Gold and silver are mingled with dirt, till avarice parted them.
~ Proverb
In a previous post, I talked about the correction of gold & silver being quite short and that the rebound was only a lame one, and that I was expecting a further correction to occur. (See Gold a Better Buy for the Short Term, Silver for the Long Haul for further discussion.) As you can see, the correction did indeed last a little longer but from the charts, the correction is over and the new move is underway.
From the chart below, you can clearly see that a double top looks to be in the making for gold. Resistance is at $139, support at the rising 14dma (also a previous resistance), then 50dma and next at $132, in that order. A break below $130.30 may signal a start of a downtrend.
Silver on the other hand, seems to have a clear uptrend intact with the metal making higher highs and lower lows. However, as gold and silver normally rise and fall in tandem, should gold drop, silver will most likely be taken for the ride so it's important to keep an eye on both precious metals. Silver also may have a more volatile reaction as is characteristic of the metal, dropping or rising suddenly and drastically.
Resistance for silver is at $29.47, while support is at 14dma, then $27.16 (a previous resistance) and next at $25.87. A break below this may signal a break in the uptrend and that prices may turn southwards.
Would I buy?
Well RSI has dipped down for both metals but is not low enough to consider adding to my holdings. However, if you feel strongly that the 14dma will hold support, perhaps nibbling is an option. Just my two cents.
Cheers,
~K
