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Gold & Silver; Out of Gas

6 years after the disastrous economic depressions, we are now in the midst of a steady recovery. Various government and economists are making bold claims that the ship is far steadier and the future looks a lot rosier. Critics would say that blowing on their own trumpet is an understatement as we have seen in many economic situations that self-fulfilling prophecy do happens. Despite that, many still at odds and majority of the pessimists are arguing that the good old times are coming back.

It is ironic that we are seeing many headline statement of a growing economy but the lack of real income growth could stifle the next stage of recovery. How detrimental will that be; only time will tell. With the prospect of rising interest rate and the lack of growth in real income, one could already argue that the economic recovery could soon stall to a halt. Look at how central banks pulling all the stops in money printing which help stimulate the current recovery; add that with rising interest rate (which could add significant pressure on lenders) followed by lack of prosperity among the working family. With money so tight, savings could balloon and politician and their crooked economists could push out policy to divert any rise in interest rate.

More likely than ever, an economic stagnation and higher prices is coming.

Gold Technical Outlook
Weekly Chart

Déjà vu as gold continue to yo-yo its way around the 1290 and 1316 area for most of the week. Lacklustre attempt from the seller and buyers have left many investors drawn away. This is followed by the lack of any real volume in pursuing any lower or higher prices put the current trade at a deadlock. Support now stands at $ 1290 and a break below will spell more trouble. The ceiling remains at $ 1323 area and only a break above that price with follow up buying will allow the yellow metal to fly higher.
The setup could go both ways, with some analysts calling for a bullish 3rd wave higher. A buy order at $ 1323 is sufficient to test the mettle of this bull, aiming for $ 1345.

Resistance: $ 1323, $ 1345, $ 1363 Support: $ 1278, $ 1258, $ 1240

Traders Notes: A break below $ 1291 will give way to more selling. Only if gold breaks pass $ 1323 then allow another attempt at $ 1345.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6- 12 months)
Bearish $ 1258 Bullish $ 1331 Target $ 1550

Silver Technical Outlook
Weekly Chart

We stand true with our outlook last week and the white metal continues lower to test the downtrend line. A break below the line could spell further trouble as the lower half of the Bollinger band could fulfil lower prices at the $ 18.86 region. We see no real argument to change our short term view that silver prices remain depressed.

The prospect of any recovery in the silver prices remains unlikely as we envisaged a period of dull trading (see previous triangle pattern) with upside breaks that created lower high. The real concern now is if the bear will retest previous low and attempt to further short the market? Our view is to stand aside as prices could continue lower as the weekly Stochastic is showing no slowdown as of yet to bring the white metal lower. Prices could potentially retest the lower Bollinger band before it breaks out higher to $ 20.00.

Resistance: $ 21.05, $ 20.73, $ 20.18 Support: $ 19.51, $ 19.23, $ 18.65

Traders Notes: Sell at market open with a stop loss of $ 21.45 and target of $ 19.55. Italics are an active trade, silver sold at $ 20.69 at the open (28th July). Stop loss moved from $ 21.45 to $ 20.75 with the same target. Please note we have decided to take profit at the open (basis of 11th August) at $ 19.88 locking in a profit of 81 points. Silver close the week at $ $ 19.51 which hit the target we set at $ 19.55. No trade for now.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6 - 12 months)
Flat Flat Bullish - a potential bull run?

This article is written according to the author’s views and by no means indicates investment purpose. Opinions expressed at Sharps Pixley Ltd are those of the individual authors and do not necessarily represent the opinion of Sharps Pixley Ltd or its management, shareholders, affiliates and subsidiaries. Sharps Pixley Ltd has not verified the accuracy of any claim or statement made by any independent writer and is reserved as their own and Sharps Pixley Ltd is not accountable for their input. Any opinions, research, analysis, prices or other information contained on this website, by Sharps Pixley Ltd, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. Sharps Pixley Ltd will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The data contained on this website is not necessarily real-time or accurate. 

18 Aug 2014

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