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Richard Russell continues:
“The month of January was a winner, and according to Yale Hirsch (he edits the Stock Trader's Almanac) if January is an up month the odds are that the rest of the year will also be up. Newspaper or magazine headlines seldom get it right, but courageous Barron's keeps trying. The cover of this week's Barron's shouts in large red letters -- STOCK ALERT! GET READY FOR A RECORD ON THE DOW.
I've posted five years of the Dow on the chart below. At the bottom of the chart we see the 89-day rate-of-change. It seems so easy -- all the Dow has to do is climb another 174 points, and eureka, it's at a new record high, and at the same time it has confirmed the new record highs in the Transportation Average. Wait, note that RSI is at its severe overbought zone for the first time in almost two years. In the last five years, RSI has signaled overbought five times. At the bottom of the chart we see the 89-day rate-of-change (this is momentum).
I keep thinking about that giant surge among the silver miners. Was that surge telling us that silver is preparing to take off to the upside? I'm not sure, but it has certainly worked to keep my eyes on silver. I know that the world's supply of silver has grown dangerously low. Whereas ten years ago there were three billion ounces of silver above ground and there for the taking, today there are less than one billion ounces of silver available. And unlike gold, silver is actually consumed.
I find the chart below of silver to be interesting. For the first time in many months, silver has closed above its 50-day MA (moving average). MACD could be in the process of turning up. Silver has now closed above its declining trendline.
Below, I keep a sharp eye on the US dollar, and you can be sure the bond market is also watching the dollar closely. Actually, all commodities should be watching the dollar, because if the dollar breaks down, it's going to require MORE dollars to buy commodities, which is inflationary. Also, if the dollar breaks down our foreign creditors will demand more yield (higher interest rates) for buying and holding dollars.
The daily chart below shows gold's latest action in a down-slanting flag. This flag should break to the upside, putting gold above 1700. The higher horizontal line denotes tough resistance at 1800. We should see some significant action in gold and silver this week. At the bottom of the chart we see the Dollar Index, which is declining. The declining Dollar Index should be a plus for gold.
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Eric King
Richard Russell - World’s Supply Of Silver Dangerously Low
Today the Godfather of newsletter writers, Richard Russell, warned his subscribers “... the world's supply of silver has grown dangerously low.” Russell also had some fascinating comments regarding gold, and stocks, including some great charts. Here is what Russell had to say: “If a problem has no solution, it may not be a problem, but a fact -- not to be solved, but to be coped with over time.” (Shimon Peres) As I read the quote, I relate it to the FACT of the US's debt. This is a situation that can never be solved honestly -- it's a fact. A fact that our children or our grandchildren will have to cope with. How they cope with it will set the course of the world of tomorrow.”
© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
February 5, 2013
