With continued uncertainty in global markets, today King World News is featuring an important interview with one of the greats in the business discussing the key to the gold and silver markets in 2016.
James Turk: “It has been nearly two months, Eric, since our discussion in early December where I said, “It seems reasonable to conclude that gold and silver prices have fallen as far as they are going to fall.” Since then, there have been a lot positive developments happening for both gold and silver…
I think the best news is the price action itself. Both gold and silver continue to pull away from their December lows. Each passing day improves the odds that the December low is the final low. In other words, it marks the end of the bear market and that the price will not be broken.
More importantly, if the December low proves to indeed be the final low, it signals that new long-term uptrends in the precious metals have begun. That is the key point everyone needs to know, but we will only find out with certainty whether the final low is in place in the weeks and months ahead. When it comes to markets, anything can happen – both good and bad. And like I said back in December, they do not ring a bell at market lows, or tops for that matter.
Key To The Gold And Silver Markets For 2016To look at some of the positive developments, it is very good news that both precious metals have hurdled their previous resistance points. That was $1,100 for gold and $14 for silver. Gold has now traded above $1,100 for six consecutive days.
That small number of days is not enough of a trend to bet-the-ranch, but it is a start. It could therefore be the beginning of a new uptrend, meaning that gold will not fall back below $1,100. All we can do is watch the evidence unfold day-by-day and let each precious metal tell us its own story.
Another positive development is that gold’s and silver’s moving averages are turning positive. The short-term moving averages – like the 21-day and 55-day averages – are already trending higher. We now need to get further confirmation of the strength and durability of this uptrend by having the longer-term moving averages turn upward. Their 200-day moving average has been declining for months in a fairly consistent decline.
The steepness of the decline is now moderating, so next will watch to see if this critical moving average starts to level off. Nevertheless, it is positive news that at the moment gold is trading above its 200-day moving average, which presently stands at $1,118.
This long-term average has always been an important trend indicator. Given that gold has taken the first step by trading above this key hurdle, there are now two things to watch: First, let’s see if gold remains above this average, and second, we have to wait and see whether the average itself changes from its multi-year downtrend and starts trending up.
It is also very good news that the mining shares are moving higher along with the price of the precious metals. It is an important confirming indicator of bull markets when the precious metals and the shares of the companies that mine them are moving in the same direction.
Keep AccumulatingAll in all, Eric, everything is falling into place very nicely for the precious metals, and the outlook for this year is bright. I therefore continue to recommend the same strategy that you and I have discussed many times before.
Everyone should continue to accumulate gold and silver on a cost-averaging program by buying the same dollar amount of physical metal each month. By doing so you are building up your savings, which everyone needs, and best of all, you are saving sound money that preserves your purchasing power.”
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