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GOLD
AND SILVER REPORT Gold
The weekly chart below shows gold within its ascending triangle formation. It is also well above its 65 ma. MACD looks to be setting up for a positive cross over. RSI is above 50 and turning up.
After the weekly chart of gold is the daily streetTRACKS gold trust exchange traded fund. The index fell below its 200-day average recently, but has since recovered and rallied up above its 50 ma. Not a bad performance.
The following chart is quite interesting. It is the GLD inventory held in reserve (supposedly) compared to the price of gold (GLD). Notice that since mid-July the price of GLD has gone down, while the inventory of stocks held in reserve went up substantially. This is going against the grain of the previous relation of price to inventory.
Silver Silver was up more percentage-wise as compared to gold this past week. However, overall silver has been weaker than gold for the entire year thus far. The next chart shows silver falling below its 200 ma, but well off its low. Recall that GLD is above its 50 ma. Silver gained .30 cents to close at $12.10 for an increase of +2.53%. It still remains below its bottom trend line, which is the first target it needs to clear before any sustainable move up is even within the realm of possibility. The fact it closed above 12 is encouraging.
Hui Gold Stock Index
The Hui Index closed up +6.14% to $324.99 for a gain of just under 20 points. The Hui has not only put in three false break outs within the past 15 months, it has now broken below its lower trend line. It came pretty close to breaking below last year’s low a few weeks’ back, which would have put into question the continuance of the gold stock bull market. This may yet occur, but as of now it has not, which means the Hui is in a bull market until proven otherwise. I remain cautiously positive that this consolidation will end in a bullish breakout. The breakdown has made the already long and tortuous correction even longer and more tortuous, but as with all things – no pain no gain. What is worth having most costs, or it isn’t worth much. Sometimes the cost is in dollars, sometimes euros, sometimes in blood, sweat, and tears.
The Hui/Gold ratio has put in a nice move to the upside, as depicted by the yellow highlighted area.
The Xau/Gold ratio gained for the week but has a good deal of work cut out for itself.
GDX Index The GDX Index rallied up for the week but still remains below its lower trend line. It has yet to retrace half of its recent decline.
Central Bank Gold Sales Switzerland made an official statement that it plans on selling 250 tons of gold by the end of 2009, which appears to be true, as they are well on their way towards the goal, if indeed it is their avowed goal. The Swiss National Bank (SNB) sold 34 tons of gold in July. If the SNB continues to sell at that rate, they will have sold their quota allowed under the Washington Agreement by the first few months of 2009. Then what? Who will be left to offload any sizable weight of physical gold into the market? Joining the Swiss was the Central Bank of Spain that sold 25 tons in July. Other miscellaneous central banks sold 8 tons, giving a combined total of at least 67 tons sold in July by the central banks that are signatories to the Washington Agreement. This is a significant amount of gold, especially considering the market readily absorbed the selling without any major digestive problems. Spain and Switzerland have been large sellers, leaving one to wonder who is going to fill their shoes? All of the gold the central banks have sold has been readily absorbed by the market. If supply decreases and demand stays even, what will the price do? Or what will happen if demand increases while supply dwindles? Lastly, who’s buying all this gold? A novel idea – the central banks should sell their gold to the people of their nation, as more likely then not it is theirs to begin with. Drop by and check it out. Good luck. Good trading. Good health. And that's a wrap.
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INFORMATION About the author: Douglas V. Gnazzo is CEO of New England Renovation LLC, a historical restoration contractor that specializes in restoring older buildings that are vintage historic landmarks. He writes for numerous websites and his work appears both here and abroad. Just recently he was honored by being chosen as a Foundation Scholar for the Foundation for the Advancement of Monetary Education (FAME). Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America. The opinions of FSU contributors do not necessarily reflect those of Financial Sense. |
The
weekly Hui gold bugs chart below shows this past week’s price
action. 
