1. Chinese investors should be back on the “gold buying job” today. To understand why that is, please click here now. Twice a year, Chinese citizens celebrate “Golden Week”. Businesses are generally closed, and workers spend time with their families.
2. Chinese gold buyers should become quite active in the next few days, as Golden Week ends, and the nation goes back to work. India’s Diwali festival is also approaching. In the coming weeks, physical demand for gold is likely to be relatively strong.
3. I’ve suggested that demand for silver could be even stronger than for gold, and the most recent price action shown by gold’s “little brother” is superb.
4. On that note, please click here now. You are viewing the daily silver chart. A week ago I highlighted the $20.75 price zone as a key buying area, and you can see how nicely the price has surged from there.
5. Although it’s still early, today marks the second day that silver is trading over the key red downtrend line, and that should attract buying from technical traders.
6. There’s more good news for silver enthusiasts. Note the position of my stokeillator (14,7,7 Stochastics) at the bottom of the chart. The lead line is at about 41, and there’s a crossover buy signal in play.
7. Please click here now. That’s the daily chart for gold. Note the green wedge pattern that I’ve highlighted. It’s very bullish. An upside breakout would be a very positive event.
8. While the stokeillator is still exhibiting action that is sluggish, it does favour the bulls.
9. The Dow has not been doing very well recently, and I’ve highlighted the precarious technical position of most general equities.
10. At this stage in the super-crisis, rising bond prices are bullish for gold. That should change, but not for several years. In the very short term, bonds are a bit overbought, but I don’t see anything to be overly-concerned about.
11. Please click here now. That’s the daily T-bond chart. There is a new stokeillator sell signal in play, and that could derail the gold rally in the short term. In the bigger picture, a decline from here should create a powerful head and shoulders bottom pattern.
12. In turn, that pattern could fuel a massive rally in T-bonds, and in gold!
13. Please click here now. That’s a daily chart of the Dow. For the past several decades, I’ve labelled the September – October time frame as “crash season”.
14. Each year I warn investors to exit the market around August 7th. My suggestion is to stay out of the market until the end of October.
15. Substantial fear created by the US government shutdown is beginning to envelop a lot of mainstream investors. Worse, it seems that many of them just entered the market, during the summer months. If so, they are already underwater on their positions.
16. Investor fear could get a lot worse, and the Dow could get hit a lot harder, if this shutdown drags on for a long period of time.
17. Gold stocks have exhibited very little volatility, despite the withering general equity market. Some analysts believe in an “imminent parabola”, while others are predicting a decline to the lows of 2008.
18. I don’t think either scenario is the correct one at this juncture in time. Gold stocks are trading in the COP (cost of production) zone, and that is going to attract value-oriented investors.
19. Their buying is probably providing a “soft floor” under gold stocks, but momentum players are needed to produce the kind of “barn burner” rally that really excites the gold community.
20. What technical event would trigger buying from these powerful momentum-oriented players? For the answer, please click here now. That’s the daily GDX chart. Gold stocks have declined along with the Dow recently, but the decline is relatively modest.
21. Volatility is increasing in the general stock market now, while it’s declining in the gold stock sector. A move above the thick black downtrend line is likely to trigger momentum-based buying.
22. There’s also a red trend line that may be important. Note the powerful surge that occurred when Ben Bernanke announced “no taper” a couple of weeks ago.
23. In the very short term, GDX needs to push out of the price channel that I’ve highlighted with thin black trend lines. Note the position of my stokeillator at the bottom of the chart.
24. The lead line sits at about 10, which is a dramatically oversold condition for this key oscillator. Gold stocks are certainly not in a position that is appealing to momentum players. Regardless, technical analysis and liquidity flows in the physical markets in Asia suggest that both short and long term investors should be focused on the buy-side of the market.

Oct 8, 2013
Stewart Thomson
Graceland Updates
website: www.gracelandupdates.com
email for questions: stewart@gracelandupdates.com 
email to request the free reports: freereports@gracelandupdates.com

 Is Crude Oil Ready for Further Growth? What Impact Could It Have on Gold?

One of the main events of recent days was the first U.S. government shutdown in 17 years. Light crude dropped to a new monthly low at $101.05 on concerns that this event would reduce demand for black gold in the world’s largest oil consumer market. In the previous week, the yellow metal also declined and dropped below $1,300 an ounce. Despite this declines, on Wednesday, both commodities rebounded sharply supported by a weaker U.S. dollar as commodities priced in the greenback became less expensive for holders of other currencies. Additionally, in the second half of the previous week we saw similar price action in both cases.

Taking the above into account, investors are probably wondering: what could happen if the recent positive divergences between both commodities remain in place? Can we find any guidance in the charts? Let‘s take a look at the charts below and try to find answer to this question. We’ll start with the daily chart of crude oil (charts courtesy by http://stockcharts.com).

On the above chart, we see that the situation improved slightly in the previous week. Last Monday, crude oil dropped to a new monthly low of $101.05 per barrel. With this move the price of crude oil declined not only below the August low, but also below the 38.2% Fibonacci retracement level. Despite this drop, we saw a pullback, which erased most of the losses late in the day. 

In the following days, we saw further improvements as oil bulls managed to hold this level. This positive event triggered another pullback, which pushed light crude to the previously-broken rising medium-term support line on Wednesday. Additionally, the price of light crude came back above the 38.2% Fibonacci retracement level and the breakdown below this level was invalidated. Although crude oil closed Wednesday almost at the rising medium-term support/resistance line, the buyers didn’t have enough strength to break above this resistance until the end of the previous week. 

Looking at the above chart, we see that crude oil remains in the declining trend channel. Therefore, if we see a breakout above the medium-term support/resistance line, we could see a move up to the declining short-term resistance line based on the Aug. 28 and Sept. 19 highs – currently close to the $106.4 level (marked with blue). 

Please note that the nearest support is the September low and the 38.2% Fibonacci retracement level. If it is broken, the next one support zone will be slightly below $100 per barrel where the 50% Fibonacci retracement level intersects with the June high. 

Once we know the current short-term outlook for crude oil, let’s take a closer look at the chart below and check the link between crude oil and gold. Has it changed since our previous essay on oil and gold was published? Let’s examine the daily chart.

Looking at the above chart, we see similar price action in both commodities at the beginning of the previous week. They declined on Monday, however, in the case of crude oil, the buyers managed to hold the September low in the following days, which resulted in a sharp pullback on Wednesday. Meanwhile, gold declined and reached its new lowest level since the August top. Despite this drop, the rest of the week looked similar for both commodities.  

Summing up, looking at the relationship between crude oil and gold, we notice similar price action in both commodities in the previous week. Therefore, if this relationship remains in place, we could see some strength on a short-term basis in case of the yellow metal and crude oil. However, we should still keep in mind that the recent decline in crude oil is just slightly bigger than the previous ones and light crude remains above the 38.2% Fibonacci retracement level, which forms strong support. From this point of view, the uptrend is not threatened at the moment. At the same time, the downtrend in gold remains in place and the yellow metal remains below the declining resistance line, which has already successfully stopped buyers several times. 

Thank you.

Nadia Simmons

Sunshine Profits‘ Crude Oil Expert

Oil Investment Updates

Oil Trading Alerts

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Disclaimer

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons’ reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Showdown to Shutdown

What is going on in Washington is more of a political charade than real budget negotiations; albeit, it is a distraction from the real structural problems created from a two decade period of debt-fuelled surges in consumption.