Gold and Silver Trading Alert: Time for a Breather?

By: Przemyslaw Radomski | Wed, Apr 2, 2014
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Gold & Silver Trading Alert originally published on April 2nd, 2014 8:54 AM:


 

Briefly: In our opinion short speculative positions in gold (half), silver (half) and mining stocks (full) are justified from the risk/reward perspective.

Generally, everything that we wrote in our previous alerts remains up-to-date - precious metals are likely to move lower in the coming weeks - and the thing that we would like to emphasize today is that even if we see an upward correction, it will likely not be anything more than just that - a correction. Let's take a look at the mining stocks chart (charts courtesy of http://stockcharts.com).

Market Vectors Gold Miners Daily Chart

Miners bounced after moving to the 61.8% Fibonacci retracement level and no wonder - the preceding decline had been quite sharp. We could have written that they paused, as the move higher was rather small. Tuesday's small upswing took place on very low volume, which suggests that we are right before a more significant move - the question is what direction miners will take.

The preceding short-term move was down, so based on the above chart it's more likely that the next move will be to the downside as well. However, even if we see a move to $25 or so in the coming days, it will still look like a correction.

Why could we see a temporary move higher here?

US Dollar Index Daily Chart

US Dollar Index Weekly Chart

The USD Index is about to reach its cyclical turning point. It's a tough call to determine the short-term action based on it, as the most recent move was horizontal - the USD Index has been consolidating in the second half of March.

The move that preceded the consolidation had been up, so the next move is also likely to be up, especially that we are after a long-term, medium-term, and short-term breakouts. However, on a very short-term basis, we can't rule out a dip based on the turning point alone.

As mentioned previously, the situation in the precious metals market and in the USD Index is just as it was in the previous days. The USD index is likely to move higher (even if it declines a bit in the first part of April) as it already paused after a short-term breakout and when it does rally, we will be likely to see another slide in the precious metals sector.

To summarize:

Trading capital (our opinion): Short positions: gold (half), silver (half) and (full) mining stocks.

Stop-loss details:

- Gold: $1,342
- Silver: $20.85
- GDX ETF: $25.6

Long-term capital (our opinion): No positions
Insurance capital (our opinion): Full position

Thank you.

 


You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.

As always, we'll keep our subscribers updated should our views on the market change. We will continue to send them our Gold & Silver Trading Alerts on each trading day and we will send additional ones whenever appropriate. If you'd like to receive them, please subscribe today.

 


 

Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Gold & Silver Investment & Trading Website - SunshineProfits.com

Przemyslaw Radomski

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same.

His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem that may never be solved, PR has changed the world of trading and investing by enabling individuals to get easy access to the level of analysis that was once available only to institutions.

High quality and profitability of analytical tools available at www.SunshineProfits.com are results of time, thorough research and testing on PR's own capital.

PR believes that the greatest potential is currently in the precious metals sector. For that reason it is his main point of interest to help you make the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for professional excellence and ethics for the ultimate benefit of society.

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer: All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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