Gold & Silver: Falling Knives

Silver has failed to complete the second leg up as it couldn’t break above the August top of $15. It is interesting that this misbehavior of the white metal didn’t surprise you as the majority of you had bet last week that silver would fail and drop below $14.2. It’s impressive how accurate your forecast was!

In this post, I would like to update downside targets as we should be prepared for the resumption of the drop in metals after pullbacks have been finished.

Chart 1. Gold Weekly: Bear Flag Targets Bottom

falling knives
Chart courtesy of tradingview.com

Last week I reminded you of the big range of trade, which requires the retest of the downside of the range to complete the setup. Continue reading "Gold & Silver: Falling Knives"

Cyclical Commodities Continue To Weaken

Crude Oil and Industrial Metals continue downward. This is significant per this NFTRH monthly chart showing these items and the broad CRB itself having hit trend lines from the 2008 highs. These pullbacks from long-term trend lines are notable and qualify cyclical commodities as risk indicators for the cyclical macro.

industrial metals

Here is oil’s weekly view. Key support was lost last week as noted in this article: Positive Implications for Gold Miners if Crude Oil Breaks Down. I expect currently oversold WTI to rally from the noted support area, but remain ‘not bullish’ on this cyclical commodity (and remain in scouting mode for the upcoming gold miner buying opportunity). Continue reading "Cyclical Commodities Continue To Weaken"

Silver Slows Saving Gold From Collapse

Chart 1. Gold Daily: Former Support Retested, Another Spike Is Possible

pullback
Chart courtesy of tradingview.com

Gold has finally reached both the AB/CD target and the former support area of $1237 (gray dashed line) as it was forecasted last month in this chart. The metal hit the maximum of $1243 on the 26th of October and then dropped like a rock as was also anticipated after the completion of a pullback. Last Wednesday the price established a low of $1212 losing $31 (-2.5%) from the top. But at the end of last week, gold restored almost all of its losses, closing just below the former support at $1233.
Continue reading "Silver Slows Saving Gold From Collapse"

Gold Stocks Will Benefit From Cyclical Change

As we have noted over the many years of the gold sector’s bear market, the gold miners will not rally for real until the real sector and macro fundamentals come into place. Those fundamentals do not include commonly promoted inflation, China/India “love” trades, a US dollar collapse or especially, war, pestilence or any other human misery than economic. The more astute gold bugs do not fall for that.

The gold miners are counter-cyclical as they leverage gold’s performance (whether positive or negative) relative to cyclical assets and markets. Hence the handy picture showing the key fundamental items with the 4 largest planets orbiting the golden sun being the most important.

macro fundamentals

So the 3 Amigos (of the macro) were saddled up last year in order to guide us to the point of macro change. Linked here is the most recent update from October 19. In this post let’s look at just one macro fundamental indicator among several important macro and sector fundamentals; the ratio of gold to developed stock markets.

As a side note, the macro fundamentals indicate whether the larger economic cycle and investor sentiment backdrops are right for the gold sector and the sector fundamentals that we track indicate whether gold mining companies are likely to improve, operationally. The gold stock sector is a real value now, assuming the turns in stock markets are for real, unlike the February spike down. Continue reading "Gold Stocks Will Benefit From Cyclical Change"

Gold & Silver: Fly or Die

The precious metals are busy finishing the anticipated pullback to the former support, which is almost within our grasp on the short-term charts. So, let it go and in the meantime we can look into the bigger charts with higher time frames to update the outlook beyond the short-term horizon.

Chart 1. Gold Monthly: 1122/1375

Gold Shines
Chart courtesy of tradingview.com

The monthly gold chart above answers some critical questions. The first one, why gold reversed ahead of $1000? The answer is the red horizontal line, which was set at the 2008 top and acted as strong support and breakdown of it would unleash severe volatility into the market as the next level of serious technical support is located in the $700 area (2006 top/2008 bottom). Continue reading "Gold & Silver: Fly or Die"