Macro Implications, As Silver Takes Leadership From Gold

Since we noted the initial move to break the 200 day moving average – and at least temporarily break the downtrend on August 27th – the Silver/Gold ratio (SLV/GLD) has held its breakout, looking to close the week and the month of August on a signal that we have long anticipated.

silver gold ratio

Okay, but the monthly chart of the Silver/Gold ratio makes abundantly clear that nothing has happened that has not happened before during the precious metals bear market. So that is the caveat to a macro thesis that would see a change to inflationary (as led by Silver/Gold), thereby letting commodities of all stripes and many global markets out of the barn. The monthly EMA 30 (grey dotted line) is a reasonable marker for the ratio’s post-2011 containment. The ratio’s price is below that marker. Continue reading "Macro Implications, As Silver Takes Leadership From Gold"

Gold Hit First Target

Last Wednesday gold had hit the minimum target of $1490 that we were waiting for since January when the price was at $1288. The target was clear, but the path was not and only this May the market eliminated one of three possible options. One month later, it has finally shown its real face leaving the single initial path to go.

Last month gold advanced quite well, but it failed ahead of the first target. I spotted the consolidation on the 4-hour chart and shared it with you to reassure disappointed bullish traders as to when the price doesn’t reach the target someone could start to exit early. Consolidations are tricky by nature, and I showed you three possible types it could unfold. Let’s see below which one you liked the most.

Gold Poll

The triangular type was your first choice; the simple correction was the second with a minor gap, and the complex flat was the least liked. And again the majority of you were right as this was a triangle. Let’s see it in the updated 4-hourly chart below. Continue reading "Gold Hit First Target"

Precious Metals Big Picture

While many are talking about major new bull markets in gold, silver and the miners I find it safer to set realistic goals within a still very bullish outlook. After all, we became bullish in November, had to retrench due to over-bullish sentiment and fading fundamentals in February (both situations linked here) and then have been back in the bull seat since the gold stock launch as noted on June 3rd.

The point being, I have nothing to prove to you; nothing to woo you and tempt your greed impulse about. NFTRH has simply called the sector in line with its fundamentals and technicals, and that is what we continue to do as of this day. We chart 20 quality miners (+/-) each week and note short-term targets, resistance, etc. for the miners, gold and silver routinely.

The other priority is to stay on top of the still-bullish fundamentals. Most recently silver joined the party and is probably slamming our favored theme into gear, which is for it to take over leadership from gold and potentially lead the macro to a future inflationary cycle. Easy now, that is still in the realm of potential, not yet reality. But all of this fun – and it has obviously been fun lately – takes place against a big picture that is lumbering along at its own pace.

What I like best is that due to the big picture view I can put forth a conservative 2019 plan, and it still calls for a minimum of another 70% upside for the HUI index. Within that, many of the miners we track will do much better. And within that, we have not even seen the speculative end wake up yet. Those would be the little TSX-V type penny stock bottle rockets (lottery tickets) that pull 400% rallies out of nowhere when they finally get played.

Okay, let’s reel it into the lumbering big pictures on HUI, gold, and silver. As noted, there will be bumps and pullbacks along the way. Monthly charts are not preferred for managing those situations so we’ll stick with the dailies and weeklies in NFTRH reports. But with the ferocity of the current rally (and the fundamentals behind it) it appears a good bet that a second leg to the impulsive ‘A’ leg in 2016 is underway after the beautiful consolidation that killed everyone’s spirits (as it should) since 2016. Continue reading "Precious Metals Big Picture"

Gold Bugs, How Deep Is Your Love?

The title of my previous update was “Calm Before Storm”, and it was not “clickbait” as I spotted a telling market structure that appeared on the chart as a huge visible consolidation had emerged.

Indeed, a sharp move higher followed that post after the consolidation mentioned above had broken out. That move was strong enough to overcome the barrier of the potential triangle’s resistance above $1360. This has invalidated the second option (green arrows) of intermediate triangular consolidation on our master chart. As time goes by, the dust settles, and the chart structure gets clearer eliminating one option after another until only one single way to go remains.

The gold advanced as high as $1437 so far, let’s see how you felt the market one month ago.

gold

Most of you thought that the triangle’s top could stop the market at the $1360 level, but at the same time, you were optimistic about the gold move although a bit conservative. It is interesting that in second place, the votes were given to an opposite bearish scenario. This confirms the idea that market forces are struggling during consolidation, as trading opinions are polar. There is a Bull Flag’s target on the third place, and it is the closest result so far, my congratulations to those who hit that option.

I cleaned the master chart below for you to focus only on one option, and I extended the view there. Continue reading "Gold Bugs, How Deep Is Your Love?"

Don't Get Trapped By Recent Dollar Weakness

Last week I promised to the reader who commented on the dollar index’s strength under my silver post, that I would write a separate piece about the king currency.

Here we are, and I will start from the very long term chart, and you will see why I answered in my comment that it all depends on which time frame we are looking at as these days as the dollar index is falling. Should we worry about it?

Chart 1. Dollar Index Futures Quarterly: Correction

Dollar
Chart courtesy of STOOQ.com

This is a long-term view of the dollar as almost 50 years passed since 1971. For the whole period, the maximum price was established in 1985 when the dollar index hit 164.7. After that, it dropped like a rock down to the 78.4 in 1992. And then we can see a huge correction that had reached exactly a 50% Fibonacci retracement level at 121.5 in 2001. That strength of the dollar turned out to be short-lived as another drop followed. This time it had fallen much faster as it quickly reached the former trough and after a small consolidation, the index slid further down to a new four-decade low of 71.1 in 2008 amid the financial crisis. Continue reading "Don't Get Trapped By Recent Dollar Weakness"