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Successful Selectivity

Monday November 19, 2012 10:09

Heading into this Thanksgiving week we should see much less volume coming in, especially Wednesday on with markets closed Thursday and only partially open for a few hours Friday.

Thanksgiving week is one of the quietest weeks of the year and a great time to use the quiet time for study, reflection and planning for the time to come.  And of course, gorge on Turkey and all the fixings with family and friends.

This year may be a little different though since it looks very much like we’ve put a low in Friday for markets and many leading stocks.

As for gold and silver, they had a decent week in terms of hanging onto life by a thread!

The mining indices are crashing along with many mining stocks and they are leading gold and silver by a few days so I’d have to come to the conclusion that gold and silver investors aren’t going to be so thankful this Thanksgiving week.

As much as I love gold and silver and think they are the go to investment, there are still many other trades to ply when investing and they pay much better than simply sitting in gold and silver.

Not that I’ve change my view. 

I still hold a very high percentage in physical gold and silver and don’t see that changing anytime soon but that percentage is shrinking fast as cash is built up trading other vehicles.

I wouldn't mind a couple hundred dollar off sale in gold in fact and I’d be adding to my positions on such a move if it is to come.

Let’s get into the precious metals charts and see whats going on.  I’ll show a few more charts than usual today, and write less.

I like to keep the fluff down and keep the meat level high for subscribers.

Metals review

Gold fell 0.99% this past week which isn’t bad considering how many others fared.  The little pattern it’s got, kind of a reverse head and shoulders, is often good for higher prices but this time I don't think so.

Volume is accelerating as gold falls and there are other major factors which are telling me gold is going to fall harder, soon.  I’ll get into them a bit later.

I’m looking at $1,680 as the first level of support, then $1,640.

I hope I’m wrong, but I really don’t think so.  If you’re looking for an early Christmas gift of physical gold or silver I’d hang off as they should be soon on sale.

Silver slipped 0.55% on the week and also has a kind of mini reverse head and shoulders pattern that is also looking set to fail.  Next stop, or support area is at $31 with both horizontal support as well as the 200 and 100 day moving averages there.

If $31 falls then there really isn’t much support until $29, but $28 is much better support.

We can fall fast as I’m sure you’re aware so be careful here if you’re long on a trading basis.

Platinum was pretty well flat having risen 0.39% this past week.

Platinum has a well defined bear flag pattern here which point to lower prices.  The measured move is some $200 lower but let’s focus on the first support level for today.

$1,500 should act as a bit of support, but to be honest it’s not looking good here for platinum unfortunately.

Palladium tried to break out of this bear flag on the upside and also above it’s 200 and 50 day moving averages but it failed.  That is always a sign of trouble to come.

Now palladium is trying to get below it’s 21 and 100 day moving averages and move to the lower end of it’s bear flag.  If the flag breaks then $570 will be seen in short order.

The high volume on the breakout failure certainly points to lower prices.

Let’s take a quick look at a few tip-offs we had and have that the precious metals are heading lower.

I’ve been really impressed with the pattern in most mining indices lately but seeing the large base fail was the sign that gold and silver are heading lower.

It's definitely tax loss selling season now in full force and I’d have to expect it to get worse before it gets better.

The smaller mining company ETF has the exact same pattern and almost guarantees gold and silver are going to follow it lower.

Yes it sucks.

I’ve been a long suffering mining share investor for longer than I care to remember some days but luckily it still remains a small portions of my total investments. 

I see it as gambling almost and let them ride for the most part but I definitely have thoughts of just getting out altogether with a few exceptions.

Even those few favorite companies of mine who are performing very well are signalling lower prices to come and have fallen very quickly as of late.

I wonder if we’ll ever have our day in the mining shares sometimes.

The SIL ETF had the best base of all the mining indices but nothing is ever certain and if you can’t accept reality and take a loss quickly, I guarantee it will get much larger.

These and the other mining ETF’s and indices falling hard and before gold and silver is no fun, but if you’re quick you can certainly take advantage of the coming gold and silver move lower.

Have a great weekend and week ahead and if I’m not in touch next weekend please have yourself a fantastic few days off with family and friends. 

They are what really make life so special.

Warren Bevan

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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