by Greg Canavan, Daily Reckoning.com.au:
All the action continues to be in the precious metals markets. Overnight, gold surged more than US$50 from its low just under US$1,340. It was on its way to testing the April low of around US$1,320. When it became clear those lows wouldn’t be breached, it sparked a short covering rally.
Silver was even more volatile. After plunging to a low of nearly US$20, silver railed to US$23.25 before settling back to US$22.85 in the US session. From the lows to the highs of the day, that’s an approximately 15% price move. Wild stuff!
So does this represent a bottom, you ask?
‘Are you crazy?’ we reply. Bottoms form when people stop confidently predicting them. So far, we’re yet to hear of anyone bravely calling the latest reversal in the precious metals a bottom, which is a good sign. Those who have stuck their necks out previously have lost their heads, so the market has clearly done its job in breaking the confidence and spirit of the gold bulls…which is the psychological precursor to a bottom forming.
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