Silver

Bear markets can be devious creatures.

We previously emphasized that the situation in Ukraine was the main bullish factor for higher precious metals prices (mainly for the price of gold) and that remains to be the case.

The TDG Silver Producer index recently hit multi-month resistance and has since declined. Weekly 1-year chart: Chart going back to the 2011 peak: Analysis of these charts is available for premium subscribers in regular premium updates. Consider a premium subscription. 

From last Friday’s close at $1322, gold opened strongly on Monday trading, as high as $1355 before losing two thirds of the rise on Tuesday.

An interesting aspect of the gold market is that most analysis is off track, with the reasons put forward for being bullish generally being further off-track than the reasons put forward for being bearish.

Gold, silver and mining stocks didn’t do much on Friday, so what we wrote in Friday’s alert is generally up-to-date.

In this chart we plot the cumulative speculative long position in Gold and Silver relative to cumulative open interest. The price is constructed using half Gold and half Silver. The cumulative speculative position reached 23% last week. From 2002 through 2012, the lows came around 25%. The recent low in the cumulative speculative long position … Continue reading

Gold and silver extend their rallies amid escalating Chinese demand for gold

If gold is entering a new bull market then it’s a great time to get in.

In short: In our opinion, no positions are currently justified from the risk/reward perspective.