The Next Major Move in Precious Metals Is Close
NEW YORK (TheGoldAndOilGuy.com) -- After making new highs about a year ago we have seen silver and gold consolidate for roughly the last 12 months.
Technically, it would typically be a bullish scenario with gold from the standpoint that the last 12 months' price action was a sideways consolidation in a bullish pennant formation.
However, over the last year we have witnessed a series of lower highs and increasingly tested supports levels around $150 on gold that raises caution.
With the Federal Reserve pulling any extensions on further quantitative easing in the form of QE3 or other programs, the bullish case has lately been criticized. However, I am still a firm believer that gold, in most respects, is a currency, and the only one that can maintain its value. There are very serious issues looming in Europe and across the world that are far from resolution. With few tools left in the toolbox to stimulate world economies, further easing can never be ruled out. Silver, after breaking through strong resistance around $19 to $20 in September 2011 went almost parabolic in spring 2012 prior to giving up most of its gains in the last year. There seems to be significant support around $26 on silver. However, this level has been tested quite frequently over recent months, and this again raises caution. While silver owes some of its moves to its industrial application, the high correlation between the two metals is not to be ignored.
I think the long-term trade will be long in both metals, but I'm waiting to see a significant breakout out of these consolidations on heavy volume to confirm a direction. I would like to see both precious metals break out of their respective consolidations and ultimately have further confirmation in the U.S. dollar. Any major headlines over the next couple of months involving Europe or quantitative easing may provide us with the trigger for the next big move. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. Chris Vermeulen is founder of the popular trading sites www.thegoldandoilguy.com and www.ActiveTradingPartners.com. There he shares his highly successful, low-risk trading method. Since 2001, Chris has been a leader in teaching others to skillfully trade in gold, silver, oil and stocks in both bull and bear markets.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV