Honest Money Gold and Silver Report: Market Wrap
Week Ending 11/23/07
Gold had a very good week, advancing $37.70 to $824.70 for a gain of 4.79%.
The weekly chart below shows RSI dropping back under the overbought zone, which has acted as a release of a bit of pressure.
MACD is still headed up strongly; however, the histograms are slowly receding.
The 65 ema still provides formidable support, as does the horizontal line at $730.40.
Last week's low of $773.40 broke its bottom trend line; however, it bounced up and closed above its first fib retracement level.
In last week's market wrap I mentioned and drew the square box seen in the chart below that represents the 50-60% retracement levels.
So far gold has kept above its first fib level of $773.11. It will be very bullish if gold holds this level.
A drop below the 50% area would herald in an intermediate term correction, while holding steady above the 38.2 fib level indicates a correction of a short term time frame.
Next up is a chart showing the relationship between gold and the U.S. dollar. They are almost a mirror image of one another.
If the dollar goes up, gold goes down. If gold goes up, the dollar goes down.
Silver was up .22 cents for the week, closing at $14.73 for a gain of 1.55%. Below is the daily chart of the silver ETF.
Price had fallen just below the middle Bollinger Band and has now closed just above. Will it continue higher to the upper ban, or back off to the lower band?
RSI bounced off the 50 level and is headed back up, and the histograms are receding. MACD remains with a negative cross.
Volume has steadily been declining.
The Hui had a big week gaining 17.84 points to close at 429.88 (+4.33%).
The weekly chart below shows RSI headed back up. Resistance turned support has held so far, but has not been severely tested.
Note the stochastic indicator has put in a negative cross over, which suggests further downside action may be coming.
Next up is the daily Hui chart. Price still remains below its trend line, but is closing in on it fast.
If it regains its trend line then the correction is of short term duration; if not then an intermediate term correction is likely - one that will test the box.
Below is the Hui/Gold ratio, which shows that gold has been out performing the gold stocks.
The higher the number the better the stocks are acting. The lower the number the better physical gold is acting.
Next is the monthly chart of the Xau Index going back to before the start of the gold bull market.
The price channel rises from the bottom left hand corner of the chart to the upper right hand corner - a bullish signature of no doubt.
The upper band is above 200, while the lower band is down around 120. The yellow highlighted area represents significant support.
Below is the daily chart of the Xau/Gold ratio. It shows that physical gold has been out performing the stocks. In late October stocks broke above the upper fork, but have since fallen back down.
As those familiar with this report know, I have stressed watching four "indicators" to flash warning signals that all's not well in the markets. These four indicators are:
- The Yen
- The Yen/Euro Cross
- The Ted Spread (difference between Libor and T-Bills)
- Permanent Open Market Operations by the Federal Reserve
Last week the Yen rallied setting off the first warning. Last week the Yen/Euro cross favored the yen over the euro - flashing another warning. Last week saw the TED spread widen to its largest degree yet - a third warning signal.
Only permanent open market operations by the Fed were not put into motion last week. Note that this is the most critical of all four indicators. Things are rough out there, so be careful. I strongly suggest you have the safety nets mentioned in these reports in place. Hopefully they will never need to be used.
The Yen was up and so the stock markets were down - thank you to the carry trades for that action. This is why the yen is important to watch, as it has fueled the present asset bubbles via the yen carry trades it is employed in.
Money is running from the stock market into the bond market - thus driving bond prices up. The path of least resistance appears to be up for prices and down for yields. If it continues, it will be positive for gold and bad for the dollar.
Physical gold is by far the safest asset to own (perhaps the only true asset), but the gold stocks do provide a greater return if they do not get caught in an overall stock market debacle.
I am of the opinion that a bear market has begun in equities - Caveat Emptor.
Congressman Ron Paul has been attracting more and more attention, as well he should, as he is the only statesman running for office - the rest are pure politicians I wouldn't buy a used car from. Check out Dr. Paul's message - the message of the Constitution - the message of Honest Money.
Moving on we note the French strikes are simmering down; however, the power of the people in the streets was very evident and powerful. It was a reminder for all politicians that We The People have the right to seek redress from any and all opposition, including the government.
The following news article shows the mood of the moment, only time will tell if it has any lasting affect.
Agnès Poirier, Thursday November 22, 2007, The Guardian: "The French are not amused. Trade unions and the government know they'd better speed up negotiations and find an agreement on the reform of special pension schemes or France will soon reach boiling point. On day nine of transport strikes, the streets are simmering with discontent. Yesterday's announcement that Jacques Chirac is being questioned about l'affaire of the Paris town hall's fictitious jobs has done little to soothe the highly volatile national temper."
Stop by our website and check out the complete market wrap, which covers most major markets, including stocks, bonds, currencies, commodities, and energy, with the emphasis on the precious metal markets, both physical and stocks.
There is a lot of information on gold and silver, not only from an investment point of view, but also from its position as being the mandated monetary system of our Constitution - Silver and Gold Coins as in Honest Weights and Measures.
On the main homepage are papers and articles by some of the best out there to be had. There are audio and videos on banking, the Constitution, and cutting edge news of serious interest. Many articles are archived, while others are linked.
Live time quotes on gold and silver and precious metal stocks are available, including charts for most world currencies and futures. Links to the World Bank, central banks, international monetary fund, the United Nations, and much more are offered.
There is also a live bulletin board where you can discuss the markets with people from around the world and many other resources too numerous to list.
Drop by and check it out. Good luck. Good trading. Good health. And that's a wrap.
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