m expecting that the next rally of precious metals will see both silver and gold rising drastically compared to bits of paper with masonic symbols on them, ie US dollars but silver will do so quicker and more violently causing this ratio to drop again. As marked on my chart bottom of this range would be somewhere around 27 or 28.