Gold and silver have formed a perfect inverse head and shoulders. There is only one move left to complete the move, and that is the shadow, meaning the last down move. This move happens because there is downside pressure built, and the bears want one last raid. After this, when support holds, it proves the support level, and forces the pressure off. Then the rise starts. We are moments away from this now.
US GDP missed today but the market was up. What gives? Well, the policy makers don't want the US data blamed for sinking stocks, so next week look for weakness in Europe to be blamed for a falling euro, rising dollar, and down stocks. At the same time gold bears will be yelling at the top of their lungs that gold is not a safe trade while it's price falls. Same ol' same ol'.
I see gold and silver breaking down next week. I see gold touching $1610 and silver flirting with $28. This will move the dollar up slightly, and the DXY should touch 81. Stocks will slide, and I see DJ touching 12,800. The down move in precious metals should last about one week.
Support should hold at the above levels for many reasons: First and foremost fiat is the weakest link because there is so much of it in supply plus the demand is not strong when real inflation is high and investors demand growth or yield and thus will not breakout; this gives all assets a cushion, especially real goods like PMs. Second, there is massive support for PMs at these prices. Not only will buyers like me go and move my savings from cash to silver, but there will be institutional buyers doing it as well. Third, supply is decreasing. Industry demands silver, miners are producing less than in the past, and there is not much currently above ground. Finally, the actual price of precious metal is much lower than it should be due to naked short positions by JPM and others, and JPM will be forced to lift these positions due to the above reasons, and they never like to get blown out.
I do not use this blog as a political platform because I assume if you are reading this you know who I am and what I think, but I will say this: Now will be a great time to buy, and removing every once from the market will put pressure on JPM to stop shorting silver. So not only will we benefit from the purchase, we will continue to destabolize the Fiat Ponzi system. I had not bought silver since Christmas and I have built a cash position, but I bought this week, and I am looking at buying for the next 3-6 weeks. If the price goes to $28, I will go all in. If it doesn't I will dollar cost average until early June. Either way, the technicals and fundamentals say this is a great time to buy, and may be the last time to buy at these price levels ever.