I have added a Current Thoughts section to the Home Page to help investors with short, medium and long term forecasts. I will be using the ETFs symbol GLD and SLV as my proxy for physical gold and silver. By using these ETFs as a proxy for gold and silver I am by no means recommending an investment in them. don’t recommend these ETFs as a proxy for owning gold and silver however. There are too many flaws with them, including annual fees and no insurance. Owning physical gold and silver is the way to go and storing it yourself will save you the fees. For a discussion on the weakness of ETFs and how to store gold and silver, please read my book Buy Gold and Silver Safely.
As many long time readers know, I don’t write articles every day explaining why gold did what it did. I could make up anything to explain daily moves as many sites do, however, I’d rather just look at the price and make predictions based on price action. This new Current Thoughts section, found on the tool bar at the top, will do just that.
I have been somewhat negative on gold and silver as many of you know, and I still am for the time being. I was short term bullish in my last article, however we only went from $1,308 to $1323 and proceeded to fall. I admit I should have written an article saying that a move to the sidelines should have been made as the charts below dictated, so to help investors be more proactive for their short term buy or sell movements, I am implementing this section on the home page that will tell investors where we are with the metals. I will incorporate a chart with indicators for daily, weekly and monthly direction.
How to Read the Current Thoughts Charts
You will see a score with a number for each chart for GLD and SLV. This number will range from -100 to o to +100. This give you an indication of where we are with the current trend and how you can plan your purchase of metals.
A turn from a negative number to a positive number might have you go long for a risk vs. reward trade, but that is pure speculation and only for those who know how to keep stops if the trend reverses. A reversal in trend from positive to negative or negative to a lower negative number might also have you get out of a trade.
You ideally want these numbers to be +100 for being on the right side of the trend. The trend is always your friend as the saying goes. Your trades should correspond with the trend. Your purchases of metals should also be on the major dips that always come if you are dollar cost averaging into a position. This would be a score of -100.
Educating Yourself
Also keep in mind that if you are following along with my 8 indicators I revealed on July 31st in 8 Indicators That Tell Us Where Gold Might Go Next, you’ll see the Dollar has simply moved higher and the 10 Year Treasury has done nothing but get stronger, both being major headwinds for gold. I provide you with these indicators so you can think for yourself on when would be a good time to buy gold. If you see what I see, then you can possibly make a better decision without anyone telling you to buy, buy, buy like every other gold dealer out there.
In fact, the Dollar Index is now pushing 83 and looks poised to move even higher. What happened to the dollar crash that all of the gold bugs have been calling for? This is not to say of course that all is well with the U.S. economy, but one can’t ignore price action whether it is the dollar or gold/silver.
There are not too many out there that made the call in May for lower prices over the next 3-4 months and we are sitting below the prices when I wrote that article. These Current Thoughts will give you one more indicator to help you know whether to be on the sidelines and wait for the eventual all-in signal from me or possibly an opportunity to buy on the dip, dollar cost averaging into a position. Some may use the indicators to hedge their gold and silver holdings as well.
Blog and Current Thoughts Section Added
Below are charts you will see for gold and silver posted daily at buygoldandsilversafely.com under “Blog and Current Thoughts.”
AUGUST 21, 2014 – GLD
The above chart was from Aug 21st. When you see “New 3 Week Low” it is not a good sign for gold. Neither does a move below the 20 day moving average. You’ll also see the 3 month high was way back on July 9th. But it can also mean a reversal could be coming depending on what the next day brings if the score moves higher. The duration of the trade depends on the continued improvement in the trend. Obviously you don’t want to be long gold or silver when they are in a weak or strong downtrend. A strong downtrend might give one the opportunity to add to their allocation in precious metals.
AUGUST 22, 2014 – GLD
The score went from -70 to -60 after Aug. 22nd trading. The price is still below the 20 day moving average.
AUGUST 22, 2014 – SLV
Silver had it’s 3 month high on July 1st and it’s price is still below its 20 day moving average. The 3 week low was back on July 15th which means the price of silver has been range bound.
AUGUST 25, 2014 – GLD
The price and score fell but no change in other indicators.
AUGUST 25, 2014 – SLV
No change in silver. You’ll see this from time to time. These are days when being on the sidelines makes sense.
August 26, 2014 – GLD
GLD went from 122.76 to 123.36, a nice move pushing it to a 3 day high. The score went from -70 to -55. There was nothing to indicate this move may come and as the recommendation says, “Sidelines Mode for GLD.”
August 26, 2014 – SLV
Silver had a smaller move than gold but did hit a new 3 day high. Sidelines Mode.
August 27, 2014 – GLD and August 27, 2014 – SLV
Same charts and numbers with little movement in gold and silver.
August 28, 2014 – GLD
Gold continued to move higher, but still sidelines mode. No change in score.
August 28, 2014 – SLV
Little change with silver on this small move higher.
August 29, 2014 – GLD and August 29, 2014 – SLV
Same charts and numbers with little movement in gold and silver.
September 2, 2014 the current price for gold and silver are down significantly. If you followed the sidelines mode above, you would not be hurt by this move down.
Charts will be posted at the end of each trading day in the section titled “Blog and Current Thoughts.” There will be 2 sections and just click on “Current Thoughts on Gold and Silver” to get the latest score for gold and silver.
My goal is simply to help you become more educated about buying gold and silver. The future will take care of itself, but sometimes it’s difficult to understand why gold and silver are doing what they are doing. Hopefully this Current Thoughts section gives you more insight as to where we are with gold and silver prices, but don’t forget the other indicators.
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About Doug EberhardtDoug 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
Disclosure:
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.