Base metals fall, gold/silver also

Gold, silver and base metal prices fell significantly overnight in the US. The fall in base metals was anticipated because the inflationary outlook inevitably was going to result in a tightening in interest rates, crimping global economic activity. The Fed is behind the rest of the world in that respect.

Gold and silver fell too, but less significantly, just losing their gains from the past week. I actually expect gold & silver to hold these levels. Gold can be expected to hold around $US875/oz, with some scope for weakness to $850, but thats likely to be temporary. Silver is well supported around $16.80/oz, though its industrial applications might similarly see a fall in this metal back to $15.00/oz, its just I dont see this happening. I think silver's spec appeal will see it hold with gold. During a period of speculative demand, the industrial side of supply/demand loses all significance. So basically I see gold and silver holding these levels.

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Andrew Sheldon
www.sheldonthinks.com

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Andrew Sheldon www.sheldonthinks.com

Profiting from the next gold boom

You might be asking yourself how high is the gold price going to go. I recall years ago (around the year 2000) people saying that gold would never recover from $290/oz, that there was just no use for the metal. Since the gold standard had been abandoned, what were all the central banks to do with gold. I think there are a number of problems with this argument:
1. Gold has been a monetary unit for 5000 years
2. Just because governments have abandoned gold, it does not mean people have. In fact I would suggest any attempt by the central banks to abandon gold just makes it more valuable.
3. No other commodity shares gold's characteristics - silver comes close, but gold 'shines' because any years production or consumption is a fraction of total inventories, making pricing of the metal more stable. The speculative demand for gold today is really just because central bankers dont play homage to gold.
I produced this report to provide an analysis of where I think gold prices are heading, and the timetable for the gold boom. I have used several indicators to outline where I think gold is heading. Further details here.
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Andrew Sheldon www.sheldonthinks.com

Gold needs to break $885/oz

While I remain bullish on gold, I would not be surprised to see it to it drift back to $850/oz before advancing. Looking at the candles shows some trepidation, so it might pull back to make a new base before advancing. I would be watching the price action over the rest of the week. Anything less than a significant move up is a negative. After $885, the next significant resistance level is $950/oz.

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Andrew Sheldon www.sheldonthinks.com

Silver $16.00, support at $15.50/oz

If you are interested trading silver then there are few suitable silver stocks in Australia. Macmin is one candidate, but the lack of resource upside makes them a poor candidate. Others tend to be explorers with alot of work to do. It makes more sense to look at US or Canadian stocks. Alternatively you can invest in silver through a CFD trading platform such as www.cmc-markets.com.
As we speak gold has fallen to $850/oz and silver has fallen with it back to $16.00/oz. This is not a support level, and since the US market has yet to close, I would not be surprised to see further weakness and a close either today or tomorrow around $15.50/oz. This is a strong support, and I dont see silver falling back to the $14.70 level. I expect silver prices to recover quickly, so $15.50 is a good entry level.

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Andrew Sheldon www.sheldonthinks.com

Gold reaches $850/oz support

Checking Kitco, I see that gold has fallen $25/oz in the USA, that brings it back to $US850/oz, an important support level. There is of course no assurance it wont fall further, but I will be looking for consolidation, if not a rally off this support level.
This level was the historic peak for gold reached in Jan 1981 and it was also a resistance level before on gold's recent move up to $1030, so it should be firm. Of course it will be supported by the Fed's rate cut and growing inflation.
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Andrew Sheldon www.sheldonthinks.com