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Gold & Silver Weekly Wrap-Up

It was a good week for precious metals investors, with the HUI climbing 23 points from 330 on Tuesday to our resistance point at 353 on Friday. The importance of this point can not be overemphasized, as this marks the fourth time in the last few months that it has proven to be a tough ceiling. It also marks the 38.2 Fibonacci resistance level. The HUI closed up 1.2% today, despite strong employment data buoying the dollar.

To save our readers valuable time, we are going to start posting a “Gold & Silver Weekly Wrap-Up” like the one below. This will include a summary of the interesting articles, analyses and editorials that we’ve found across the web. An easy way to keep your finger on the pulse. If you want to suggest or submit an article, please do so here.

Eric Orlandini from Dow Theory Analysis writes…

I expect silver to really take off in September and at the very least test good resistance at $14.81. Furthermore, I expect it surpass this level and more than likely reach $20.73 by March 2007.

Roger Wiegand writes that Silver is Ready to Ring the Bell and opines…

Silver supplies are tight and getting tighter. Powerful controlling authorities would have you believe silver remains plentiful. We say under-supply exists and it continues to get tighter. Prices must rise to accommodate needs. We forecast the completion of a near term market price correction in silver to be followed by a fall rally. Prepare your trading plan for silver as it resumes its rally and watch carefully as silver is viewed less as an industrial commodity and more as a currency and investment safe haven for traders and investors.

The Real Deal brings an interesting angle, stating Silver Wheaton to benefit from Goldcorp/Glamis merger.

Salman Partners analyst Haytham Hodaly suggested Friday that once Penasquito comes into full production in 2009 it could produce more than 20 million ounces of silver per year.

‘’A portion of that, if structured properly, could go to Silver Wheaton under an agreed upon silver purchase agreement,’’ Hodaly said.

Silver Wheaton, in which Goldcorp holds a controlling interest, holds the rights to buy all of the silver produced by Goldcorp’s Luismin mines in Mexico.

Olaf Sztaba writes that Gold Awaits Their Seasonal Turn and agrees with our analysis that a close above 353 would signal the next major uptrend. He writes that…

July was an essential base-building phase. This developing base, in the form of the bullish “V-extended” structure, should act as a launching pad for the next rally (please see below). A signal for such a move would be the HUI above 355-360.

Chris Laid from Prudent Squirrel gives a somewhat somber assessment of the future for commodities. He blames gold’s horizontal movement on the fear of a coming depression in the US, followed by the EU, Japan and other countries, saying…

The single greatest force on gold right now is an expectation of a collapsing US economy due to the collapsing housing bubble. That expectation is overriding every major gold bullish force now. Even war fears in the Middle East. The expectation of a coming US economic contraction is a great hand over the gold and commodities markets now.

I think the gold bugs who are forecasting gold to rise to 725 or higher this year are not seeing the impact a slowing US economy will have on commodities and gold, and are really looking only at the recent several years where the housing bubble has dominated the US and world economy and of course has driven commodities over the moon. In fact, financial writers and investors are not seeing the coming end of the great post World War 2 prosperity bubble in the West either.

If China were to follow the US into recession, as I expect, I foresee a very large scale drop in commodity prices as well beginning in 2007 possibly by January, but definitely by June. Now there is one major caveat to all this, the US economic decline and gold dropping. That is major war news. War news is big for commodities and gold too.

Herr Axel Weber, the President of the German Bundesbank was asked to comment on gold sales with reference to assisting the government in its budget plight. He said…

It’s not a good idea to touch the substance. It would be better to consequently push for the reduction of debts. Gold is an important factor for the confidence in the stability of the €.

The good doctor Richard Appel, writes Resource Stocks Prepare to Rise, saying…

The vast majority of exploration shares have posted their correction lows. They are now in the process of building important bases before resuming their Bull Market. After staging a major price rise between the summer of 2005 and May, 2006, the wind was abruptly let out of their sails as they followed gold sharply lower. Now, I am confident that the tide has begun to change in their favor.

Barrick Gold announced a hostile take-over bid for Nova Gold. Most of Nova Gold’s shareholders will use some or all of their proceeds to acquire other junior resource companies. They will do this in the hope of finding yet another Nova Gold, and similarly riding it from the pennies it was worth but four years ago when many bought it, to its $19 C. range of today. This amount of fresh money reentering the exploration market is sufficient to alone launch a major sector advance.

By | 2017-03-23T14:06:43+00:00 September 1st, 2006|Gold & Silver Commentary|

About the Author:

Jason is the founder of He previously worked in data analytics for the world's largest research firm, consulting to Fortune 500 companies globally. Jason eventually leveraged those skills to trade successfully full-time and after helping friends and family optimize their investments, he launched Gold Stock Bull and The GSB Contrarian Report newsletter. Jason is a cycles investor with a contrarian eye for identifying undervalued assets. He has built an expertise in both the precious metals and cryptocurrency markets. Jason believes in honest money, limited government, decentralization of power and enjoys studying alternative economic models.