Gold & Silver: The Calm Before The Storm

Aibek Burabayev - INO.com Contributor - Metals


In September I warned you about the possible weakness in both gold and silver after a good rally as strong reverse signals appeared on the chart. That warning alert paid well as the metals dropped heavily – gold lost more than 7%, and silver fell more than 10%. I hope it helped those of you who had market exposure that time.

There are updated charts below with further price action forecast, which is based on pattern recognition and market staging approach. I hope my detailed graphs with annotations will help you understand market behavior, training your eyes to recognize patterns and determine market stages with me.

Chart 1. Gold Daily: The Baby Bird Could Fall Out Of The Nest

Gold Chart
Chart courtesy of tradingview.com

In the previous gold chart I put two zigzags to show you possible paths for further price action, the red zigzag was the main option, it showed the downside move with a small consolidation inside. In reality, the drop has been even sharper with just a minor correction within. Continue reading "Gold & Silver: The Calm Before The Storm"

Commodities: Time For A Strategy Shift

Lior Alkalay - INO.com Contributor


Commodity prices are facing a shift. As inflation heats up and growth stabilizes, the commodity arena is gradually tilting in favor of growth-oriented commodities such as Oil and Copper Meanwhile, commodities associated with inflation protection, e.g., Gold and Silver, are not only losing their allure but face growing sell pressure.

The thought of selling precious metals just as inflation is showing signs of coming back may sound counter-intuitive. After all, precious metals are one of the more well-known methods of hedging against inflation. So, why are precious metals tanking just as inflation is coming back?

Because the capacity of precious metals as an inflation protection method emerges when investors believe that inflation is understated in the official numbers. When inflation becomes fact, we begin to see the classic, "buy on rumor, sell on fact" response; i.e., investors start selling precious metals. Since Gold and Silver do not pay interest, their investment appeal decreases when rates rise. But, when inflation is under-reported, effective rates are lower and the value of the currency, in our case the Dollar, is eroded. And, in this case, precious metals gain appeal for preserving value and as an alternative investment. That would explain Gold’s price surge from July $1,210 an ounce in July to $1,350 in September, when US headline inflation numbers caught the market off guard with a fall to from 2.7% in February to 1.6% in June, meaning inflation was understated.

This dynamic also explains the fire sale that hit precious metals in the aftermath of the Fed's September rate decision. The Fed signaled a rate hike as soon as December and another three in 2018. Gold responded by shedding 3.6% in two weeks.

Gold
Chart courtesy of MarketClub.com

All the while, the rest of the commodities space was holding rather well in the face of higher rates. In fact, in aggregate, excluding precious metals, commodities prices were gaining. One good example is the iShares S&P GSCI Commodity-Indexed Trust ETF (GSG), which embodies exposure to the broad commodities market from energy and agriculture to precious metals and gained 0.54% during Gold's selloff. Continue reading "Commodities: Time For A Strategy Shift"

Gold & Silver: Beware Of Correction

Aibek Burabayev - INO.com Contributor - Metals


What goes up should come down. The precious metals are in a good bullish move, but one should be prepared for the possible downside corrections ahead as the natural phases of market cycles change again and again.

Chart 1. Gold Daily: Channel’s Top Hurdle

Daily Gold Chart
Chart courtesy of tradingview.com

When it comes to money, people start to excel in math, even if they didn’t in school. And so did I when it came to the market analysis, I started to understand both the beauty and power of geometry in the trends even though I didn’t like this subject in the school.

The price of gold made a tiny puncture on the upper side of the blue ascending channel but then retraced to close below it It’s another illustration of how powerful the trend channels can be. However, even if it gets broken, again, it will add more value as evidence of an even stronger price move.

There's almost $17 left for gold to hit the previous major top, but it vanished behind the channel’s top as does a setting sun behind the mountains. What’s next? It’s the perpetual question in the markets. Continue reading "Gold & Silver: Beware Of Correction"

Gold & Silver: Gold Breaks Up As Silver Licks Wounds

Aibek Burabayev - INO.com Contributor - Metals


The broad weakness of the U.S. dollar supported precious metals and currencies. Gold has been saved from silver's Flash Crash destiny so far. Below are the updated charts for gold and silver.

Chart 1. Gold Daily: Breaking Upside

Daily Gold Chart
Chart courtesy of tradingview.com

The experimental clone chart for gold that I posted in April amazingly finished its move down as planned although later than expected. The anticipated reverse to the upside followed the end of the consolidation highlighted with the gray rectangle. Continue reading "Gold & Silver: Gold Breaks Up As Silver Licks Wounds"

Silver Stocks: This Penny Stock Became A Superstar

Aibek Burabayev - INO.com Contributor - Metals


The continued weakness in the silver price offers opportunities to buy silver stocks, which have followed the metal to the downside. This time I selected three of the top silver stocks by their P/E ratio for analysis.

Table 1. Top Silver Stocks By P/E


Image courtesy of finviz.com

Top three companies are:

1. Silvercorp Metals Inc. (NYSE:SVM)
2. Coeur Mining Inc. (NYSE:CDE)
3. Silver Standard Resources Inc. (NASDAQ:SSRI)

Silver started to drop into a long lasting correction a year ago on the 4th of July, 2016. Below is a comparison chart of three stocks and silver itself to show you how they performed relative to each other. Continue reading "Silver Stocks: This Penny Stock Became A Superstar"