Precious Metals: Silver

For a while I've held the belief that gold and Gold miners would be moving toward a longer term, primary and maybe even secular bull market move. That analysis, while not having changed, was put on the back burner for a while until the longer term signals started to clear up.

Shorter term, you're probably aware I'm expecting some downside in GLD, from the looks of the charts, SLV too. However, it may be time to revisit the longer term GLD perspective, especially with a pullback in prices and a few things on the charts that look like perhaps precious metals may very well take the place of stocks in the very near future as risk asset of choice.

Gold

 This is one of several near term signals suggesting a fairly decent pullback in gold. Of course tomorrow's ECB policy announcement can have some wild fluctuations and I've heard everything from the ECB will come out with a bazooka and the market will sell the news to nearly the exact opposite, all from Investment bank analysis, the point, no one really knows, but for now, we've been expecting a near term GLD pullback, yesterday's post dealt with this, GLD Update, including a reversal down right in this very area which so far looks to be on track today from the loss of the early gap up.

GLD has never really recovered since our 2011 top call and Intermediate to primary downtrend to follow, if you look at a 5-day chart of GLD like this, you don't see much of interest...

However, add some trendlines and some macro versions of our head fake concepts, nearly exactly the same as what we are looking at with the short term market bounce we are expecting or at least that has been setting up, and you get a different view.

A closer look on a 1 day chart shows what we have suspected for some time was a large base being put together, albeit within the confines of what looks like a bearish descending triangle, although the price pattern is much too big to be anything of the sort, traders still view it in this manner.

As per usual with a head fake move, we see it just before a reversal 9to the upside), it builds momentum. In this case that head fake move would be in the yellow area, creating a bear trap and thus as it moves back in to the triangle, a short squeeze. So in fact, the short term action in GLD, may put us back on track to start considering the longer term position.

Silver is in a very similar situation...

 This long term 2 hour chart of SLV shows an impressive positive divergence, even though I'm not a big fan of silver for all of the manipulation through the years.

 The shorter term 5 min chart shows a base (white), mark -up and the same sort of near term negative divergence (pullback) that we are expecting in GLD.

The 3 min SLV chart shows this sharply, much like GLD's charts in similar timeframes.

As do the shorter intraday charts.

While we do have some GLD pullback positions, like GLD puts, I am starting to think more and more that we'll be looking at longer term positions in either PM shortly.