Friday May 11, 2012 6:42 AM CST
Gold and silver are approaching to near their previous sold extremes when the two were a screaming buy. Of course you would never know that by the headlines which are proclaiming that gold and silver owners are 'taking hits for their own good.' I don't know what Ms. Saefong means by that and doubt she does either. So take a look.
Gold
Silver
Both charts exhibit the same patterns The most bullish outcome would be a higher low in this time period. That would be able the previous lows last September (just before the stock low Oct 3) and December (same thing). Please note the oversold extremes of the Commodity Channel Index CCI at top in each chart.
This may well coincide with attempts by the big banks to make short raids on gold and silver via their derivative programs. This is quite a departure from 'sound banking practices.' Bank of America was open for business via a table on the San Fransisco waterfront after the famous earthquake.
Now the banks are causing their own financial earthquakes, see our previous post.
At any rate, gold and silver are re visiting previous oversold extremes which turned out to be buying opportunities. This is occurring as the Dollar approaches its previous high, and the news is negative in Europe. All this could come together for a social mood climax, the sort that creates market lows and highs. We should then have a
high in the dollar
low in the Euro (articles now suggest Greece will leave the currency)
low in gold and silver
And today's JPM headline may be what is needed to generate an extreme social mood.
CEF
We have recommended accumulation of CEF the last couple of weeks. This is a near perfect textbook inverse head and shoulders patter. As of last night's close CEF is trading at a mere 1% premium to its NAV. This parallels our December time period recommendation.
You should have a succession of orders to buy CEF. In bull mode CEF regularly trades at a 6% premium to NAV.
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