It’s March already and the financial markets are on fire, negatively that is!
The world indices are at lows not seen for over 15 years and the fear is that there’s still much more to come. Maybe we’ll see a bounce first but this bear market is far from over.
The worldwide economy keeps on deteriorating further and further and at a pace not seen in recent history. Where will this end we ask ourselves? Well, I don’t think anybody really knows because the current situation is unprecedented.
Interest rates are being lowered all over the globe in order to keep the financial system going. The big question is will it work? The problems in the system are so enormous that all the measures taken up until now have failed, so why keep on throwing good money after bad?
The possibility of deflation is now looming. Consumers are slowing spending at a rising pace, so prices have to be lowered in order to persuade the consumer to buy products again… this combined with the very low interest rates and the creation/printing of new money will without any doubt lead to hyperinflation further down the road, a perfect environment for precious metals.
Any decline in these metals over the coming months or years should be taken as a last opportunity to preserve some of your wealth and livelihood. Don’t be fooled by the powers that be. They want to preserve the current status quo as long as possible but just look at the writing on the wall. The times they are a-changin’ and they are changing fast. Make sure that you will not be left behind once the precious metals train starts its decade long journey.
All charts are courtesy of Stockcharts.com
Gold is within a blue rising channel and is putting in a strong performance. It even briefly breached the upper channel line, a showing of strength.
The recent drop was expected and the 50 d. MA did the job, holding firm and allowing Gold to use it as a springboard for another rise. If Gold manages to break above the 14 d. MA the way is clear for a new high. Should however the 14 d. MA prove to be too strong to overcome, a test of the lower channel line (currently at $900) can be expected.
For now, the chart favours of a rise to the top end of the channel, currently at $1,025.
Like Gold, Silver is showing strength. It reached the resistance at $14 which was the signal for a correction, and the RSI showed the way by getting extremely overbought.
This correction tested the 50 d. MA and currently Silver is challenging the 14 d. MA again. A break above it will clear the way for another run at the $14 resistance and most likely even a run all the way to the $16 level.
The conditions in the chart are perfect for this bullish scenario to unfold. RSI is bottoming at the 50- level, Buying power is triggering a new buy signal, and the MACD is curling up again in positive trend territory. So far so good!
Oil seems to have turned the corner. We see a nice saucer shape bottom, which in many cases is very reliable. It is also on the verge of breaking above the newly formed resistance line (magenta) which should clear the way for a new rise towards the mentioned resistance levels in the chart.
This upcoming month could trigger another important buy signal, a crossing of the 14 d. MA above the 50 d. MA, confirmation that the trend has changed from negative to positive.
The future for oil looks very good based on this daily chart and higher prices are expected.
Despite the poor economic conditions, the USD is showing strength against other currencies. It managed to get above the last high at 88, building on its current trend of higher lows and highs.
Normally a break of a prior high will lead to fresh buying. However, there’s a bearish pattern showing up in the chart in the form of a rising wedge. Such a pattern is often followed by a decline back towards the base of the pattern, which in this chart is at 78 (a break below the lower pattern line is needed for this expectation).
The USD can avoid this bearish outcome by breaking higher past the upper pattern line thus making the pattern invalid. For now the outlook remains positive, at least as long as the USD manages to stay above the 14 d. MA.
The Copper chart is improving and just like Oil we see a saucer shape bottom occurring in the chart. Copper recently took out the newly formed resistance level formed over the last couple months, indicating that positive pressure is building.
Both of the MA’s are starting to rise now in support of a further advance, and the other technical indicators are in a very good position to support such an advance.
All in all we should see higher prices this upcoming month.
Chief Technical Analyst
Resource Fortunes LLC
The above is an excerpt from the technical analysis portion of the monthly Resource Fortunes Premium Newsletter publication, available in its entirety for subscribers at http://www.resourcefortunes.com/. We currently offer a 30-day trial subscription for $2.99