There has been almost no action in the precious metals market today, but the fact that PMs moved higher in the overseas markets yesterday and are not declining today is bullish, especially in case of silver.
In the latest Premium Update we wrote the following:
"Silver appears ready to rally once again but prices have not yet broken out above the 10-week, 50-day moving average. Only a small rally is needed to accomplish this, and the picture will then be further approved."
The above-mentioned moving average is at $31.83 and silver is currently trading close to the $32 level. It actually moved to $32.10, pulled back to $31.80 and is now moving higher once again. While the move back above the moving average is not yet confirmed, the only thing the price needs to do to confirm it, is to stand still. In other words, the outlook for silver improved slightly this week.
In other news, the Bank of Japan announced the expected monetary stimulus. This information may have already been discounted in the price and most likely greatly contributed to gold moving above its 2011 high (in terms of the Japanese yen). Consequently, gold may not move higher simply based on that factor. It's likely to move higher anyway, but not on this piece of information, because those who were willing to purchase based on it - have already done so.
The general stock market is moving higher and so is the financial sector.
The Euro Index is consolidating above the 2012 high, further verifying the breakout. As it's already been confirmed, the index is likely to move higher and the opposite can be said about the USD Index.
The interesting fact about the USD Index is that its cyclical turning point is only a few days away and it's most recent short-term move (the last 10 days or so) was actually to the upside. This means that it's likely to start moving lower once again soon, especially that it has once again moved to its declining resistance line - the one we featured in the latest Premium Update.
Consequently, the decline in the USD Index and the continuation of the rally in gold, silver, platinum and mining stocks may be only a few days away.
We remain bullish on the precious metals sector and, just as we indicated previously, half of the long position is suggested for gold and silver and full long position is suggested for mining stocks.
Naturally, we suggest remaining in the precious metals market with your long-term investments.
As you recall from last week's Market Alerts, we have recently expanded the Dictionary section on our website and now it includes related terms and dialogs that can help understand what a given terms means for gold and silver investors. Here are three more terms for you to look at:
As always, we'll keep you updated should our views on the market change. We will continue to send out Market Alerts on a daily basis (except when Premium Updates are posted) at least until the end of February, 2013 and we will send additional Market Alerts whenever appropriate. That's right, we decided to keep sending you daily Market Alerts at least until the end of the next month based on the very positive feedback that these daily alerts have generated.
Thank you.
Sincerely,
Przemyslaw Radomski, CFA
