Barry Rosen Gold/Silver Comments/Forecast:
TOP TRADE RECOMMENDATIONS: (see daily service for futures entries)
Dec. gold calls on pullbacks on June to 418-419 and into April 22.
Dec. silver calls by April 11 at the latest. Hold until August 13.
PRECIOUS METALS
GOLD: (4/5) Gold has fallen on schedule with a first pattern completion at 418.20 but we will not rule out a fall to 400. Cycle lows dominate into April 22 when gold stocks are due for a low but the market may not take off until after the FED meeting for a rally into June 1. If that rally is not impulsive enough to take out $460, then we may have to hold back our bullish posture and as cycle lows dominate into mid-July. That does not make sense to us but at the moment the dollar is pointing toward another rally on flight to quality probably June 1-July 18. We still see a very bullish cycle into August and gold and we will have to be long into late April and see what develops and maybe take partial profits into early June.
LONGER-TERM: Monthly chart patterns point toward 678 in conjunction with the falling the dollar to the 6560 region into 2006-2007. If the dollar were to really crash, we are open to seeing gold move to $1000 or even $1600 into 2007. An inflation cycle dominates into August 2005 and in the past it has pushed gold up sharply so this year could end up being another 1979-1980. It may happen very quickly from July into August in a very short number of weeks. We think the best entry for gold will come in late April but given the upside potential, buying Dec. call options as early as April 11 may be a safe way to go.
STRATEGIES: We are going to continue to favor longs on pullbacks looking to buy Dec gold calls into April 11 and April 22.
KEY DATES: April 11, April 22, May 31 (high), July 12-17 (low), August 15-17 (top).
GOLD STOCKS: (4/5) Gold stocks have held key support so far at 9040 but should push lower to 8815 into April 22 when a cycle low is due. Higher prices are due into May 31 but then another low could develop into July 12. Until we see the extent of the May rally, we cannot give a strong signal to the higher prices that we had forecasted before. On a conservative basis, a retest of 103-104 will happen again and we will have to watch May 31 to decide whether to take partial profits. Still see a good chance for a strong rally in late July and August and we have to hope the June decline is a congestive retracement.
OVERALL: We expect gold to soar this year and gold stocks will be the most important hedge for your portfolio, as the XAU could reach up to 119 and even 132 and possibly even 160 into 2006. Gold will become kind when the dollar tanks into next year.
SILVER: (4/5) Silver is setting up for a major buy this week and generally looks higher into late July and early August. It may have a few pullback weeks with gold in June but generally we still like it. We would feel better buying it at lower levels like 686 or 668 but if we do not see those levels we would still be long Dec. 2005 call options.
OVERALL: The Feb. bottom is probably it for silver and we probably do not have to worry about new lows to 5.95 any longer. Still trying to pinpoint exactly when this market will take off but we are inclined to think it will happen after April 22. First upside target will be 8.64 and then 9.05 but we expect even higher prices than that.
LONGER TERM: While we think silver will follow gold higher with the inflation cycle, it’s too early to gauge how high it can go. We think our original monthly chart target of 9.05 is an easy target but will silver reach up to 11.00 or 13.00 if gold starts soaring? We will want to start accumulating Dec. call options and hold.
MONTHLY CHART PERSPECTIVE: Given bullish cycles into January 2006, we want to stay open to movement up to 11.00 and even 14.00 if the market gets very excited into 2006-2007. We would use any weakness to buy March 2006 call options into late March. Consult daily service for futures entries.
KEY DATES: April 8-11, April 22, May 31 high, August 15 (high).
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