Submitted by Morris Hubbartt:

Note how oversold gold is, compared to the euro.  A strong buy signal for gold is now in play, and the last time one like this occurred, gold doubled in price, over the next three years.    I don’t want to be predicting pies in the sky, but any rational investor can see that buying some gold here against the euro is a reasonable course of action!

Silver is one of my favorite assets to purchase on weakness, for long term capital gains. Today’s prices offer a great opportunity to do that, but remember that silver is far more volatile than gold.  Note how drastically oversold RSI and the slow Stokes are.  These powerful indicators suggest that investors who endure the pain caused by the FOMC minutes, could soon be greatly rewarded!


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Dow Versus Gold Chart

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  • The resolution that I was looking for in debt negotiations has taken place, and that has lifted stock prices.  I continue to expect the Dow to approach 14,000 in the next several weeks, and top out there.
  • Note the RSI indicator on this chart.  It suggests potential outperformance by the Dow against gold, but only over the next few weeks.

 

  • This last-gasp move higher by the Dow should set the stage for a multi-month rally in gold.

Gold Versus Euro Chart

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  •  This is a weekly ratio chart.  Note how oversold gold is, compared to the euro.  A strong buy signal for gold is now in play, and the last time one like this occurred, gold doubled in price, over the next three years.
  •  I don’t want to be predicting pies in the sky, but any rational investor can see that buying some gold here against the euro is a reasonable course of action!

 

GDX Bull Transition Chart

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  • A week ago I highlighted transitional volume on this GDX chart and discussed the possibility of an upside breakout.  GDX delivered that breakout, and roared higher.

 

  • Unfortunately, the breakout was short-lived.  The release of the FOMC minutes did some technical damage to this chart.  The red sell volume bar that occurred yesterday is a concern. Still, it’s too early to guess about whether it is the beginning of a new leg down, or capitulation volume.

 

  • What is most encouraging about the senior gold stocks sector right now, is the positive divergences that are in play.  Both the slow Stokes and the Ultimate Oscillator are trending higher, and until the Fed bombed the market, GDX was also beginning to rise nicely.

 

GDXJ Money Flows Chart

 

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  • Last week I highlighted a Doji candlestick pattern, which indicated that a bottom for gold stocks was close at hand. That bottom occurred, and is holding.  There are two areas of resistance on the chart that need to be taken out, before junior gold stocks are likely to really move higher.

 

  • The first one that is directly overhead is the neckline off of the double bottom.  It is located at $21. There is also minor resistance just above there, at $21.50.

 

  • What I expect from here is stabilization over the next few sessions, and then a strong move through that resistance, and up to $24.50.

 

  • I have highlighted strong money flows into the sector, at the bottom of the chart.  This action is very similar to leg two of the double bottom last summer, when GDXJ rallied 45%.  Stay long and strong!

 

Silver No Pain No Gain Chart

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  • Silver is one of my favorite assets to purchase on weakness, for long term capital gains. Today’s prices offer a great opportunity to do that, but remember that silver is far more volatile than gold.

 

  • Note how drastically oversold RSI and the slow Stokes are.  These powerful indicators suggest that investors who endure the pain caused by the FOMC minutes, could soon be greatly rewarded!

 

Silver And Gold Swap Chart

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  •  By accumulating silver in the light green sections on this ratio chart, and exchanging it for gold in the reddish areas, your performance could be greatly enhanced.

 

  •  Note the blue horizontal line that I’ve used to highlight the key .020 price area.  If silver can rise over that line, it could mark the beginning of a long period of outperformance against gold.

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  1. David Morgan is at it again.  He is making price predictions for 2013.  He says he doesn’t expect a banner year for silver, however, he expects silver to touch 49 dollars per oz several times in 2013.  This means he expects tremendous volitility.
    David called the 2011 high in silver of around 49 dollar per oz and he mentions this.  He does not mention that he also called for silver to reach 60 dollars per oz for the Feb 2012 time frame.  He was totally wrong.  Silver did reach 37.50 but was demolished by the so called leap day massacre as everyone remembers so well.  Now, Morgan was not the only analyst that was totally wrong.  Bob Chapman, bless his soul made the same prediction.  What point am I making?  David Morgan is guessing about where silver is going.  He should have learned his lesson as his newsletter subscriber ship tumbled severely after that bad call last year.  David knows a lot about silver but he is not a prophet.
    His 2013 predictions might happen, but Davids credibility was damaged by making those crazy 2012 predictions.  Shame on him.

  2. It’s funny how the bigs in the silver world are predicting this and that.  Watch a few MMA cage fights and try to predict who’ll win.  That call is hard until someone finally taps out.  This metal war is much like the MMA.  Powerful fighters waging serious battles.  No one can call the winner. 
    Maybe Goldilocks has a good guess.  I’d trust her so long as the the curtains and carpet match.
    On another topic, if you take the buying power of the US Dollar since the creation of the Fed, close to celebrating its 100th anniversary, the same year as Nixon was born (cue gacking noises) that purchasing power is 3% of the 1913 dollar.
    Silver’s increased 30 fold. The dollar’s dropped 30 fold.
    In an offhand way, an American .999 eagle silver dollar would today buy the same basket of goods as a silver dollar in 1913. Therefore silver has done nothing but maintain its value against inflation over the last century and the degradation of the paper dollar. That’s not to say silver will double or triple in value overnight. Maybe we’ll get lucky and enough people will realize that silver is the bomb and go nuts on buying it.

  3. When I see a price prediction I like to try and think about what their motives might be.  Do they sell a newsletter?  Do they sell metals?  Are they trying to sell a precious metals fund?  If the answer is yes than I must remain skeptical.  Jim Sinclair passes my test so I place a lot of credibility on his opinion.  It also raises my suspicion when an analyst tells us with a straight face that cash is trash.  But, they are perfectly willingly to accept fiat currency in return for PM.   2013 is going to be a hell of a volatile year for the metals in my opinion.  Its going to take courage to stick with this.

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