PM markets-Are they flat?
Posted by ogr8bearded1 11 years, 8 months ago to Economics
If you haven't been keeping up with the precious metals market you may be unaware of what is happening.
Some big holders of ETFs(paper precious metals) dumped their stocks in December and January and there is still a big exit going on from these. This has led to a lot of volume in the markets lately. At the same time, Central Banks have been BUYING a lot of physical metals. The market at this time doesn't differentiate between paper metals and physical metals and this has led to high volumes in the trading.
Another thing is that while the prices have been going up due to demand, they are also going down due to the strengthening of the dollar. This makes the market look flat to us, while other countries are seeing price go up against their currencies. I like the Kitco link to this article for it shows both of the changes.
IMHO, there is a big move about to come in metals, I'm just not sure which way it is going to head, up or down. I feel that in the long run it will head up and test new highs. But it could do so after a further drop. If the drop does come, its a great time to buy and you can make a lot off of rise later. At the same time, if the drop doesn't come you can buy now and still see good gains if looking to the long term.
If you are already in the market, either way it goes it is time to get out of the paper and into the physical. Silver is my metal of choice. As you can see here of this chart http://www.kitco.com/reports/template_ji... we have just crossed the MACD, RSI is only 9 points above the oversold mark and the Bollinger bands are almost touching each other. We are past the best time to have gotten in ($28.50 silver) but with the 'flat' market there is still time. When the dollar tanks and people move out of the DOW to reap their profits is when you will see the metals skyrocket.
I'll admit, I'm new to following this market and learning these indicators. I did use them to predict a $4 fall in silver prices last month ($32.50 to 28.50) based on trend patterns of falls after peaks. I'm still trying to determine how to see the rise on charts and graphs coming as it is more dependent on 'fear' and others jumping on the bandwagon to ride the price high.
Would love to hear some others thoughts on my read of the market and please don't rush out and invest or sell based on what I say, but pay attention to more than just the daily close price if you are considering investing or selling in the metals market.
Some big holders of ETFs(paper precious metals) dumped their stocks in December and January and there is still a big exit going on from these. This has led to a lot of volume in the markets lately. At the same time, Central Banks have been BUYING a lot of physical metals. The market at this time doesn't differentiate between paper metals and physical metals and this has led to high volumes in the trading.
Another thing is that while the prices have been going up due to demand, they are also going down due to the strengthening of the dollar. This makes the market look flat to us, while other countries are seeing price go up against their currencies. I like the Kitco link to this article for it shows both of the changes.
IMHO, there is a big move about to come in metals, I'm just not sure which way it is going to head, up or down. I feel that in the long run it will head up and test new highs. But it could do so after a further drop. If the drop does come, its a great time to buy and you can make a lot off of rise later. At the same time, if the drop doesn't come you can buy now and still see good gains if looking to the long term.
If you are already in the market, either way it goes it is time to get out of the paper and into the physical. Silver is my metal of choice. As you can see here of this chart http://www.kitco.com/reports/template_ji... we have just crossed the MACD, RSI is only 9 points above the oversold mark and the Bollinger bands are almost touching each other. We are past the best time to have gotten in ($28.50 silver) but with the 'flat' market there is still time. When the dollar tanks and people move out of the DOW to reap their profits is when you will see the metals skyrocket.
I'll admit, I'm new to following this market and learning these indicators. I did use them to predict a $4 fall in silver prices last month ($32.50 to 28.50) based on trend patterns of falls after peaks. I'm still trying to determine how to see the rise on charts and graphs coming as it is more dependent on 'fear' and others jumping on the bandwagon to ride the price high.
Would love to hear some others thoughts on my read of the market and please don't rush out and invest or sell based on what I say, but pay attention to more than just the daily close price if you are considering investing or selling in the metals market.
SOURCE URL: http://www.kitco.com/kitco-gold-index.html
If you're buying your PMs with federal reserve notes, it's flat. It doesn't matter what the Krona is doing versus gold, to you.
This business of comparing PMs to other currencies rather than the dollar has been trotted out in the last month by several people in the industry. I think it's just to make people believe their PM holdings aren't stagnant. They are.
It doesn't matter. One invests in PMs to protect against inflation and worse. Those days are certainly coming. But this is going to be a ten-year ride. One shouldn't convert their money to PMs and then watch the conversion ratio like a stock. Even when your PM is soaring against the dollar, it is merely a sign that the dollar is weakening, not that your "investment" has gone up.
My analysis of silver is that it's got a ways to fall again. But that advice is worth what you paid for it. Nobody knows the future. If you want to humor yourself, start keeping a table of famous PM writers, their predictions, and whether they came true. The accuracy rate is lousy all around. Markets cannot be predicted.
The true indicator of what is happening is not the closing price, but the volume being traded. This is the second part. As paper metals are sold, someone, maybe even the same ones selling the paper, is also buying physical metals. This is making the volume traded look huge compared to the past volumes. Now is not the time to be in paper metal and we may see a collapse in that area. At that time, demand in physical will increase greatly and so will the price. Then, even if the dollar continues to strengthen, it will be outpaced by the increase in demand.
While there may come a better time to invest in physical metals, there may not. I have invested what I have in physical silver. Even if I lose half its value in the short term due to a drop, I fully expect to double and perhaps even triple my investment in the long term. At the very least, I expect to do better than I would have keeping fiat money in my sock drawer.
I know what you mean about the PM writers. I have one yelling right now of $750 gold and another about $2k gold.
As for myself, I've noticed when one line crosses another the market reacts in a predictable way, at least for the short term, and right now I'm seeing a hefty buy signal that has not gone away while the market price has stayed 'flat.' I'm in for the long run, mostly to hedge against inflation as you say. But, if I see another opportunity to cash in before a correction and buy it back lower I certainly will take advantage of it. Plus, now that I'm in the market, I will take advantage of the gold/silver ratio for the very long term to increase my overall holdings of physical metals, the true way to really profit if taking the long view :)
If you were able to predict a $4 fall in silver price, I am impressed. Lets see if it was a fluke. I will be super impressed if you would lay out other predictions in this thread. If you're system works, I might buy advice from you :-)
I've seen other PM commentators draw high and low trendlines to an intersection point and then say "SOMETHING" is going to happen when they get to that point. It's going to make a big move. I just don't know whether it is up or down.
What are you supposed to do with that advice? I can say the same thing right now. It amounts to "You should either buy or sell soon. I don't know which. But definitely do one or the other!"
This is assuming nothing major happens in the world (i.e. U.S. Gov't shutdown, Israel attack on Iran, N. Korea going active with threats or a major Gov't pulling out of the EU.) If any of those happen we will see a massive spike up in price instead.
I'm not an expert by any means and have no training at all that I am drawing on with my predictions. All I'm doing is looking at 1, 5 and 10 year charts for past signals, reading current indicators I mentioned above and relating them to current price and future actions based on these.
I've read warnings that the market can't be played this way, otherwise librarians would all be rich. I will say that if you try and take only one thing to make the prediction this would be true. You have to look at many factors lining up the same.
I made a move into silver because I honestly don't see a way to exit QE or deal with $16 trillion debt without hyper-inflation coming and have no plans to play the market unless I see a big opportunity. I will be keeping an eye on gold/silver ratio, and when it hits 30 will sell my silver and buy gold, and when it hits 60 will sell my gold and buy silver. This will increase my actual holdings and is a very long range play that could see only a trade every 2 to 3 years of that sort.