Gold and Silver Outlook 10-28-14

We got some volatility today with gold and silver as they bounced off their most recent lows slightly, but it was the miners that made the biggest moves. JNUG did break to a new 52 week low but both GDX and NUGT only came within a few cents of their lows before marching higher. I had said in yesterday’s report to watch for quick reversals during the week the Fed meets and to expect volatility and that’s what we got today.

GDX was the only score that improved on the day. All eyes on the Fed tomorrow.

Economic Reports Moved Gold

Gold started the day higher on a decrease in durable goods orders for a second straight month. Then gold reversed lower with a higher than expected consumer confidence number.  This shot the stock market higher and TNA had a banner day up 5 points.


UGAZ also had some good news with forecasts for a Eastern U.S. cold weather finishing up 8.66% to close at $11.04 after hitting a 52 week low earlier in the day at $10.02. If Thursday’s Natural Gas report comes in better than expected, then UGAZ has a way to go. I like the risk vs. reward here for a play into Thursday’s numbers, even though the numbers may not come out good. If we get a dip I would be a buyer tomorrow. If we don’t get a dip I may still be a buyer. These leveraged plays bounce pretty hard when news hits them. The high today was $11.19 as a reference point.

Expect a Volatile Day Tomorrow

My guess is the Fed will NOT tip their hand tomorrow and QE will come to an end, but I do think that when the minutes come out in a couple weeks, it will show more discussion on whether they ended QE too soon from some of the members. This could be temporarily bullish for gold then, but I don’t see a real catalyst for it to move higher. Long time readers know where I think it’s going before we get the nice move higher.

One caveat to the above is the dollar was down today with the durable goods report and higher consumer confidence didn’t do much to pick it back up.

That said, days like tomorrow with the Fed meeting are best traded going into it flat and waiting for the trend to develop. Reversals almost always occur as well as market makers try and take out stops up and down. That’s their job. So if the trend reverses a trader has to keep a stop and either stay out or catch the reversal. These are not easy patterns to play for your average investor.

What Will the Fed Do?

I just can’t see the Fed doing anything unexpected just yet. They want people to believe that all is well. Durable goods report and many other economic reports show otherwise despite the consumer confidence. The consumer is always the last to know.

More on Gartman and Gold

I mentioned Dennis Gartman yesterday. He was still bullish in buying gold in Euros despite him being “dismayed” about the fall in price. One reason he might still be bullish is the GARTMAN GOLD/EURO ETF symbol GEUR. It’s only been around for about 3 months but it lists as one of its attributes  “Access to one of Dennis Gartman’s Popular Investment Ideas – Over the course of many years, economist Dennis Gartman has become well known for his cross trading of currencies and/or commodities. GEUR allows for a simple, cost effective way for investors to obtain a similar investment idea of gold priced in euros.”

Investing in ETFs Versus Gold

Investing in ETFs (Exchange Traded Funds) is no substitute for owning physical gold. Gartman is about break even with his “buy gold in Euro’s” investment because gold is falling in most all currencies the past 3 years. It won’t stay that way, but having heard personally Dennis Gartman tell me that he is wrong 80% of the time with his recommendations doesn’t make me want to go out and buy an ETF that is based on his recommendations. One really shouldn’t trade gold anyway. They simply need to allocate a portion of their wealth to it by dollar cost averaging into a position and go enjoy life the next few years, come back and see how great you’ve done.


10-28-14 GLD Chart

10-28-14 GLD Chart

10-28-14 SLV Chart

10-28-14 SLV Chart

10-28-14 GDX Chart

10-28-14 GDX Chart

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About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534


Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.

All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.