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Wednesday
May262010

Gold, Silver and Mining Companies Shaping Up

Gold Chart 26 May 2010

We will kick off with a review of the charts for gold, silver and the gold bugs index, the HUI, in an attempt to see where we are now and just where we might go from here. However, to put the charts into context we need to take into consideration the surrounding political, economic and investment landscape. These are volatile times with the financial markets in turmoil as what were perceived to be sound and secure governments now toil under the strain of their own excesses. The borrow and spend philosophies are coming back like a bad penny, to haunt not just those who caused this mess, but also for the rest of us, who are expected to clear it up. The follies vary from mis-management to corruption, resulting in people taking to the street to protest the latest craze of austerity and belt tightening. Society, in general, has high expectations in terms of their standard of living and the mere thought of it heading lower is not acceptable to them. Take state pensions, for example, millions of people are expecting it to be there for them when they retire, however, the pensions cupboard is empty and therefore the concept of sitting back as the cheques roll in is well and truly dead in the water. We need to start protecting ourselves now, don't wait, make it the number one priority to put your independence at the top of your 'To Do' list.




Taking a quick look at the above gold chart we can see that the sell off in gold prices of $60.00/oz has now steadied and gold appears to be set to continue its rally. Note both the 50 day and the 200 day moving averages are climbing gently in support. The RSI has turned north and the STO has just made a crossover, which is usually a positive sign.


Next we have the HUI which is making steady progress despite the volatility and is now perched just above the 200dma. Looking at the technical indicators we can see the RSI has turned north just above the '30' level and that the STO has also turned up having dipped below '20', again all positive for the gold and silver mining producers.

HUI Chart 26 May 2010.jpg

Turning to silver we can see that the pull back looks to have run its course so we are looking for silver prices to head to higher ground. The technical indicators are now out of the overbought zone thus reducing the selling pressure on silver and allowing it the space to resume its advance.

Silver chart 26 May 2010

In conclusion we are of the opinion that the precious metals should once again be bought, gold, silver and their associated stocks. As a word of warning though, its still not clear to us whether or not the stocks will go down in the face of a broader market sell off should it occur. So go gently and make your acquisitions on a 'layered' basis. Finally, we are considering the purchase of a number of options trades which should be profitable during the next move up, which we believe to be imminent.


Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

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Reader Comments (12)

i thought i will be stopped out on another short i added at 18.27 when i woke up at 5:00 AM today. but i didn't because i am going with the downtrend. yet i still don't discard some upside on thursday's london session, if all goes according to the plan i will be adding 2 more shorts at 17.00 tomorrow (yeah, i think tomorrow we are going to do it big), right below 17.40 (the support). and one more at 16.50 or 16.40. in 3 weeks i will be exiting at 13.50 or something like that

May 26, 2010 | Unregistered CommenterDi

We wish you well with it Di, but as you know we are going the other way and hope to acquire some Call Options shortly.

May 26, 2010 | Unregistered CommenterGold Prices

thanks. well i passed the second test on london session, my stop at 18.56 wasn't hit. i wish you luck too. right now it is 18.19 lets see who wins.

May 27, 2010 | Unregistered CommenterDi

Di,

According to stockcharts the intraday high was $18.56, so did you survive or were you stopped out?

We placed orders to buy some slw Call Options but did not get them filled as we bid too low in an attempt to get a bargain and slw put on over 4% today, so its back to the drawing board for us.

May 27, 2010 | Unregistered CommenterGold Prices

Bob: Enjoyed reading your work for the first time. What is STO? Where do I find on the net?

May 27, 2010 | Unregistered CommenterR

Hi R,

We use Stockcharts see the links below:

Developed by George C. Lane in the late 1950s, the Stochastic Oscillator is a momentum indicator that shows the location of the current close relative to the high/low range over a set number of periods. Closing levels that are consistently near the top of the range indicate accumulation (buying pressure) and those near the bottom of the range indicate distribution (selling pressure).

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:stochastic_oscillator

http://stockcharts.com/

Hope this helps, Stockcharts is a good site for learning about charting, good luck with it.

Best wishes,

Bob K

May 27, 2010 | Unregistered CommenterGold Prices

Di,

Its 10:41 in London and silver is standing at $18.58, so it looks like your stop at $18.56 will be taken out. Please be careful with these shorts, it could cost you dearly.

sincerely yours,

Bob K

May 28, 2010 | Unregistered CommenterGold Prices

I didn't survive, i was killed. Obviously i was overtrading and so i went to take a rest. Now, i put another short at 18.40. Stop at 18.70. Tomorrow is going to be my day. Wish me luck.

June 1, 2010 | Unregistered CommenterDi

Don't worry about me when i lose, i lower the position size and recover in a few days.

June 1, 2010 | Unregistered CommenterDi

Here we are. Silver at 17.95, monthly candle for may is bearish. Weekly trend weakening. Daily trend down. Yet still market isn't ready for a big plunge, but i expect it to develop in about 10 trading days. A weekly trend to break 15.00 support , to end between 13 and 11.

June 3, 2010 | Unregistered CommenterDi

I think that the PM stocks will go down with the market should a major correction occur, just like in 2008/early 2009. I know that some people suggest that the only stocks that should go up are the Gold/Silver stocks as Gold should continue to rise with economic uncertainty. One factor which may be the key is that people will get margin calls and will be force to sell their PM stocks.

June 15, 2010 | Unregistered CommenterGSR

How do you get the price of SLGLF. My quotes show in the neighborhood of .003. I like your price better as I hold a good sized portion. Thanks

June 17, 2010 | Unregistered Commentermerle johnson

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