Marc Courtenay's  Instablog

Gold is trying to break through the $1,000 level, and silver has moved up another  5% in one day to a level above $16 an ounce. These are fairly impressive moves over the past two days, and may signal that the market-movers are going to test the higher levels many of us have been waiting for.

My sources are confirming that there is some major, international buying of precious metals going on, especially in Europe and Asia. Some rumors are also suggesting it's a "just in case", short-term trade reflecting uncertainty about the worldwide economy.

Chris Vermeulen, who writes at the TheGoldandOilGuy.com, wrote a special report last night which I'll share with you thanks to Chris' permission. Here's what Chris wrote and I'll let you draw your own conclusions:

"Another crazy week in commodities with precious metals and precious metal stocks surging higher on heavy volume, while natural gas and crude oil move lower. Money seems to be rotating out of energy and into precious metals."

Spot Gold Bullion – Weekly Trading Chart
Gold jumped higher today breaking out of its 6 month pennant pattern. If prices can hold into the weekend then I expect the $1000 per ounce to be reached quickly. Also Gold stocks took off like rockets, which are a strong sign that gold will follow through on this breakout. It will be interesting to see what happens from here.

 

Spot Silver Bullion – Weekly Trading Chart
Silver and silver stocks are shooting higher as well.

Natural Gas – Monthly Trading Chart
Natural gas continues to trade lower. The good news is that the price of natural gas is now at a major support level, which was formed as far back as 1996. The weekly natural gas chart shows much of the same price action that oil had before reversing to the up side in February of this year. I would not be surprised, if we see buyers stepping into natural gas at this level.

Crude Oil – Weekly Trading Chart
Crude oil continues to trade within its bullish wedge pattern. We will be looking for a low risk entry point for oil this month using the daily chart.

Commodity Trading Conclusion:
Precious metals are showing strength while the energy sector continues to have selling pressure. Gold, silver, natural gas and oil look ready to make big moves in the coming weeks and, being positioned on the right side, will generate some massive profits.

Staying focused for low risk entry points is important when volatility and emotions are running high. The excitement/stress for traders this week is very high. With precious metals and precious metal stocks breaking out today on massive volume, it has traders excited or in a panic, if they are not positioned yet. To add more fire to the week, natural gas continues to fall, triggering a panic sell reaction by many investors/traders.

I do like precious metals as a bull play here, but risk is a little higher than I would like. The past couple months precious metals have been jumping around like a yoyo, making it very difficult to find a low risk entry points.

I know many traders are in serious pain, because they bought natural gas a couple months ago, expecting a rally which did not happen. I would like to mention that I am seriously starting to think about scaling into Natural Gas over the next 1-2 months. Natural gas reminds me of a Canadian fund XTR, which I scaled into last February and am now sitting with a very healthy gain, not to mention a 16% dividend. I feel Nat Gas will pay off huge over the long run, but it will take some time to bottom.

If you would like to receive Chris' Free Weekly Trading Newsletter or his Trading Signals visit his website at: www.GoldAndOilGuy.com. 

Thanks Chris for some great insights and charts. He is a patient analyst who believes we should wait till a trend is established before jumping onboard.

As for those of us who are long GLD, SLV, CEF and wish we were long on SIVR, GDX and ASA, this may be the moment we've been waiting for. I am so thankful I held on to some of my shares of IAM Gold (NYSE:IAG).

Remember, this could also be a "head fake" when it comes to the precious metals, especially if we don't get to the old highs of gold $1034 and silver's recent high above $21. An unexpected pullback could be the next buying opportunity.

The stock market has "paused to refresh" this week, but everything I've written of late has not changed from my perspective, and I anticipate a resumption of the upside rally over the next couple of weeks. Many investors are still on the sidelines and will be very surprised.

Recently I've increased my holdings of CHK, PG and EMR.

One of these days we will see a "blast off" of gold and silver prices that will shock even the bulls. It will be as unexpected and even more dramatic than what we've seen the last couple of days. Will you be ready to benefit from it?

Disclosure: I'm long GLD, SLV, CEF, CHK, PG, EMR and IAG.

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