By Bill Downey

During the course of the year, it is always good to sit back and review the current markets you’re involved in.  In this manner, one would look at the performance not only from a percentage gain or loss basis, but in the field of seasonality as well.  In other words, if we are interested in the gold market, we want to see if it is following the typical script in price movement in relation to past years.  Keeping an eye on seasonality will alert you to when the best chance for highs and lows to occur during the year.  More important of an indicator that something might be going on is when a commodity does not perform like it usually does during its yearly cycle.  Movement that is uncommon can provide for opportunity in the form of rallies and/or corrections (uptrend’s and downtrends.)  When we see a commodity rally when it’s seasonally weak, we can ascertain potential underlying strength that has not yet been discounted by the market.  The same can be said if a commodity is weak during a time when it should be strong.  Keeping an eye on this gives one a good perspective of whether the market is strong, weak, or normal.

How has gold been performing so far this year, and over the past year?  Well so far this year, gold peaked in February, went lower into April, rallied in May and into the first week of June, and our largest correction year to date has brought us to the July timeframe.  As you can see in the seasonal chart below, gold is following the exact script it usually does in an average year.  Therefore, we can categorize gold as in a NORMAL trending fashion thus far this year. 

Read the rest...

TOKYO, May 31, 2009 (AFP) - The man who hopes to be Japan's next finance minister envisions an Asia united by a single currency, saying the dollar may no longer reign supreme in future.

The opposition's "shadow finance minister" Masaharu Nakagawa also says he hopes to reshape the world's number two economy into a kinder, gentler place if his Democratic Party of Japan (DPJ) wins elections this year.

"You can't invigorate society only through... the law of the jungle where the strong become stronger," he told AFP. "The same player would always win if there were no handicaps in golf."

Red more

Gold stocks have been performing well but I cannot help but notice that the gold sector has reached a major resistance levels on the monthly chart. As much as I would like gold stocks to continue higher we must be ready for a pullback.

I have moved my stops higher to lock in profits from the recent rally in price. If the price breaks down from here I will be sitting in cash having made a decent profit, and I waiting for the next low risk entry point buy or short gold.

Gold Bugs Index – Monthly Chart

You can see clearly that we are at a resistance level in the monthly time frame. Two things happen at resistance levels. The price eventually breaks though and surges higher or eventually drops like a rock.

Read More

Dear Investors:

A month ago, I recommended buying silver and gold on weakness. This week, silver started to closed above its 50 day moving average for the first time since the end of March. Silver has broken out of the $11.80 to $13.00 range in which it has been trending for the last month. Gold so far has not closed above the 50 DMA of $912. I would like to see that and then closes above $920 so that gold also breaks out of its trading range of $868 to $918. When that happens, we should have confirmation that the next precious metals rally is underway.

Silver has moved up almost two dollars from its lows, while gold has not move up that much, percentage wise. Typically, I favor silver, as it tends to have bigger percentage gains than gold. However, since gold has not yet broken out, if you are sitting on cash waiting to buy, gold would be a better value than silver at the present prices. The general stock market has had the biggest one month rally since the Great Depression and the Bank Stress Test results are due to be released tomorrow. The financial landscape has improved very little and I expect investor enthusiasm for equities will fade as more discouraging economic news comes to light. The stock market rally would then turn into a sell off and people will shift more to safe haven assets like gold, silver and government bonds.

God Bless,

Timothy Silvers

www.silverbrothers.com