Ugly Charts In Gold, Silver & Oil

(News & Editorial / Ugly Charts in gold, silver & oil)

15 July 2012, Gold-Eagle article, by Larry Edelson

“I’d love to tell you that all is well in the world. That Europe has solved its sovereign-debt and currency problems. That the U.S. economy is looking better than most believe. And that Asia is about to soar again.

But the fact of the matter is that none of that is true.

Europe’s in deep doo-doo. Spanish and Italian debt yields are soaring again. Moody’s has now downgraded Italy. Finland is threatening to pull out of the euro. The euro is tanking; it’s at a fresh multi-year low and threatening to plunge even more.

Here in the United States, corporate earnings are starting to disappoint. The U.S. budget deficit hit $904 billion in June and is on track to hit $1.17 trillion by the end of the year.

Our national debt is approaching $16 TRILLION, more than $51,000 for every man, woman and child.

Plus, our country is quickly heading toward a fiscal cliff of gigantic proportions ? uncertainty in just about everything, from tax policy … to fiscal policy … to monetary policy and more.

Also thrown into the mix: Underlying tones of class warfare, rising social unrest, stubbornly high unemployment, and more.

In Asia, China’s economy has slowed more than I expected. Though the region can bounce back quite quickly, there’s no doubt the added worries about Asia are also weighing on the global economy.

Bottom line: The short- and intermediate-term fundamental forces driving the markets are looking ugly.

That’s also precisely why the technical picture for most markets is also looking bad.

Consider this chart of gold: Many see some sort of bullish formation forming, all because gold has managed to hold the $1,522 to $1,545 level on at least five occasions.

But anyone who has truly studied the market knows that the more times a market tests a particular level, the greater the odds are that it will eventually break that level and plummet right through.

All my system signals remain bearish gold in the short to intermediate term. Once $1,545 is taken out, look for support levels at $1,495.50 … $1,446.80 … $1,400.80, followed by $1,373.10 and $1,346.80.

ONLY a close above $1,723 in gold would reverse the downtrend. Short of that, I strongly believe gold is headed lower.

Also consider this chart of silver: Similar to gold, silver has repeatedly tested – and worn down – the support level at the $26 area. The next time through it, and silver should plummet.

Look for support at $23.61 followed by $20.27 and $16.89.

Only a weekly close above $31.49 would reverse silver’s short- to intermediate-term downtrend.

Hard to believe silver could fall to $20 or lower. I know. But that’s what my systems are telling me. And the rout could come soon. So stay alert.

Also consider this chart of crude oil. It’s one of the ugliest charts I’ve seen in a while.

While oil is trying hard to hold the $80 level, it will soon fail to do so. Instead, a shocking decline lies ahead for oil, one that will see it plunge to below $60 a barrel.

Keep your eyes on the $77.33 level. Once that gives way, oil will spin a lot of heads as it tumbles hard. Only a weekly closing above $92.87 would turn the immediate trend around for oil.

As for U.S. stocks, don’t expect much upside there either. While the broader U.S. stock markets are in a new long-term bull market, they remain vulnerable to the downside in the short term.

There’s simply too much global uncertainty right now, and I see the Dow falling to at least 11,500 and possibly 10,500 – before any sustainable rally develops.

My view:

  1. Continue to keep most of your liquid funds in cash, ready to be deployed on a moment’s notice, but as safe as can be right now. The best way: A short-term Treasury-only fund in the U.S., or equivalent.
  2. Despite gold’s weakness, hold on to all long-term gold holdings. You do not want to let go of those. Long term, gold is heading to well over $5,000 an ounce. Short term, gold is heading lower. Consider inverse gold ETFs, such as the ProShares UltraShort Gold (GLL), to hedge your long-term holdings.
  3. Consider prudent speculative positions to grow your wealth. Like those I have recommended in my Real Wealth Report, which are doing great right now as silver falls, as the euro struggles, and more.

Most of all, don’t let the pundits on Wall Street kid you. The Fed will not prop up the markets for the elections … Europe will not be able to solve its sovereign-debt crisis … corporate earnings have seen their best for the current cycle … and there are more dangers to your wealth right now than there have been in the recent past, since at least 2008.

So stay cautious, but ready to pounce on new opportunities as they unfold.”



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