Silver

Paying subscribers get to see quite a bit more of Rick’s Picks than lurkers might infer from reading the free commentaries that go out each day to many thousands of readers. A headline that will have caught the eye of the latter was this one, from the May 2 edition: Gold’s Nastiness Hints of a Major Bottom. Comex June Gold subsequently fell $76, and we were therefore unsurprised to receive e-mails from lurkers who evidently had been caught flat-footed by this supposedly unforeseen (by us, anyway) bout of weakness. In fact, the daily “trading touts” that lie behind the Rick’s Picks subscriber wall have been far more cautious than outsiders would likely know. Just yesterday, in fact, we offered a projection for GDXJ, a proxy for junior mining stocks, that may have caused some subscribers’ scalps to crawl. (Click here for a free trial subscription if you want to see just how low we think this favorite of gold bulls could conceivably go.) So which is it:  Are we bullish on gold, as our headlines would seem to imply? Or do we privately shrink from the risk of owning bullion? The answer is that, although we are bullish on gold and silver for the long-term and have been socking away bullion coins for years, we are not so certain that it will achieve the stratospheric heights that some gurus have predicted. However, what we are most confident in saying is that, come hell or high water, gold’s purchasing power will more than hold its own relative to all other classes of investable assets.  We would concede, however, that the fantastic price targets of some bullion superbulls have a few things going for them.  For one, the U.S. dollar is already intrinsically worthless, and that implies that real money – i.e.,

Gold and Silver were getting trounced when we looked in on them during this action-packed session. A washout low? Probably not, if one reads the technical evidence dispassionately. We identified some new targets and made a short list of things we’d need to see happen before the turnaround would become credible. There was also a discussion of some very subtle distinctions between internal and external lows on charts of larger degree.

Wednesday's selloff overshot the 28.895 downside target of the compelling pattern shown, telegraphing more weakness ahead. Also, like June Gold, July Silver futures has yet to bounce energetically enough to create a bullish impulse leg on the hourly chart. These signs lend weight to the 28.100 target shown as a likely place for a tradable bottom. Camouflageurs should start to look for a subtle reversal pattern on the 30-minute chart from 28.835 on down.  If your aim is to get short, use minor-degree, downtrending ABCs that are as subtly impulsive as the ones we've used on the way up.

I've proffered some ugly targets for the bullion vehicles we track and trade, although, taking the  sleaze factor into account, I read the pounding that gold and silver are taking Tuesday night as mildly bullish -- a shakedown, although, alas, perhaps not the washout of answered prayers.

A 28.810 target is by now an old friend -- make that, enemy -- and there would seem to be little chance that the futures will somehow avoid getting there in the day(s) ahead.  If they close below that number, however, keep 26.940 in mind as a logical next stop.  That Hidden Pivot is equivalent to the one at 1534.30 that I've identified in today's tout for June Gold.  One more number to watch is 28.420, for which the 30-minute-chart coordinates are A=30.235 (5/7), B=29.135 and C=29.520. _______ UPDATE (10:06 a.m. EDT):  The Hidden Pivot at 28.810 evinced zero support. Given that it was as clear a target as I have yet to discover, this development is quite bearish. We'll continue to give Silver the benefit of the doubt nonetheless, and to bottom-fish whenever the odds look good. However, today's action suggests that at a minimum, the futures will come down to test December's 26.500 low.

A downside target at 28.810 remains my minimum price objective for the intermediate term, but a place to contemplate aggressive bottom-fishing as well. More immediately, you could try getting long via camouflage near the 29.875 hidden midpoint support of the pattern shown.  If it gets bashed, we be looking at more downside over the very near term to at least 29.520, the pivot's 'D' sibling.  Keep in mind that theoretical entry risk for this vehicle should never exceed $70 per contract. This implies that 'camo' trades will usually be initiated on charts of 5-minute degree or less. _______ UPDATE (22:25 p.m. EDT):  The futures caught a tradable bounce from 29.550, three cents above the pivot, but it proved fleeting.  The subsequent relapse down to an intraday low of 29.135 has further shortened the odds that 28.810 will be reached.  Bottom-fishing will be warranted there, and you should start looking for the turn from around 28.835.  Camouflage will be needed in order to hold theoretical risk on entry below $70 per contract.

The futures turned higher on Friday without having reached the 29.480 correction target I'd flagged. This is bullish as far as it goes - and bullishly impulsive on the lesser charts -- but the rally will need to eke out a little more upside to generate a second 'camouflage' opportunity for those of you who missed the 30.180 entry signal tripped on Friday (A=29.850, B=30.480). The subtlest such opportunity I am able to discern as of late Sunday afternoon is shown in the chart.  Keep in mind that a worst-case target at 28.810 is still viable.  If you are able to get long based on the pattern I've sketched the chart, please let me know in the chat room so that I can establish a tracking position for your further guidance. Rather be a trader than a lurker? Click here and we’ll show you  how.

Today's commentary references a worst-case target of 28.810, but you could attempt bottom-fishing at 29.860, the Hidden Pivot midpoint of the pattern shown.  If weakness pushes the futures below that support, though, they'd probably fall to at least 29.480 in search of traction.  That's the 'D' target of a larger pattern, nicely visible on the 5-minute chart, where A=31.365 on 5/1 and B= 30.410 on 5/2. Notice as well that there are numerous subtle handholds for catching a ride north via camouflage. Rather be a trader than a lurker? Click here and we'll show you  how.

Crikey! Although we declaimed here the other day that gold appeared to be carving out an important bottom, getting airborne could be bumpy.  One reason we “feel” a bottom is near is that it has been relatively difficult to stay long in gold.  Getting aboard has been no problem, of course, since traders can attempt it at any time, albeit not always with confident expectations of success. And so it was early Thursday morning, when we put out a “buy’ recommendation in Comex June Gold in the dead of night, shortly before 5 a.m. Eastern.  The rationale was purely technical and involved placing a bid at the target of a corrective pattern we’d expected to reverse at exactly 1637.40 -- $7 below where the futures were trading at the time. However, our Hidden Pivot support evinced no discernible bounce as the futures made a violently choppy descent toward an intraday low of 1631.30.  In the Rick’s Picks chat room, a subscriber reported having made a few dollar trading from the wrong side of the move, but this feat – catching a falling piano, so to speak -- would not likely have been duplicated by any but the nimblest of traders. So how much lower might we expect gold to fall before a bottom is in? Our guess, worst case, is 1574.30 for the June contract. Using Thursday night’s price of around 1637.40, that would represent a fall of approximately 3.8 percent from current levels. We say that would be a “worst case” target because gold looks pretty feisty on the hourly chart and could come alive at any time. Bulls have not ceded ground easily, and it would take a rally to just 1648.00 today  -- $11 above current levels -- for the good guys to regain the offensive short-term.