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« Newmont takes out the Fronteer Gold Incorporation | Main | Gold and Silver are on the starting blocks »
Tuesday
Feb012011

Gold and silver prices look to have bottomed

Gold Chart 02 Feb 2011.JPG


We kick off with a quick look at the chart where we have included the 150dma as gold prices have bounced off the 150dma once again, as they did in August 2010. The technical indicators, RSI, MACD and the STO look to have bottomed and are now heading north with plenty of open water ahead of them. Also note that the US Dollar had a bad hair day today, slipping down to the '77' level before stabilizing, well at least for now.

Richard Russell of the Dow Theory Letters in an interview on King World News had this to say regarding the dollar:

Ironically, the media seldom attacks the dollar or fiat currencies. The media never mentions that fact that most fiat currencies have died within 40 years of their original creation.

Yes, it's a strange, strange world we live in. And I expect the year 2011 will be a year when a great many questions will be answered. Stock market, the dollar, gold, interest rates -- we await your verdicts.

In the meantime, I believe the surest bet is as follows -- the US dollar will continue to lose purchasing power. All else will stem from that phenomenon.”


The historical inverse relationship of the dollar down and gold up may be about to re-commence as the transparency of fiat currency becomes more widely understood by the masses. Debt continues to rocket, politicians continue to pacify, the printing presses rumble on endlessly through the night, social unrest shows its face as capital cities are marched on by the worlds poorer people. The state of affairs in Egypt is almost a mirror image of what took place in Iran some years ago when the people ousted the Shar and the existing government. We suspect that the Egyptians will settle for nothing less than the immediate removal from office of President Mubarak as their disenchantment gathers momentum. However, this issue appears to have been largely overlooked by the investment community as the manufacturing figures took centre stage and the DOW gained 148 points in todays trading session.

Moving on to the silver space, the volatility continues with silver prices putting on half a dollar today, boosting the share price of many of the producers as the table below shows:

silver producers table 02 feb 2011.JPG

This may indeed be the turning point as both gold and silver form a base from which to catapult to higher ground filling the coffers of the producers in the process. As this happens and balance sheets begin to glow we may well see the HUI make spectacular gains, however, it remains uncertain in our humble opinion that the stocks are ready to outperform the metals.


..............................................................

Over in the options trading pit we have just closed 3 more winning trades, so we now have 62 winners out of 64 trades, or a 96.87% success rate.


If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.


sk chart Jan 2011.JPG


The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and 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.


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. (Winners of the GoldDrivers Stock Picking Competition 2007)

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.

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Reader Comments (13)

Doesn't look like a bottom to me. It has to close above 1366 this week to confirm the bottom. I am short and not thinking to cover.

February 2, 2011 | Unregistered CommenterDi

Even if the bottom is in, there may be retest???

February 2, 2011 | Unregistered Commenterep

Check this out.

http://broadcast.ino.com/education/gold2111/?blog

No need to register; takes a few seconds to load.

I have no connection with the people behind the above web site.

February 2, 2011 | Unregistered Commenterep

ep,

Interesting, however the situation in Egypt is the only fundamental they come with for come up with that should be sending gold higher.

They say stay on the sidelines or go short, well this is still a bull market in our humble opinion so we would rather not be short. If we went back a few months we would be saying just wait until the charts look this and we will back up the truck........

So, are you going to short here?

February 2, 2011 | Unregistered CommenterGold Prices

Bob,

I refuse to short in a bull market. However, it is a good idea to write call options to protect the longs for insurance purpose. (I don't do this either.) I am waiting for a retest of the low of this year (regardless of whether it will go below 1300) or a green light to buy fresh/add more.

Have you checked out DGC.to? The officer was interviewed by Andy at BNN yesterday. Will back up the truck.

Want to buy SLW, MSV, FR etc. etc.

Have you bought anything recently? I mean stocks not options.

Today I learned about the Phillips Curve.

February 2, 2011 | Unregistered Commenterep

ep,

The last stock we bought was SLW back in August for $19.12 when we made a major sea change whereby we reduced our exposure on a number of both gold and silver stocks and put the cash into SLW and our options trading service suggestions.

We have also posted a number of articles on the wisdom of buying stocks compared to the physical metals and we remain a tad skeptical about the stocks ability to perform, although we are watching the situation with great interest.

February 2, 2011 | Unregistered CommenterGold Prices

PS Did you know that in the UK travel agents are still flying people out to Egypt for a holiday, granted they are in the Red Sea area, but its still Egypt.

February 2, 2011 | Unregistered CommenterGold Prices

Bob,

You wrote: "......we remain a tad skeptical about the stocks ability to perform......" I think I know what you meant. But if you hold a takeover candidate ...... Case in point - FRG.to. It was one of your core holdings, right? Maybe I should own some shares of ALL takeover targets??? Know of any?

I am looking into iron ore stocks to diversify. Interested?
http://seekingalpha.com/article/250163-stocks-to-benefit-from-an-iron-ore-bull-market?source=yahoo

Going to Egypt? I don't even want to go to Mexico.

February 3, 2011 | Unregistered Commenterep

We dont do iron ore, maybe we should but we find that what we have to get through is enough.

February 3, 2011 | Unregistered CommenterGold Prices

GP Team, what are your thoughts/opinion in regards to Excellon resources EXN.T

February 3, 2011 | Unregistered CommenterVincent

It is interesting to note the difference between the two indices.

http://preciousmetalscentral.com/subscriber/weeklycommentary.pdf

February 7, 2011 | Unregistered Commenterep

Bob,

It just dawned on me that the recent low around 1300 was already a retest!!!

Is the volume good enough today to announce that the bull run resumes? If not, I think spring will be the latest???

Thanks.

February 8, 2011 | Unregistered Commenterep

Team,

We are now at $1363 so gold prices are still moving in the right direction, the triple top is the one to beat and it wont be easy, but lets see how it pans out.

February 10, 2011 | Unregistered CommenterGold Prices

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