Tag Archive | SLV

Gold Goes Parabolic on U.S. Downgrade

Earlier this year at the end of April, silver and it’s exchange traded funds iShares Silver Trust (SLV) began to launch their booster rockets and go “parabolic” trader parlance for a vertical move upwards. The relative strength index (RSI) during that period peaked around 89. Silver hit all time highs of $50, and created a topping tail or reverse hammer, a very bearish indicator and then swan dived 20%.

GLD - Gold ETF

The fundamentals behind gold’s price action are different but in some ways the same.  Gold has been in a strong uptrend for well over a year now. The reasons for this continuously positive trend are varied, a weakening dollar, fear in the markets etc. New language has entered the lexicon of investors, credit default and debt rating downgrade. These two hugely bearish terms have become catalysts for much fear and panic in the equity markets. The results of which are extremely volatile down days that have erased all of the gains of 2011.

When in fear, people run to the exits (as many have) or they run to safe havens, such as gold. Read More…

Gold Speculators Lead Yellow Metal to New Highs, Gold and Silver Miners Surge

by Raghu Gullapalli, SmartStops writer  – originally posted at Minyanville

This past weekend I was watching Wall Street 2 on HBO. During the course of one of his monologues Gordon Gekko, played by Michael Douglas said, “Bulls make money, Bears make money and Pigs get slaughtered.”

 Did Gekko spell pigs P-I-I-G-S?

 Over the past several months the world markets have closely watched the soap opera regarding European debt play out. Perhaps we have mistakenly fixated on the Greek and Portuguese characters when we should have focused on the 800-pound gorilla, Italy.

 One group of people who did have their eyes on developments in Italy were Safe Haven investors, i.e., gold speculators. Physical gold and its exchange-traded funds had a strong surge, pushing gold above an important resistance level at $1,550

 This group of investors led gold to new Euro/gold highs (something I mentioned previously in Silver Is A Value Buy). This was all before Tuesday’s news of the downgrade of Ireland and the possibility of another round of quantitative easing by the Fed. Thats when the whole world started piling in.

 Gold surged again, seeking out the all time highs of $1,577.40 and falling just  $10 short.

Gold chart - GLD

 SPDR Gold Shares (GLD) saw a similar surge, which may well continue in the days to come, as the market begins to price in the Irish default and a possible QE3. The ETF is forming a short-term bull flag and holding well above the 210 day moving average. But with rapid price spikes come rapid declines, SmartStops has the short-term and long-term stops for GLD at $147.52 and $142.55. It is very likely GLD will take out the all time highs of $153.61

Gold chart - GLD

 

Gold chart from Smartstops - GLD

A surprise development from Tuesday’s news was the revival of the gold and silver miners. For several weeks, during the commodity sell off which was sparked by increased margin requirements for precious metals, the miners were in decline and then range bound. Silver Wheaton (SLW) was trading below its 210 day moving average a fairly bearish indicator, as was the Market Vectors Gold Miners ETF (GDX). But on Tuesday that pattern may have changed. If SLW continues to rise it may keep going till the next resistance point at $42. SmartStops has the short-term and long-terms stops for SLW at $33.16 and $29.94.

Silver chart - SLV

Silver Chart from SmartStops - SLV

I’m less confident about GDX as it still below the 210 moving average but a few component stocks of the ETF, Goldcorp (GG) and Barrick Gold (ABX), saw impressive runs on Tuesday.

Silver: Value Buy

By Raghu Gullapalli, contributing writer ,  as originally published on Minyanville

Value investors, such as Warren Buffet, William O’Neil and Jordan Kimmel are all big proponents of the idea of buying low and selling high. All these extremely experienced investors also look at historical patterns and are always on the hunt for bargains.

Or as traders refer to it, “buying into a pullback.”

Since its ballistic drive up in late April to create new historic highs, silver has plummeted down and the market saw the kind of volatility many traders thought gone in the post financial crisis era. But rather than continue its freefall to price levels that this writer thought were more in keeping with its historic norms, silver defied expectations and has consolidated in a $5 range over the past seven weeks.

Silver, SLV

Read More…

Gold and Silver Part Ways?

By Raghu Gullapalli, contributing writer

GLD SLV

 Just this morning an absolutely abysmal jobs report was released. This latest news on top of the steady stream of poor economic reports over the past week will no doubt conspire to push the market down. The S&P 500 is down to 1,300 levels and may well seek out the long-term support at 1,250. And on top of all this domestic turbulence, lies the desperate situation in the Eurozone and their dealings with the PIIGS; Portugal, Ireland, Italy, Greece and Spain.

 Economists of all stripes are talking about a double dip recession and under those circumstances you would think there would be a flight to the security of precious metals. While recent increases in margin requirements may reduced the fervor for such investments than in recent months, it will not completely dampen the enthusiasm of many for Exchange Traded Funds (ETF) that can be erstwhile proxies. After all in the midst of all this new terrible news, what is the dollar doing? Tanking!

Much of the speculation has been shaken out of the Silver trade, especially after the dramatic 30% pullback from its all time highs in the first two weeks of May. Despite these more reasonable prices, and its recent range bound state, there has been little or no appetite for Silver.  iShares Silver Trust (SLV) is continuing to trade below its 55 day moving average but comfortably above the 210 day moving average.  Smartstops has the short-term stop at $33.09  and the long-term stop at $32.58

 

In contrast to Silver, Gold has not altered the direction of its movement significantly on the long-term chart. If you look at the SPDR Gold Trust (GLD), five-year chart, the price of the ETF is in a strong upward channel and despite the volatility in early May looks to continue its longer-term trajectory. This supports the opinions of many analysts and Gold bulls that project $1,600 Gold by the end of 2011 and may even lend credibility to the idea of $2,000 gold. Smartstops has the stop price of GLD at $146.84   

The Bubble has Popped, Now What?

by Raghu Gullapani,  SmartStops.net contributing editor

  SLV, GLD, USO, DBC

A rare halt in oil trading Wednesday triggered a sharp sell off in commodities and equities, in markets afraid of an encore of last week’s commodity plunge. The last halt in oil trading occurred in September 2008, a week after the collapse of Lehman Brothers.

Silver lost 9% in the sell off, erasing gains in the previous couple days and is down another 6% in the pre market (as of when this was written). It has yet to find a bottom or to a paraphrase Bob Barker, of the Price is Right, “Down, down it goes, where it stops no one knows.” Now with the increased margin requirements driving a number of speculators out of the market, the precious metal may seek out price levels more in keeping with historical norms. Those prices are calculated by seeing how many ounces of silver are needed to buy an ounce of gold. Over the past ten years the ratio has been roughly 60:1. If silver were to return to a similar ratio, it could go down as far as $25 an ounce. iShares Silver Trust (SLV) the proxy we use in lieu of silver at Smartstops.net has the short-term stop at $31.97 and the long-term stop at $29.37

It that wasn’t enough to make you reconsider being long commodities, Powershares DB Commodity Index Tracking ETF (DBC) has formed a Head and Shoulders. A pattern associated with a change in trend direction. The neckline/support of the pattern, coincides with the Smartstops.net short-term stop at $28.16 and the long-term stop is $27.30

 

 

Seven ETFs To Play Silver

Over the past few months, precious metals have taken the cake and attracted an influx of assets, pushing the price of silver and its exchange traded funds (ETFs) up.  As for the future of the metal, it appears to remain bright and investors have a slew of choices to gain both direct and indirect exposure.

This recent rally in silver has been driven primarily by macroeconomic forces.  Increases in money supply and a record budget deficit have many concerned about the overall strength of the dollar and a reduction in the purchasing power of the nation.  Read More…

10 ETFs To Play Deflation

As deflationary concerns continue to make headlines among investors, dividend paying investments, interest-bearing investments and cash become more appealing.

Weak economic figures, a decline in money supply and fiscal tightening around the world are a few reasons why falling prices could be in the near future. Other factors that could lead to a drop in prices include tight credit markets, declines in consumer spending and high unemployment – all of which lead to a reduction in the demand for goods. Declines in the demand for goods eventually result in excess supply, which further leads to a decline in prices to bring supply and demand in equilibrium.

A fall in prices can be detrimental to an economic recovery if businesses and consumers become reluctant to spend and decide to hold on to any disposable cash. This decrease in money supply is most devastating to economies that are highly dependent on consumer spending, such as the United States. Other results of deflation include erosion of consumer confidence and amplification of the burden of both household and public-sector debt. Read More…

Three Reasons Silver Is Likely To Shine

Although gold continues to grab most of the attention in the precious metal world, its less glamorous sister, silver, may be more appealing and for good reason.

First off, silver has many more uses than gold does.  It is used for numerous industrial purposes and nearly 55% of total silver fabrication is used for industrial purposes.  Silver is commonly used in the electronics space and can be found in plasma display panels and printed circuit boards, as well as in the lining of refrigerators, for food storage containers and for water purification.  Additionally, the metal can be used as an antimicrobial to fight bacteria and as an antiseptic to treat fungal infections.  Silver’s industrial uses even span to the solar energy industry.  As economies around the world continue to expand, the industrial demand for silver will likely follow. Read More…

Weak Economic Indicators Bolster Precious Metals

An unexpected increase in initial claims for jobless benefits as well as a plunge in the Philadelphia Federal Reserve’s index of regional manufacturing enhanced fear in the overall strength of the U.S. economic rebound causing investor’s to turn to precious metals.

According to the Labor Department, the number of people filing new claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000, raising significant concern that hiring is lackluster and slow economic growth is in the near future.  This increase in new filings raises concerns that June may snap a five month streak of increased employment in the private-sector.  To make things even more challenging, the Labor Department also reported that the economy generated a mere 41,000 private-sector jobs in May as compared to 218,000 in April.  As for relief in the labor markets, it isn’t expected to prevail until sometime in 2011. Read More…

3 Ways To Play Sovereign Debt Crisis

As the sovereign debt crisis continues to take its toll on Europe and fails to linger away, currencies continue to deteriorate, government bond yields continue to rise and stock markets remain volatile.  Depsite the fear that this crisis has brought on, there are four ways one can play it.

Japan

Many believe that the next country to be hit by the crisis is Japan.  Traditionally, the Japanese Yen and Japanese bonds have been a safe haven in times of uncertainty; however, this is no longer the case.   According to a study conducted by Moody’s, Japanese government debt is estimated to be more than 200 percent of the nation’s gross domestic product (GDP), which puts limitations on the government’s ability to spend and implement additional fiscal stimulus plans to stimulate a much battered economy. 

In regards to interest rates, the Bank of Japan needs to keep interest rates at or close to zero and continue its asset-purchase program to curb the effects of deflation and worsen the overall health of its economy.  To make things even more challenging in the Asian nation, Japan’s demographics are highly unfavorable.  The Japanese population is aging and shrinking, which eventually will result in the labor force retiring and cashing in on government bonds, which is likely to result in the Japanese government borrowing more at higher yields from more prospering countries.  

With the future looking relatively gloomy for Japan, some possible plays include the ProShares UltraShort MSCI Japan (EWV), which aims to seek twice the inverse daily performance of the MSCI Japan index.  A second play includes the ProShares UltraShort Yen (YCS), which allows one to bet against the Japanese Yen.  EWV closed at $47.29 on Tuesday and YCS closed at $20.65 on Tuesday.

Emerging Markets

Nations that are fast-growing and rich in natural resources are likely to be at the forefront of this crisis.  One such nation is Brazil.  Brazil is one of the few countries in the world that is self-sufficient in oil as well as is a leader in alternative energy.  Regardless of the volatility in crude, it will continue to remain a sought after commodity as global economies grow and nations rich in black gold will reap the benefits.  Read More…

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