Monday, July 16, 2007

Silver At The Crossroads

Thursday's spin----

Stocks Hit Records on Retail News
AP - Stocks surged Thursday, carrying the Dow Jones industrials into record territory as investors gleaned some positive consumer spending trends from retailers' generally sluggish June sales reports.

Friday's reality----

Retail Sales Take Steep Fall
AP - Consumers put away their wallets in June, sending retail sales crashing by the sharpest amount in nearly two years. The Commerce Department reported Friday that retail sales fell by 0.9 percent last month, the biggest drop since August 2005.

If it wasn't so sad it would be amusing. Corporate profit reporting for the second quarter begins in earnest this week. It will be even more amusing to to witness the spin cycles as they polish the turds. The weatherman is in for a pasting...

The Dollar is under pressure and Oil is trading over $74 this morning as I type this. Gold and Silver remain stuck in neutral. How much longer can these two "lights of truth" be kept in the dark by dem Rat Bastids? We may not have long to wait.

Gold enters day three above 664 and looks eager to stretch it's legs a bit as it catches the scent of the June high at 672. The cartel is fighting to hold Gold here near the 50% Fib retracement off the April highs near 700. 672 not only is the June high but the 38% Fib line of the April high. The cartel will attempt to cap Gold their next should we break free of this 666 - 668 area. If we can beat them there, we will have to face them in earnest at the downtrend line around 682. The cartel's Family Jewels will be on the line there. Downside risk here appears limited and should find solid support around 660.

Silver finds itself at crossroads this week as its 50 and 200 day moving averages converge with the neckline of a Head & Shoulders Top. Silver has risen from below this neckline in an attempt to negate it. Shorts will be emboldened here, but should be very wary of the convergence of the 50 and 200 day moving averages. Historically, the convergence of these two averages have been excellent buying opportunities. Not only in Silver, but in Gold as well. Silver's 50 day moving average last slipped below its 200 day in August of 2005. We are below it now. If history is any measure we will not be below it long. I have documented the low in the Summer of 2005 several times here. We all know what followed that low. And we're all anxious for the same to follow this Summer's low. A strong move thru 13.25 and the neckline could possibly be the catalyst we need for just such a move. Protection to the downside in Silver begins at 12.92 and continues at 12.78.

I suspect there will be one more brief dip in Gold and Silver before we Steamroll dem Rat Bastids and there Vermin friends across the globe. When and if that happens is impossible to tell given the tactics of our enemy. But is important to steel yourself against it, and to spit in the faces of these thieves if they try and steal your positions. Their days are numbered.

For an excellent and insightful read on the seasonality of this Gold Bull Market please read Adam Hamilton's Gold Bull Seasonals 2:

Thus gold’s bull-market seasonals greatly increase the probability for success for long positions in the second half of the year starting in late July. From August to early February, traders have the opportunity to ride two of the three big seasonal rallies including the biggest by far that starts in October. While it remains to be seen if gold will reasonably mirror its established pattern for the rest of this year, it sure has been mirroring it fairly well since last October. I sure wouldn’t bet against these seasonal tendencies today.

Adam's research and charts of Gold are second to none. I read his work at Zeal Intelligence weekly . His archives of essays will keep you busy for hours. Please stop by an visit his website.

Another Must read is The Birth/Death Ratio by the respected John Mauldin This piece will open your many of his essays often do.

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