Did the Price of Gold Just Form a Bottom? Silver, the Devil's Metal, Too?

Commodities & Metals

Published: May 20, 2013 12:55 pm

Last Updated: May 20, 2013 1:05 pm

It was looking this morning as though gold could be ready test even new lower lows based on the trading tape action of late. Suddenly, a 2% gain in the price of gold may change that according to some technical traders and chart watchers. A new report from the Commodity Futures Trading Commission showed that large speculators have continued to cut their net bullish positioning for gold and silver futures. The most recent data that traders have increased their bullish bets for platinum and palladium in the most recent reporting period.

Silver hit a low not seen since late in 2010 this morning, and the price of gold has again broken back under the $1,400 per ounce mark. Gold is back up to $1,486 on last look. Kitco.com was bearish earlier showing silver could break under $20 before it showed the total numbers of speculative bullish positions in gold, silver, platinum, and palladium.

The move is trying to bring favor back to miners. The Market Vectors Gold Miners ETF (NYSE: GDX) top ETF is up by 4.5% at $27.58 and the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) is up 4.8% at $10.96. The reality is that these bounces are off of 52-week lows and much may be short covering. Gold itself was down over 19% in dollar terms so far in 2013 before today’s bounce. Now compare that to the miners, where the “GDX” was down literally about 45% just in 2013 as of this morning’s new lows.

Silver Wheaton Corp. (NYSE: SLW) frequently trades in tandem with silver and its shares have recovered by 4% to $22.62 so far this Monday. The iShares Silver Trust (NYSE: SLV) was down as much as 29% in 2013 at this morning’s lows, while Silver Wheaton was down about 41% year to date as this Monday’s lows.

ETFS Physical Platinum Shares (NYSE: PPLT) is up 2% at $147.74 so far today, but this broke under $142 earlier and the platinum ETF was down by only 6% so far in 2013 at the lows this morning.

Our view is generally that trying to call an exact bottom is a very painful game. Sometimes it works and sometimes it doesn’t, and there are equal numbers of reasons for each. That being said, here is a view of the latest action in the price of gold via stockcharts.com showing you where the GLD ETF was trying to hold some support this Monday.

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