Gold & Silver: Expected Drop Kicked Off

It was a timely call last week to "Beware Of Extended Consolidation" as right from last Monday we saw both metals plummet all the week long. Surely, it wasn't a self-fulfilling prophecy as the market was unexpectedly caught in a bullish euphoria. The chart structure was telling us about this possibility as such patterns appear from time to time. The same pattern had appeared on the Bitcoin chart as I had warned you this past August. That pattern of extended consolidation smashed Bitcoin’s value as planned from $10600 down to the projected target of $7800. Let's see where this pattern could send precious metals prices this time around.

Chart 1. Gold Daily: Undershot => Overshot

gold silver
Chart courtesy of tradingview.com

We've got the tricky junction between two legs down on the gold chart. The triangular structure (blue) had been shaped as lower peaks, and higher valleys were established there. This pattern is rarer than the regular zigzag that I was expecting to unfold. It created a huge undershot to the top of the range, which might result in a big overshot below the bottom of the range. By the way, gold already dropped like a rock to pierce the valley of the range last Friday. But, of course, that's not enough. Continue reading "Gold & Silver: Expected Drop Kicked Off"

Gold & Silver: Beware Of Extended Consolidation

Gold and silver chart structures got synchronized, and I am happy to bring them back together in this post.

Chart 1. Gold Daily: $1557=>$1458

gold silver
Chart courtesy of tradingview.com

In my earlier post, I shared with you a detailed 4-hour chart of gold with a bullish outlook. Fortunately, the price had indeed gone higher and booked $27 per each ounce since then. I set the confirmation above $1520, which wasn't triggered yet, although we were very close as a high was hit at $1518 at the end of October. Continue reading "Gold & Silver: Beware Of Extended Consolidation"

Silver Update: This Setback Could Be A Takeoff Roll

Earlier this August, I shared with you the map for silver with three possible options of how the price could emerge. I labeled them with three different colors for you to distinguish them easily.

Let’s see below how did you vote for the future of the silver price.

Silver Poll

I didn’t doubt that the “Pessimistic” (red) scenario would be the least liked option as silver bears are rare these days amid the powerful bullish move in the metal’s price, that had preceded the ballot. The polar “Optimistic” (blue) scenario, which implied the non-stop move of the silver price to the upside to tag the former top of $21.13, ranked second. Indeed, it was a close call as the poor man's gold, surprisingly rocketed in a week after the post to hit the multi-year maximum at the $19.65. It could be a winning stake, but right after that the price dropped hard to close the first week of September below $18. And here comes the accurate prediction, that was picked by the majority as you had chosen the “Conservative” (green) scenario, which implied the setback of the price ahead of the final home run. Again, it was an amazingly prophetic call, thanks for sharing your votes with all of us here on the Blog.

I updated the map for you in the weekly silver chart below, let’s have a look there. Continue reading "Silver Update: This Setback Could Be A Takeoff Roll"

Precious Metals Were Ripe For A Pullback

If you hear one peep out of the gold community about a precious metals “takedown”“attack” or any other such aggressive or war-like language you will then be hearing some old fashioned and promotional gold bug orthodoxy. Fortunately, a casual look around the Bug-o-Sphere does not yield too many obvious conspiracy theorists or importantly, cheerleaders.

Indeed, it seems that all too many bugs expected this correction in gold, silver and the miners. That is a good thing because when the real top comes these ladies are going to be out front and greed will be running rampant (quite possibly against a negative fundamental or valuation backdrop as in 2008).

 

Instead, everybody, it seems knew about the high-risk Commitments of Traders situation for gold and silver. The CoT is not a timer, but for weeks now it had been a condition that’s been in place for a correction. It’s not a “takedown”, it’s a condition of too much speculation that had to be addressed. Now it is. Other CoT data available here.

gold cot

silver cot

As the CoT, Hulbert’s HGNSI and the extreme overbought readings first in the gold price, but then dynamically in the silver price and the miners gathered to form a high-risk situation, the time to take some profits was over the last couple of weeks, not now. Gold oriented newsletters appear to have jerked over bullish with the latest head-fake rise in the gold price. Continue reading "Precious Metals Were Ripe For A Pullback"

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"