Hi, welcome back. I hope that everyone had a great weekend.
Just a quick post here on Father's Day in the U.S. Back on Friday, I promised you some interesting charts and they are shown down below. As you know, a debate is raging as to whether this summer will bring the usual "doldrums", where the PMs languish and drift lower or whether current geopolitical and economic events will drive a "flight to safety" trade that will, instead, lift the PMS higher.
While the contrarian trade has benefited me greatly over the years, I'm not ready to rill with this one just yet. The pattern from the Fed's initiation of quantitative easing is quite clear and ongoing. It's roughly four months of rally followed by two months of consolidation. You can plainly see it in this weekly chart.
For those of you who think that QE is over and kaput, this chart says otherwise. If this trend ever breaks to the downside, then maybe you can begin to think that QE has ended. Until then, the chart suggests business as usual. To that end, I have a very hard time seeing gold get up and away before autumn. I won't mind being wrong but I'm pretty sure I'm right.
Now, here's where I think the next two weeks are quite significant for gold and for those who expect a summer rally instead of doldrums. Take a look at this daily chart. The trend from Turd's Bottom is still clearly in place but the next couple of weeks will leave gold with very little downside wiggle room. It's going to need to get rolling higher and break through 1550 once and for all or it risks a significant break of the trend and, if that happens, we can be quite confident that the winner of the debate will be doldrum over rally.
The weekly silver chart is very interesting, too. Note that for all the wailing and grinding of teeth, the trendline from the breakout last August is still firmly in place. However it, too, needs a good couple of weeks or it risks breaking its trend and falling into the doldrums. We'll see but I'm not giving up just yet. It could skip away, back toward 40 and give itself plenty of breathing room.
Like gold, crude remains in the uptrend that it started back in March of 2009. That's a long, flippin time so I suspect quite a bit of buying support should crude continue to trade lower and begin to approach $90.
The proverbial "fly-in-the-ointment" in the CRB. It does not look pretty at all and, if you're a deflationist, no more QE guy, this is the chart upon which you hang your hat. The lows from early May had better hold because, if they don't, the index looks like it could fall to 590 or even 550. Personally, I have a hard time seeing it as the grains are so fundamentally sound and crude has already come so far down but you never know. This must be watched closely.
OK, that's it for now. It's been a great week and I can't tell you how thrilled I am at the overwhelmingly positive reaction to the new site. As we go forward, I encourage everyone to visit and peruse the forums...this is where the real action is! If you are only stopping to read my blog posts, you are doing yourself a tremendous disservice. You can get to the forums by simply clicking on the "Forums" tab in the main navigation bar at the top of this page. There are forums for gold, silver, miners, crude, grains...just about everything we regularly discuss here. You have to sign up as a member to post and interact but everyone can read the pages and give "hat tips". No registration is required. Be sure to check them out!
Have a great night. See you bright and early Monday! TF