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Precious Metals Stock Review

By Warren Bevan      Printer Friendly Version
Aug 4 2008 1:03PM

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Like the splinters in my finger, the junior and exploration market has been painful as of late. Almost painful enough for some many to lose faith and sell. I am told the pain is just too much and asked why it hurts so much. There are many reasons, naked short selling being the most aggravating but the coming wave can only be slowed not stopped.

I try constantly to explain that now is the time to put your emotions aside and back up the truck. The simple truth remains. Many junior and exploration companies have much larger resources and are even producing or near producing in some cases. Yet their share prices are lower than when gold and silver were much lower. If you believe we have higher metal prices coming then it is the easiest and most profitable investment you will ever come across.

But the sad truth remains, the real interest will come at a time that the party is nearing the end and so few will have actually made money in this market as they watch their shares drop and pray it’s not over.

Metals review

Gold ended up doing what I had laid out last week flashing a sell signal by violating support but so far it seems that was just a bear trap setup. The price has moved up above the lower Fibonacci line and is hovering just below the recently broken short term up trend line.

As I outlined in my Thursday update, this time of year has, bull to date, been the best time to enter the gold market. My update was timed with the bear traps formation and I believe that is the low for the next year and honestly I think we are on our way to well above $1,000 and will never see these levels again. Ever.

The moving averages are postured bullishly as the 50 day just crossed the 100 day which is flat to slightly down.

The RSI is above the short term downtrend line drawn in but needs to get above the 50 mark to signal more strength. MACD is moving down and bearish triggering sell signals which will draw in some bears and trigger the black box trading programs employed by so many hedge funds. Slow STO appears to be turning up and about to cross over bullishly. Its level right now in the past has been where some truly great gains have begun from.

Monday I expect a strong move up, and then we will be off.  Let’s hope.

Silver must break its short term downtrend line very soon or risk running down to $17. There are major Fibonacci levels that lie at $18.06, $18.89 and $19.32. They have proved difficult to surpass recently and will be difficult going forward.

The moving averages look good with the 50 day crossing the 100 day which is slightly down. RSI is hovering below 50 and pointing down. MACD is starting to head back up nicely. Slow STO made a bullish crossover from very low levels where prolonged and substantial gains have begun from in the past.

Platinum continued its run down to where it began its huge and swift run up. The reports of a shrinking supply deficit and slowing catalytic demand for autos continues to hurt the precious metal. But the facts are larger and growing economies continue to produce growing automotive demand.

The two horizontal grey lines are areas of support. The first one didn’t hold but did cause a pause. The second one is much stronger and I don’t expect any runs much below it for any length of time. It may be soon a safe time to re-enter this market on the long side. Amazing how quickly it ran up and then came down just as violently. Volatility remains a part of precious metals investing. But the trend is clearly up and fundamental reasons continue to be bullish.

The moving averages have all rolled over bearishly. RSI below 30 signals an oversold condition, but that can persist. MACD is strongly bearish while the Slow STO actually made a bounce but it must take out the downtrend for any significant move to be signalled. Tough time in platinum right now but on the longer term charts there is strong support just below the price.

Palladium ook another tumble this week but is now at a strong support region. The short term downtrend is in place and needs to be taken out soon. The moving averages have rolled over bearishly. RSI is very oversold and must take out the downtrend line. MACD is flattening out and the Slow STO looks to be turning up from a very low level. As platinum goes, palladium goes too.

As I wrap this up tonight before heading out to the local summer festival for the headline concert I refresh my memory with this video of tonight’s band. I expect to see a bit more grey on their heads tonight, but hey I love the classics and they are about as classic as you can get! Have a great weekend and long weekend if you’re in BC, Canada, Eh!

Warren Bevan

 

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