Alibaba (BABA) is going to become the United States largest initial public offering (IPO), and U.S. stock market indexes are up nearly 2% this week

And Scotland voted to remain part of the United Kingdom, and Treasury yields are near lows, and gold and silver prices are getting bludgeoned in the paper market.

While U.S. financial prognosticators are raving over Alibaba and the IPO, the price action in precious metals and in the broader U.S. equity indexes showed signs of weakness about the time it was announced that Alibaba could start trading in the low to mid eighties.

The chart below shows gold futures prices during the same time frame as the silver chart above.

In silver, the selling pressure started around July 15^th of this year and the selling has not stopped. Silver futures prices dropped from roughly $21.50 to $18.50 an ounce in about two months. This represents a near 14% decline in the price of silver over the past 2 months.

Gold prices have also seen strong selling over the same period from July 15^th to present. Gold prices fell from around $1,340 per ounce to a recent low slightly below $1,220 per ounce. Gold prices dropped nearly 9%, showing some strong relative strength against silver futures.

The daily chart of gold futures is shown below:

The $1,180 – $1,200 price level has shown major support for gold futures prices which is clearly depicted on the weekly chart of gold futures shown above. We are contrarian traders and the price action in precious metals is ripe for a potential bounce. We view the opportunity more as a trading opportunity than an investment opportunity for now, but that could change in the longer term.