Tuesday August 27, 2013 11:14
It was a pretty quiet week all-in-all with many market participants on holiday as the summer is soon coming to an end. The S&P 500 broke its small head and shoulders pattern Thursday and we are in for several more weeks of this corrective action.
I’m not so sure we will see a large downtrend emerge, rather, so far it looks like just a healthy pullback before another burst higher for the last couple months of the year which would top the year off well.
Gold and silver had a great week and are now at resistance levels I’ve talked about here the past couple weeks as they setup for higher prices which came in a hurry this week.
Now we have to expect a little rest and see how it goes, but it’s more likely they continue higher than drop.
Gold and silver lows are almost certainly in now and they are looking great for higher prices in the months and years ahead.
Of interesting note is that John Paulson cut his gold stake in half recently. While he’s been beat up pretty bad here and I’m sure his investors are none too thrilled, a man with his investing prowess should have been upping his stake in my view.
Now we’re looking for resistance levels so let’s see what the charts are telling us.
A great week for gold, which saw it rise 4.72% for the week. The move began overnight for us in North America leaving us out of the trade but gold did come back to test the breakout level and gave us a chance to get in on the trade.
We’re right at the horizontal resistance and the 100 day moving average here now so I’d expect at least three days below the $1,375 area before we can make the push to the next major resistance level at $1,450.
While I didn’t nail the exact low in gold, I was pretty early in identifying it and my views on that became more and more solid as we setup bottoming patterns.
I’ve said that perhaps trading may not be the best, up until this past week, but buying physical gold for a long-term time horizon looked to be a good idea. I hear from quite a few of you who have been accumulating physical gold and silver and are so far quite happy. Congrats and thank you for your kind words.
Unless you’re trading very short timeframes I’d remain long gold.By Warren Bevan