triple hammerSubmitted by Morris Hubbartt:

If the implosion of Lehman could only get the dollar to 89.11, is there really any hope for the bulls now?  I don’t think there is.  I’ve labeled the dollar chart the “Triple Hammer Chart”, because I see 3 powerful chart patterns, and all of them are very bearish for the dollar.

Silver is setting itself up for a nice rally.  The set-up is very similar to last fall. At the bottom of the chart, note the bullish breakout of the Aroon indicator.    Silver is my favorite asset in the precious metals group, for adding fresh risk capital.  The Bollinger bands are tightening, and that is usually followed by an explosive move.

morris4Submitted by Morris Hubbartt:

US debt negations have been delayed again, by squabbling political parties.  We are told that in May everything will be fixed, but the debt continues to grow, and so does pressure on the US dollar.    
The US dollar is vulnerable to a “loss of confidence” event.  That could create a stunning decline, and a powerful move higher in the price of gold. A key level that I watch on the US dollar chart is the 80.50 area, which never seems to hold for very long.

This chart has numerous head & shoulders top patterns on it, and it closed out the month of January below 80.50, which is a very ominous sign for dollar holders, and great news for gold! 
As this debt crisis continues to unfold, I expect more investors to transfer money from paper gold products to physical gold.  

morris4Submited by Morris Hubbartt:

The dollar’s huge head and shoulders top formation is maturing.  The target is 72. It will be activated when the dollar closes under 78, for two consecutive days.  A breakdown under 78 should be accompanied by gold breaking above $1800.

Over time, markets oscillate from undervaluation to overvaluation. The chart below demonstrates how gold stocks go from one extreme to the other, forming a channel that can be bought and sold.
In terms of undervaluation, gold stocks are now stretched to the point of challenging the 2008 panic low! 

morris5Submitted by Morris Hubbartt:

Public participation in gold is near the lowest levels of the bull market. This is a good sign that higher prices are coming.   My upside targets are $1850, $2350, and $2750.  At $2750, I’m projecting that the public will become eager to own gold again, and the price will begin the next major consolidation.

There is a big positive divergence on the gold chart. Once gold trades above $1800 for 3 consecutive days, gold stocks should have their technical shackles removedAt that point, I will be looking for an enormous 100% rally in most gold stocks, from the double bottom that was established in the $39 area on the GDX chart.

imagesSubmitted by Morris Hubbartt:

I see the dollar soon beginning a decline akin to a snowball tumbling off a cliff of gold.
Note the bullish long-tailed candlesticks on the gold and silver charts. Last Friday’s jobs report created an exciting hammer candle formation, and it came on climactic volume.

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!

 Submitted by Morris Hubbartt:

This is a ratio chart of silver versus gold, and it suggests silver is set to dramatically outperform gold, in the intermediate term.  RSI is close to confirming the latest CCI spike, and the Stokes oscillator at the bottom of the chart is flashing a significant buy signal.
A bullish Doji candle recently occurred, just outside of the lower Bollinger band.  No technical pattern has a 100% success rate, but a Doji is highly dependable.  The silver bears are treading on thin ice here, and the bulls are looking good.

The best trade for 2013 could turn out to be buying silver now.

Submitted by Morris Hubbartt:

The pullback in silver this week brought the important RSI indicator back down to the key 30 area.  Silver is one of my favorite long term growth investments.
On the long term silver chart, RSI for silver has declined to 30 area, seven times.  Six big rallies have occurred after each of those events.  Will this time be “lucky number 7”?  I think so, and my target for this rally is $44.

Submitted by Morris Hubbartt:

Once the neckline on the dollar index chart breaks, a target of 73 will be activated, and gold should begin to rally aggressively.
The general attitude from Wall Street about the gold bull market is disbelief and denial. From the standpoint of contrary opinion,
this viewpoint is bullish for the precious metals.

The longer gold takes to break out of the current “power house” consolidation, the more explosive the move is likely to be.    
I believe that gold and silver are on the cusp of entering a “new price era”.

Submitted by Morris Hubbartt:

The dollar’s failure is probably being masked by a gold market that feels a bit like it is “under attack”. The line in the sand that I have set for the dollar is 80.50It has closed under that key price numerous times, which indicates technical deterioration.
This “Cork In The Sea” weekly chart highlights a massive symmetrical triangle formation, with a horrific final price objective of about 50 for the USDX.   Where would gold trade if the dollar were to suffer such a catastrophic decline?  I believe it would trade above $4000 an ounce.

Submitted by Morris Hubbartt:

Many market pundits seem to have forgotten how strongly QE can affect the price of gold. This gold chart highlights those effects, with a broad green “chart brush”.   Note the thick green bars.  They highlight the gold price action during QE1 & QE2.  I believe QE3 (and possibly QE4) will produce very similar results.  When the Fed purchases bonds in the open market with printed money, gold tends to rally for a significant period of time.
Quantitative easing is positive for gold, and the effects on silver are even more powerful.  This chart highlights the enormous gains that silver achieved during both QE1 and QE2.   My focus is physical silver, because of concerns about the banking system and growing volatility.
My short term target is $44, which should be acquired at about the time that gold reaches $1850.  To put that in perspective, I expect silver to gain about 29%, while gold gains 7%.  That’s an outperformance ratio of about 4 to 1!

Submitted by Morris Hubbartt:

My technical analysis indicates that a major long term bottom is in place, across the entire precious metals sector.  The intermediate term gold target is $2015, but gold could move even higher before correcting significantly.   When daily CCI spikes lower, as it did recently, followed by RSI touching the 30 level, a trending move higher is very likely.    The short term target is $1850, and it could be acquired quickly.

Fundamental and technical analysis suggests higher gold stock prices are coming. What is most compelling about gold stocks is the undervaluation of the sector against gold itself.   GDX is currently as cheap as it was during the meltdown of 2008.   There is a substantial head & shoulders pattern in play now.   I am projecting that gold stocks will rise to about .44 on this ratio chart, which is almost a 50% gain from the current price.

By Morris Hubbartt:

The US dollar counter-trend move to the upside is probably nearing the end of the road. Firm resistance resides at the 81.25 area, and all of the indicators point to lower prices.   Once the countertrend move higher is complete, the large head and shoulders top pattern should take center stage. A decline below 80.50 could trigger a mini-crash.

We may be entering the eye of the debt storm, so I prefer to buy physical metal, and hold it for long term.   The immediate silver target is $35.44, and once that is acquired I am projecting that a stronger move will carry this mighty metal to the $44 area!

By Morris Hubbartt

Silver is an ideal metal to accumulate on price weakness.  The market is currently oversold.  Please note how perfectly the price has pulled back to the green downtrend line, after staging a magnificent breakout!  Silver’s RSI and CCI indicators are currently flashing strong buy signals.  I expect the $44 price target will be acquired by January, 2013.  The “silver plane” appears to be cleared for take-off. 
Are you are on board?

By Morris Hubbartt

The market that will be most damaged by QE bond purchases is the US dollar. The destructive action of quantitative easing is somewhat hidden, because other central banks are also damaging their own currencies.  Technically, the US dollar is somewhat overbought, and the counter-trend rally is failing. The key number is 80.50 and an additional monthly close below that key level sets the stage for a substantial downside move.

Right now, the normally-volatile silver mining stocks are the star of the precious metals show.  The incredible resiliency of silver stocks during this correction, implies that they could run like the wind once the bull trend resumes.   A move higher in silver stocks also sets up the underlying metal, for a solid move to the upside.  Please note the position of the MACD indicator, as well as the very bullish volume pattern.  Silver stocks, and silver, may be about to soar!