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Gold And Silver Channelized For Summer?

By Roger Wiegand      Printer Friendly Version
May 28 2008 4:03PM

“We’ve entered the summer doldrums trading period for our favorites. Historically, these futures become what I call ‘channelized,’ or stuck in a trading range without much excitement, or movement. Oil remains the wild card as a multitude of factors continue to roust oil prices. This morning oil is selling in a normal correction along with most other commodities. Do not be fooled. These are merely normal technicals expressing themselves on seasons and cycles. Primary trends for our dollar and crude oil remain intact. The dollar sinks and oil screams higher. Gold, silver, grains, energy and softs are firmly entrenched in long term bull markets. What’s happening today is the normal herky-jerky mushing around in cyclical trading channels. It is possible for futures traders to work these smaller moves. For the most part, we suggest a passive trading posture until this cycle ends.? – Traderrog

Note May-August prices last year. This is a typical cycle pattern: “Channelized.?

Gold at $850 is on a major support and resistance price. We touched it a few weeks ago and gold rebounded with a probable tiny rally back to $945 after current correction.

Traders should expect new, wider trading ranges as volume, open interest and fundamental factors continue to rally gold over the intermediate and longer terms. Momentum, (PMO) in lower box has based and returned to a new rally posture. Parabolic support as shown last summer, is a prelude to major rallies. Expect a similar pattern over the next 2-3 months.

Weekly gold on May 27 shows six years of “soft? June-July months. Note “J? months.

Weekly chart expands prices and shows normal spring correction after gold rally above $1,000.

Shares follow metal gold but not perfectly. Compare “J? months on XAU with cash gold.

While precious metals shares have been soft of late, we are holding above moving averages, current price is clustering near the highest support channel, and above two other support channels. PM prices as reflected in this chart are saying 175 is a line in the supporting sand and should hold-up barring any near term disasters in the major stock index markets obviating current support. The Dow and S&P 500 should be collapsing and selling but the PPT will not allow it. Consequently, our PM shares should follow along in a supported price trading channel until the major fall rally begins.

Weekly US Dollar Index cannot rally back through 74.00. Check the “J? months. With each Rally recovery in gold and the XAU related shares, our dollar sells. Expect more of the same.

Those “J? months for crude oil often rally and lead gold movements.

Crude oil covers 50% of the CRB. When oil moves up it often rallies the entire group. Large funds holding baskets of commodity positions move the group when they trade.

Silver corrected from peak over $20. Price of $18.15 is 50% Support-Resistance.

Since silver is a smaller market and prone to higher volatility. It overshoots during both buying and selling events. During the “J? months, silver sold proportionately more than gold but likes to follow gold’s trends like an old hunting dog. While it oversold last August, look where it landed in November.  Note the “J? month selling just like gold.


Spring Selling Cycle Delayed But Arrived

Watch for new rallies in most all commodities markets in late August. We should see channelized mini-rallies in gold and silver this summer. The bloom is off the rose and the off-schedule, nasty “Sell-in-May-And-Go-Away? arrived. We forecast a mild haircut in most stock shares including precious metals. The only action to prevent the selling is our stunningly time-worthy Plunge Protection Team who has failed twice in April to prop the shares. Will they win during the next May-June push-‘em-up event? Soon we’ll know. In our newsletter, Trader Tracks, we provide weekly guidance and extra e-mail alerts to report our best new trades and offer suggestions for trade management.

Whatever you do, make a concerted effort to stay with the trend and hang onto your core holdings of preferred shares, cash, and coins. Physical gold should never be sold or, traded but rather accumulated steadily on a monthly savings plan and squirreled away. Big traders are always ready to buy on the dips and normally never sell their gold and silver. You would be amazed how quickly your physical gold and silver will accumulate using this strategy. - Traderrog

Roger Wiegand
Editor Trader Tracks Newsletter
& The Rog Blog at



Roger Wiegand is Editor of Trader Tracks Newsletter for gold, silver and energy traders. Roger provides recommendations for short and longer term traditional stock shares and futures- commodities trading with specifics for individual trades.  See for more information.

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