Gold and Silver (and Oil)
was wrong ...
23 February, 2005
I was too cautious in my last Gold and Silver Market updates,
and yesterday's dramatic developments proved me wrong. I was
right about one thing, however, and that was that we were at
a very important inflexion point. What happened on Tuesday was
immensely important for both the oil and precious metals sectors,
and for the dollar which dramatically crashed a strong zone of
support, which I had expected to at least generate a bounce,
as it was so important.
What happened yesterday was
super bullish for the oil and precious metal sectors. The dollar
took out the support at its lows of late January and early February
and at its 50-day moving average. Gold vaulted above strong resistance
at the $428 level and its falling 50-day moving average. The
HUI index dramatically bust through strong resistance in the
210 area. Silver was not so hot, but it was much more overbought
than gold following its strong advance earlier in the month.
There was also an exceedingly
important development in the oil sector. Crude bust out above
$50 for the first time since October, thus, at a stroke, eliminating
the danger of a Head-and-Shoulders top. This was a very important
development not just for the oil sector but for the precious
metals sector as well, because major bull markets in the precious
metals are should be accompanied by a major bull market in the
energy sector. Oil stocks have reached overbought extremes in
recent weeks, although in exceptional circumstances an overbought
condition such as this can persist for a considerable time with
prices going even higher. Oil stocks, which tend to move ahead
of oil itself, can be said to have forecast the breakout by oil
Now everything - gold, silver,
oil, oil stocks, is moving ahead in tandem - a most propitious
situation. There are several fundamental reasons for oil to rise
in the time ahead. Obviously a resumption of the larger downtrend
in the dollar will fuel a rise, but in addition to this there
is believed to be an increasingly tight supply situation. As
long-time subscribers of my site know, a year ago I indicated
that some kind of attack on Iran and Syria was not a matter of
if, but when, as part of the rolling takeover of the mid-east.
Recently, as we all know, the propaganda against Iran, very similar
to that generated before the invasion of Iraq, has been cranked
up. Scott Ritter came out a few days ago and said that Bush "has
already signed off on an attack/bombing of Iran in June of this
year, which probably explains why Bush is over in Europe now
passing the hat round, as the European politicians are likely
to be in a less generous mood once the bombs start falling on
Iran. Such action will clearly have a bullish effect on oil prices,
and quite possibly on the precious metals, as the consequences
of an attack on Iran are likely to be considerably more serious,
to the perpetrators and their "allies" than has thus
far been the case with Iraq.
Maund is an English technical analyst, holding a diploma from
the Society of Technical Analysts, Cambridge and living
in southern Bavaria, Germany.
Visit his subscription website at clivemaund.com.[You can subscribe
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as a consequence of trading on the basis of this analysis.
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