Today King World News is featuring an important piece which shows the gold and silver space may finally be ready for a massive and historic upside surge. Below are incredible illustrations and analysis that shows the long bear market in the metals may finally be coming to an end.
Sector Analysis
Investors Intelligence on the gold and silver space: "The PHLX Gold & Silver Index (XAU) has found support from its 2008 low. There was a very brief break of that level resulting in a mini bear-trap. Rallying from here and breaking through down channel resistance for the past three years would be a strong buy signal.
A closer look at action by the PHLX Gold & Silver Index (XAU) shows that a double-bottom has formed over the past three months and with today's strength, that base is now confirming.The MACD is rising through neutral and offers plenty of upside scope. We like the developing technicals by the sector and would buy here.
Sector Rotations
The PHLX Gold & Silver Index (XAU) versus the S&P 500 is pulling out of a confirmed base formation. That projects outperformance by the sector over the next few months at least as the prior trend is retraced.
The fifteen year chart for the PHLX Gold & Silver Index (XAU) against the S&P 500 shows that the short-term base has occurred just above the low in 2000. That suggests now is a good time to consider covering shorts in the precious metal miners as reversionary risk is high.
The PHLX Gold & Silver Index (XAU) versus the PHLX Bank Index (BKX) also shows a turn underway from just above a long-term support shelf, here dating back to 2003 through to 2005. Therefore investors should look to commence a rotation from overbought banks and into the miners.
The ratio for the PHLX Gold & Silver Index (XAU) and the PHLX Utility Index (UTY) has found support dating back to the year 2000. Here the level was successfully tested, adding conviction to following the rotation into precious metal miners from the utilities. Given the size of the decade range, the relative outperformance potential by the gold miners is huge.
The PHLX Gold & Silver Index (XAU) against the S&P 500 Industrials (S5INDU) has also turned up from a key level, the low from the year 2000. Should the bounce from support continue then investors would gain performance by being overweight gold miners relative to the industrials.
The PHLX Gold & Silver Index (XAU) versus the S&P 500 Information Technology (S5INFT) sector has not tested the ratio's low from 2000 but it is reversing up from just above it. We would not follow this rotation just yet but watch to see if the gold miners can sustain their rally and then consider the switch.
The ratio for the PHLX Gold & Silver Index (XAU) and the S&P 500 Health Care (S5HLTH) index is one of the few areas to have broken down through the year 2000 low. Short-term it is turning up and should that continue, to recapture broken year 2000 support, then a bear-trap would print. That action would be a strong signal to take profits in health care.
King World News note: If the reversal patterns featured above begin to take hold more aggressively, this will mark the end of the long bear market in gold and silver and it will usher in the next leg that takes both metals to new all-time highs.
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