05/14/10: While the US dollar continues to move higher in earnest vs. its European currency pairs, gold has broken its old high and looks to be pointing towards $1400 US per oz. More significantly, Silver has registered a massive Cup & Handle formation suggesting prices there want to move into the $24 US per oz. Please refer to this weeks CTS spotlight for more on these two markets. Elsewhere, Natural Gas looks very interesting as it has held last falls lows and put in a night tight double bottom. I shall look to re-establish my long option position first thing Monday morning (through the ETF - UNG) and would advise those that can take the risk to do so as well. Lastly, I see the F. Cattle market is settling down> while I am reluctant to play this short, it does lend support to the grains bottoming and for the Soybean bottom to be legitimate.
Gold & silver. Above I have attached the weekly charts for Gold and Silver. While I had been reluctant to move into these markets heading into the seasonally 'toppy' time of year. I can appreciate a violent breakout when I see it. As well as price breakouts, notice how the momentum indicator (in this case RSI) has put in double bottoms and broken out as well. Silver looks especially bullish here as it has just now confirmed a massive Cup & Handle formation. This price pattern suggests prices want to move into the $24.00/oz area or 26% higher than current levels.
For some historical perspective, gold topped out at $800/oz in 1980 and silver at $50/oz. If the same relationship were to be true today, gold at $1200/oz would imply a silver price near $75/oz!
That's all for this issue of the CTS Spotlight,
Brian Beamish FCSI
the_rational_investor@yahoo.com
http://www.the-rational-investor.com
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