Zedpher's  Instablog

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Director of Research & Owner at Ivancic Associates. Creator of the IMTS which uses multiple variables and signals to create a heatmap of market health and momentum.
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  • Gold And Silver Evening Brief 0 comments
    Dec 12, 2013 10:28 PM | about stocks: DSLV, DGLD

    Both gold and silver suffered big drops today. I was not surprised by this as the IMTS has been showing persistent weakness in both for a while now.

    I recommended subscribers go short silver (via DSLV) yesterday afternoon after I saw that silver was faltering and the 10 year bond yield was rising even as the US Dollar floundered. I saw this as a sign that the dollar would rebound as yields grew stronger, and that this would ultimately hurt both gold and silver. My DSLV position returned a little less than 11% by the time I closed the position around 2PM on Thursday.

    Here is where gold stands now:

    Gold still has much more room to drop, unless it can start building some upward momentum. The first colored column now stands at 88.22% and, when a bottom is reached, this really should be in the 78-80% range. For that to happen, gold would have to drop down to around $1,100. Subscribers will get an email notice when that happens.

    In order for gold to start getting back on track towards a bull market, the first hurdle is for it to reach the next higher level, which is above the $1,291 mark.

    As for silver, it appears to be closer to a bottom:

    Like gold, silver should get to around the 78-80% range in the first column before a bottom can begin to be considered. Silver has been so weak that it could linger in that area for several days or more, or could go even lower if forces conspire to create a fully depressed scenario. In that case, it could drop down to the mid 60% range.

    For it to get to the 79% area, the price would have to drop to around $18.50. But, as I said, it could go lower if silver gets completely out of favor. For silver to reach the next higher level, it needs to surpass the $21.79 level.

    Note: I currently don't hold any positions in Gold or Silver and have no plans to initiate any within the next 72 hours.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: DSLV, DGLD
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