Saturday, May 19, 2012


A few days ago I wrote a post titled, A LITTLE INFLATION AIN'T SO BAD and I discussed how we are suddenly seeing lots of comments from Europe and Germans that perhaps the inflation bogey man that they have feared isn't so bad.  I mentioned essentially that central bankers will pretty much throw out all reservations and any moral conviction regarding inflation to save the Euro and their failed system.

My post was basically an introduction to the idea that gold and silver may actually have corrected and that this recent fall would be the last great opportunity to buy before rallying hard on new central bank action.  A few days later we have seen a pretty strong reversal in gold and so I wanted to put up two charts that give you a technical idea of where support and resistance might lie.  Remember though, if this printing and new found like of easing gathers steam at the G-8 meeting this weekend, gold and silver will rally significantly.

In the chart below we see the powerful bounce off of the $1530 level on May 16th.  Over the course of the next two days it has climbed to $1590.  We are clearly still in a downward channel with a upper trend line at $1630 and $1690 which is overhead resistance outside of the channel.  Downside support and the channel boundary is still around $1530.

I do not see much danger in testing the bottom of the channel unless the G-8 says that they are prepared to allow Greece to exit.  Although if that happens, gold will probably also launch higher as Spain, Portugal, and Italy may be right behind them.  Because there is such a chance of this blowing out of their control (like it is in their control) there is absolutely no way that I see them not printing here and spewing more Euros to every willing taker.

To sum it all up.  Gold and silver have bottomed here (thanks to the G8) for a while and you can look to targets above to sell if you are trading the shiny stuff.  If you are a long term holder, I hope you added more.


Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at