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Analysis of Gold, Silver and Crude Oil

Commodities are finally becoming interesting once again. The slumber is over.

Comex Gold

Gold seems to be the first one off the block. It has gained around $150 since our last call on Gold (A case to buy Gold - now) and has gained around $50 since the Jan 5th call. But all these advances are peanuts when compared to the real potential of Gold and Silver.







From the longer perspectives, something that we are very interested in, the weekly charts of Gold show first signs of birth of a new rally. The twice thick upper channels on the weekly charts have been broken on the upside. Though it is early to say the rally has started, it is a clear sign that uptrend remains intact.

Importantly, if this is the bottom - then the correction would appear very short. The prices have seen a correction of One year contrast to a three year bull run. What this means is; IF this is a terminated correction then the Bull Run coming forth would be huge and would have astonishing momentum. Fundamentally does that make sense? It never made better sense that our largest country also being the largest debtor country and nearly broke! (read - Rich man's story)



Silver



So, where is silver? Silver is like an underdog. And unfortunately has remained an underdog to Gold since the eventful 1873 events. The prospects in silver are however no bleak, if anything it is much better than Gold. Silver is known for its last minute sprint, and it again seems to be the late off the block.





The consolidation of Silver has made it a good base, but just as with the case of Gold, the amount of time it has spend is much less than it would conventionally be expected.

Silver however has much tougher shorter term resistances than Gold. Therefore do expect some choppy movements in silver. But the overall trend is expected to be up.



(also: Its time to buy silver)



Crude Oil



Crude oil seems to be on the chopping block as far as the commodities go. It seems to be under threat from all sides, consumers, demand strength, countries with high deficits, petro-dollar backlash and falling OPEC market and rise of alternative energies.





If anything this proves that commodities no matter how important in consumption do not take the place of Gold or Silver or other precious metals.

Technically, however Crude seems to have made a bottom but the resistances are high. But even a dead cat bounce after such a steep fall will give crude a decent $10-20 rise from current levels over period of next few months.



Commodities seem to have made the bottom. It would also mean the financial domino that was put in effect due to selling of good assets to cover the bad investments are coming to an end or have already ended. Commodities would be the first asset class to ride out of the credit-crisis whirlpool, possibly in 2009. The charts seen over longer term seem very interesting in that it gives a glint of promise the coming bull run could be an extended wave i.e. just buy and buy some more. Simply put, we will see a rally that history will remember.



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