Gold/silver bulls are getting sloppy again, now at $1410/ $27.73. Silver has been the catalyst for this entire two-month leg up, crowning a whopping $10 move during this time frame. At the start of this Tuesday's session, however, the Bulls ought to be cautious. Just like with that $3.50 Dec NatGas print early in Oct.25 session - the daily charts are going parabolic!
I would be heeding the following alarming factors, as Gold and Silver futures sit at record highs tonight:
1. USD has been firming in last couple of sessions - but Gold and Silver still rallied to records. Bulls will argue that this a positive divergence, pointing to "independent strength". I suspect that this, in fact, may be pointing to forced short-covering; and thus, less of the forced short-covering remains to be executed!
2. Platinum and Copper did not follow Gold, Silver and Palladium's move to new highs Friday and Monday. I would note muted response in Crude and grains as well. The only other commodities that continued parabolic were the leading stars of the period: Cotton and Sugar. Again, another sign of forced short-covering well in progress.
3. Significant news of QE2 and elections are done with, and precious metals have just tacked on more gains.
4. Chartists know that, following a lengthy run, a commodity that continues parabolic at week's start risks a powerful intra-week reversal. Those types of "outside reversals" on the Weekly are much more potent, in my observation, than the ones on Daily. When Gold futures chart-painted that "shocking" intra-day reversal from $1366 to $1326 on October 7, that made me temporary Bullish. I shall not be Bullish if something like "outside reversal" will be painted on Weekly chart.
5. Another chart complication will be caused by semi-holiday week, with Veterans Day shutting the Treasury markets on Nov.11, and taking bank and Fed personnel out of the office.
p.s. Had lunch with a formal colleague, who has been super bullish on Gold for many years, the first thing he said to me is "congratulations", before I asked what for, he said: look at Gold price, and you have gold, right? because all Chinese buy gold, stereotype!!
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