Gold and Silver Prices – Tug of War
The metals have been trading on light volume since last week. The big news and price spikes from last Thursday and Friday as a result of non-farm payroll, unemployment and job creation reports is already old news.
The payroll number was weak. Only 80,000 new jobs were created in June. Official unemployment was stuck at 8.20 percent. Real unemployment and underemployment is much higher.
Short term traders are still holding long positions believing that weak economic data and Euro zone problems will fuel the metals higher. This is a perfect setup for large commercial traders to add to their shorts. Profit taking and short covering will follow. We have been unable to decisively break through $1,625 – $1,640 resistance.
With QE3 on the horizon, possibly unveiled at the FOMC’s August meeting, beware of a rush to liquidate long positions.
Support remains at $1,525. No man’s land between the high and low. The same with silver – essentially stuck between $25.35 and $32.50.
The USD has rallied and added pressure to the metals market.
All Things Considered – John’s Commentary:
One of two things will happen for both metals. They will eventually pierce their upper or lower resistance decisively. Then it will be off to the races.
Look for a second half of the year rally no matter when QE3 comes, as it will.
Action to take: Continue to accumulate silver at these price levels. From these price levels, silver is currently slated to outperform gold by 40% in the intermediate term.
Quote of the day: “An investment in knowledge always pays the best interest.” – Benjamin Franklin
