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Silver Still Leading Gold

We saw a marked change in market action and leading stocks this past week.

After a very slow summer of false moves and chop this past week wasmuch different.

Leading stocks and indexes are acting much better and moves areworking.

I'm still playing with small position sizes and using some options to limit risk and we did get lucky with a nice 50% gainer and a couple that were morethan doubles in short order.

I'm still not ready to buy heavy into stocks but there are some really nicesetups which may deserve a medium weighting in the week ahead.

Real strength usually doesn't come until the fall but we are getting somenice moves right now, even if they may only be shorter term trades.

I don't discriminate against gains regardless of if they come quick or ifthey take some time.

As for the precious metals, silver just could not get off the bottom and I warned subscribers of this all week long as gold was looking much better.

Sure enough, Friday, gold cracked.

I noted for subscribers Thursday night that a couple stocks, who do tendto lead, were showing weakness and that was a warning sign and that playedout right on schedule.

Gold lost 0.39% for the week and was looking very constructive but silverstill being so weak had me thinking gold would fall and that's what occurred.

We rarely see one move without the other and as I've said in this letterthe past couple weeks, silver had taken the leading role.

Gold should now head back to the 200 day moving average at $1,290and then we will see if it breaks or holds.

Golds last move was on news and I talked about that in this letter and said that moves on news tend to not last long and that is how it played out.

Gold was very weak Friday before more news out of the Ukraine came out and gold still couldn't really get going so expect much more weakness shortly.

Silver lost 1.83% for the week after just sitting in it's small bear flag andnot showing any strength at all.

While I did tell subscribers that gold looked good, I warned that withsilver still looking very weak that there wasn't much point in trying gold on abreakout, which never came in the end anyhow.

Silver does have some good support here at $19.50, then $19.25, then $19.

After support at $19 breaks I see $18.50 as support.

I still think my call from long ago that silver is heading back to $15before we can really consider a meaningful bottom to be in is still well in play.

That call for $15 was using monthly charts and moves on monthly charts take time.

Platinum fell 1.22% for the week and is now breaking badly.

It follows gold and silver and that's all there is to it until it's behaviourchanges.

Next stop, and support level is the 200 day moving average and chart support at the $1,440 to $1,430 range.

Strong volume on the break Friday in gold, silver and platinum is tellingus the move lower is for real.

Palladium gained 3.92% for the week in a major change from the rest ofthe precious metals.

We've seen clearly how well palladium has held up in the face of the otherprecious metals being so weak. Imagine if the others were holding up or evenslightly trending higher how well palladium would be doing.

Friday saw a great breakout with nicely increasing volume and I'd love tosay all clear now as we move strongly into new all-time highs but I can't.

Even with palladium holding up so well we do have to be realistic andexpect a failed breakout to come shortly.

I'd be very careful and have stops at cost or $890 if you are in this trade.

I'm not saying palladium will drop with the other metals, rather that it ismore likely to just come back and stay within the $870 to $890 range for awhile longer.

But if gold and silver really kick things into high gear on the downsidepalladium will probably see even more weakness down to the $840 area.

Unfortunately, things are not all roses and chocolate in the preciousmetals world this week.

There are places to make money though. There is almost always a strongmarket somewhere so as the old adage goes, follow the money.

Enjoy this great summer weekend.

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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