SuttonWatch.Net: Gold/Silver: Ready To Shine Again!

The 3-year bear market in Gold and Silver prices is over. The October 3rd intra-day low in the prices for both precious metals was the clear turning point in the start of a major new bull market advance.

In the interest of full disclosure, on Friday, October 10th, I starting buying Gold/Silver mining shares (AG, EXK, PPP, & GDXJ) for the first time since I liquidated all my precious metals investments in early July 2014. I now have a 12% allocation to Gold/Silver mining shares, and I expect to add to this position over the next few trading days.

Daily chart buy signals were triggered in my computer trading system in almost every Gold/Silver mining stock this past Wednesday, October 8th (see daily charts below). Despite relative strength in underlying precious metals prices on Thursday and Friday to end last week, the mining shares retraced between 50% and 100% of their extraordinary single-day gains as posted on Wednesday, October 8th. The volatility is this unloved sector is off-the-charts right now, but the potential upside now in these out-of-favor and under-weighted stocks looks extremely attractive when measured against the potential downside risks.

Much has been published over the last few days about the latest FOMC minutes released by the Federal Reserve Board on Wednesday, October 8th. While some Fed Governors are talking tough (hawkish) on when short-term interest rates should be raised, it's clear to me that Fed Chair Janet Yellen is running the show now. Ms. Yellen is mostly concerned about the lack of wage growth and also the dis-inflationary factors that have come from the very strong U.S. Dollar in recent foreign exchange dealings. While interest rates may in fact be raised by the Fed sometime in 2015, the hawkish rhetoric will soon give way to more dovish comments from Fed officials over the next several months, at least! And a dovish Fed is bullish for Gold/Silver prices, especially at this point in time when uninformed (and often wrong) bearish sentiment is at record high levels in the precious metals markets.

One of the more interesting potential catalysts for Gold/Silver prices to advance sharply soon is the upcoming vote on a Swiss referendum to force the Swiss National Bank to hold a fixed portion of its assets in Gold. This vote is scheduled for November 30th, and if approved by Swiss voters, the Swiss central bank would then be forced by mandate to keep at least 20% of its reserve holdings in Gold. Since the Swiss central bank currently has total assets of approximately $500 trillion dollars, it would then have to purchase about 1500 tons of Gold to satisfy this mandate, which is approximately half the world's annual production right now!

The next seven weeks could be VERY interesting in the Gold/Silver market!!

Here are several Gold/Silver charts, with all signals reflected from my computer trading system: