Tuesday, December 14, 2010

Gold and Silver - Now What?

If you have followed my posts for a while, you have noticed that on occasion I am able to consider the longer term picture of things - gold's C wave parabolics, silver's potential height in December and more recently, palladium to the moon.  And I enjoy the research and consideration of the evidence to offer these longer term views of the precious metal's bull market.
But what I am much more comfortable with is the day to day analysis of things - looking up close at a tree or two and not broadening my scope to the forest in which they live.  In that context, this post simply offers a look at a couple trees - gold and silver - and expresses my observation of what is likely to happen later this week.
This first chart is a 4 hour look at the continuous contract for gold.  Of particular interest to me is the rising trend line of the True Strength Index (TSI) indicator and the relationship of the current reading.  In plain English, I think there is a day, maybe two, left on the shot clock before the trend line is broken.  When it is broken, gold will take a spill downward.
Click on either chart to ENLARGE
This second chart is also a 4 hour look at the continuous contract, but this time silver.  Yesterday I sold my position in Proshares Ultra 2X Silver (AGQ) for a nice one day gain of 6.8%.  But at the time I made that sell decision I was not looking at the data offered in this chart.  It is impossible for me to see all the clues when I have so little time during the day to look for them, but had I seen this chart yesterday, I would not have sold my AGQ position - just yet.  
However, this chart does suggest to me that the optimal time to sell is rapidly approaching - from a short term trader point of view, that is.


  1. John,

    Again, thanks for all you share here. I noticed that your sink or swim charts show the tsi settings as 7,4,1. Your freestockcharts setting is 4,7. Does Sink or Swim simply take the settings in a different order or have you really reversed the settings for the charts?

    Thanks again.


  2. Hi,

    Can you please explain why use often use a 4 hr time frame?



  3. joe - try putting in (7,4) then look at (4,7). Are they not the same?

    Yogikeung - i view the daily time frame as the more accurate of the two. but when i get over anxious to see if I can figure out what will happen next (like reading a good book that you don't want to stop reading), I often jump ahead to the 4 hour or even 2 hour charts to see what the book characters are doing in a little closer detail. ie there is information on the 4 hour chart that may not show up on the daily chart for at least a couple days. For me it is like peeking at a few chapters ahead of the one I am reading - to see who 'done it' and what will happen next - before it happens.

    Thanks for your questions!

  4. John,

    When do you think the optimal time to sell AGQ will be and/or what price point?


  5. Steven - the answer, i suppose, depends on your time frame. are you basically a day trader as I, or a longer term investor?

    if a day trader, and if the dollar successfully reverses northward in the next few days, the optimal time to sell silver was yesterday.

    if a longer term investor, the optimal price is past $200....how far past I have no idea.


  6. I'm more of a swing trader. I started to acculate over the summer would like to sell before year-end. You said you wouldn't have sold if you saw the chart. Assuming one wants to sell within the next 1-2 weeks what price would you target?

    Many thanks.

  7. Steven - well, you have a very very nice gain then. Excellent!

    I am quite satisfied that I sold AGQ the other day. I have my money (gain) and if the dollar breaks down soon, I can just rebuy my position and go for an awesome ride.

    In the mean while, if the dollar does not break down (certainly this evening it is trying to rally), then you are holding a ticking silver time bomb and likely to lose some of your gains if you hold the bomb too long. What is right for you I have no idea. But as you asked my thoughts, this is what they are.

    Steven, I try to navigate my trading through the land mines of perceived risks. A whole other way of investing is what you do which I gather is buy and accumulate and sell when you feel the time is right.

    Right now I perceive the risk to holding as too great to justify the reward. But that is just me. And for sure, I could be wrong. Not sure I offered you the words of wisdom you deserve to hear, but I did try.