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Silver broke below the trading range in the chart beneath this text:
Gold fell hard below the upward sloping wedge shown in this chart:
Next, the XAU, Gold and Silver stocks Index, gapped up on Tuesday and closed near the lows of the week as well. The large unfilled gap in the XAU weekly chart is the primary target should the decline extend at this point.
Stocks were mixed this week. The Dow Jones Industrials gained about 125 points while the Nasdaq and the S&P closed near the break-even level. All three of the major indexes have been consolidating for about 3 months. Watch the consolidation support and resistance levels for signs of a break-out.
*Interviews with Roland Watson, Jim Willie & Dave Morgan* On the Saturday February 11th program at radio.goldseek.com, we have a diverse group of experts Dave Morgan returned this week after making a great call on the silver market last weekend. Dave comments on what he thinks will happen next with precious metals. The second guest on the show, Roland Watson hails all the way from Edinburough, Scotland. You won't want to miss our final analyst Jim Willie. Jim shares his comprehensive report on the energy market and the global dynamics and ramifications of peak oil. This weeks show wraps up with a look at how markets finished this week. Here is a few of the important points that each of our guests touched on in the interview: * Dave thinks that we peaked in the precious metals markets this week. He is convinced that silver will need a month to recover for the next bull leg higher. He remains very bullish on precious metals in the long term. * Our next guru, Roland Watson sees the dollar in trouble and the resulting inflation as worse than in the seventies! He says that we should expect inflation to persist for a very long time. * Roland applies Elliott wave analysis to the current precious metals bull market. He thinks that we started the first phase of the bull move in precious metals in the year 2000 which ended in 2003. He points out that we have entered the second wave up in the precious metals move and that one final wave will follow. He is not sure if this wave or the next will be the blow off phase, like the gold price explosion in 1980. * To hear Roland Watson's market forecasts for the HUI, Gold and Silver, tune into our online broadcast at the following link, don't forget to bookmark: radio.goldseek.com * Our final guest, Jim Willie is concerned with what he views as a substantial decline of world oil production and the geopolitical risks created by the dilemma. Jim sites a 10% decline in oil production with the Gulf of Mexico. * Interestingly, he notes that Canada is not in decline but that production is actually Pre-Peak He says that Calgary in Alberta is actually a boom town area. That 1 in 5 people in Alberta were originally Texas natives. * Lastly, Jim is concerned that the new Iran oil exchange will lead to considerable dollar weakness due to its Euro currency designation. In fact, he says that the global banking superstructure is threatened by the Iranian oil exchange. * To find out where Jim is putting his money in this volatile market environment, click here: radio.goldseek.com
Despite the weakness in the precious metals market, there was no shortage of bullish forecasts. Timothy Silvers, agrees with Dave Morgan in his most recent article. Timothy thinks that $7-$8 silver is possible during a sharp sell-off and that it would be an incredible buying opportunity. Dave Morgan noted on Radio.Goldseek.com last week that any price under $8 would be a bargain and that it would not likely ever drop that low again: " ...we could correct into the $8 to $7 range and still be in line with a healthy bull market trend. In my opinion, being aggressively long right now is risky, given the history of corrections when the commercials are short at these high levels. I still think there is a high likelihood of a correction at least to the $8 level and potentially lower ...Any drop into that zone will put us close to a great buying opportunity, perhaps the last buying opportunity ever again under $8." Puru Saxena also thinks that gold is over-bought on a short-term basis but very bullish on the long-term gold prospects: "However, on a short-term basis, gold is severely overbought and due for a correction, which will provide us with an excellent entry point. On a long-term basis, I have no doubt in my mind that gold will probably go much higher over the coming years. How high? I'm thinking $2,000 or $2,500 an ounce - that's right, another 400-500% from current levels!" Super-bull Jason Hommel supports GATA's work and has a plethora of gold and silver forecasts for his readers this week. He thinks that silver could rise quickly to the $25-$100 level if large investors became suddenly interested in the metal. I'll leave his gold prediction for you to discover: "First, there is the inflation that started with banking in general, and accelerated in 1913 with the creation of the Federal Reserve. This is the inflation we see in total accumulated M3, the measure of money in the banks, which exceeds $10 trillion now, which, if you divide by the gold held by the U.S., shows that the gold price can exceed $38,000/oz. Second, there is the inflation that increased in the mid 1990's with an acceleration of the increase of M3 from a plateau of about $5 trillion, which also started with the rigging of the gold price through central bank selling. This inflation should take the gold price towards $2000/oz., as mentioned in the recent Cheuvreux report that endorses GATA's work. (see below). Since then, silver has risen 27% in the last three months from about $7.75/oz. to a peak of $9.91/oz. So, perhaps gold will rise about 30% in the next three months, from about $550 to about $700 due to the Cheuvreux report??? Yes, the central bank selling, once revealed, and once it comes to an end, is bullish for gold. Yes, the silver shortage is extremely bullish for silver. But perhaps the entire world will wake up to the reality of precious metals (and head to $36,000/oz. for gold) slower than I would have thought? Perhaps it will be the continuing rise in commodity prices that will wake up more people and have a bigger impact on rising gold prices (than things like the Cheuvreux report)? After all, the whole world will not read some report by some big brokerage house, but the whole world sees world commodity prices soaring! I don't know which will have more of an impact on investor's decisions to buy gold and silver. I do know that if less than 1% of the world's paper money moves into gold and silver, that gold prices will likely exceed $2000/oz., and silver will likely exceed $100/oz. But that still is not happening. Yes, at any time, it appears if only one billionaire bought a billion dollars worth of silver, that silver prices could be driven to $25/oz. perhaps by tomorrow?" The new Gold Investments report from Dublin, Ireland, also sites The Gold Anti-Trust Action Committee (GATA): "Cheuvreux is the equity brokerage house of Credit Agricole. They distributed a 56-page report during the week endorsing the findings of the Gold Anti-Trust Action Committee (GATA) that the price of gold has been surreptitiously suppressed by western central banks and that those banks do not have the gold they claim to have. The report, written by Cheuvreux's mining sector analyst in London, Paul Mylchreest, is titled "Remonetisation of Gold: Start Hoarding." It foresees an "unprecedented" rise in the gold price and accuses central banks of "covert selling" in order to suppress the gold price and maintain faith in the US dollar. Accordingly Cheuvreux has raised its mid-cycle gold price estimate to $900/oz from $750/oz, and sees the possibility of a spike to $2,000/oz, or higher.
The Gold Bug of The Week Award, goes to Jason Hommel for his very aggressive $36,000 gold target. When we take the average of all of our intermediate-term pundit estimates this week we find a single price target of, $717 a decline of $69 from last weeks consensus of $786. $550+ $700+ $900 = $717 In last weeks article, I noted that gold stocks had registered a very bearish shooting star candlestick pattern in the weekly chart. I pointed out that gold stocks could lead the metals lower this week. In fact, gold stocks did lead to a sharp sell off in the metals. Don't be surprised to see extreme volatility, powerful swings up and down at this stage of the bull market. Thanks for reading.
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