Silver Market Update

January 26, 2006

What a difference a few hours can make! After posting the article “The Great Silver Standoff”, additional research for a new Silver Market update revealed that on the arithmetic chart, silver has in recent days successfully tested the lower channel line of a fine parallel uptrend channel, and is now in position to break strongly higher, an event that can be expected to trigger another strong rally in gold.

The 6-month chart for silver shows the fine uptrend channel and how, with the lower channel line now approaching the price from beneath, it is about to force an upside breakout. While a breakdown from this channel is technically possible, and would of course be a sell signal, it is assigned a very low probability. WE THEREFORE COME DOWN OFF THE FENCE DECISIVELY AND EXPECT A MAJOR UPSIDE BREAKOUT BY SILVER VERY SOON.

Any sidelined funds from recent sales of precious metals stocks should be immediately redeployed in strong gold and silver stocks that are not ridiculously overbought. If you have recently sold stock take the opportunity to redeploy into those with the most potential.


 

Gold Market Update

Clive Maund

Gold is expected to break sharply higher soon, in sympathy with an important upside breakout by silver. A strong rally should follow that will probably take it to the $610 area. However, gold is already substantially overbought, being significantly more overbought than silver, although this is not expected to stop it - but once the move appears to be approaching completion, we will be noting the positions of the exits as the gap with its moving averages will then be huge.

The 6-month chart shows how gold has stalled out in recent days above its 10-day moving average awaiting the outcome of the silver standoff. A 10 and 20-day moving average have been added to this chart, in addition to the usual 50 and 200-day, in order to assist in gauging how overbought gold is on a short-term basis. It is clearly substantially overbought, as measured by various oscillators and the gap with its longer-term moving averages, but is nevertheless expected to advance considerably further, as a result of silver breaking higher coupled with its own intrinsic reasons for going up.

Any sidelined funds from recent sales of precious metals stocks should be immediately redeployed in strong gold and silver stocks that are not ridiculously overbought. If you have recently sold stock take the opportunity to redeploy into those with the most potential.

 

Clive Maund, Diploma Technical Analysis

support@clivemaund.com

www.clivemaund.com

Kaufbeuren, Germany, 25 January 2006

Indian gold demand muted at festival, buyers hope for lower prices