September 2011 was like a Wile E. Coyote cartoon for gold and silver. Both metals spent the first part of the month bouncing gradually down a hill. But in the last week, they stepped right over a cliff edge, hung in mid-air for a split second, and then "poof!" a straight freefall to the ground below. Splat!
Final tally: September saw gold and silver's worst monthly performance since the height of the financial crisis in 2008.
And, according to several news sources, the metals' mutual sell-off was not on the mainstream radar. Here, a Financial Times report had this to say:
"The price falls came as a shock to investors who hoped precious metals would offer protection against events such as... the eurozone debt crisis. It's hard to say that something that can fall 15% in three days is a store of value."
But gold and silver's price falls were not a shock to everyone. In the days prior to the moves, EWI's Metals Specialty Service went on high alert to the metals' downside potential via these timely insights:
"Bottom line is that silver appears bearish... Odds suggest we have or are likely very close to completing a large rally. Once complete, a large decline to eventually below 32.30 is the expectation."
"... all the necessary ingredients are in place for a key top."
"The current decline is confirmation that we are still subdividing... a third wave and portends lower prices ahead. Given all that has and is now transpiring, it would be no surprise if its now time to go to [where the 200-day MA is rising at 1525 [$1,525/oz]."
On September 26, gold prices nearly hit the 200-MA area of $1,525/ounce on the nose before rebounding alongside silver.
Now, I asked EWI's Metals Specialty Service editor Mike Drakulich what his take is on the recent upside gains in gold and silver, and here's what he had to say:
"We've seen substantial bounces off the lows and this is where we watch the unfolding action closely for further clues that will tell us whether possible important intermediate term lows were registered or these bounces' are simply upside corrections on a path to much lower levels."
Mike leaves no stone unturned in his intraday, daily and weekly analysis of gold and silver. Get the complete details today with his Metals Specialty Service >>.
Metals Specialty Service Editor Mike Drakulich uses the Wave Principle and 30 years of market experience to help you replace the endless market possibilities with higher-confidence probabilities.
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