Gold & Silver Slide, Trends Stay Intact, Rare Earths Continue Rally

Gold was down $34.40 (2.43%) and silver down $.94 (3.08%) today and led the selloff in commodities. No matter how many times CNBC and other financial news broadcasters attempt to call a correction here, the fact does remain that neither gold nor silver broke through any type of trendline today. The 20 day MA in silver was tested, and the bears failed to force it to close lower. The 50 day MA in gold also was tested and the closing price was right in line with the trend.

The trends on the RSI and MACD do indicate weakening momentum in the trade, I choose to not to interpret gold as in a correction until the price closes below the 50 day MA.

Similar story with silver, oscillators are indicating weakening momentum – something I mentioned I felt yesterday and sure enough, we had a selloff today. Price has to close below the 20 Day MA to be a correction.

I also want to give an update on the rare earth sector. Since the Chinese rate hike Molycorp (MCP) has increased from $47.58 to $61.80, Avalon Rare Earths (AVL) has increased from $4.50 to $7.30, Great Western Minerals (GWMGF) has increased from $.40 to $.67, and Stans Energy $.89 to $1.38. This sector is red hot, and the Chinese are squeezing the supply as a political move against Japan and America. I expect this sector to grow rapidly in the next 3-5 years.

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About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

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