Precious Metals and Miners Making Waves and New Trends
Written by: Chris Vermeulen
NEW YORK ( TheGoldAndOilGuy.com) -- The precious metals sector has been dormant since both gold and silver topped in 2011. But the long-term bull market remains intact. As long as we do not have the price of gold close below the lower yellow box on the monthly chart, then technical speaking precious metals should continue much higher. Large consolidation periods (yellow boxes) provide investors with great insight for investments looking forward six to 18 months upon a breakout in either direction (up or down). The issue with investing during these times is the passage of time. One can hold a position for months and sometimes years having their investments fluctuate adding extra stress to their life when they really do not need to. Once a breakout takes place, a powerful rally or decline will start putting an investor's money to work within days of committing to that particular investment compared to money invested waiting months for the breakout and new capital gains to occur.
Gold Price Chart - Monthly
Gold Price Chart - DailyThe chart of gold continues to form a large bull flag pattern with a potential 3 or 5 wave correction. If the price reverses this week and breaks above the upper resistance trend line then it will be a 3 (ABC) wave correction, which is very bullish. But there is potential for a full 5 wave correction, which is still bullish but it just means we have another month or two before metals bottom.
Gold Miner Stocks - GDX ETF Chart - DailyGold miners do not have the sexiest-looking chart. It was formed a strong looking bull flag but has continued to correct and is not nearing a key support level. This level could act as a triple bottom (bullish) or, if the price breaks below, then it would be breaking the neckline of a massive head-and-shoulders pattern which points to 50% decline. I remain bullish with the longer term gold trend until proven wrong.
Silver Price Chart - DailySilver remains in a long-term bull market much like the monthly chart of gold shown earlier in this report. Silver continues to work its way through a large bull flag pattern with a positive outlook at this time.
Silver Miner Stocks - SIL ETF - Daily ChartReviewing the precious metals sector it seems that silver miners have the sexiest-looking chart. All price patterns are showing strength and are in proportion to one other. If this chart plays out to what technical analysis is pointing to then we could see the precious metals sector put in a bottom and rally within the next week or two. If this is the case then silver-miner stocks should provide the most opportunity going forward.
Precious Metals Trading Conclusion: In short, what you need to focus on is the yellow consolidation box on the monthly gold chart. A breaking in either direction will trigger a massive move that should last six to 18 months. Until then long-term investors can simply sit back and watch the sector while they put their money to work in other active sectors.