GOLD AND SILVER OPEN LOWER -- SO DO THEIR STOCKS WHICH ARE EVEN WEAKER -- THAT INCREASES THE ODDS FOR A PRECIOUS METAL CORRECTION
SILVER AND SILVER STOCKS OPEN LOWER ... As a follow-up to my earlier message on the likelihood that silver is peaking, the first three charts show silver assets opening lower today. The 15-minute bars in Chart 1 show Silver iShares trading below yesterday's intra-day low at 44.53. That increases the odds that yesterday's wide-ranging price action (on massive volume) marked a short-term top in the commodity. So does the fact that silver shares are falling. The daily bars in Chart 2 show the Global X Silver Miners ETF (SIL) nearing a test of its mid-April low and its 50-day line. Silver Wheaton is doing even worse. The daily bars in Chart 3 show the silver stock falling to the lowest level in a month after breaking its 50-day line. The fact that silver shares are dropping increases the odds the silver should start to weaken as well from its 1980 peak near $50.
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Chart 1
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Chart 2
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Chart 3
GOLD SHARES LEAD GOLD LOWER... Although gold is not nearly as over-extended as silver, the yellow metal is also overbought and due for a pullback. Chart 4 shows the daily RSI line for GLD to be in overbought territory over 70. If silver corrects, gold will most likely do the same. Gold shares also hint at precious metal profit-taking. Chart 5 shows the Market Vectors Gold Miners ETF (GDX) pulling back sharply from its December high near 64. The GDX has already formed a "lower high" from its early April peak and is threatening chart support near 60. That type of negative divergence between gold stocks and the commodity also hints at profit-taking in precious metals.
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Chart 4
