Larry Baer's Technicals: Gold Rush Back On With QE3, Dollar Trending Lower & Treasury Yields Surging

September 17, 2012

 

The trend has been up for gold futures on the monthly chart for years now. Gold issued a buy signal in August and is beginning to super-trend once again. Gold hasn’t super-trended on the monthly chart since 2011. Gold has been making higher lows the last three months, another bullish indicator. The upside potential for gold on the monthly chart looks to be around the $1840 level and has strong support at $1669.

Gold Monthly Chart

Sector Performance: June 2012
For a larger view, please click on the image above.

 

I feel it’s also worth mentioning that hedge funds Paulson & Co. and Soros Fund Management increased their exposure to SPDR Gold Trust to 21.8 million shares and 884,000 shares, respectively. Paulson & Co. now has 44% of its $24 billion fund exposed to gold.

Silver

Silver futures (December) also suggested a fresh buy signal on the daily chart on Sept. 13. The trend is up for silver on the weekly chart, and silver indicated a king’s cross countertrend buy signal last month on the monthly chart. The king’s cross is my attempt to account for why, shortly after a change in trend, a market often puts in its extreme. What I discovered is that the trend had not actually changed; rather, it was just an event—a news event, short or long covering, etc.—that caused a correction. After this “event,” the market would often turn around and resume its previous trend.

Silver Monthly Chart

Sector Performance: June 2012

For a larger view, please click on the image above.

 

U.S. Dollar Index

A lower U.S. dollar tends to bolster commodity prices, and the recent weakness in the American currency has added support to gold. On the daily chart, the trend has been down for the dollar since July and confirmed to me that it may be in a longer-term downtrend in mid-August. The dollar has once again resumed its super-trend to the downside and has been generating sell signal after sell signal on the daily chart, giving a total of six signals in the past six weeks.

U.S. Daily Index Daily Chart

Sector Performance: June 2012
For a larger view, please click on the image above.

 

 

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