Gold and Silver: Positive Divergence
Positive Price Action
Finally today there appeared some positive divergence in the precious metals. Physical gold was down intraday to $602.61 (continuous contract) before rallying up to $615.97 down $6.68 for the day or about -1%.
Silver was down intraday to $10.67 (continuous contract) and rallied into POSITIVE territory closing up 0.06 cents to $10.93 or about .57%. Silver needs to break above its 50 dma at $11.48 before a sustained move up can take hold.
The XAU Gold & Silver Index was down to an intraday low of 130.40 before rallying up into POSITIVE territory closing at 135.66 up +2.22 for the day or about 1.66%.
The HUI mirrored the price action of the XAU hitting an intraday low of 303.04 and then rallying up +6.43 for the day closing at 316.13 (continuous contract) or about 2%.
The stocks outperformed the physical metal today. Physical was down about 1% yet the stocks were up about 2%. One day does not make a trend, but it MAY be the start of a short term bottoming process.
The Three Amigos
There were three (3) positive divergences today.
Silver was down intraday an reversed to close in positive territory
HUI was down intraday an reversed direction and closed in positive territory.
XAU was down intraday and reversed to close in positive territory.
Also contributing to the somewhat positive change in the precious metals market today was gold moving off its lows substantially higher, although still closing down for the day.
XAU Gold & Silver Index
Work To Be Done
There is still a lot of work to be done, even IF today was the start of a short term bottoming process. An intermediate term rally back up is still a ways off.
There is a fair amount of overhead resistance that needs to be worked off. Further downside price action is a definite possibility until the 50 dma's can be breached and move from resistance levels to support levels.
It appeared that the powers that be knocked gold down enough to cause the intraday low and then the shorts started to cover lifting gold off its lows. It's smells of intervention, but if you know how they play the game you can be on the right side of the trade.
Take what the market gives - don't fight it. However, all of the gold & silver vehicles are below their 50 dma, which must be bettered before any significant even short term rally is likely. Caveat Emptor.
Gold Continuous Contract
As is our manner of trading we bought two new positions today buying into the early weakness in the pm shares. Since last Thursday we have added three (3) new positions to our Gold Stock Portfolio.
We did not buy with the intention of an immediate rise up - but with the outlook that it was a good area to begin accumulating for the intermediate term move yet to come. There may first be more downside action, however, at this point the risk to reward appears to favor accumulating positions incrementally by buying into weakness.
The HUI needs to close back over its 50 dma at 321.48 for a more sustainable short term move. Likewise, the XAU needs to close above its 50 dma at 138.84. As this is being written gold is up $5.50 overseas. Perhaps tomorrow will bring some positive price action, then again - maybe not.
Coming Soon: A Request For An Audit of the U.S. Gold Reserves