Gold is dipping. Where do we go from here?

Buy Gold Buy SilverWe all know that the markets can move in any direction. It’s hard not to get emotionally attached to the markets. It’s even easier to forget why you have physical gold and silver when the markets take a dip. Never forget that owning physical gold and silver is the ultimate insurance against fiat and other backless currencies, has been and will continue to be, period.  That does make seeing the markets dip any easier, unless you know the markets and have confidence that it will follow the last nearly two decade trend of three steps forward one or two steps back increases.  That’s where I am, I welcome these dips, always have and I have (with very few exceptions) benefited from it.

In this game, in all games involving money/currencies, a valuable lesson I learn in my stock trading days goes like this, with persistence you will win some and you will lose some, it’s inevitable. The key is to win more times than you lose.

So far with gold and silver, the last 17 years has won more than it has lost. That will continue to be the case.

The year started in a fog, no one knew what was going to happen in any of the markets with the new administration in power. Here we are three quarters deep in the first year of the Trump administration and…well, you know where we are from a political view (it’s ugly).

Gold and silver are still up for the year, the dollar is down and the stock markets are up.

The question of the week (or the past two weeks) is where do we think it’ll go from here.  Here’s my view, in brief.

There is a belief/theory that this dip is a “wash out” and an end of the fiscal year sell off.  A way for the bog boys to scare out the speculators, the speculators (with long positions) sell, markets are pushed down, the big boys (central banks, big corp, big investment firms, China, etc…) then have their opportunities to buy low.

This usually happens right before some big (or bigger than normal) upswing.  How do they know there’s going to be an upswing soon?  Many believe that all markets are manipulated in some way, I too believe this. I would say I know this, and I am confident in my belief, to me, yes, I know there is manipulation. With that said, I have never personally been invited to the meeting rooms where manipulation action plans have been discussed or put in to place. Without having personally been in on it or seeing the act actually committed…well, you know where I’m going with this.  Let’s just say that by using the scientific method we can easily develop a general supported theory stating that the markets can be and could be manipulated to high degree.

Now that we have that all cleared up, this may be a push to scare speculators to get the prices down for a new fiscal year buying opportunity.   We have been getting some mixed messages from the Federal Reserve lately. Miss Yellen says, very quietly, that the Feds miscalculated the rate of inflation and the labor markets, to the downside. Meaning they have been touting that the numbers are higher than they truly are.

Interestingly, at this same time, the same week, we get news the the GDP broke 3.1% last quarter for the first time in a long time (I don’t believe it to be true, I think we’ll have a retraction in the coming weeks to show that it was nearly a point lower).  You can’t have all the retail closures, bankruptcies, debt spending, etc…and still have the GDP jump like they are saying. It may be so, just because I can’t find a report that shows where all this production is coming form doesn’t make it a false report (and it’s not the hurricane rebuilding, these numbers are for the second quarter).

Getting to the question, where do we go from here…without getting too technical, when analyzing price projections, it’s common to refer to what’s called the “moving average”. Here’s a link to a definition so a moving average.

Gold’s 50 day moving average is an important numbers, right now it is around $1296, we broke below that and held so far for a three trading days.

Where we go next depends on many variables, however, borrowing another war or something unexpected in the markets hitting, it’s going to be based on volume. If the speculators (or any other investor for that matter) are getting scared now that we have stayed below the 50 moving average (yet above the 100 and 200 days moving average) there could be another sell off before the spike.

The 100 day moving average (MA) is approximately $1272, that would be our next marker. Making $1272 a level of support and the 50 day MA of $1296 (now that we are below that mark), becomes the new resistance (in this scenario).   The 200 day MA is $1245.  The 200 day MA can be seen as the bottom (we hope), meaning that we should not break below that level, that’s a hard support line. If we do break below that level what then? It would not be a terrible thing to get to that level again, if that happens we’ll talk about it then.

Here’s an FYI, this happens when the big boys want to cover their short positions. They take gold down to the 50 day MA, get the speculators out of their long positions, this covers their short positions and puts them in position to buy low. I think it is getting harder for them to orchestrate these dips, especially with the BRICS and China banks and exchanges all leaning heavy toward gold trades for oil and energy. I assure you no one is stressing this recent dip.

Can we expect the see the gold and silver markets head toward the 100 and 2o0 day MA? We’ll see. Being that this dip has happened so quickly, there may be a push to set a new level of solid support at the 50 day MA, which could mean we’ll back to the mid and upper $1300s in the next few weeks. If we break and hold below the 100 day MA, we may see $1250 again. If so, I’ll have to revisit the situation.  Of course I’ll keep you informed.

 

No matter what the situation and/or the price, you need to be sure that you are protecting your savings by having physical gold and silver.  Owning physical gold and silver can be an wonderful investment, time has shown that to be a fact. What physical gold and silver more importantly are it is an insurance policy.

Have you insured your hard earned savings?

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