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Extrapolating from personal experience, I can conservatively estimate that at least a few hundred financial advisors are dependent on a recovery in precious metals markets for their short-term profitability. Today will prove to be another nail-biter for them, with gold testing $1,400 (U.S.) and silver down two per cent.

Determining an intrinsic value for bullion remains the subject of heated, occasionally rancorous debate. The absence of earnings, cash flow or other fundamentals means technical analysis is often the best predictor of future gold and silver prices.

Unfortunately, the charts are broken and prices have failed to build a sustainable floor. The gold spot price (see chart) attempted to rally to within one standard deviation of its 50-day moving average in the last two months of April, and then immediately headed south in a hurry.

The chart for silver is similar but with an interesting difference (see chart). Unlike gold, the silver price has endured – and recovered from – an even worse sell-off in the past three years, beginning August 2011.

In terms of Relative Strength, currently our favoured method of technical analysis, both gold and silver are hovering just above the 30 level that signals oversold – 35.2 and 31.9 respectively.

None of this means much until the gold and silver price stabilize for a few trading sessions – at least a week of low volatility, but the longer the better. Only then can the charts suggest whether the market is capable of another assault on previous highs. In the meantime, stress levels for a lot of market participants will remain elevated.

Scott Barlow is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here to read more of his Insights, and follow Scott on Twitter at @SBarlow_ROB .

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