Monday, May 27, 2013

Gold & Silver Double Bottom With Major Bearish Sentiment

JUNE ANALYSIS: Gold and silver prices have bounced after reaching a double bottom. Here is a price analysis for June 2013 reviewing likely circumstances.

June Price Forecast - Clive Maund
Gold is now one of the most hated asset classes in the world, and Big Money's media henchmen are not wasting any opportunity to put the boot into it, oblivious to the irony that such negativity is music to the ears of the true contrarian, which we like to think includes us. The relentless and brutal attacks on gold in the mainstream media are a sure sign that we are at or near to an important bottom. We see that gold has dropped back quite hard, but in a fairly steady manner, over the past week or so towards its April panic lows. This alone implies that there is a fair chance that the support at these lows will hold, or that if it is breached, it won't be by much. While gold admittedly doesn't look too good on its multi-year chart, as the high volume breakdown from the top area implies that it could drop further towards strong support approaching $1000, this outcome does not look likely given the Commitment Of Traders and sentiment extremes that we are already seeing, and the explosion of negativity towards the metal in the mainstream media, all of which are indicating that we are at or close to a major bottom NOW.
The COT chart shows that Commercial short and Large Spec long positions have dropped to their lowest level by far for the life of this chart. This is bullish. Small Specs are out completely, which is another positive sign.

Gold's COT is at its most positive since the 2008 crash with the Commerical short and Large Spec long positions at their lowest levels since that time. This is construed as strongly bullish for the medium and long term. In addition, the Hubert Gold Sentiment is at its lowest reading for years. As a contrarian indicator, this is strongly bullish.
Will the double bottom pattern hold or could we still see a move down to the $1,200 level which mainstream media has been hinting at for months? Looking at the upcoming month of June for the gold markets, it is very difficult to suggest that there will be steady movements. The market will certainly be held hostage to the whims and statements of the Federal Reserve. The mere mention of the possibility of pulling back some of the quantitative easing will continue to put a massive panic in the markets. The $1,400 area will be important. If the market will be able to break, and more importantly hold, above that area, it would signal a stronger gold market. The area between $1,350 and $1,400 seems to be one of consolidation. The reality is that most talking heads on the television have left gold for dead, and I am starting to wonder what is left to beat the market up. The fact that most people hate gold doesn't faze me overall, as I have heard this kind of pessimism on and off for years. The markets seem to have two speeds, one that focuses on the longer-term trend, and one that focuses on the last week or two.
The metal's plunge after the longest bull rally in at least nine decades has kept it below the 200-day moving average since February. Prices may climb to $1,500 in June after forming a "double bottom". Equally as likely, however, is another leg down in this price correction that could take gold down to the $1,200 level and silver to around $17 where they will likely find strong support.