What’s Next for Gold and Silver?

King World News featured a hopeful chart from analyst David P. out of Europe. Gold peaked in 2011 at $1900 per ounce. It has been almost six frustrating years for gold bulls waiting for the bull market in gold to return.

The closeup of this chart shows this last week has brought a crossover in the MACD, the first bullish buy signal since the sell signal in 2012.

Stockcharts explains the Mac Dee or MACD, “Developed by Gerald Appel in the late seventies, the Moving Average Convergence/Divergence oscillator (MACD) is one of the simplest and most effective momentum indicators available. The MACD turns two trend-following indicators, moving averages, into a momentum oscillator by subtracting the longer moving average from the shorter moving average.

As a result, the MACD offers the best of both worlds: trend following and momentum. The MACD fluctuates above and below the zero line as the moving averages converge, cross and diverge. Traders can look for signal line crossovers, centerline crossovers and divergences to generate signals. Because the MACD is unbounded, it is not particularly useful for identifying overbought and oversold levels.”

I don’t have the same kind of chart to show you of silver. The MACD is bullish both on a daily and weekly basis, but the MACD has tended to whipsaw giving short-term buy and sell signals.

Something Michael Belkin said recently on King World News struck me. Michael Belkin is the man who advises the most prominent sovereign wealth funds, hedge funds, and institutional funds in the world and he warned investors that gold, silver and the mining shares are set to skyrocket.

Belkin said “…there is this mindless, huge herd in a few select high tech stocks that have bid Apple (AAPL), for example, to a market cap of $792 billion.  “Meanwhile, there are huge opportunities in the precious metals mining stocks, particularly silver and gold mining stocks around the world.” You can buy all of the silver companies, which have a total market cap of $49 billion for 1/56^th of AAPL, which is selling at 56 times the whole silver industry. A small shift from high tech to precious metals would cause an explosion.

Eric King said, “These (gold and silver mining) stocks, Michael, they haven’t moved yet (this year).  But when they move, they move violently to the upside.  So your P&L can change pretty radically in a short period of time.”

Michael Belkin, “Absolutely and that’s what we’re setting up for.  I think we’re setting up for a huge upside.”

There are two levels that we must watch to avoid getting left behind:

• Gold: a close above $1362
• Silver: a move through $19

Remember, we offer no guarantees that this analysis is correct and full disclosure: I have a position in gold and silver coins and a position in the gold stock of Gold Standard Ventures (GSV).