Gold & Silver: History May Repeat

Aibek Burabayev - INO.com Contributor - Metals


People record history from ancient times only to find that nothing is new in this world and everything repeats in cycles, waves, high and low tides, and therefore it is quite useful to have those historical records to project the future as it is another human propensity.

It is always a big challenge to be the first in doing something as you face uncertainty, and those who go next can learn from the achievements and mistakes of the pioneers. A few days ago, my eyes caught an interesting similarity in the chart history of gold’s price, which could give us a clue of an upcoming price development and I am happy to share it with you below.

As you may already notice from time to time I post different experimental charts, which use a variety of uncommon approaches in analyzing the markets to expand the scope of our vision. In this post I used the clones of the historic moves, which could shed light upon future moves.

I squeezed the charts to let both legs of the current upside move to fit in the snapshots, that’s why I would recommend you to open both graphs in a separate window for a comfortable view.

Chart 1. Gold Daily: Amazing Similarity!

Gold Chart
Chart courtesy of tradingview.com

The first leg of the first move up took 50 candles (70 days) of the time spent from the 3rd of December, 2015 till the 11th of February, 2011 as highlighted with the blue date range arrow. The first leg of the second move up took almost the same amount of time, 51 candles (74 days). A difference of only one day. The price hit the same level as in the first leg up at $1264. Amazing similarity!

On the left side of the chart I highlighted the area of consolidation with the blue rectangle. It has 77 candles (109 days) in length and $113 in height. Once the first legs are similar in date range I decided to clone the consolidation period and replicate it on the right side of the chart, besides that I inputted the price action clone highlighted with the orange zigzag to visualize the possible upcoming chart structure.

As you can witness for yourself the first down move and the first move up within the right rectangle are already similar with the first moves in the left rectangle. The down move was not deep and it was followed by the short move up which briefly surpassed the previous top and then reversed down again.

The height of the range of the current consolidation is equal to $113 and it was copied from the previous consolidation as the price is still inside of it and fits the clone. The downside is located at the previous low at $1194 and the upside was projected at the $1307 mark (1194+113 = 1307). This range should expire on the 14th of June, 2017.

What was left unspoken is the price growth difference between the first legs, $218 in the first move and $142 in the second move or more than 1.5 times less. We should expect then that the second leg of the current move (after consolidation) on the contrary would be larger than both the second leg of the first move and the first leg of the current price advance to obey the symmetry.

Chart 2. Silver Daily: Consolidation Is Shorter

Silver Chart
Chart courtesy of tradingview.com

I used the “Cloning” technique for the very first time in November of 2015 in the silver chart, which showed an impressive result as price target was hit almost to the cent although the time target was hit earlier with the Fibonacci sequence in place. So, this is already the second application of clones for the silver.

The first leg of the first move up charted 43 candles (59 days), while the first leg in the second move up printed 49 candles (69 days). This is not as accurate as we saw in the gold chart above.

Let’s move on to the following consolidation. On the left side of the chart it took 36 candles (50 days) to finish it and the range had the height of $1.52 between the $14.62 and $16.14 marks. When I put the clone rectangle to the current price area I found one disparity, the height of the current range is already bigger than in the previous consolidation. It is equal to $1.65 as the downside is at the $16.84 mark and the top side is at the $18.49 mark, therefore the right rectangle is higher. And this is not the last case of lack of coincidence, the current top couldn’t surpass the previous one as it was in the left part consolidation although the zigzag is similar, down then up.

The period of consolidation of silver price could be more than two times shorter than that one for the gold price. But it still fits very well with the gold/silver ratio extending weakness concept. This consolidation should finish soon enough on the 18th of April, 2017 with the move down as highlighted with the red arrow. After the consolidation, the market could move further upside as it was within the second leg of the first move up. I cloned that price action from the left part of the chart and pasted it to the right side as highlighted with the black zigzag.

The consolidations have tricky price actions and they are more suitable for short-term swing traders with the low-risk approach. So there is a plenty of time to sit back and wait while the consolidation would finish watching other markets.

I am going to analyze some metal stocks for you, please take a moment to comment and tell me which gold and silver related stocks you would like me to analyze next week.

Intelligent trades!

Aibek Burabayev
INO.com Contributor, Metals

Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

14 thoughts on “Gold & Silver: History May Repeat

  1. Watch what happens to gold as the VIX starts its move up, when the natives get restless beware you bulls.

  2. I'ld be projecting dollar strength based on FR moves and flight to safety in opposition to fiscal efforts that may weaken the dollar. I think silver and gold, like other commodities, have upside with the expectation of a weaker dollar.

    1. Question to me boils down to whether the orange thing will crash the dollar or the economy first. If you listen to what he says, it will be the economy as he cuts spending on stimulating social programs and blows more on the war toy machine, while crabbing at the Fed for keeping interest rates "too low." On the other hand what he says has little bearing on what he actually does, so it could be the dollar he throws under the bus and that would be a very good thing for anyone who invests in precious metals or a garage full of canned goods. At my age, I could be dead before this reality show plays out, which on the one hand could be an escape, but on the other I'd miss the surprise ending..

  3. Silver stocks: AG, HL, SSRI, CDE, PAAS

    Big selloffs mid-Feb on AG, HL, CDE. Would help to get more clarification on this. Also, the relationship of silver stocks and the price of silver seems to have a time lag on occasion.

  4. Recent juncture, which is started by around one year, movement of Gold, silver and Crude oil became so strange that we just cant predict Either it will capture Bull Run again or Bear turn will be continued.

    I think, probably, this situation is arrived due to the most uncertain future out-look of USD $ and therefor, we may found totally and shockingly changed equations of every thing, either it may be a matter of precious metal, currency or oil.

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