The dollar, gold, silver and gold mining stocks remain in their trading ranges. As I do periodically, today I'll give you a status update on these three key financial markets.
U.S. Dollar
Most economists expected the dollar to rise this year for various reasons, including …
- The U.S. has a stronger economy than most of our trading partners.
- The Fed is tapering its government bond purchases, causing long-term interest rates to rise.
- Growing geopolitical tensions in the Middle East.
- And now the unanticipated Russian-Crimea crisis.
Despite these forecasts, the dollar remains at the lower end of its trading range.
A recent Wall Street Journal article suggested the dollar is not as strong as many anticipated. That's because the Fed and other global central banks have started and ending several quantitative easing (QE) programs.
No one knows when these programs will change, or when the authorities might start a new one.
I think this view has some merit …
Bigger than gold …
It's a complete mystery.
China imported a record amount of gold last year … almost $70 billion in bullion.
Russia's gold holdings have skyrocketed last month … and with the sanctions being imposed over the Ukraine crisis … I think this is the beginning of a very powerful trend.
The truth is Central Banks around the globe are buying gold at record pace … and it's just a matter of time until we see the price skyrocket.
And even though I'm somewhat of a "gold bug" … I'm not loading up just yet. Watch this brand new video to see why … |
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Below is a current chart of the Dollar Index:
Technically, the longer-term trend is bearish. Rallies keep running into selling pressure. The Dollar finally made a bottom last October.
Medium-term there is a slight upward bias, but in a trading range. Support is the $79 area, and resistance is the 81.50 area.
Short-term prices show a neutral pennant formation. This pattern may be indicating a pause in the trading range. Prices are roughly in the middle of its medium-term trading range.
Gold
Below is a current gold chart.
Let's review the chart:
- The gold rally that started last December is seeing some profit-taking.
- If prices could have stayed above $1,350 resistance, gold could have established a new higher trading range with $1,350 resistance becoming support.
- A lower support area near $1,200 is strong with a bullish double-bottom from July and December of last year.
- Also, $1,200 is also the cost to produce gold for some companies, especially the smaller producers. At prices below $1,200, some producers will probably cut production and gold supply will fall. Eventually prices would have to go higher to convince gold companies to produce again.
- Gold's trend is still dominated by declining trendlines. Rallies are met with selling.
- Resistance is the $1,350 to $1,400 area.
Gold will probably remain in its trading range with support at $1,200 and resistance in the $1,350 to $1,400 area.
Silver
Below is a current chart for silver:
Silver also shows a long-term trend of selling into rallies.
- Prices have held the $19 area since last July. $19 should provide strong support for silver.
- Resistance shows at the current declining trendline in the $21 area. The next resistance will be the last rally to $22.
- For now, silver has strong support at $19 and resistance at the $21 to $22 area.
Silver has been stuck between $19 support, and resistance the $23 to $25 area. Prices will probably remain in this area for the near future.
Gold Miners
Below is a chart for GDX, a proxy for gold mining stocks.
Let's review the chart:
- The GDX rally that started in December is now seeing profit-taking with higher volume (bottom pane).
- The Choppiness indicator (wavy blue line) suggests the current bearish move has almost run its course. Readings below 30 suggest that a move may be exhausted.
- Support is the $22 area, and resistance is $28 to $30.
All the above charts show strong support. With prices stuck in trading ranges and likely to remain so, the best strategy for now is to trade within these ranges.
"Fighting the tape" is rarely a good idea in markets like this one.
Sincerely,
Dan Hassey
P.S. Discover the 3 investments that could prove to be "bigger than gold" in the next 12-18 months. Just
click this link here to watch this brand-new video interview today.
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